How Do You Measure SEO Performance and ROI?
We have worked with hundreds of clients in almost every conceivable industry – from startups with brand-new websites to Fortune 500 companies. As you can probably imagine, we’ve received a lot of SEO and marketing questions over the years. However, there is a question that almost everyone asks in one form or another: “How do I measure the ROI for SEO?” In other words, “How do I know if it’s working?”
SEO has been an important and valuable marketing channel for companies for over 20 years, but it is still confusing for many and often misunderstood. When someone unfamiliar with SEO does see good results, they attribute the results to luck or some inexplicable voodoo magic. It’s hard to blame them! How else can we explain why that one blog post from three years ago that hasn’t ever been updated suddenly started getting traffic last week? Or why that product page you published a month ago still hasn’t made a single sale when a similar product page published at the same time is crushing it?
Most people get the general idea that showing up higher in Google’s search results means they will get more clicks, more traffic, and more sales. How do you get your website to show up for these keywords, though? And, how do you know if your SEO and marketing efforts were the catalysts?
The truth is there ARE a lot of factors that impact rankings, some of which are in your control – like user experience metrics and blog content. Some are not in your control, like competition and changes from Google. Sometimes, getting an exact measurement of an SEO campaign’s impact is difficult or even impossible.
Still, seeing if SEO projects are adding value CAN be done, and when you take a step back and look at your data holistically, it can also become clear and even easy to measure.
Companies who follow SEO best practices consistently WILL see positive results over time. That is a statement we are very confident making, with many years of experience as proof.
Now for the Fun Part: How Do You Measure SEO Results?
Did your SEO efforts bring more traffic? If so, did that traffic convert into leads and sales?
Search engine optimization aims to bring more qualified traffic to your website through search engines (like Google and Bing). So, here are the primary questions you generally need to answer: Did your SEO efforts bring more traffic? If so, did that traffic convert into leads and sales?
You can also track things like keyword rankings to identify if projects are moving things in the right direction as well as user experience metrics, like page speed and mobile-friendliness, to ensure you are providing a good experience for site visitors. However, these are only leading indicators that come second to actual conversions. For this article, we will focus on actual conversions and revenue.
Setting Up Tracking & Assigning Value
Start with basic page tracking with Google Analytics, then create unique conversion goals.To calculate ROI for SEO (and other channels), you will first need to set up E-commerce tracking in Google Analytics. If E-commerce tracking is not already enabled, see instructions here.
If you have not set up basic page tracking, you can learn how here.
If you use Google Tag Manager to manage your tracking code, review this setup guide for E-commerce tracking.
Finally, if you are not a traditional E-commerce business, you can still assign value to important conversions like form submissions and even phone calls.
The setup process is relatively simple:
- Log in to your Google Analytics account & navigate to the admin page (you need to have the rights to “edit”)
- Select the “View” you want to add goal values to
- Click on “Goals”
- Add the goal value
- That’s it! You’re done!
Google Analytics allows you to add goal values for multiple situations:
- • Destination goals
- • Duration goals
- • Pages/visit goals
- • Event goals
Determining What Value to Use for Your Goals
To accurately attribute value to specific goals and actions, you will need to calculate how much these actions are worth to you on average. To do this, you can divide the number of would-be goal completions by the historic value received from these activities. For example, if you have 100 form submissions over the last three months, and these submissions resulted in $10,000 in revenue, you might want to assign each form fill a value of $100 ($10,000 / 100).
The SEO-ROI Formula
Two simple formulas to help you measure your SEO efforts.
A traditional ROI formula looks something like this:
You first calculate the increase in total value by subtracting your baseline value (pre-investment) from your post-investment value. Then, multiply that number by 100%.
Suppose you invest $2,000 for six months in SEO (or $12,000). At the end of six months, you understandably want to know what your ROI looks like. First, you add up the monthly revenue for the six months before your SEO campaign (your baseline), and that total comes to $100,000. Next, you add up the revenue for the six months while investing in SEO, and this comes to $120,000. This leaves you with an increase of $20,000.
Our formula would look like this: $20,000 / $12,000 X 100% = 166%.
This is not a bad method to calculate your ROI; however, this simple formula does not tell the whole story when it comes to SEO. SEO has a unique advantage when compared to traditional paid media channels. When you stop spending money on paid media (Adwords or Facebook Ads), the return on investment disappears almost immediately. However, with SEO, traffic and conversions from your efforts can continue for months to years into the future; your keyword rankings and traffic don’t go away immediately. Your results can also compound with time as you continue to build your website’s authority.
So, you might choose to use the formula above but project your continued return several months into the future. Although rankings can last for years, we typically recommend using around six months for projections like this to keep things simple (and not overly optimistic).
Here is what that new formula might look like:
According to the illustration above, our ROI might be significantly higher than our previous figure. If we assume the same return for the next six months (an additional 20K), the return would be more like 333%.
Establishing a Baseline
As you can see from the formula and illustration above, it’s vital to calculate a baseline ROI first. You can use any period of time you want for this calculation, but ideally, you should choose a period that’s similar to the comparison period you wish to track AND one that’s long enough to produce significant conversions and data. For example, you might want to use six months for the previous year vs. the previous six months if your business has seasonality.
When calculating your baseline, you might also isolate only specific pages or keywords you want to track. If you are making updates to some of your product or service pages, but not all of them, you might only want to track the impact on the pages you are testing. Alternatively, if you are focusing your SEO efforts on a particular group of keywords, you might choose to isolate the traffic from these keywords in your calculations. However, keep in mind that search engine optimization benefits more than just the targeted pages.
For example, when adding backlinks to a particular page, you might also increase the entire domain authority for your website. This, in turn, can improve your rankings and increase your traffic and conversions. For this reason, it’s wise to track your SEO efforts holistically, even if you are looking closely at more isolated metrics or sub-segments of your traffic.
Projecting Future Returns & Growth
Opportunity for future growth is great with SEO’s long-lasting effects.
Because SEO provides long-lasting results, you might also want to project your future results when investing in SEO and marketing tools. Here is one simple process that can help:
- Determine Your Average Order Value (AOV) – AOV tracks the average dollar amount spent each time a customer places an order on your website. To do this, simply take the total revenue for a specific period and divide that by your number of orders.
- Determine Your Conversion Rate – The conversion rate is simply the number of conversions divided by the total number of site visitors. For example, if your website receives 100 visitors from search engines in a month and has 25 sales, the conversion rate would be 25 divided by 100, or 25%. (Remember to isolate organic traffic in Google Analytics.)
- Estimate Increases in Traffic – To project your future returns, you will first need to project your future traffic from organic visitors. This is the difficult part because of unknown variables like changes to Google’s ranking algorithm or new competitors. You might choose to base your projection on historical data. For example, if you grew by 20% last year and your organic marketing investment will be the same this year, maybe 20% is a reasonable estimate for the coming year as well. Or, you can get more detailed by identifying specific target keywords, looking at the volume of traffic available for those keywords, and projecting your future traffic based on a percentage of that available traffic.
- Estimate Increases in Revenue – Using the figures above, you are ready to calculate an estimated ROI for the future.
Here’s the formula:
If you estimate 1,000 new visitors from SEO and your conversion rate is 5%, this would give you 50 conversions. If your AOV is $100, your estimated increase in revenue would be $5,000.
Despite being notoriously difficult to track and project, search engine optimization is still undoubtedly a powerful and effective channel for any marketing campaign. Some things that make it hard to project (like compounding growth and long-lasting results) are also what make it such a uniquely powerful tool.
Hopefully, the simple calculations and formulas above will help as you plan your campaigns and report on the impact your SEO efforts have!
Author
CJ Lewis
COO
