Calculate Your ROI Of SEO – 2024 Guide

ROI

The return on investment is important for any business to understand. 

Know what you’re getting out of your SEO investment in this step by step guide and how to calculate your Return On Investment (ROI) of Search Engine Optimisation (SEO).

 

What is the ROI of SEO?

The ROI of SEO measures how much profit a business makes, compared to how much they spend on their SEO activities. 

However, SEO isn’t a quick fix. This means that calculating your ROI on SEO can be a bit complicated as it takes time to start seeing SEO results.

 

How to Calculate ROI on SEO

Calculating your ROI on SEO is pretty much the same as calculating your ROI on any other investment.

The formula is the SEO Profit divided by the SEO Costs. It will look like this:

SEO ROI = (gain from investment – cost of investment) / cost of investment 

Let’s dissect the formula and have an understanding of what each aspect means

Step 1: Calculate your SEO Cost of Investment

Here, you are going to add all the costs you have spent on investing in SEO.Normally, these costs will come from your in-house SEO resources, freelancers or agencies, and the tools you use.

Step 2: Track your Conversions

For this step, you’ll need to have Google Analytics set up as it will quickly, and easily, help you measure your profit from your organic search.However, the type of conversions you are tracking will depend on what type of business you are.For example, if you are an E-commerce store, you can apply E-commerce tracking. Or, for Service Provider or lead-based companies, you can use customer data to set up conversion goals. Let’s set up conversion tracking for your specific business. 

Lead Generation Conversion Tracking

Setting up conversion tracking for lead generation businesses is a bit more complicated. These businesses don’t always make sales directly on their websites, making the data less accurate.

Here is how you do it. On Google Analytics, go to Admin > View > Goals. Then you need to set up a value for every conversion on your site. You can do this by analysing your customer data to find the dollar figure.

Now figure out the number of leads converted into sales. For example, if you receive 200 lead forms per month and 50 of those leads become customers, that goal has a 25% conversion rate.

Calculate the average pound figure for each sale or the lifetime value of a customer. If all the leads that sign-up spend between £180 and £200, your average value is £190.

Calculate the pound figure of each lead by dividing the total value of conversions by your original number of leads. Using the values above, if you earn 50 customers and they each spend £190, you make £9,500. Divide that £9,500 by your original 200 leads and each lead from this goal is worth £47.5 on average.

Follow these steps for every avenue of revenue on your website. Enter the goal and the value to store the data. Once you’ve tracked these conversions for a month or so, you should have enough information to start calculating your SEO ROI.

You can view this data by looking at the conversions report on Google Analytics and clicking Conversions > Goals > Overview.

 

Step 3: Measuring your ROI of SEO Using a Formula

Now you know how much revenue your website has earnt over the last month. You can now use the formula to equate your SEO’s ROI.

Use the data from below as an example:

Gain from Investment: £503,456

Cost of Investment: £20,000

(£503,456 – £20,000)/£20,00

£491,110/£20,000

24.55 x 100

=245.55 %

That’s a vast 245.55 % return on investment for the company! Now, don’t go firing anyone if you can’t see a profit in the first couple of months. Keep in mind that SEO is a long term investment and it may take a while to start seeing results like the example shown.

Frequently Asked Questions about the ROI of SEO

When should I measure the ROI of SEO?
The ROI of SEO is usually measured monthly, quarterly, and annually. It’s easy when all the systems are in place. Once you have set up your conversion tracking system and have wrapped your head around the formula, then you can watch your return as much as you like.

When will I see Return On Investment?
Keep in mind that SEO is a long term investment and that you may not see a return in the first six months. Analysing data in those first six months may be the equivalent of watching grass grow. Have faith in your digital marketing team, let them work their magic, and enjoy looking at your return after that 6-month mark.

How much return should I see?
The ROI is different for every business. There is no average return but it is great to have an idea of how much you want to see on your ROI of SEO. Having a figure in mind will give your digital marketing team a goal to work towards. Keep in mind that being realistic is key, but also updating your goals once you reach them is essential.

 

The Importance of Having a Good SEO Agency

Knowing what you’re getting for your investment is critical. The journey of building a successful business is a beautiful process, and StudioHawk is there to help you enjoy it and be a part of it.

For more information on StudioHawk and how we can help you, contact us for a free consultation.