How To Measure the ROI Of an SEO Campaign?
People often tend to evaluate search engine optimization merely using backlinks, keyword rankings, or optimized content. But that’s far from how it’s done!
Let’s bust the myth for you- the best way to assess your SEO practices is by the traffic and sales you generate. These are the monetary gains for any level of spending from your end.
Plus, there isn’t any company that can have an unlimited budget irrespective of its size and potential. That’s why it’s essential to be aware of what you’re getting in return for all your spending.
Now, if you’re wondering what this procedure entails, it will do you good to go through our detailed article on SEO ROI and its measurement for any business. So, let’s begin!
ROI for SEO and PPC- How Are They Different?
Marketers have traditionally used Cost Per Click (CPC) values to measure the real worth of organic clicks. That’s because advertisers actively spend the amount on getting such clicks for paid keyword searches.
But organic SEO can fetch you the same number of clicks without any costs. For instance, a website is likely to rank at the top for keywords that can generate over a thousand clicks on a monthly basis and have a high CPC.
In the case of keywords with high CPC, businesses would need to pay thousands of dollars to get an equal number of clicks with a campaign on Google Ads. Thus, ranking organically for the same keyword can fetch you those clicks at considerably lower costs.
That’s why the economic value of organic clicks is of much significance considering the CPC for each keyword a website ranks for.
Coming to the CPC calculated for SEO campaigns, amounts to an average of the bids originating from Google tools. But most advertisers, especially the ones getting the top AdWords positions, often have to pay more. Thus, the majority of brands are underestimating the value of traffic earned through SEO.
The heavy costs associated with creating Google Ads campaigns have made many businesses abandon the idea of allocating an unlimited budget to buy clicks on the platform. So, while CPC might help you prove a lower cost-per-acquisition for SEO, it isn’t an accurate way of measuring the ROI.
SEO campaigns are largely about gaining organic search traffic. So, you’ll need to track the activities of organic visitors to a website to get an accurate measurement of their ROI. Let’s move on to the details of the procedure.
Measuring SEO ROI The Right Way
Step 1: Decide on the Start and End Dates for Calculating Your ROI
First and foremost, keep in mind that an SEO campaign doesn’t have a clear date for the start or end. It can take time to witness substantial results, especially for new websites that require building domain authority.
Thus, you need to break the ROI calculations for your SEO campaigns into longer timespans, that can range from three, six, or 12-month calculations. This will help you achieve reasonable results consistently.
Studies have shown that the ROI calculated for a three-month period would be negligible. But an improvement in the impressions and ranking positions for a page can eventually boost the inflow of organic clicks for any website. In comparison, the performance metrics for six and eight-month periods are likely to reveal major returns for the SEO efforts of any business.
If your SEO is on the right track, the marketing team would probably keep a record of the ROI on a regular basis. But note that generating a calculation for the revenue would require setting a particular time period. All in all, the best practice is to lean toward longer periods to achieve stronger ROI figures.
Step 2: Find Out the Costs of Investing In SEO
Calculating the cost incurred is the next most important step for investing in SEO. This is the price you’ll need to pay for SEO services India. In the case of the in-house digital marketing teams, you’ll have to rely on data provided by members across different departments including web development, content marketing, and others.
The following are the costs generally included in SEO investment:
Cost of Tools
You’ll have to take into account the SEO tools used by your team members- add the monthly cost of using each tool to the calculation. In case other departments also share such tools, you should consider including that cost as well.
Costs of Agencies and Freelancers
Calculating the SEO investment for freelancers and outside agencies is quite simple. Since most contracts with agencies are based on a retainer model, such services come with a definite monthly fee.
Once you get the figures for freelancer charges or the fees for an SEO company in India, you can add them directly to the calculation for investment.
Link Building and Web Development
SEO also involves building quality links and working on website design and development. Make sure to add the cost of all the links you’ve leveraged for SEO and incorporate the web development costs as reported by the concerned team members. keep in mind that such costs might not be constant every month, so you’ll have to account for any changes each time you calculate SEO ROI.
Speaking of the costs involved in different activities, some of them might come with a considerably higher price tag. Changes in web design or development and link building generally cost higher but are likely to have a more significant impact on any business.
Another point worth noting is that a more targeted and precise SEO strategy can make ROI calculations much easier. A strong strategy for keywords with more qualified traffic and better conversion potential is likely to raise the overall ROI.
Step 3: Find Out the Conversion Actions That Have Economic Value
A conversion takes place every time a visitor takes a specific action. In the case of brands that generate sales as soon as their clicks convert, identifying a conversion action becomes quite simple. Brands that have longer sales cycles such as B2C and B2B need to identify the actions that constitute a conversion funnel.
Do note that a website may not be able to process sales. In that case, you’ll need to identify actions that fetch your sales team more qualified leads or take customers further toward making a purchase decision.
First of all, it’s essential to come up with the estimated value of every conversion action your business records. Only then can you identify the ones with true economic value.
In case all online transactions are processed within your website, the value of every conversion will be equivalent to the revenue generated from a sale. Brands generating leads rather than sales generally evaluate conversion actions such as:
- Demo bookings
- Submission forms
- Newsletter signups/ email lists
- Free trials
- Meeting appointments
After identifying the actions included in the conversion funnel, you’ll need to assign a proper economic value to each of them. Organic visitors who’ve filled out a submission form will show up as potential customers.
However, if a visitor books a meeting or demo session with the sales team, they’ve probably progressed much further along the sales funnel. That’s why the second action needs to be assigned a greater value.
To record the value of conversions for different types of businesses, you’ll need to follow a different set of procedures:
Micro-conversions are a key part of the digital marketing strategy for B2B businesses. Activities such as watching demo videos and clicking on conversion-worthy pages hold significant economic value.
If B2b business owners assign lesser value to such actions, it can help them deduce the impact of organic links on revenue generation. Note that this is also applicable in cases where the final sales are generated much later following the first click.
Calculating the value of e-commerce conversions is relatively simpler. In such cases, the value will be the actual revenue earned from sales.
You might also need more information about organic visitors apart from whether they bought your services/products. Here’s what you might require to set up the conversion tracking procedure the proper way:
- Which services/products did the customer consider?
- How much did they spend?
- Did they add any purchase suggestions to the cart?
- Are they first-time customers? Or, have they made a purchase before?
Such details might not help in calculating your revenue but can be useful for improving your SEO strategies for better overall conversion rates.
Step 4: Prepare A System to Track and Analyze Conversions
Once you’ve identified conversion actions that hold significant economic value, you’ll have to track them using Google Analytics.
This procedure can provide plenty of information on the time spent by users on the site, the pages they’re viewing, and more. However, the best feature of this platform is that you can use it to set particular conversion goals and track the way users complete such goals at the time of their visit.
Get Your Google Analytics Account Linked with Google Search Console
To determine the ROI for your website, you’ll also need to know the conversion actions that came from organic visitors to your site. This will be easy when you link your Google Search Console account to Google Analytics. In such cases, Google analytics will report the goal completions generated from organic traffic. All this information can then be centralized in one place, making it easier to handle all your SEO activities effectively.
Now, let’s look at the methods for tracking and analyzing the conversions for different types of businesses.
E-Commerce Conversion Tracking
You can collect data on E-commerce conversions by incorporating events relating to e-commerce into your website on Google Tag Manager. Those yet to set up the Tag Manager can follow the instructions laid down by Google.
The tracking process, once started, will give rise to an E-commerce report containing detailed information regarding all your transactions. To navigate to the reports on Google Analytics, you’ll need to select Reports -> Monetization -> E-commerce purchases.
Then you’ll have to filter the results to organic traffic- for this purpose, you’ll have to click on “add filter”, select “Source Medium” under the dropdown menu, and choose Google/organic.
Following this, you’ll have to click on “apply” to view the cumulative conversions for the business. The value of a specific conversion can be viewed by selecting the required time frame and clicking on the icon “insights” from the top right-hand corner.
Tracking B2B Conversions
B2B businesses can efficiently manage conversion tracking by creating custom goals on Google Analytics based on their business needs. The “Goals” option is located in a column on the right and allows businesses to add trackable goals throughout. Do note that you should add a specific goal for each conversion action identified in the previous step. Every report will include the economic value of all business conversions.
Alternatively, you can obtain more accurate calculations for the ROI by completely linking their CRM and Google Analytics accounts. Once you’ve known which organic leads went on to become customers, you can get a more exact calculation.
Given below is an explanation of how you can create comprehensive close-loop analytics reports:
- Begin by adding scripts to the website to extract the Client ID of a user after they submit a form targeting lead capture.
- Use a customized form to send the particular Client ID to the CRM.
- Following this, you can use CRM plugins or integration to export custom events back to Google Analytics when leads convert into customers.
Data on Google Analytics is basically funneled into the CRM to ensure your marketing and sales team can identify the leads arising from organic search. Your leads might’ve logged into your website several months before signing a contract, but you can still understand the amount of revenue generated eventually from that lead.
Tracking Conversion Values for Lead Generation
In case you don’t earn sales on your site, tracking conversions can be more of a challenge. Conversion for lead-based businesses is different from an E-commerce transaction in that it doesn’t have an associated value unless you’ve assigned one to it.
Leads can be assigned values on Google Analytics using a simple procedure. You’ll have to move to the “Admin” menu and then select “events”-> “create event” to create an event for each conversion. The conversion actions can include free-trial signups, specific page visits, and signups for free trials.
To register a particular conversion in the system, you’ll have to choose a parameter or the action a lead is performing, an operator, and enter a value of the conversion. Once you’re done, you can view all conversions under the “Existing Events” section.
The moment a conversion is complete, remember to toggle the switch “Mark as Conversion”. Thereafter, you can assign the conversion a monetary value- for this, head over to the section on “Parameter configuration” and click “Add modification”. The next step will be to enter the currency type applicable to the transaction, add the value, and click on “Save”.
This value will help you measure SEO ROI- each time a conversion is triggered, you’ll need to assign a monetary value to the service.
Next, you’ll need to calculate the total amount customers are likely to spend with the business during their purchase journey. An easy way to calculate this value is to multiply the Customer Lifetime Value by the rate of lead conversion.
The former metric tells you the total amount you can expect customers to spend with the business. On the other hand, the lead conversion rate equals the percentage of leads that are converted into sales.
While you need to make assumptions in this technique, it’s a convenient alternative for businesses that derive conversions from leads.
Step 5: Perform the ROI Calculations
Your revenue values and total conversions for a specific period can be used to form a more accurate picture of the ROI of your SEO efforts. Here’s the basic SEO ROI formula to keep in mind for the calculation:
Basic ROI= (Investment Gains-Investment Costs)/Investment Costs
For instance, if an SEO campaign generates $300,000 while the investment costs are 50,000, using the figures in the above formula will fetch you the results:
($300,000-$50,000)/$ 50,000 = 5 (ROI)
A business with an ROI of 5 would earn a return of $5 for every $1 it spends on SEO. This formula can be used to calculate the ROI for any period so long as you’re aware of the costs and reruns.
So, once you delve deeper and analyze granular SEO data on the above-discussed metrics, managing your SEO would no longer be mind-boggling.
You’ll be able to implement the right strategies for the targeted ROI for the best results. So, start tracking your ROI of SEO along with associated metrics, and you’ll soon witness better returns than ever before.
If you’re still unsure about where to start, give us a call and we’ll be happy to help. Signing off with best wishes!