SEO ROI: How to Calculate the Value of SEO

Jonas Sickler SEO Manager
Key Points
  • SEO acquires customers at 25 cents on the dollar compared to any other paid channel.
  • Search engine optimization also strengthens your brand equity and reputation.
  • SEO traffic is 5X higher than PPC and 10X higher than social media.

SEO ROI is like the return on investment for real estate. Let me explain…

Buying a house is a lengthy process. And, when you purchase a house, it doesn’t increase in value the next day or week or month. However, over time, it may be one of the best investments you make. Even factoring in maintenance and upkeep costs, you’ll probably see sizable returns.

On the other hand, paid media is like renting an apartment. If you need a place to live right away, you can probably move in fairly quickly. However, your monthly payment will never deliver an ROI beyond the month you made the payment. The longer you rent, the more money you spend without any financial appreciation over time. Make sense?

So why do most marketing strategies prioritize PPC over SEO?

It’s because marketers don’t know how to measure ROI on SEO compared with other marketing channels. As a result, it often gets a smaller slice of the marketing budget. Don’t make that mistake. Your SEO investment has the potential to outperform all other digital marketing channels

Of course, the value of SEO depends on a variety of factors. But, for reference, Terakeet clients see average ROI on SEO like this:

SEO ROI statistics

More Traffic

Increase organic search revenue by 25% in 12 months

Reputation

Repair damaged online reputations in less than 18 months

Lower CAC

Acquire customers at 25 cents on the dollar compared PPC

Next, we’ll dig into how SEO produces a return on investment. If you want to skip ahead, you can jump right to one of these sections:

WAYS SEO PRODUCES ROI

About half of all web traffic comes from users who clicked on organic results. So right off the bat, the websites that rank organically are swimming in a pretty nice pool called “half the market share of the entire internet.”

This organic traffic is roughly 5X higher than from paid search and 10X higher than from social media. Any website that’s performing well in organic search, therefore, is likely in a better position to produce a strong ROI than those overly reliant on paid search or social media.

Capture organic search market share

Organic search still dominates the search engine results pages (Google SERPs). According statistics from Advanced Web Ranking, organic listings earn more than 77% of all desktop clicks.

Here’s where you can start to make more actionable forecasts. Let’s say your website is ranking #20 (page two) on desktop for a valuable search query. You’re looking at a 1.03% SERP click share, according to AWR. With each incremental increase in rankings, you capture a little more share. By the time you make it to #5 on page one, you’ve increased your click share by 313%. As soon as you crack the top 3, that increase grows to 852%.

Even on mobile, organic reigns supreme, with more than 73% of the clicks.

Capture overall market share

Don’t look at the ROI of your SEO campaigns through a keyhole. Too often marketers ignore how search engine optimization impacts overall share in the market (not just click share in the SERPs). CEOs are increasingly discussing their SEO strategy during quarterly earnings calls, understanding how organic search impacts the business overall. For example, Cars.com is often found pointing to SEO results as a reason for increased leads and financial results when talking with investors.

Terakeet helped a disruptive home goods brand achieve a 340,000+ monthly increase in organic traffic through our SEO services. As a result, the brand quickly rose from zero to 3% market share in a $29 billion dollar industry.

SEO return on investment is more than just rankings. It’s about moving the needle for one’s business, including SERP click share and overall market share.

Increased website traffic

Using the SERP share measurements alone, you can do a rough calculation of the improvement in traffic you can expect just by improving your rankings for keywords that are already bringing traffic to your site.

An equally important pay-off comes from the untapped traffic your brand is not reaching today. SEO ROI isn’t just dependent on boosting what’s already on page two or three. It also depends on capitalizing on the opportunities you’re currently missing.

  • Does your target audience search in a certain way and your current pages aren’t addressing those queries?
  • Are you missing out on high-volume, high-opportunity topics and keywords?
  • Is your SEO program missing key stages in the purchase funnel (ToFu, Mofu, Bofu)?
  • Could you boost your website’s sustainable, incremental traffic by targeting a few additional long-tail keywords with each piece of content you produce?
increased website traffic

Increased website traffic is one of the easiest forms of SEO ROI you can demonstrate to your C-Suite. As an example, the following are all actual organic traffic gains recently achieved for our clients:

4X Organic Traffic GrowthTerakeet Increased Organic Traffic by 4X within One Year for an Identity Theft Protection Brand.See How

Decreased bounce rates

Of course, you don’t want just any traffic. The users that visit your site and immediately return to the SERPs to choose another option aren’t doing you any favors. In fact, under certain circumstances it could be hurting you.

If you’ve noticed that pattern on your site, I suggest you give this article a read: How to Reduce Bounce Rate. Here’s the TLDR version:

  • Strategically select the queries your target audience searches
  • Match their search intent for every query
  • Create the most helpful content for these queries
  • Provide the best user experience beyond the actual content

Capture traffic from the people who actually need your content and with whom your content will resonate most deeply. And as their interest peaks, they’ll explore more pages on your site and continue their journey as a customer.

When that happens, you no longer have just a visitor. You have a prospective customer. And that’s just one of the many benefits of content marketing.

Increased conversion rates

SEO-first content marketing allows you to target new customers at each stage of the purchase funnel. By aligning content with search intent, you can deliver incredible experiences that increase engagement. As a result, you’ll earn more conversions and build your pipeline.

Compare this to the out-of-sync timing of a TV, magazine or display ad. Can you see how SEO delivers higher conversion rates?

Want even more conversions?

Combining SEO with a positive user experience (UX) translates into a powerful one-two punch, further increasing your conversions. Forrester Research found that optimizing the UX of web pages increases the conversion rate by 200%.

Conversions don’t have to focus solely on transactions, either. Depending on the length of your sales funnel and how your customers convert, you can set other conversion goals that strengthen brand loyalty, focus on nurturing or send high-quality leads to your sales team. Examples include:

  • Signing up for a newsletter
  • Downloading an ebook
  • Filling out a request for a quote
  • Registering for an event or webinar
  • Requesting more info
  • Downloading a coupon
  • Submitting a contact form
  • Watching a video
  • Contributing user-generated content
  • Booking an appointment
  • Making a donation
  • Etc

Increased revenue

The upshot is more revenue. This is true whether your user converts as soon as they hit the checkout button or whether they spend more time getting to know your brand, talking with your salespeople and converting later.

The more traffic you generate through SEO, the more revenue you are likely to realize. However, not all traffic is created equal. Some keywords may have higher search volume, but carry with them less purchase intent. Other keywords may have lower search volume, but higher purchase intent.

In order to achieve SEO ROI in the short term, you’ll need to perform well on the keywords with a higher purchase intent.

As mentioned, Terakeet clients average a 25% increase in organic revenue in their first year.

Over the long-term, though, you’ll be able to calculate an ROI on your SEO program by also incorporating traffic results from those keywords at the top of the funnel, priming your business for future sales. With this in mind, it’s important to factor in not only revenue, but also lead quality scores from traffic higher in the funnel in your ROI calculations.

Reduced customer acquisition cost (CAC)

With SEO, you can often acquire new qualified traffic and customers at a mere fraction of the cost of paid search. In fact, Terakeet typically achieves acquisitions up to 30% that of paid search for our clients. Better ROI through SEO means improved margins and increased revenue.

Ironically, CMOs allocate millions of dollars to paid search because the correlation between investment and return are immediately clear. The acquisition cost, though, can be sky high. As a result, profit margins shrink and budgets are devoured.

Unfortunately, when you stop paying, you stop playing. There are no long-term gains from a PPC campaign. You have to constantly feed the beast or your traffic and customer acquisitions literally go to zero

In comparison, SEO is a flywheel that keeps providing returns.

What’s worse, many ecommerce brands ignore top-of-the-funnel acquisition due to the costs of the Google Adwords model for those keywords. That means they aren’t present when customers are researching options.

That doesn’t mean you should choose SEO over paid search in all cases. But you should rethink how you look at acquisition cost. A typical CAC is tightly time-bound and linear. If you factor in the much longer timeframe for returns and the new prospects brought into the awareness funnel from SEO, you’re looking at an even lower actual CAC for SEO initiatives.

Strengthened brand equity and reputation

A holistic approach to SEO also has many branding benefits, including:

  • Finding the right people
  • Matching their search intent
  • Building relevant pages and creating genuinely useful content
  • Answering their questions
  • Building a trusted brand
  • Establishing expertise and authority in a subject or industry
  • Strengthening your brand’s presence in the SERPs
  • Solidifying results for your branded terms
  • Getting people talking about your brand and sharing your content
  • Producing high-quality content that that supports link building
  • Being a brand that others want to link to in general
  • Guiding visitors to the actions that matter most
  • Making sure your happy customers leave great reviews

All of this adds up to strengthened brand reputation.

Through online reputation management, enterprise companies can rebuild their search profiles to showcase positive brand sentiment. In addition brands can immunize against future threats and recover more quickly from a crisis. Integrating SEO and public relations extends the visibility of PR placements, increasing ROI even further.

From 8,421 to 0 Negative ClicksTerakeet Transformed the Search Profile for a Fortune 500 CEO, Whose Name Was Being Searched More than 14,000 Times Monthly.See How

Curating a positive online reputation is big business. A study by the World Economic Forum found that approximately 25% of a company’s market value is directly attributable to its reputation.

Further, negative brand search results can scare off potential customers, translating into millions of dollars in lost revenue.

A case in point is a national furniture retailer for whom we engaged in reputation management. Terakeet flipped Google page one for brand terms to 100% positive results. This increased  click-through-rates (CTR) on positive articles for branded “review” searches by 456%. The client subsequently recovered $32.7 million in monthly revenue.

how to calculate seo roi

HOW TO CALCULATE SEO ROI

How do you measure SEO? The answer ultimately depends upon your business goals. In this section, I’ll explain how to measure SEO ROI so you can maximize the impact of your budget.

Determine the types of ROI you’ll measure

Revenue might be your ultimate goal, but the value of SEO is more multifaceted. Tie incremental indicators directly to a KPI so you can more effectively communicate ROI across the enterprise. For example:

  • Rankings: Measure rankings for new SEO keywords, as well as positional improvements for existing keywords.
  • Brand sentiment: Measure the percentage of positive, neutral and negative listings in the top 10, 20 or 100 search results.
  • Increased SERP share of voice: Define a competitive set, and measure rankings multiplied by the CTR of each position to calculate estimated traffic totals.
  • Lower acquisition cost: Measure your overall organic traffic numbers vs. the cost of your SEO program.
  • Authority: Track the number of backlinks and the improvement of traffic that comes in through related keywords.
  • Funnel progression: Track performance of keywords categorized by stage (Awareness, Consideration, Decision) to understand movement at a high level. On a micro level, you can also track onsite funnels with behavior analysis tools.
  • Conversion rates: Assign a monetary value to soft conversions in your analytics package. This will help you to measure the cost of your SEO program against a revenue figure.
  • Revenue: Measure actual revenue through ecommerce tracking and calculate the associated CAC. Assign a dollar value to each conversion, or use the average order value. Then, multiply your the number of conversions from organic traffic by the value of each conversion.

Tracking, analytics and reporting

The plethora of SEO goals isn’t well-suited to a single at-a-glance metric, but it’s easy to track if you set up a dashboard. There are plenty of dashboard-based reporting tools, including Google Data Studio, Klipfolio, Grow or DashThis.

Keep an eye on your performance by monitoring some the following SEO ROI metrics:

  • Organic rankings on your priority non-branded keywords
  • Organic rankings on your branded keywords
  • Total organic traffic
  • The percentage of overall traffic attributable to organic traffic
  • Organic desktop vs. tablet vs. mobile traffic
  • Organic traffic from different regions
  • New vs. returning organic visitors
  • Search Console impressions: How many people saw you in the SERPs?
  • Total traffic from all mediums
  • Traffic from keywords related to a specific topic or initiative
  • Bounce rates from organic traffic
  • Organic traffic conversions and conversion rate
  • Soft conversions from downloadables and subscriptions
  • Organic revenue and assisted revenue

Reviewing your month-over-month stats is vital so that you can notice what’s working (or not) and adjust your SEO program moving forward. Year-over-year performance is just as important to track for understanding the true, longer-term ROI of your SEO efforts. Track this on a monthly basis, too.

how long does it take to see SEO ROI

HOW LONG DOES IT TAKE TO SEE SEO ROI?

The literal million-dollar question.

With the right approach, you can expect to see organic rankings and traffic improvements within six months. But the reality is, you’ll start to notice movement much earlier than that – sometimes even within a week or two of implementation.

It may not translate to traffic or revenue immediately, but if you start ranking at #58 for a high-priority keyword and a few weeks later you’ve bumped up to #30, that’s a sign that Google is slowly starting to understand the page’s quality and usefulness relative to its SERP competitors.

And of course, not all traffic leads to revenue. But over time a sufficient amount of the traffic will, and you should be able to see traffic and revenue improvements quarter to quarter, or year to year with seasonal businesses.

If you want a truer picture of your SEO ROI, look at the traffic and revenue increases over two or three years. With a longer timeframe, you’ll be able to see how your rising tide in SEO performance is lifting all ships, resulting in greater rankings, traffic and revenue performance more broadly.

And that’s the best calculation of all!

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