The ROI of SEO: Why It’s Important & How to Measure It

ROI, or return on investment, has always been a valuable metric for evaluating the effectiveness of SEO, or search engine optimisation, investments and whether it has been generating profit for your business. With ROI, you would know if your SEO is driving traffic and that your investment has been worthwhile.

Link building services have always offered high-quality and professional SEO strategies. However SEO services can still occasionally be expensive, especially for smaller businesses, so it is important to make periodic ROI calculations to make sure that your SEO investments have an opportunity to truly prove their worth.

The beauty of ROI is that it has both short-term and long-term calculations. Short-term ROI usually spans a couple of months to a year, and long-term ROI spans from a minimum of six months to several years. In the short-term, link-building ROI may be insignificant or even negative; but in the long-term ROI can increase exponentially, and businesses would obviously wish to know what needs to be done to drive further high-quality links and expansion of traffic.

SEO’s ROI: The Basics

ROI has always been an important KPI used to determine whether an investment is profitable. It is useful for measuring overall performance, successes, and determining what is to be done in the future regarding these investments. The significance of ROI measurements for marketing strategies has only increased since the digital revolution.

As per its name, the ROI of SEO measures the return on investment – or amount of revenue – generated by SEO activities. The ROI is placed against the costs of the investment. Usually, when the revenue generated by the SEO is higher than the cost of the investment, it means that there is a positive return on the SEO; when the revenue generated is lower than the cost of the investment, then there is a negative return.

The primary purpose of SEOs is for the optimisation of websites, to ensure that they rank higher across search engine result pages (SERPs) with targeted keywords. ROI becomes a substantial assessment tool for these rankings. Higher rankings mean more traffic, and usually, this means greater profit.

Why It’s Important

The pivotal question for those who invest in SEO is to know whether the SEO is working properly – that is if it is gaining traffic and attracting new/potential consumers. Assessment of ROI is an effective SEO strategy that can propel increased online visibility and website traffic.

Understanding the ROI of SEO is fundamental for businesses that have SEO investments. While SEO is an extremely powerful marketing tool, it does not mean that it is completely perfect. ROI assessment allows you to ensure that you are not pouring huge amounts of labour, time, and resources into an SEO project that only yields lacklustre results. The ROI of SEO provides an objective assurance as to whether or not your strategy is working, and if changes need to be made. While the ROI of SEO may not be the most directly accurate form of measurement, it still nevertheless offers a glance at how well the SEO is performing.

Organic traffic, keywords across SERPs, and conversions are three key metrics used in decoding the ROI of SEO. These metrics allow you to identify the weaker points of the SEO to enhance and strengthen its effect on SERPs. It can also function as a justification for the SEO investment and become a cost consideration guide on how much you should allocate towards your SEO investment.

An SEO with a high ROI provides the opportunity to hone high-quality content across search engines. All of these factors facilitate boosting organic traffic and ensuring that the flow of new and potential customers visiting your site is not disrupted.

How to Calculate the ROI of SEO

Usually, businesses need to find out the overall costs of the SEO investment. These costs can include:

• In-house SEO resources – salaries you may have paid to employees who work solely on SEO for your company.

• Freelancers and agencies – expenditures you may have paid to external agencies or freelancers for your SEO strategy.

• Tools – monthly or one-time costs for external tools that you may have used for your SEO project.

Tools like Google Analytics or Crazy Egg are useful conversion rate optimisation tools that measure revenue generated from organic traffic. They also serve as useful tracking mechanisms for overall website performance. Yet tracking content can still vary for each business field. For example, eCommerce requires the use of sale data from online transactions and lead generation to ensure that revenue measurement accurately represents overall business performance.

Once these figures have been tracked, the ROI from SEO activities is founded by a simple formula:

SEO ROI = (Conversion Values - Investment Costs) / Investment Costs.

For instance, if a company’s SEO had generated $350,000 and the cost of the investment was $100,000, the calculation will be as follows:

SEO ROI = ($350,000 - $100,000)/$100,000

= 2.50

This means that the company for every $1 they had spent on the SEO investment saw a return on investment of $2.50. It also means that the ROI for this company is 250%. The method applies to all time series.

The impact of profitability that SEOs incur can be significant, and the ROI of SEO is a valuable way to assess these impacts. It is a tool that you can use not only to prove that your SEO is working, but also for you to secure a substantial competitive advantage over business rivals.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.