SEO ROI: The Ultimate Guide

Search Engine Optimization (SEO)

Search engine optimization is a set of marketing strategies and tactics designed to improve the rankings of websites and web pages on target keywords and related topics. SEO aims to achieve several key objectives:

• To increase the rankings of a website and individual web pages in search engine results pages for target keyword phrases on major search engines such as Google, Bing and Yahoo!
• To increase the quality of organic traffic arriving at a site from keyword results so that the search intent of visitors matches the target marketing of the website
• To increase the volume of organic traffic arriving at a site from keyword results
• To steer incoming traffic toward landing pages that generate email subscriptions, social media follows and sales conversions
• Ultimately, to generate revenue from SEO-acquired leads

SEO forms a major component of search engine marketing (SEM). SEM includes SEO as well as paid methods of advertising on search engines, such as pay-per-click (PPC) advertising. To the extent SEO forms a part of your SEM strategy, what will be said here about SEO ROI applies equally to SEM ROI.

Return on Investment (ROI)

Return on investment is a profitability measurement that compares the profit yielded by an investment to the cost associated with the investment. Mathematically, this is expressed as a ratio of profit to cost, converted to a percentage. In the numerator of this ratio, profit can be determined by taking the revenue generated by your investment and subtracting the cost. The result is then divided by cost. Expressed as a formula:

ROI = P/C = [R-C]/C

In this formula, ROI represents return on investment, P represents profit, C represents cost and R represents revenue.

In the present context, the investment under discussion is your marketing investment in SEO. Return on investment can be interpreted either directly as profit or indirectly as marketing results which yield profits, such as increase in search engine ranking on a given keyword.

SEO ROI as a KPI

When applied to SEO, the concept of ROI becomes a key performance indicator that tells you how much in profit or marketing results you gain from each dollar you invest in SEO.

Simplified without an itemized breakdown of components, this can be expressed as a ratio of the profit or results generated by SEO-acquired leads to the cost of acquiring those leads.

This can be determined using the following formula:

For R, use the revenue or results generated from SEO-acquired leads. For C, use the cost of acquiring SEO leads.

Applied this way, SEO ROI becomes a way to measure the profitability or tangible results of your SEO marketing efforts. It also lends insight into the efficiency of your SEO strategy. The more efficient your SEO, the higher your SEO profits or results will be, and the higher your SEO ROI. Conversely, a low SEO ROI indicates low profitability and points toward strategic inefficiency and waste.

Understanding How To Find The ROI of SEO

To calculate the ROI of your SEO, you need to decide which metrics you’re going to use to define your SEO results and costs. 

The data you need falls into two main categories:

1. SEO Metrics (or KPIs)
2. SEO Costs (or investment expenses)

Later in this guide, we’ll break down each of these two categories. Then we’ll look at how SEO calculators can help you automate the process of determining your SEO ROI.

SEO ROI Formulas

To define the return on your investment, you can use financial SEO metrics, non-financial SEO performance metrics and combinations of the two. Let’s start with the financial side first and then consider how this relates to SEO performance metrics.

In most cases, the purpose of SEO is to generate sales revenue. From a purely financial perspective, you can measure the results of your SEO investment in terms of revenue generated. For example, if a particular content campaign generates $100,000 in sales at a cost of $50,000, you could plug this into the general formula:

This would give you the results:

ROI = ($100,000 - $50,000)/$50,000 = 1

Converted into a percentage, this represents a 100% return on investment.

While this is a very simple and direct approach to measuring SEO ROI, it focuses on your sales bottom line, which gives you a limited amount of information about the specifics of your SEO investment. For example, how many clicks do you need to generate $100,000 in sales, and at what conversion rate? 

Which content on which keywords helped generate the necessary clicks? How did your clicks increase as a result of your SEO investment? To answer these types of questions, you need to dig deeper into your SEO ROI by analyzing your financial results in relation to SEO performance metrics.