The so-called “return on investment” (Ratio Of Investment, referred to as ROI) is actually an SEO optimization key performance indicator (Key Performance Indicators, referred to as KPI), which determines how much return or profit is obtained from the expenditure.
It is critical to the success of every investment and supports you in making important decisions. In terms of marketing tools such as SEO, SEM, etc., ROI is also quite important. But how do you measure the ROI of SEO to see its true value? This is exactly what we will analyze with you in this article.
When talking about the performance of SEO optimization, many marketers often use ranking positions or network traffic as KPIs for SEO optimization programs. In addition to this, we should also look at the actual financial value that SEO optimization brings to your business, which is the ROI of SEO optimization.
Why measure SEO ROI?
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Without knowing how much return they can get from SEO, marketers have no way of knowing which media channels are working and can increase/cut spending on marketing channels. But accurately measuring the ROI of SEO optimization is not an easy task.
Because organic rankings go up or down over time, rather than buy like Pay per click (PPC). Unlike PPC, there is no “cost per click” for organic ranking traffic. However, there are the following ways to measure the effectiveness of your SEO optimization investment.
How to Calculate Your SEO Program ROI
First, you need to calculate the cost of your SEO program investment. These might be:
Invested resources for SEO within the company: This requires calculating the time cost of the company’s marketers working for SEO, whether they are copywriters, developers, or other positions.
Amount of SEO investment outside the company: such as SEO service company fees, etc.
Other SEO tools: such as analysis and tracking SEO tools, keyword research tools, and SEO plugins, etc.
Now combine all of these costs and that is the cost of investing in SEO. Next, you need to track and measure SEO conversions. This will vary depending on the type of company website, such as a company website or an online store platform, etc.
Calculate lead Conversion Rate
Compared to actual sales, lead conversion rates are more complicated because they are difficult to measure actual value. However, we recommend using Google Analytics (GA) to analyze conversion value by setting a Custom Goal.
For example, you can define goals that can be measured as “customers submit inquiries”, “free trial registrations”, or the number of “customer registrations”, etc. For these goals, you can set a certain value. Then, use the customer value x (multiply) the lead conversion rate calculation. Customer value is the average amount a customer spends over a period of time. The lead conversion rate is the percentage of leads you generate that convert into sales.
For example, if the customer value is US $50,000 and your conversion rate is 8%, then your acquisition target value should be $4,000.
With these two metrics, you can calculate the ROI of your SEO optimization.
The ROI formula for SEO Optimization
Example: In three months, your SEO campaign generated $180,000 in revenue. But the associated cost of SEO is $30,000.
The ROI of SEO is calculated as follows:
($180,000 – $30,000 ) / $30,000 = 5
This means, over a three-month period, the SEO ROI is 5x.
Understanding of the ROI of SEO Optimization
The ROI of SEO optimization will vary over time as costs and benefits need to be checked regularly.
Marketers need to calculate the ROI of SEO optimization, review the original SEO optimization strategy, and finally improve the return of organic traffic. This is ArunSEO specialty. Ensuring that our clients enjoy a good SEO ROI has always been the top priority of our efforts.
If you would like to discuss with us how we can help you increase your sales and grow your business through value-added SEO optimization, you are welcome to contact our team.
