Compared to PPC or other paid marketing measures, the value of SEO is difficult to quantify. In this article, we explain why calculating return on investment is so complicated, what it depends on and how you can meaningfully evaluate it.
Return on investment (ROI) is every online marketer's goal. It’s the benchmark that every business leader wants to know. And this is no less true when it comes to SEO ROI.
If you’re already running pay-per-click (PPC) ads, you’ll know that it’s very easy to calculate the ROI here: simply compare revenue against expenditure. If the number is a positive one, you’re getting a positive return on investment (ROI):
Yet while it’s easy to calculate the ROI for online ads, it’s unfortunately much more difficult to do so for your SEO measures.
Search engine rankings are probably the most obvious way to map SEO ROI. If your website performs well in the search results, you’ve generated value for your website. Unfortunately, this is not really the SEO ROI, but more like a medal. It shines beautifully golden, but is only a token of your success.
Fig.2: Keyword rankings and the resulting organic traffic help to assess SEO success
While you can use keyword rankings and organic traffic to evaluate the success of your SEO, it’s hard to make cast-iron statements about the return on investment. So what is SEO ROI, and how can you calculate it?
By definition, SEO ROI indicates the return on investment of your SEO measures. If your SEO campaigns generate more revenue than the amount you spend implementing them, then congratulations – you’ve got a positive website ROI.
Unlike PPC ads however, there are no fixed costs per organic click in SEO. Instead of paying for top position, SEO is about earning your organic visibility on Google!
So while some digital channels can guarantee a certain amount of traffic and resulting revenue for a certain sum, you cannot directly and concretely measure your SEO value, or the revenue that can be traced back to SEO measures.
What’s more, SEO is not an overnight recipe for success. All measures are designed for the long term, and can take months to bear fruit.
You can of course define an expected SEO return on investment based on estimated costs, sales and other factors. For a more accurate calculation or to compare whether expectation and reality match, you have to include a few more aspects.
Fig. 3: When it comes to SEO ROI, revenue and spend aren't always easy to measure
We’ve already said that you calculate your SEO ROI by subtracting all the costs related to your SEO efforts from the revenue generated by them.
But that's not so easy, because the "revenue from SEO" and "costs from SEO" can be much more than pure amounts of money. To determine the value of your SEO efforts, you need to consider several factors.
SEO ROI, among other things, includes the success rate with which you direct qualified traffic from the search engine results pages (SERPs) to your own website. Qualified traffic means leads or users who offer you as a website operator and entrepreneur a certain sales potential. These can come from different sources:
What makes calculating an SEO ROI so difficult is that you have to analyze the connections and link profiles that result from website and search engine traffic, and then multiply that data against the conversion results.
Tools like Google Analytics can help you here. But it's still difficult to sync, analyze and map the data in a truly coherent way.
The actual SEO return on investment is only as meaningful as the underlying data and level of detail. It must always to be set according to the goal. So you need to know the origin of your traffic and track it down to the desired action. You then have to place all this data in relation to one another.
For example, you could track links from online forums that lead to products in your webshop. Then your SEO ROI can consider, for example, a list of inbound links that have converted to a purchase. Or you could analyze details from the search results (using suitable keywords, anchor tags or within the context of a piece of content) that led to a purchase.
You then connect this information together. For example, by calculating the total number of forum links or the total number of blog articles that rank for the corresponding keyword (on Google page 1). And against all purchases taken together, of course, you have to subtract expense like your agency or in-house SEO team, in order to get the actual SEO ROI.
First of all: it's nice to see that you haven't given up on calculating your SEO ROI yet! Because yes, it is complicated. It’s certainly more complicated than the aforementioned PPC ROI.
SEO is a bit of a soft skill among online marketing efforts. It doesn’t show immediate results, and it’s comprised of a variety of factors.
First though, you need to know what your SEO costs you in order to be able to even begin to calculate the return on investment.
Do you work with an agency or an external SEO expert? Then your SEO costs often depend on how much volume or what specific measures you book. The advantage of this? It makes the calculation of your SEO costs reasonably clear.
Is your SEO done in-house? Then your costs are easy to calculate if everyone involved is doing it full-time. But as soon as your content creators, digital marketers, developers, etc. are each doing just one aspect of your SEO efforts as part of their day-to-day business, it becomes harder to calculate, and should be based on a proportion of their hourly wages.
Oh, and if you use any paid software or tools to implement your SEO, then these costs must also be included when calculating your SEO ROI.
So let's say you now have your expenses ready.
Next you need to calculate the revenue which you can attribute to your SEO measures. To determine how successful your SEO strategy is, you first need to know your website’s organic performance. And you measure this using key performance indicators:
And this is exactly where the problem with calculating a flawless SEO ROI becomes clear. You can of course assign an individual value to the individual key performance indicators.
But the only way you can calculate revenue from SEO is with hard conversions – in other words, sales. And these are hard to assign purely to SEO activities.
The benefit of your SEO strategy is a very individual thing. It depends on the business model, monetization strategies and marketing goals.
Fig.4: Many different variables go into the SEO ROI, which makes it complicated
What can help you at least a little are benchmarks. These provide context that will help you understand how you stack up against others, or how your content compares to your competitors.
SEO and PPC are both effective ways to generate traffic. The difference lies in the time it takes to see results. SEO is a long-term investment, as it often takes months for your website to show up in search engine results for competitive keywords.
Also worth noting: over 70 percent of all internet users only click on links that rank on page 1 of search results. And getting ranked on page 1 is hard, especially for competitive keywords.
PPC is a more direct approach: you only pay when someone clicks on your ad. The advantage here is that you can generate clicks immediately when your ad has gone live.
Both SEO and PPC have their purposes, and ideally you’ll combine both methods to get the most out of your content.
Which of the two methods is more suitable for you depends a lot on your business goals and your marketing budget. But it also depends on the product or service you offer, and how complicated it may be.
Do you want to generate leads and sales quickly? Then PPC might be the best place to spend your online marketing budget.
Alternatively, do you have long-term goals and want to generate close customer loyalty? Maybe your product or service requires more explanation? Then SEO is possibly the better investment.
As a long-term investment, SEO is also better suited if you’re on a budget. Depending on the industry and the competition, PPC can quickly become very expensive.
Tip: Although the SEO value cannot be determined 100%, in Ryte's 'Weekly Traffic Value' report you can see how valuable your traffic is in PPC terms. Based on the click prices of your organically ranked keywords, Ryte shows you the value of your organic traffic. Which indicates how much you’d have to spend on paid ads to get the same website traffic without ranking organically for the keywords:
Fig. 5: Track website value in the Ryte Organic Performance overview
To answer the initial question: SEO has the greater long-term potential to achieve a positive ROI than PPC. The reason for this lies in the cumulative nature of SEO. The longer you consistently and regularly practice SEO according to best practices, the more convincing results (traffic, conversions, sales) you’ll see in the long run.
We're always talking about "long-term" here. But what exactly does "long-term" mean? Especially in connection with a topic that is about speed and components of the algorithm can change every day.
Let's say you only do SEO, without any paid ad activity. You can expect to see the first results within 3 to 6 months. That may sound long in relation to the lifespan of various online services. But what you shouldn't forget is that SEO results accrete exponentially over time. PPC results disappear as soon as you stop spending money on them.
What matters is that you should gradually adjust your expectations of SEO ROI, because it’s an ongoing process. As a rule of thumb, if you're still not seeing any ROI after 12 months of SEO, it's time to reconsider your strategy.
But one thing can be said for sure: the sooner you get started with search engine optimization, the sooner you’ll see results!
Optimize your website with a free Ryte trial
Published on 05/27/2022 by Julia Fähndrich.
As a trained linguist, Julia had a soft spot for language from an early age. So the step to online editor and content creator with a focus on on-page SEO was the next logical step. The special attraction for her lies in the fact that everyday language and SEO requirements for users and readers merge as naturally as possible. After more than 10 years, she's now extended her content expertise to the development of content strategies. When she's not working on concepts and content pieces, she's no less passionate about her dog or her record collection.
Own the SERPs with the only Platform using exclusively Google Data.Book free demo