Learn how to calculate search engine optimization (SEO)’s return on investment (ROI), and you’ll have instant insight into your SEO performance, which can help you get additional buy-in for SEO campaigns, discover new tactics, and accelerate your returns.
What is SEO’s ROI?
SEO’s ROI varies and data on average returns is limited. However, 49% of marketers credit organic search for delivering the highest returns compared to other marketing channels. Organic search also generates 40% of business revenue.
What this data proves is search engine optimization can consistently deliver a return on investment. How much you get back, though, depends on how much you invest and where you spend it.
What is the formula to calculate SEO ROI?
The formula for SEO ROI is as follows:
(Gain from Investment — Cost of Investment) / Cost of Investment
SEO ROI is calculated as the gain from SEO investment minus the cost of SEO investment, divided by the cost of SEO investment. After solving that equation, multiply your answer by 100 to get a percentage.
When should I measure SEO’s ROI?
Whether you’re partnering with SEO companies or starting an SEO program in-house, wait at least six months before measuring search engine optimization’s ROI. Since SEO takes three to six months to work, calculating ROI sooner will lead to inaccurate results.
Why measure the ROI of SEO?
Whether you’re doing SEO for your business or another’s, measuring the ROI of SEO is important for demonstrating the impact SEO has on a business. Finding the ROI of your SEO efforts brings benefits to your business like:
- Making better SEO decisions: By calculating SEO ROI, you can better understand what SEO tactics are bringing in results and continue to invest in the strategies that boost your ROI of SEO.
- Educating leadership about SEO: Your superiors want to see concrete results, and by measuring SEO ROI, you can do just that. Measuring the ROI of SEO efforts helps you demonstrate to your company’s decision-makers why SEO is a vital strategy to continue investing in.
- Measuring SEO success: SEO is an ongoing process. By regularly calculating the ROI of your SEO efforts, you can measure your success and continually improve your strategy to make the most of your SEO budget.
How to calculate SEO ROI
Now that we’ve talked about the ROI of SEO and why it’s important, how do you calculate it?
Follow these three steps to calculate your SEO ROI today:
- Calculate your investment
- Track your conversions
- Measure your SEO ROI
1. Calculate your investment
To find SEO ROI, you first need to calculate your SEO investment. Once you do this, you can start measuring the revenue generated from your investments.
SEO investments include:
- Any SEO tools used (e.g., Ahrefs, Semrush)
- Freelance, SEO company, or SEO consultant
- In-house employees
- Payments for content distribution or link-building
Once you’ve added these expenses, you can calculate your SEO ROI.
2. Calculate your revenue
Next, you need to calculate the revenue you’ve earned from your SEO efforts by tracking your conversions.
Conversion tracking varies based on what kind of business you run. If you’re an ecommerce or product-based company, you can track conversions based on purchases and online transactions and get an exact revenue amount.
Google Analytics 4 (GA4) is a great way to track conversions.
On the other hand, if you’re a lead-based company, like a service provider, you can track conversions by assigning dollar values to conversion goals, like form submissions. Marketing automation software can make this tracking even more accurate.
If you don’t have marketing automation software, though, Google Analytics 4 (GA4) is a great way to track conversions. In GA4, businesses can set up conversion tracking on their sites to effectively monitor conversions and calculate their gains from SEO investments.
By tracking conversions, you can learn which strategies drive the most sales for your business and also identify any conversion killers that may cause you to miss out on revenue.
3. Calculate your SEO ROI
Once you’ve calculated the revenue of your SEO efforts during a chosen period (most businesses look at specific months or quarters), it’s time to calculate your SEO ROI. Plug in your SEO investment and revenue into the following formula:
(Gain from Investment — Cost of Investment) / Cost of Investment
Once you’ve calculated your SEO ROI with this formula, multiply the result by 100 to get your answer in a percentage.
Let’s take a look at this formula in action.
Suppose a business invested $5000 (Cost of Investment) in their SEO efforts and came out on top with a profit of $50,000 (Gain from Investment) as a result of those efforts. Then our formula would look like this:
(50,000 — 5,000) / 5,000
Doing the math, we’d get 9.
Multiplying that by 100, we’d learn that the company’s return on investment was 900%!
What’s a good SEO ROI?
Throughout all this, you’ve probably wondered, “Is there a good SEO ROI?” Sure, the SEO ROI formula gives us a percentage, but what exactly does that number mean, and is there a specific ROI businesses should aim for?
The answer to those questions depends on your business. Companies invest anywhere from $2500 to $7500 per month on SEO. Sometimes, they can spend as much as $10,000 per month. Not to mention, lead values vary from company to company.
All of this is to say that there is no universal “good” SEO ROI.
That depends on what a business invests in SEO and how much they get back from it. So, when calculating your SEO ROI, set an attainable benchmark percentage for your business, then work your way up as you collect more data and earn more revenue.
FAQs about SEO ROI
Get answers to common questions about SEO and ROI:
What is SEO ROI?
SEO ROI is the estimated business value of search engine optimization and helps businesses strategize for the future by setting marketing budgets, outlining strategies, and more. SEO’s ROI is calculated with the following formula: (Gain from Investment — Cost of Investment) / Cost of Investment.
How often should you measure SEO ROI?
Businesses typically measure SEO ROI monthly, quarterly, and yearly.
SEO takes time to produce tangible results, so calculating SEO’s ROI can be tricky since there may be limited data to go on. But as your SEO strategy progresses and your business grows, your cost of investment, gain, and ROI will become more defined.
What are the challenges of measuring the ROI of SEO?
Calculating and understanding the ROI of SEO doesn’t come without its challenges. Below are a few common obstacles businesses face when measuring SEO ROI:
- SEO takes time: Results from SEO efforts don’t appear immediately. Typically, SEO takes three to six months to generate results. That’s why it’s important to set expectations in your organization about SEO’s turnaround time.
- Gaps between investment and return: Since SEO isn’t time-specific, looking at overall ROI can be tricky initially. While waiting for SEO to kick in, consider monitoring other key performance indicators (KPIs) and metrics like page rankings and organic traffic.
- Disconnected tech stack: When you have siloed tech, like your website analytics software and your customer relationship management (CRM), it makes tracking SEO’s return difficult. That’s where a platform like MarketingCloudFX becomes helpful!
How do I fix a poor ROI from SEO?
If your ROI from SEO isn’t where you want it, consider the following action items:
- Do a cost analysis: Companies with a lower average sale value will need to generate more sales to cover their SEO costs. For example, if your average sale is $15 but your monthly spend is $1500, you need to generate 100 sales just to breakeven. Consider where you can optimize existing SEO costs to make your spend more compatible with your business model.
- Audit SEO efforts: Research your site’s issues and opportunities, plus consider where you’ve been spending your time over the past few months. Have you focused on low-hanging fruit or time-intensive projects that require more time to work?
- Get professional help: Consider getting professional help (especially if you’re unfamiliar with SEO) or re-evaluating existing partnerships. For example, if your SEO agency hasn’t been great to work with, the lack of ROI could be another indicator to find a new partner.
Are there other ways to measure the success of SEO?
Calculating ROI isn’t the only way to measure the success of SEO efforts.
Businesses can also look at their SEO strategy’s performance by monitoring SEO analytics.
SEO analytics is the process of collecting and analyzing raw SEO data to gain a better understanding of your SEO performance. SEO analytics involves tracking data like:
- Page rankings
- Bounce rate
- Average session durations
- Exit pages
- Organic search traffic
There are tons of SEO analytics tools out there to help measure your SEO performance. By analyzing these SEO KPIs and metrics (and others), businesses can identify opportunities to optimize their campaigns and continue investing in the channels that bring them a positive ROI.
Accelerate your SEO ROI with SEO.com
Looking for the perfect partner to help you with your SEO campaign?
You’re in the right place — WebFX (the team behind SEO.com) is an SEO agency home to optimization specialists with over 25+ years of experience in navigating the ups and downs of SEO.
Want to learn more? Contact us online to see how our SEO plans and conversion rate optimization (CRO) services can help you get more conversions and revenue from your SEO efforts!
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