How to Calculate your ROI in SEO?
One of the main concerns that site owners and search markers have is how to calculate ROI. This comes in handy when a person is looking for answers for various situations such as:
Justifying spending on a new SEO project.Increasing funds that are being used for an SEO project that they are working on. Transferring funds from various marketing channels to SEO. Reducing money spent on paid search and increasing the amount spent on SEO.
Before you go ahead to calculate SEO Roi, it is important to note that there are 2 types of ROI you should be aware of i.e. anticipated ROI and the actual ROI. The anticipated option is what you believe that you will get after doing research. The actual ROI on the other hand is what you will actually get from your SEO efforts.
The formula for this SEO Roi is:
Anticipated ROI is equal to the Anticipated Revenue from the SEO efforts – the Proposed Costs of the entire SEO project.
Before you start calculations for the anticipated ROI, some of the things you need to know in advance include average visits the site gets on a monthly basis, the average order value and the site’s E-commerce conversion rate. The values are needed before hand when you need results for anticipated ROI. You should always look to achieving at least 100% ROI. This implies that if you spend a certain amount on the SEO project, you are supposed to get twice the returns. If you are not getting anything out of the SEO project, you better re-strategize as it means that you are wasting money, time and other resources. This is especially important if you are working with professionals as they need to show you that the money you are pumping in will bring in excellent results that will actually help your site out.
This is what determines whether the SEO project is actually working for you or not. The formula that is used to get results for this SEO Roi is:
Actual ROI is equal to the total Ecommerce Revenue that is gotten from SEO plus the total goal value via SEO minus the cost of running the SEO project.
Other factors to take note of when looking at the results for ROI include:
To accurately measure progress, it is important to have a representative base line of the current traffic your site receives. For this non brand SEO should be used. For instance, if traffic has increased recently on an average of 3to 6 months, you should ensure that the recent changes made reflect on the website to know what the baseline is. If you are using information from less than one year, you should consider seasonal factors that should be taken into account.
Estimate the potential additional traffic
This can be done easily by using data derived from your analytics, ranking monitors, search engine volume data and Google webmaster tools. The entire process requires a person to calculate the search volume for each of the keywords that is available. Do not forget to adjust natural growth in the search volume and the growth of the company from the baseline. However the growth rates should be excluded from estimated additional traffic. This is because the traffic is still expected even when the SEO project is not yet complete. If you have been calculating estimated traffic based only on Google numbers, you need to gross up the estimated traffic increase so that it reflects on traffic that comes from all the other search engines.
Value new traffic
To get the SEO Roi results, you can identify the additional value brought about by SEO traffic that is driven to the site. This can also be done by identifying how long it takes for the SEO project you are working with to provide the additional traffic. This however varies between projects, industries companies and the level of competition. It also requires analysis and judgment so that you are able to properly identify the appropriate time period. ROI in this case is the value of the additional traffic minus the cost of the SEO project. This should be able to tell you whether your SEO efforts are working or they need to be adjusted accordingly.