Measuring the ROI of SEO

It's no myth that search engine optimization (SEO) is a significant concept in the marketing realm. Often, you hear people emphasize the importance of SEO for a website. Improved visibility leads to more clicks and visitors. Websites typically aim to generate leads. But how do you analyze this, how do you earn from it — commonly referred to as ROI — and how do you calculate it?

Collect

The initial step involves gathering reliable data to estimate the ROI of an SEO strategy. Start by utilizing tools like Google Analytics to collect valuable website data. Keep the following Analytics metrics handy when examining the ROI of your SEO campaign:

• Number of website visitors
• Conversion rate
• Number of monetary transactions
• Average value per transaction
• Revenue

Utilize an extended period, such as three or six months, to gain a comprehensive view of your SEO campaign.

Webshop or website

Do you own an online store and wish to determine the revenue generated from organic website traffic from Google? It's beneficial to have e-commerce tracking properly configured on your website. This ensures accurate measurement of conversions and revenue. Once set up correctly, you can view the revenue through Google Analytics. Filtering in Google Analytics for "organic traffic" reveals how you earn from website visitors arriving via organic search results.

For websites without an online store, the approach differs slightly. Since there are no monetary transactions, measure goals like conversions, such as the number of times an email address is submitted on your website. In Google Analytics, you can change the value from a monetary amount to a goal. You can easily calculate this value yourself. For instance, if 5% of visitors submit their email addresses and subsequently become customers, generating an average transaction value of 20 euros, you can assign a value of 1 euro (5% of 20 euros) to the goal in Google Analytics. This way, similar to webshops, you can filter for "organic traffic" and see how much revenue is generated.

Analysis

Once you've calculated this, it's essential to analyze the data over an extended period. It takes time for SEO adjustments to show results, both in traffic growth and conversions. After some time, retrieve the data from your website and commence the analysis. A crucial aspect of SEO is the revenue generated from organic traffic. By referring to the report in Google Analytics, you have the opportunity to observe the value of the goals you've created — such as the number of email addresses submitted. This reveals the amount earned from various channels like "organic traffic." You can then compare these channels with the revenues before starting your SEO campaign. This way, you gain a comprehensive understanding of your return on investment, or ROI.

Calculation

Now that you have a clear understanding of the ROI, you'll want to calculate it. However, determining the ROI of content marketing can be challenging because campaigns can last for months, during which lead generation occurs. To calculate the ROI of your SEO campaign, use the following formula:

ROI = (LTV / CPA) - 1

As described earlier, ROI stands for return on investment. LTV refers to the lifetime value of a customer—the revenue generated by customers during their time as clients. CPA stands for cost per acquisition—the average cost associated with a conversion. It's essential to note the average percentage of leads and the average CPA value. So, what is the average profit per customer during that period? With this formula, you can easily analyze, calculate, and measure the ROI of your SEO campaign.