Getting Down to Business: The ROI of SEO
by Brian Harnish
Some SEOs are just that: creative professionals. SEOs don’t always know about business, how businesses operate, and how their efforts are being counted on by business professionals to increase ROI. This can be a good thing and also a bad thing: it can be a good thing because this leaves you as an SEO more business time for focusing on what you are good at. It can be a bad thing because unless you are familiar with certain business aspects of yours or your client’s industry, failure is nearly guaranteed.
Let’s set the stage: Imagine. You’re probably sitting at your cubicle right now. You booted up your computer, and walked to the kitchen to get that cup of coffee. The smell of the aroma fills your nose as you walk, your shiny shoes hitting the floor almost rhythmically. It’s that time of the month. No. Not happy hour! It’s time for a meeting to discuss last month’s progress with the gatekeepers. If you are like some SEOs you dread the monthly meeting: the sweat, the chills, the resulting fever. The cold you may decide you have to help you get out of it.
You have looked in detail at your analytics. It has dropped 45%. You do some research and find a few messages from Google in your inbox. You have a manual penalty. You panic. How are you going to explain this? How are you going to move forward with a potential solution when it is even more impossible to figure out in two seconds what you did last month? There were so many tasks. So many links to remove or build. So much content to write. So much optimization to do. You don’t know what went wrong. All sorts of things are flowing rapidly through your mind right now, trying to get to the bottom of this so you at least have some sort of reason to explain this performance hiccup that didn’t involve your surfing Reddit every afternoon.
In any event, you are trying to figure out what you will do when you need to report your marketing campaign’s progress to your clients. Or your CEO. Or your superiors. Regardless, they are the ones holding all the cards, the keys, the doors unlocking your future. Or booting you onto the street if you don’t perform. Or if they just don’t like you. So how do you build a solid reporting structure that digs into the details of your marketing campaign? Well, first off, let’s examine the different types of SEO, their objectives and goals, and then I will dive into the methods that will help you find your way out of this mess you got yourself into!
Rand Fishkin goes into the different goals of SEO in significant detail in his excellent post here, so I will only touch upon the brief basics for the purposes of this guide.
The Different Goals of SEO
First off, let’s examine the different goals of SEO that will determine the metrics that you factor into your month end reporting. Depending on the goals of your SEO, you will end up with different analytics metrics in the end. Whether you are doing SEO for traffic, doing SEO for leads, doing SEO to spread awareness about a socially necessary campaign, you will have different metrics at the end of the month to report on. In order to get proper accuracy in their interpretation, you will need to know more about the goals of your SEO.
SEO For Traffic
This type of SEO is purely a traffic builder. You go after traffic in order to build a solid traffic base that views the website on a daily, weekly, or even monthly basis. SEO just for raw traffic is rather easy to analyze on the surface. But, to do a deep dive in order to see everything someone is doing on the website will take more time that even the best automated methods won’t save you from. When you consider reporting on SEO for traffic, you will end up including metrics like visits, unique visitors, pageviews, quantity of pages per visit, the average visit duration, and perhaps even the bounce rate of visitors to the page. These metrics will help you to better optimize your site for those visitors who you just want to provide a resource to, but don’t necessarily need to measure conversions.
SEO For E-Commerce
Building a solid SEO campaign for e-commerce is a bit different than SEO for traffic only, since now you are aiming for the best converting traffic as well. Going after converting traffic is a lost art that should ultimately result in better sales and a direct improvement to the bottom line. It’s probably one of the most challenging SEO goals to measure. This will influence the types of leads you get by going after those people who are looking to buy right now and perhaps soon in the future, depending on whether or not your company engages in seasonal sales. For the most part, you will need to target keywords that are plentiful of these types of customers.
SEO For Branding And Brand Awareness
This is using SEO to build the awareness of your brand so that as many people as possible know what you are about. The goals of this type of SEO is to increase brand awareness and authority in your niche. Through branding and building authority, you can reach those consumers who would normally buy from your brand through pure brand recognition, rather than exploring their interests based on what they are searching for.
SEO To Acquire Leads And Engage in Direct Marketing
Using SEO to go after leads can be an important part of any service-oriented company’s marketing strategy. The goal here is to acquire leads by form sign ups, calls into the company, and other methods. It will be necessary to setup proper points of conversion to be able to measure whether or not people are converting directly from the website or from elsewhere in the conversion funnel. Usually one of the best ways to do this is to employ a phone number system for tracking calls from a wide variety of sites. There are a number of call tracking services available who can assist you with this process.
SEO For Reputation Management
Picture this: you’re surfing Google. All of a sudden you identify a website whose strategy is to attack your brand an the authority that you have built over the past six months. Your heart sinks. It’s what you thought. It’s worse than you thought. They have built a page full of negative reviews and false negative experiences in an attempt to destroy your company’s reputation. What can you do to protect against reputation attacks like this? First off you can build websites that help rank for your key terms and discuss your brand in a positive way in an effort to help deflect some of the awfulness that is happening. Using SEO for reputation management effectively can help bolster your position in the SERPs and build a solid authoritative ground for going after some of the more difficult potential clients.
SEO For Swaying Public Opinion And Increasing Ideological Influence
You can even build a solid promotional SEO campaign the can be used to sway public opinion on a wide variety of issues. From the political to the technical, it is possible to promote websites that discuss topics in detail in such a way that helps to sway public opinion on particular issues. Using this approach can be very effective towards building newsletter signups and a client email list to help spread the awareness of your organization. This can be a great way to build relationships with the public and eventually setup a pipeline that will help keep your business afloat for years to come.
However, the ultimate goal of SEO is to contribute to the overall ROI of the company, or rather, the company’s return on their investment in SEO.
ROI (Return On Investment)
While we like to think that we’re not a performance occupation like sales which is entirely dependent on commission in most cases (unless you’re a salary + commision junkie), it is extremely important to consider the fact that with every SEO campaign, your boss will expect performance from you. You will need to be able to perform and add to the company’s bottom line, or their return on investment in you. If you don’t, what do you think may happen? It’s not a pretty sight. This is why any SEO needs to seek the best ways to add to the company’s bottom line so they are pulling their weight. No marketing team likes to have a slacker or spammer who does not know the value of hard work.
But, aside from that – return on investment measures the basic dollar amount that a specific marketing effort achieves. Whether it’s zero, $100, or $1,000,000 (wouldn’t we all like to build an SEO campaign that returns a million dollars ROI?), you have to be able to show how much ROI you have generated as a result of your efforts. There are many methods available to calculate this but usually, in most instances, to calculate the return on investment from SEO, companies will use the following metrics:
Actual Sales Dollar Amounts
What is the dollar amount that SEO has generated for this month or this year? How many sales has the company achieved as a result of SEO? How many dollars in revenue has marketing generated? How many new customers has the company been able to acquire? How many sign ups for a service have there been? How many leads were actually generated? Depending on your sector, your company may use one or all of these to ask this all important question regarding whether or not their efforts are worth it.
How Many Sales Were Made?
If you are doing ecommerce for SEO, it will be important to show in your monthly reporting how many sales were achieved, in addition to sales dollar amounts. Very likely, the person you report to will want to show how much of these sales were directly from the website. Using a custom page like a “confirm.php” page as the only page someone gets to after they actually use their credit card to purchase can help you set a goal in Google Analytics that measures how many actions were taken as a result. This way, you won’t have to go through manual email signup confirmations. Although, it’s probably a good idea to do this in order to ensure no duplication of efforts and to ensure accuracy.
How Much Revenue Was Generated?
When a company sells goods and services, the amount of money that this company gets paid as a result of this is known as revenue. This is usually a final calculation after operating costs are deducted from the gross. So, for example – if the individual or company buys widgets for $190, sells 5 of them for $250, they have made a net profit of $300. But, the gross revenue they report will be $1250.00. If a company has offered a discount on the products or services, for example, 4%, then they would probably calculate it as: $1250 * 0.96 = $1200, for net revenue.
For service oriented companies, they probably will not be dealing with much buying of products to sell, so they would use operating costs instead of sales product costs to calculate revenue.
It’s important to be able to link SEO efforts directly to revenue generated, so you can show the big boss how much you have been able to improve directly. Creating a section in your reporting for revenue generated will help build that positive impression. SEOs are not just about doing link building or optimizing pages anymore. SEOs are the new revenue generators for many companies, so any improvement is an important metric to be able to communicate to your superiors.
The Formula For ROI!
And yes, there is a very important formula that will be important in your reporting to show how much of a direct improvement you have had on the company: ROI. It’s a relatively simple formula, really – but can be quite powerful in communicating the results of your efforts. In this formula, ROI equals the total gains achieved subtracted by the cost of the endeavor, and then you divide this total by the entire cost. So:
ROI = (Gains – Cost Of SEO)/Total Cost of Operation
If you put $800 into an SEO campaign, it costs only $500 to run all of your operations, but you gain $1500 in sales, then:
($1500 – $800)/$500 = 1.4% improvement in revenue.
However, if it only costs $350 to run the operations, then:
($1500 – $800)/$350 = 2% improvement in revenue.
Percentage, however, can be misleading depending on what the operations cost to run. This can vary wildly by industry, so it is important to look at the formula for ROI in further detail if your specific operations are wildly different from this example. This way, you can get a better, more accurate picture of what the real value SEO is truly contributing to your overall bottom line.