Measuring your ROI on SEO

It makes sense for someone to look for the ROI when he’s investing money on an SEO project right?
When dealing with clients who have a limited budget, one question that they are keen on is –

“What ROI would I get investing all this money in SEO?”

And I think that’s an interesting question because, in any other project, there is a ROI calculator, especially SEM. When you are opting for PPC ads, there is a clearly a mathematics involved. In PPC, you have a daily budget and you know how much traffic you get, it’s all out there in numbers at the end of the day.

But does the same happen with SEO?
Some questions SEO’s are expected to answer are -

• Can you guarantee me a number one/two position?
• How much traffic will I get if I spent X amount of money with you?
• What will happen if I don’t reach a good position?

Now, it’s not difficult to answer these questions you know. More than answering these questions, what helps is “educating the client”. The client would be only familiar of PPC campaigns and online advertisements, the ROI of which he calculates by using the simple formula of “No. of visits/No. of purchases.”

Unfortunately, this simple formula when applied in the SEO perspective becomes a little vague. If you had all the numbers in place for SEO, probably a formula similar to the following would have  made sense. (For product selling/ecom websites)

ROI on SEO = (No. of goals achieved x Price of product) – Cost to SEO

Where no. of goals achieved is no. of sales or subscription/ visit to a check out page.

Conversion ratio OR Efficiency of an SEO = (No. of organic visits(traffic) / No. of goals achieved)

Things are more tough in the case of non product selling websites.

Here the core metrics would be (i) Page Views (ii) Traffic and (iii) Subscriptions

The above formula can be tweaked to suit them.

For sites dealing with subscriptions as their final objective.

ROI on SEO =  (No. of subscriptions x Effective revenue from Ads) – Cost to SEO

Conversion ratio OR Efficiency of an SEO = (No. of organic visits(traffic) / No. of subscriptions)

Basically, any website that employs an SEO can take the organic traffic to be their primary goal. The rest depends on what the goals are and what the revenue model is.

Most of the times, if SEOs can ensure a boost in “value traffic” then things become easier to handle. And interestingly, this is where many clients gets into disagreement. Increasing traffic is not important, but “value traffic” is.

What is the difference between “traffic” and “value traffic”?
Traffic is only numbers. You can employ 10 guys from around the world to Digg your articles to get traffic, it’s no big deal. But the question is whether it that traffic is converting into results. The SEO Efficiency ratio calculated will show how effective the campaign is. There might be 10,000 new visitors but only 100 new subscriptions. Which means the traffic is not relevant.

Meanwhile, “Value Traffic” is the one which has come from relevant sources, through a pull strategy, in the right amount. This traffic is likely to have more conversions as compared to the “bought” Digg traffic. There might only be 500 new visitors but 400 new subscriptions. But this makes more sense to the client.

So essentially, even though it is tricky to find ROI ratios on an SEO project, if you dig into the details and have clear cut ideas on what the metrics are, it is quite possible. I have an inclination to believe that SEO Efficiency is far more better than SEO ROI though.