How to Measure and Report Your SEO ROI and Demonstrate Your Value to Your Clients or Stakeholders

Intro

Search engine optimization (SEO) is one of the most effective digital marketing strategies to increase online visibility, drive organic traffic, and generate more leads and sales.

But how do you know if your SEO efforts are paying off? How do you measure and report the return on investment (ROI) of your SEO campaigns and demonstrate your value to your clients or stakeholders?

In this blog post, we’ll explain what SEO ROI is, why it’s important, how to calculate it, how to forecast it for future campaigns, how to report it, and how to know if your measured SEO ROI is good or bad.

What Is the Return On Investment of SEO?

The return on investment (ROI) of SEO is a metric that measures how much profit you generate from your SEO activities compared to how much you spend on them. It shows you the efficiency and effectiveness of your SEO strategy and helps you evaluate the performance and impact of your SEO campaigns.

The ROI formula

The basic formula for calculating the ROI of SEO is the same as for any other type of business investment, i.e., profit divided by cost. In the case of SEO ROI:

The result is a percentage that tells you how much profit or loss you make from every $100 invested in SEO efforts.

Importance of measuring SEO ROI for your business

Measuring the ROI of SEO is crucial for any business that wants to succeed online. Here are three reasons why:

• It helps you justify your SEO budget and allocate your resources more efficiently.
• It enables you to optimize your SEO strategy and improve your results by helping you identify what works and what doesn’t from a business goals perspective.
• It helps you communicate your value and credibility to your clients or stakeholders.

Knowing if your SEO ROI is good or not

Suppose you measured your SEO ROI, and it was 100%. Great! It's a positive ROI, so you’re making money! But is 100% actually a good ROI? Or could it be better?

These questions have no definitive answers, as SEO ROI can vary depending on your industry, business model, target market, goals, budget, resources, and more. However, you can follow three general guidelines to evaluate and improve your SEO ROI:

#1 Compare your SEO ROI with the ROI of other marketing channels

Using other marketing channels as benchmarks can help you determine how effective and efficient your SEO strategy is compared to other options, such as paid advertising, social media, email marketing, and even offline marketing. In other words, it establishes SEO’s relative value within your organization, making it easier to defend and promote among C-suite executives.

#2 Compare your SEO ROI with industry benchmarks

Industry benchmarks help you determine how competitive and successful your SEO performance is compared to other businesses in your industry or niche. For example, typical ROI values for a three-year SEO campaign vary from 317% for eCommerce to 1,389% for real estate.

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#3 Compare your SEO ROI with expectations or forecasts

ROI is the benchmark that determines whether specific strategies work or not and whether they'll continue to exist within the company. The latter involves investment decisions around branding, products, marketing, and all elements of a business, including SEO.

These decisions are reflected in a board resolution, which can serve as a guide or benchmark for your SEO efforts. From this perspective, your goal should be for the return on investment of your SEO efforts to meet the expectations reflected in the board resolution of your company's leaders. Hitting this goal will demonstrate the value of SEO and give a valid reason to continue investing in it.

How to measure SEO ROI

To measure your SEO ROI, you must track and analyze various metrics, such as organic search traffic, conversions, revenue, and cost. You must also attribute your revenue to specific SEO actions, such as keyword optimization, content creation, link building, and technical SEO.

When measuring SEO ROI, it’s important to note that the result carries a certain level of uncertainty since other factors besides SEO can impact some of the required metrics.

For example, consider inventory optimization, which is the process of managing your inventory levels, availability, and replenishment to meet customer demand and maximize profit. If you are working on an e-commerce website, you might want to track how your inventory optimization techniques affect your organic keyword rankings, qualified traffic, sales, and, ultimately, your ROI.

With that said, let’s dive into the steps to measure SEO ROI.

Step #1 Calculate your SEO investments

The first step is calculating how much you spend on your SEO activities, including direct and indirect costs associated with your SEO strategy. Calculating these costs will be easier or harder, depending on whether you outsource your SEO efforts or not.

Establishing the cost of in-house SEO

If you run your SEO with an in-house team, you must account for all the expenses related to each campaign, including wages, SEO tools, link building, and more.

• Wages: You must factor in the total salary, benefits, taxes, and overheads of all employees who work on SEO 100% of the time (like SEO specialists) and a proportional fraction of the salary of those who don’t (like copywriters or developers).
• SEO Tools: you need to add in the monthly cost of any tools used exclusively for SEO, like Ahrefs or Semrush, and a proportional fraction of the cost of tools only used for SEO part of the time.
• Overheads: Factor in a piece of other fixed expenses like office space, electrical bills, internet service, etc.

SEO agencies and freelance SEOs

If you outsource some or all of your SEO work to external SEO agencies or freelancers, you need to include their fees in your calculation. Calculating these costs is usually easier than for in-house teams because most agencies charge a fixed monthly fee. However, there are exceptions, as some agencies and freelancers charge variable rates based on performance.

Once you have those costs down, add everything together to get the total SEO Investment:

SEO Investment = (Cost of in-house SEO) + (Cost of outsourced SEO)

Step #2 Calculate the revenue from your organic traffic conversions

The second step is to calculate how much money comes in as a consequence of your SEO efforts. In this context, we measure revenue as the value of organic traffic conversions.

Pulling this off requires proper conversion tracking in Google Analytics, Google Analytics 360, or another similar tool like Ranktracker, as well as following the four steps below:

Track Your Conversions

To track conversions such as form submissions, signing up for a newsletter, downloading a resource, or making a purchase, you must set up goals in Google Analytics (or similar tools) and assign them to the organic traffic segment.

You can also use e-commerce tracking if you have an online store.

Correct for assisted conversions and other marketing channels

Not all conversions may be directly attributed to organic search. Some may be aided by other channels, such as paid advertising, social media, email marketing, etc.

To account for this, you need to use the multi-channel funnel reports in Google Analytics and choose an attribution model that reflects how you want to distribute the credit for conversions across different channels.

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The following table compares five standard attribution models and the portion of the conversion value attributed to each:

Attribution Model	First Channel	Middle Channels	Last Channel
Last-click	0%	0%	100%
First-click	100%	0%	0%
Linear	33.3%	33.3%	33.3%
Time-decay	10.7%	28.6%	60.7%
Position-based	40%	20%	40%

Assign a dollar value to each conversion

Once you've tracked and attributed your conversions, you need to assign a dollar value to each conversion to come up with the total value of all conversions, i.e., the revenue from your organic traffic.

If you have an e-commerce website, this is easy, as you can use the actual transaction value of each purchase. However, this can be more challenging if you have a lead-generation website or a website that doesn't directly sell products or services.

In this case, you need to estimate the average value of each lead or conversion by multiplying your average customer lifetime value (CLV) and your average closing rate.

For example, if you know that 10% of your leads become customers and your average customer lifetime value (CLV) is $1,000, then you can estimate that each lead is worth $100 ($1,000 x 10%).

Calculate your revenue

The final step is to calculate your revenue from organic traffic conversions. To do this, you need to multiply the conversions attributed to SEO by their value.

For example, if you had 100 conversions from organic search in a month and each conversion was worth $100, then your revenue from organic search was:

Revenue from organic traffic = ($100/conversion) x (100 conversions) = $10,000

Step #3 Calculate your SEO ROI

The final step is to plug in the numbers you calculated in the previous steps for a given period (usually a month or a year) into the SEO ROI formula we introduced earlier, and you’re done.

Forecasting SEO ROI for future campaigns

Measuring SEO ROI is useful for evaluating your past performance and proving your value to your clients or stakeholders. However, it’s also important to forecast your SEO ROI for future campaigns, especially when proposing new SEO initiatives.

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Forecasting your SEO ROI is similar to measuring it, except that you won’t count your conversions — you’ll estimate them based on some assumptions, your past data, and research. We won’t go into the details here, but it comes down to the following steps:

1. Find your average click-through rate or CTR.
2. Estimate organic traffic from potential monthly search volume and your CTR.
3. Use the estimated organic traffic and your average conversion rate to estimate future conversions.
4. Use your closing rate, the number of conversions, and their assigned value to estimate future revenue.
5. Adjust your SEO costs for inflation and other factors.
6. Finally, calculate the SEO ROI of your future campaign.

Three tips on reporting the ROI of SEO campaigns

Here are three simple tips for stepping up your reporting game for your SEO campaigns.

Tip #1: Use attractive visuals

Use a dashboard tool to create a visual and interactive report that shows your SEO performance’s key metrics and trends, including the ROI. A dashboard tool can help you present data in a clear and engaging way using graphs, bar charts, tables, and other resources.

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Tip #2: Don’t focus on technicalities

Focus on the business outcomes and value of your SEO efforts, not just the technical details like target keyword rankings or monthly search volume.

Explain how your SEO campaigns have contributed to:

• The company’s goals
• How the measured ROI compares to the campaign’s expectations
• How it compares to the ROI of other marketing channels or the industry benchmark

Tip #3: Tell a story

Don’t just dump data on your audience. Use it to tell a compelling story showcasing the SEO campaign’s achievements, challenges, opportunities, and actions.

Also, use a clear and logical structure to organize your report, such as an introduction, a summary, a body, and a conclusion.

Key takeaway

If you’re not tracking your SEO ROI, then you’re missing out on learning the positive or negative impact SEO may be having on your business.

Calculating an accurate ROI for SEO sounds tedious, but it only requires closely tracking the relevant KPIs mentioned above. And the best part? You can source this data automatically using Google Analytics or Ranktracker.

And doing so will enable you to prove your value to your clients or company stakeholders. You’ll finally get that buy-in that you’ve always dreamt about.