As a digital marketing agency, one question that is always asked is what is the ROI for organic SEO? Many assume that organic SEO is virtually free, therefore it is impossible to truly calculate the ROI, they would be wrong. One way or another you are paying. In the case of organic marketing, you pay for the content that is created. Whenever there is money going out, ROI can be calculated. So, let’s look at the ROI for SEO efforts in organic marketing.
WHAT’S THE INVESTMENT?
Well, your investment includes all of the costs associated with building your SEO and organic content. This includes writing blogs, creating social posts, and building backlinks. Whose time are you paying for? This may be in-house or, maybe you’ve hired an agency to take on all of your organic content creation. That is your investment.
Now that you know what your investment consists of, the challenge is calculating your return. In a paid ad campaign, the ROI is pretty cut and dry. Since we are dealing with all organic SEO strategy, the formula and calculation can be a bit more nuanced.
This will consist of keyword research, ranking factors, and how enriched with keywords your site is to help rank higher. We’ll do our best to break it down simply for you.
Ultimately, this is your calculation for ROI: (Monthly Keyword Search Volume x Click-Through Rate) x (Average Conversion Rate x Average Goal/Order Value) = Estimated Monthly Revenue
Keyword ranking is the #1 factor to weigh when calculating the value of organic SEO. This is going to be a large part of your ROI. For example, let’s say we are an Insurance Agency and want to know the ROI for their organic marketing.
Well, the total monthly search volume for “landlord Insurance” is 9,900.
The expected click-through rate for the number 3 spot is 10%.
The average conversion rate is 3%.
Finally, the average purchase value is $1,000.00.
Therefore your calculation would look like this: (9900 x 10%) x (3% x $1000) = Estimated Monthly Revenue. So with this information, we can confidently say that for every month the agency ranks number 3 for the keyword “landlord insurance”, the monthly revenue would be $29,700. Now that we have our estimated monthly revenue we want to use this number to find the ROI for SEO.
This calculation will look like this: Return on Investment = [(Return – Investment) / Investment] * 100
In order to get the most accurate results using this calculation, we will assume our keyword “landlord insurance” was not ranking, therefore getting no organic traffic prior to SEO investments. Our SEO investments would be considered as the time spent on SEO efforts to have it ranking in the number 3 position. Thanks to a monthly investment of $5,000 in SEO (for 12 months, because SEO is a long-term investment) our keyword now ranks for number 3.
So we’ve got everything we need to wrap this up and calculate our final SEO ROI…
[(29,700 – 5,000) / 5,000] * 100 = 494%
There you have it! Your overall ROI for SEO in one month is going to be 494% (assuming you retain the #3 or better ranking throughout a 12 month period)
Sounds like you need an organic digital marketing agency to help you start growing organically! Send us an email or let us know you are ready to take your business’s organic marketing to the next level. We’d be happy to help you reach your SEO goals.