As an experienced agency-side SEO, I know that Search Engine Optimisation is an effective marketing strategy to improve a website’s quantity and quality of organic traffic; but proving that to the sceptics can be difficult.
This is made particularly irksome when the sceptics are avid PPC enthusiasts, revelling in the expanses of data available to them when estimating the return on investment of their proposed PPC campaigns, right down to the individual keyword level.
Pay X amount, get Y amount back. How can an SEO compete with that? This is the question which spurred me on to create a way to effectively communicate the potential return on investment (ROI) of SEO to our potential clients.
The SEO ROI equation
In order to give potential clients more confidence in SEO, not only have I come up with an equation to estimate the ROI of an SEO campaign; I’ve seen it work in practice too!
The equation doesn’t work too differently from the way in which a PPC specialist would estimate the return on investment of a PPC campaign, and while it may not work every time, it provides an insight into the traffic, conversion and revenue potential of a particular SEO campaign.
Here’s a snapshot of the equation
Let’s break this down a bit. Here is a more in-depth explanation, using a real-life case study of an old client of mine; manufacturers and installers of high-quality entrance matting for buildings like London’s Shard and American Embassy, INTRAsystems. This SEO project ran from August 2017 – November 2018, so results have been measured in November 2018.
As with everything SEO, this equation starts with keyword research. You need to discover a set of keywords that you are planning on targeting for your proposed campaign and their combined search volume.
For INTRAsystems, the target keywords were as follows:
‘Entrance Matting’: 1,900 monthly searches
‘Barrier Matting’: 1,000 monthly searches
So, the combined search volume for our target keywords is 2,900 (at the time of starting this campaign in August 2017)
Position click through rate (ctr)
Next, we need to estimate how many visits our client can expect to receive from these monthly searches. At this point, we need to make some estimations on where we feel we can get the potential client ranking for the specified keywords. We consider where the client currently ranks and how competitive the SERPs are for these keywords.
INTRAsystems had the following rankings for their desired keywords before the project began:
‘Entrance Matting’: Position 31
‘Barrier Matting’: Position 26
The SERP wasn’t particularly competitive for these terms, and after some thorough analysis we predicted an average ranking position of 3 for these keywords. We used data from Advanced Web Rankings study of over nine-million keywords across more than 23,000 websites to specify the average organic CTR for websites ranking in position 3 (we did cross reference this with our own, much smaller data sample of over 10,000 keywords across 17 websites, and the results were very similar).
Looking at the average CTR for position 3 (on desktop, as this is where the majority of INTRAsystems traffic came from at the time) in August 2017, we estimated an 11.32% CTR on these keywords.
The next part is quite simple. We estimate the number of web visits we will achieve from these keywords by multiplying the number of monthly searches by the CTR percentage. So, in this instance:
2,900 Monthly Searches x 11.32% CTR = 328 Website Visits
So now we have our first estimation of 328 new organic visits to the website every month if our SEO campaign is a success.
Now that we know how much additional traffic we can expect, it’s time to work out how many additional conversions that might create. This equation can also be used to estimate additional revenue, but as INTRAsystems is not an e-commerce site, we are just looking at conversions for now.
There were two main conversion points on the website at the start of the project; ‘Request an entrance matting sample’ and ‘Contact INTRAsystems’.
The organic conversion rate for the INTRAsystems website was 6.7% in August 2017.
With our estimated additional website visits and organic conversion rate in hand, we can now predict the additional conversions our client can expect to receive each month.
For INTRAsystems, it works like this:
328 Website Visits x 6.7% Organic Conversion Rate = 22 New Conversions Per Month
Here’s a visualisation of how the whole equation has worked for INTRAsystems:
The return on investment
Without revealing any sensitive information regarding budgets, we are then able to divide the monthly budget by the number of additional monthly conversions to indicate a cost per acquisition.
For example, if the monthly budget was £1,000, then we would work out the cost per conversion like this:
£1,000 Monthly Budget / 22 Conversions Per Month = £45.45 Cost Per Conversion. Let's say that a conversion was worth on average £300 to the client. In that case, the investment is offering a strong return for the client.
£300 x 22 = £6,600
£6,600 - £1,000 = £5,600
ROI = 560%
Again, without going into too much detail, our SEO strategy for INTRAsystems combined on page optimisation, thorough technical SEO analysis and a content marketing / backlink strategy. We started in August 2017 and finished in November 2018. Here are the results we saw from our strategy:
By November 2018, we did manage to achieve a position 3 ranking for both keywords (both flitting between 2 - 4).
November 2017: 692 sessions
November 2018: 1,012 sessions
+320 sessions per month (pretty close to the 328 new sessions estimated through our equation)
(Looking only at the same conversions being tracked in both 2017 and 2018)
November 2017: 47 conversions
November 2018: 66 conversions
+19 conversions per month (again, pretty close to the 22 new conversions estimated through our equation)
While our estimations were not 100% accurate (are they ever?), they are close enough to make this equation a valuable method of estimating the return on investment of an SEO campaign. If you want to know how SEO can help improve your business, contact us today!