One of the advantages of digital marketing over other types of traditional marketing is the ability to analyze each action taken. This allows you to monitor the ROI (return on investment) of each one and adjust them accordingly to achieve the set goals and results.
Knowing how to calculate ROI (return on investment) allows us to analyze whether an SEO strategy is delivering positive results or not.
Calculating the ROI of an SEO strategy is important to know if the desired goals and results are being achieved. At the same time, calculating ROI helps identify what is failing or not working and make better strategic decisions, adjusting whatever is necessary.
For example, it’s possible that the number of visits to a website has increased, but these visits are not converting, which prevents achieving ROI and may result in a budget cut. With the right information, you can analyze what is failing in this part of the sales funnel and fix it with actions focused on conversion.
What is ROI in SEO?
When talking about SEO strategies, ROI usually translates into an increase in conversions. That is, turning users who visit pages and websites into leads or customers.
However, it’s important to identify what type of conversion is most appropriate for each strategy. Conversions are any action that turns a visit into a lead or potential customer. In this sense, the conversion will depend on the strategy and the medium, and could be: a newsletter subscription, a product or service sale, an app download, etc.
In each case, it’s necessary to be clear about what is considered a conversion and to have a tool such as a CRM that allows us to automate and identify the generation of these conversions.
At the same time, it’s important to know how to choose the right KPIs. These should go beyond simple metrics and allow you to understand the performance of the strategy in depth, as well as identify possible problems.
Along with the KPIs, realistic goals should be set. For example, it wouldn’t be realistic to set a 300% increase in conversions in two months. Over time, a 300% improvement is possible, but this should be done through smaller, achievable goals.
How to Calculate ROI in SEO
First, you set the time period you want to analyze to determine if the strategy is working.
Next, choose the data you want to analyze. In this case, you should choose conversions. If KPIs have been set in advance, this task will be much easier, as each indicator allows you to see how each action is performing.
Once you have this information, compare the results obtained with the defined results. If the results are not good enough to achieve the goals, you should adjust each KPI.
With all this information, calculating ROI is not difficult, as you just need to divide the value of each conversion (subtracting the investment cost) by the investment cost.
Let’s say an SEO campaign has generated $50,000 and its cost was $10,000. Therefore, we should calculate: ($50,000-$10,000)/$10,000 = 4.
This means that for every dollar invested in SEO, you have obtained $4 in return. In other words, you have an ROI of 400%.
