How to Calculate the ROI of Your SEO Campaign

When I was running an SEO agency, I realized that companies had one big issue with SEO. They couldn’t figure out if they were losing or making money from their SEO campaigns. For this reason, most companies spend their marketing dollars on paid search because it allows them to track their return on investment (ROI) easily.

But just like with paid search, you can actually calculate the return on your SEO efforts. It’s not that tricky either. To show you how to do it, I’ve created an infographic that will walk you through the calculations you need to perform.

Don’t worry, it’s simple.

Click on the image below to see a larger view:

How to Calculate the ROI of Your SEO Campaign

Click here to view an enlarged version of this infographic.

Conclusion

Whether you are spending money on pay-per-click campaigns, SEO efforts, or banner ads, you should be calculating the return on your investment. If you are making more than you are spending, you are doing a great job.

If you are losing money, you’d better either adjust how you are doing your marketing or cut off the non-profitable channels.

Are you making money from your SEO efforts? If not, why?

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Comments

  1. Honnestly, I haven’t understood anything.

    Maybe you’re too advanced for me…

    What does your 120$ example have to do with search?

    Don’t get your infographics at all.

    • It is just giving you an example of how someone is worth $120 over their lifetime.

      • Hi Neil,

        I was wondering exactly the same thing. The graphic shows the life time value of one customer and your advertising cost to get one.

        It does not really show how to calculate your SEO ROI. I was really curious to see how you would show the ROI but this is not really it.

        Once the business owner knows that he gets more clients through SEO, it is not a big deal. The difficult part is to convince him that he should invest money into SEO. Then it is difficult to show him how much he needs to invest AND how much he will make from this investment. And here it becomes difficult because noone knows how much it will cost.

  2. Is it just me or the infographic is a bit misleading? As I see it, it assumes that customer acquisition happens through SEO campaign alone.

    What about direct sales, social media marketing, PPC, referrals, etc.?

    I guess what’s missing is that you need to track your sources to understand how a customer found you and converted. Otherwise, you’ll put all customers in one bucket and think SEO campaign did A LOT better than it did.

    But infographic is great at explaining how to calculate it, you just need to make sure the numbers you’re using are good and specific to the channel you’re calculating ROI for.

    • You are supposed to separate them out before you start the calculations, so you are just supposed to look at SEO as a channel as your analytics can break down conversions from organic search.

      • Neil, I agree with Viktor. You’ve addressed the easy part – clearly ROI is straightforward if you know how much you spend on SEO and you know which customers were brought in by your SEO campaign.

        The tricky part is knowing which customers came from your SEO campaigns as opposed to any other campaigns you might be running.

        I, for one, do not know how to do that properly and would love to hear how you do it.

      • @Neil, you know that and I know that. An average business owner or beginner marketer who will look at the infographic might not :)

        @John, it is tricky and never 100% accurate. You’ll always have cross over. One way is to use analytics platform that can help you track visitor and customer sources (Hubspot, KISSmetrics, etc.). You’ll get a basic idea of where they originate. You can also add to your checkout a question to try to find out where they came from. For service businesses, you can find out in a conversation where they found you.

        But, if someone sees your Twitter ad and Googles your business name to get a better idea of who you are, finds your website and converts – you’ll most likely count that person as part of your SEO ROI, but in reality it should’ve been SMM. You just have to deal with it, and try your best to segment them and reconcile customer feedback with analytics.

  3. Thanks for the post, Neil.

    I don’t know how, but you’re always extremely timely with these posts. It’s kind of scary.

    Best regards,

    Ray

  4. Infographic does NOT make sense. And completely messed up.

  5. I would say that this is veeeery complicated topic and you summarized it into few & easy to understand steps.. Awesome infographic.

  6. Hi Neil, we use a similar formula to demonstrate the value of our SEO work to our UK clients:

    ROI = (Additional Profit – SEO Investment) / SEO Investment X 100

    When our clients add their own numbers into the formula they are always really surprised to see what great value search optimisation is!

  7. It is a great way to calculate ROI for SEO, but there seems to be one problem. This is not an SEO problem, but an overall online marketing problem. This problem is this: how to determine which online channel was most important in a certain sale?

    In my opinion, SEO is not so much about ROI. It is about
    -> the number of keywords your site is found on
    -> the number of visitors that come on your website by organic search
    -> the overall online visibilty of your brand. (And this is not a number, but more of a gut feeling)

    So the best SEO effort is when the SEO expert works together with the other ppl on a online marketing team, and just sees opportunities and makes the brand better and bigger.

  8. Normally enjoy your posts Neil but this infographic doesn’t make sense to me.
    4 x $60 x 5 = 1200
    1200 x 10% = $120
    So how is LTV $60??

    Have I missed something?

  9. Chuck B. Hickory :

    Infographic looks thrown off by a math error (might just be a typo). On your comparison, LTV for your great customer should be $280.
    The math and demonstration would make sense then.

    It’s a bti convulted demonstration in my opinion, most smart people understand SEO’s worth when you explain it this way:

    Would you rather build a house or rent a hotel room for the rest of your life?

    • A customer brings in $60, 4 times a year, for 5 years. Thats $1200, but because of physical product costs you only keep 10%, which means you keep $120.

  10. Hi Neil,

    Always love your articles. Noticed a small error in the Average Customer vs Great Customer table. The LTV for the average customer should be $120 and the LTV for the Great Customer should be $280. Its showing $60 and $80 respectively.

    Pretty great info in a very easy to understand calculation. Will definitely be integrating these principles.

    Thanks,
    Neeraj

  11. Neil, I am just little bit confuse how you calculate LTV

    LTV= (Purchase per year * avg purchase price * Life expectancy) * Gross profit percentage.

    = (4 * 60 * 5 )* 10/100 = 120

    If this is the case than how can it be $60 & $80 in last section of infographic. I assume that there is wrong data it should be $120 & $280 respectively and then only ROI should be $60 and $180.

  12. Neil, your title doesn’t not describe the content of the post nor the infographic. Calculating ROI on SEO campaigns is not trivial and your infographic simply shows HOW TO CALCULATE ROI IN GENERAL, not SEO-specific. What would correspond to the post title is explaining how to get to CAC based on SEO campaigns specifically, otherwise the title promises something the content doesn’t deliver.

    This is so misleading I actually went back to my social accounts and deleted the promotions for this post I rushed before reading through it all as I got too excited about possible insights on the topic from you.

    It would be really exciting and valuable if you had expanded on this post and actually explained what the title promises. Shouldn’t be that hard – you could keep it simple with references to conversion sources in common analytics tools, starting with GA.

  13. Wow, that’s quite some maths. But highly useful. Thanks for putting this together Neil.

    It all comes down to identifying great customers rather than average customers. Good one!

  14. Mathematical errors or not, I think some of the individuals making comments are putting their pride before the purpose of the article. If it isn’t for you, it isn’t for you.

    Obviously there are going to be assumptions in this type of article, but the purpose behind the article brings novice and average marketers up to speed, who may not be on the intelligence level of Neil and some of the ‘mistake highlighting’ commentators.

    Over, good info-graphic. I saw past the mistake/assumptions and realized that it is a great aspect/concept I will keep in mind when teaching my clients the importance of yielding a return on your SEO.

  15. Hey Neil,

    my question is rather off-topic .. you published a great infographic, but since it’s jpg it won’t be indexed word by word, right?
    This is different from your guides which were made as pdf and converted into html, so … is it worth the effort to have crawlable infographics or is it fine to post images with additional text?

  16. Thanks for the post, Neil. It’s easy to tell clients that you can get them X more number of visitors a month or move them up X number of positions in the rankings for their keywords. That’s pretty foreign to most business owners, and all they want to know is “how much more money am I going to make?” Bottom line for any business making any kind of investments, they want to know the ROI. Once again, thanks for the post, Neil. And keep up the awesome work!

  17. Neil, this make sense when your website sales a product, like your website; however, my website is a news blog… How can I adapt this infographic to my website?

  18. When calculating LTV, was life expectancy a variable or a constant? Or did the value assume that people of a certain age tend to visit certain websites more than others of a different age.

  19. I like your SEO content Neil.
    You are not only explain SEO strategy, but also explain SEO from another side of business.

    Thanks.

  20. Hi Neil,

    Nice infographics as always!!! ROI is very important in every SEO campaign. The tricky part is knowing which customers came from your SEO campaigns as opposed to any other campaigns you might be running. I think this is basically type of performance management. Anyway Thanks Neil for this valuable content.

    Have a great weekend to you.:)

    Regards!!!!
    Bhavesh Patel

  21. This was one of the major issue I was facing when I used to work for local SEO clients. They were asking me repeatedly that “Is this SEO campaign really gonna work for me”? And it was really difficult for me to make them believe that yes! this is gonna work!

    But now I can easily connivence them that the things that we’re doing are really gonna work to grow your business. Thanks for such an awesome infographic Neil!

  22. Neil, for the 1st time I could not get anything from your post :( may be the infographics is too advanced to understand :(

  23. this is very useful post , thanks for sharing .

  24. Hi Neil,

    Smart IG. I like checking in here and there to see how my SEO is panning out.

    Thanks!

  25. Hi Neil,

    In the section where you compare great/average customers LTV’s should be:

    Average: 4 purchases x $60 x 5 years x 10% = $120
    Great: 5 purchases x $80 x 7 years x 10% = $280

    Then the deduction of CAC make sense.

    Love your blog ;)
    Cheers, Harald

  26. God Damn Your Each And Every Post Is lengthy ,informative,Readable I have never seen any blog like this with complete analysis

    Thats why i follow your blog

    Hats off

    Neil patel

  27. Hi,
    This is really a good info-graphic.

    But, one question Neil, how any one can create an info-graphic like yours, please tell me. I mean r u hiring someone for doing or you are doing your own.
    Thanks

  28. Infographics has been used, clears every doubt. Great post Neil…

  29. Good infographic on what is a often confusing and cloudy topic.

  30. Neil,

    The concept which you have put up is really great and can be implemented. In other words, its highly actionable!

    Thanks,
    Mandar

  31. Thanks for this infographic. This Concept is really awesome

  32. Not getting the concept of CAC, would be please elaborate it for me.. thanks in advance

  33. Neil, I’ve enjoyed your each and every single article you’ve put out until right about now… eeks… I suppose it’s because I’m not much of an info graphic guy- That’s not to say I don’t appreciate the trouble and effort though. Cheers

  34. Hi Neil,

    Thanks for the Infographic – encouraged some great interaction and feedback with this article with a difficult topic.

    I also enjoy reading the input from others as this leads to other areas in which to explore and check out in this constantly evolving sphere of work.

    Keep up the great work

    Steve

  35. Hi Neil,
    You put out such detailed and interesting posts it is really a service to society.Thanks aton for your insights.
    What is the best and easiest SEO solution for a newbie?
    Thanks
    mona

  36. Great article, thanks! However, it’s really difficult to create great content (viral) every single day or something like that.

  37. Great Job! your blog is really interesting and holds sets of fantastic information. You have made your points with unique thoughts and content.

  38. There are many informative points you described in your post. Thank you.

  39. Neil,

    I was very enthusiastic to visit the blogpost after reading the title. I thought, finally someone will spill the beans, but was disappointed.

    I’m a traffic guy. I make money from adsense clicks and understanding ROI on seo in that regard is the real mystery.

    Can you spill the beans?

  40. Neil

    Thanks for the great insight on how we should monitor our expenses when it comes to our SEO and other marketing campaigns. It is so easy to get focused on product rather than making sure marketing is being taken care of. Thanks,

  41. Nice. Very informative as always. Thanks Neil.

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