How to Calculate ROI for an SEO Campaign

Everyone knows that SEO has the potential for a sky-high marketing ROI. But how do you know? With so many variables and moving parts, it can be difficult to determine how far your SEO budget is going for you…or even working for you at all. In this in-depth video, I show you how to use Google Analytics, Excel and a leaked document from AOL… to pinpoint your SEO ROI to the penny.

Video Transcript

Hey what’s up everybody it’s Brian Dean from Quick Sprout, and in this video I’m going to show you how to calculate the ROI of a SEO campaign.  The first thing you want to do is set up a spread sheet that help you calculate ROI quickly and easily.  So to do that, log into Google Drive, click on create and then click on spread sheet.  And you want to set up a spread sheet that looks something like this and tracks these three very important metrics.

So in this case unique visitors, these are the number of unique visitors that come to your site every month.  The current conversion rate on your site, and the revenue that you get per conversion which will obviously very drastically depending on what that conversion is.  Your first step is to see how many visitors you’re already getting from organic search.

To do that, log into Google analytics and click on the date area here.  And then choose the last full month that you had data for.  So in this case I’m choosing August 1st, to August 31st, then click apply, and then click on your site link here.  This will show you traffic that you get from everywhere, so you want to break this down to only organic search.

Scroll down to traffic sources, and then click on organic here.  This will limit the results to just organic search, so in this case.  I got 5811 visits last month just from organic search.  You want to copy that number, head back to your spread sheet, and paste it in.  Now we have that number as our baseline.

Next you want to measure your conversion rate.  So if you don’t already have that set up, I’m going to show you how to setup your conversion rate, and conversion revenue very easy.  So go back to Google analytics, scroll up and click on admin, and under the profile area click on goals.  And then click on create a goal.  Then under the template, I prefer to use one, just because it’s a little more easier to setup.  It depends on what kind of conversion you have so.

So it’s either people paying for something, making an appointment, becoming a partner, just asking as an inquiry,  but I like to put create an account, because that’s the most common kind where people are just signing up either for free or paid account on your site, then click on next step.  Then give it a name.  So we’ll just say new account.  And you can choose destination, in this case when someone fills out the form. It sends it to a destination page like thanks.html or duration.  The spent some time at your site.  But we’re going to go with destination, that’s the most common type of conversion, and click on next step.

Then under value, this is very important.  You want to choose this says on.  And give the monetary values for that conversion.  So if every lead that you get on your site is worth $10 you want to put $10.  Or if someone made a sale and your average sale is $55, you put $55.  So it depends on what kind of lead you have and how much that lead is worth.

And then under funnel, you put this on or off, click on create goal, and your goal is set up.  Once that’s all set up, log back into your dashboard for your site.  Scroll down, click on conversions, then click on over view.  What this will do it will show you your goal conversion rate.  So you’ll want to copy that and put it into your spread sheet, so in this case 2.66 percent.  Next you want to enter your conversion revenue and for the example in this video we set that at $10.

Once you have these three things in place, you have everything you need as a baseline to calculate the ROI of an SEO campaign.   Next you want to add these three columns to your spread sheet.  So SEO cost is how much you’re going to spend on SEO.  For the sake of this video, let’s just put $5000, and then your increase in revenue is how much you plan to make from that $5000.  So we’re actually going to put $5000 because first you want to see what your break even point is.  You want to  see how much more money you need to make, how many more conversions you need to get, and how much more traffic you need to receive in order to break even from the cost of your SEO.

So in this case we want to see how many more $10 conversions you need to reach $5000, in this case it’s 500, because 500 times 10 is 5000.  Next you want to see how many additional visitors you’ll need to get 500 more conversions.   You want to add a new column that says something like additional organic visitors.  Then put equals, the number of conversions that you want.  In this case 500, divided by the conversion rate which is 2.66 percent, press enter.  In this case we need 18,796 more visitors to reach 500 conversions and to make our SEO cost of $5000 worth while.

Next we need to look at how we’re going to estimate whether or not we can hit this.  What you’re looking at here is some leaked data from AOL that shows the click through rate of different positions on the first page of a search engine result.   As you can see the first result gets about 42 percent of clicks, the second result gets almost 12 percent, the third result gets 8 1/2 percent etc.  Now these aren’t obviously gospel and it depends on the search, the results, how many ads are on the page, etc.  But this does give you a rough idea of how much traffic you’re going to expect to get in the first position, the second position, third position, etc.

So the next thing you want to do is head back to your spread sheet, and add four new columns.  So keywords are the keywords you’re targeting for that campaign.  So let’s just put best running shoes,  and next we need to see the search volume, so head to Google Ad Words, click on tools, analysis and click on keyword planner.

Next click on search for keyword ad group ideas and enter one of your target keywords.  So best running shoes, scroll down, click on get ideas.  And then click on the keyword word ideas tab, and you can see that the keyword best running shoes gets 27,100 average monthly searches.  Copy that, and paste it into the volume column in your spread sheet.

Then you want to estimate what position you think that you’ll be able to rank for the keyword, best running shoes.  Let’s just say that you can rank for the second position, so that will be about a 12 percent click through rate.  Put .12 here, and you want to set a little formula that basically multiplies this by this.  So B11 times C11, that will give us an extra 3252 visitors per month,  and you want to repeat this process for all the keywords that you’re targeting and see whether or not you’ll be able to hit this metric here of 18,796.

Once you have this data in place, you’ll want to copy it and create a new spread sheet, which will be your actual calculation.  So these were just estimates obviously.  Now once you do the SEO work, and you spent the $5000 and done the link building  and the [??] work, you want to see whether or not you actually got 18,796 additional visitors, and whether or not  that resulted in $5000 in revenue.  If it did, then you got a positive ROI, from your SEO spent.  If you didn’t, that means you got  a negative a ROI, so you’d want to go back and see whether or not you’re targeting the wrong keywords, or your link building wasn’t effective.  Or what ever it is that was keeping you from getting a positive ROI on your SEO investment.

So that’s all there is to calculating the ROI for an SEO campaign.  It does take a lot more upfront work, than just like spending money, and saying, Okay, I went from number seven to number four, it must’ve been good, but this will give you more actionable data that you can use to make your SEO  even better.   Thanks for watching this video, and I’ll see you in the next one.