The acronyms “ROI” and “SEO” don’t often go together in the agency world.
I’ve been guilty of focusing on SEO-driven KPIs such keyword rankings, backlinks, and organic search traffic.
But here’s the truth:
Businesses only want one thing…
RETURN ON THEIR INVESTMENT.
When they invest $24,000 into a SEO campaign, they want MORE than $24,000 in return.
It is your job as an SEO to achieve this goal.
Let me begin by going over two examples of flawed SEO ROI logic.
2 Examples of Flawed SEO ROI Logic
For some reason in the SEO world, ROI has a weird grey area. This leads to strange illogical conclusions.
Here are two common examples:
“If I get more traffic, I will get an ROI from SEO.”
First, more traffic doesn’t guarantee an ROI because there are other influential factors outside of it. Second, more traffic will never solve deeper marketing, sales, operational, leadership, or product quality issues. Lastly, you must also understand that not all traffic is created equal. That applies to organic search traffic as well.
“If I invest in SEO, I will see a return in the future.”
Yes, SEO takes time and it is a long-term investment. But that doesn’t mean you’re going to see a return just because you “stuck with it”. A longer time-frame won’t improve a poorly developed SEO strategy and campaign.
If you’re not seeing any noticeable improvements at the 12-month mark then you need to reassess.
Another important point is that spending money doesn’t guarantee a return. That makes SEO similar to stock market investing for two reasons:
- You can’t control either (Google or the stock market)
- You can’t predict what will happen tomorrow or in the future with each
Read what I’m about to say carefully:
SEOs can not control Google. Google controls Google. If you play the SEO game, you are a pawn in Google’s game. They created the game. You are just playing in it.
That’s why you shouldn’t expect or offer ROI guarantees. It is impossible and unethical to do such a thing knowing the circumstances.
The only thing an SEO can do is make educated guesses based on testing and experience.
The same goes for someone who is looking to hire an SEO agency. You can select an agency based on research, shopping around, and requesting referrals. But even after all of that preliminary work, you are still making a judgement call or an educated guess.
There is no guarantee that the agency you selected will perform well.
With that out of the way, let outline how to get an ROI from Search Engine Optimization (SEO).
How to Get an ROI from SEO
1. Why do you want SEO?
Before you attempt to do SEO or hire an agency, you need to figure out WHY you want it. There are both good and bad reasons for engaging in SEO.
Let’s start with bad reasons:
- “Joe told me SEO is working for his business, so I want it too.” – Just because SEO worked for someone else, doesn’t mean it’s going to work for you. Someone else’s results are independent of yours.
- “Joe is getting “results” from SEO.” Notice that I put quotes around “results”. That’s because many businesses (and agencies) don’t measure SEO results based on ROI. They measure “results” based on individual keyword rankings, traffic, and even total backlinks. While these KPIs are necessary to reach an ROI, the only valid “result” is more money in a business’s pocket. Let me repeat: making more money is the goal of SEO.
- “My revenue is falling… I need to invest in SEO.” SEO is a supplement, not a solution to your business problems. If your business sucks, then SEO won’t save it. I hate to sound harsh, but many businesses look for scapegoats when their businesses aren’t going well. If your revenue is falling, then focus on fixing your business before even thinking about SEO.
Now that the bad reasons for doing SEO are out of the way, let me show you some GOOD reasons:
- “I already have reliable channels for getting new customers, but I want to take my business to another level.” As I mentioned above SEO is a supplement. That’s why it’s important to have other reliable channels outside of it. This alone helps alleviate issues with how long SEO can take to see results. When businesses aren’t reliant on SEO, they have more patience.
- “I am already getting organic search traffic, but I need SEO expertise to grow it.” Some businesses are able to drive organic search traffic without knowing they are doing SEO. This a terrific situation to step into. That’s because you are simply improving what’s already working well.
- “I want to learn SEO.” No brainer here. The best way to learn SEO is to actually do it. Read How to Become an SEO Expert to learn more.
You now know both bad and good reasons for doing or investing in SEO. The next step is to make sure your business and website are ready to get an ROI.
2. Make Sure Your Website (and Business) is Ready
I know this will be hard for some businesses to accept, but one of the biggest reasons why some SEO campaigns don’t see an ROI is because of your business. Not because of the SEO work.
An SEO agency can only control so many things. In terms of ROI, an SEO can control what keywords to go after and all the steps leading up to new organic search traffic. But the ROI equation gets complicated once that’s achieved.
If the new traffic isn’t growing revenue, then there is likely a deeper problem. That is, given the agency targeted quality keywords.
Here are a few website and business issues that may hurt your SEO ROI:
Your website has a poor user experience.
A quality SEO agency is suppose to help you improve your user experience. That’s because Google values user experience over almost all other ranking factors. It has a direct impact on SEO performance and therefore should be focus.
Unfortunately, many SEO agencies don’t get this “deep”. That’s why it’s your responsibility to make sure that your website is built for USERS.
There are plenty of recommendations I can throw at you, but that’s outside the scope of this article!
With that said, the #1 way to improve your user experience is to TEST. You can read about tactics all day, but the only way you’re going to improve your specific situation is by testing.
Your website isn’t optimized for conversions.
A website with poor user experience will almost always be coupled with poor conversions. The opposite is true as well. A pleasant user experience will likely increase conversions. “Conversions” apply to new sales, new email subscribers, and even social shares. Your website needs to be optimized for all three.
Your website is a poor sales vehicle.
Why does your business have a website? I assume it’s to either market your business and make more money.
That’s why it should be built to sell.
You need to invest (time or money) into improve your copywriting, your sales persuasion, and educating your prospects about your products and your industry. If you haven’t put effort into these things, then you can’t expect SEO to be your savior.
Your website doesn’t gather leads.
The majority of organic search visitors will never come back to your website. That is why it is absolutely critical that you have and promote your email list.
Remember that most organic visitors are not going to buy from you the first time they visit your site.
That’s why you need to do everything in your power to get them on your email list. That way you have the permission to build relationships with your prospects and convert them down the road.
To keep it simple:
You’re leaving money on the table if you aren’t trying to grow your email list.
Your product or service is flawed.
More traffic won’t help you sell more of a bad product or service. If there is a problem at this level, then you shouldn’t be thinking about or investing in SEO.
Once your business and websites are ready, you can move onto the next step.
3. Do it Yourself
Doing SEO yourself is the best way to save dollars. If you succeed, then your ROI will be huge. Unfortunately, it’s not that simple.
First, there is an opportunity cost of doing SEO yourself.
You must invest TIME.
Time is not a renewable resource and you can’t get it back. It is the most valuable commodity, so you must use it wisely. Trying to learn SEO and do SEO requires a lot of trial and error and time.
And you want to know what the worst part is?
There is no guarantee you will be successful.
On the flip-side, if you know how to do SEO, then you should obviously DIY because investing in an agency would be wasteful.
Although you need to be cognizant of where you invest your time, there is some good news:
You can do many high-impact SEO activities yourself even if you don’t have expertise.
Some high-impact activities you can do yourself include:
- Keyword research
- Competitor analysis
- Creating keyword-targeted SEO content
- Making sure your website pleases users
- Building relationships within your niche.
You don’t need an agency or an expert to do these things. I’ll be honest though, having a framework like Gotch SEO Academy can save you a lot of time from trial and error.
Ultimately, you should try to stretch as far as you can before hiring an agency. Bring on a quality SEO agency once you’re ready to scale your efforts.
But before you hire, I recommend you ask the following questions:
2 Questions to Ask Every Prospective Agency
It is critical that you ask the following questions because you need to avoid any agency or freelancer that just gives general answers. These are not easy questions and therefore shouldn’t have simple answers.
Ultimately, you are trying to figure out if you can get an ROI from SEO based on your specific circumstances (your website, your competitors, your niche, etc).
Question #1: Do you measure ROI?
If the agency doesn’t measure the return on YOUR investment, then “X” them off the list.
Question #2: How are you going to get us an ROI?
Let me start by saying that no agency can predict the future and can not guarantee results. With that said, a quality agency would take the time to analyze your website, niche, keywords, and competitors before speaking with you. This analysis gives an agency the ability to determine whether their prices vs. your situation can produce an ROI.
This brings up an important question:
How can you project the ROI of an SEO project?
How to Project Your SEO ROI
Projecting the potential ROI of a campaign is beneficial for both parties. If you’re on the agency side, a conservative (and honest) projection is a strong sales tactic. If you’re on the buyer side, you can use these projections as a way to gauge an agency’s performance.
But overall, ROI projections should be taken with a grain of salt because no one can predict the future.
If you’re doing SEO yourself, then you should still calculate ROI projections. You can use these projections as a way to guide your work and even correct course along the way.
There are many different ways you can project SEO ROI. My method is simple and it’s usually pretty accurate. I also lean towards conservative estimates.
Here’s what you need:
- Search Volume of the keyword(s)
- Your Customer Lifetime Value
Here are the steps to projected your ROI of an SEO campaign:
- Enter Your Target Keyword(s): you can enter one or more keywords because the projection is based on total search volume.
- Enter the Total Search Volume: add all your keyword search volume together.
- Enter Your Customer Lifetime Value (CLV): you need to know what your customer lifetime value is to project your ROI. This is the most important part because it helps you see determine is SEO is a worthwhile investment for your specific situation and business.
- SERP Position: this is simply the ranking order of the first page of Google.
- Click Through Rate (CTR): is the estimated click through rate for each position on the first page.
- Clicks: this is the projected amount of clicks for each ranking position. To get this number use the following equation: Total Search Volume x CTR = Estimated Clicks. Example: 590,500 x .30 = 177,150.
- Prospect to Lead (PTL) Conversions: your PTL is the total number of clicks you converted into leads. “Leads” defined as new email subscribers, contact form submissions, or phone calls. For the example, I used a PTL conversion rate of 3%. Use this equation to your estimated PTL conversions: Clicks x PTL Conversion Rate = PTL Conversions. Example: 117,150 x .03 = 5,315 PTL Conversions.
- Inbound Lead to Customer (ILC) Conversions: your ILC conversions are the estimated amount of search (inbound) leads that converted into paying customers. For this example, I used a ILC conversion rate of 5%. Use this equation to calculate your estimated ILC conversions: Total PTL Conversions x ILC Conversion Rate = ILC Conversions. Example: 5,314 x .05 = 265 ILC conversions.
- Estimated Monthly Revenue: to calculate your estimated monthly revenue at each SERP position, simply multiple your ILC x your CLV. Example: 265 x 50 = $13,250 estimated monthly revenue at position #1.
- Break-Even Point: this calculation is the most important. In essence, you are trying to project how many months it’s going to take to see a return on your SEO investment. To calculate your break-even point, divide your total SEO investment by the estimated monthly revenue. Example: 50,000 / 13,250 = 3.77 months to break even at this position.
What to Consider About Projections
Remember that these are nothing more than projections. They aren’t reality. The only reality is how much money is actually invested into SEO and how well your SEO campaign performs.
Also, the projections above are rigid. That’s the opposite of how most SEO campaigns turn out.
SEO isn’t clear cut.
Sometimes you are pleasantly surprised and surpass expectations. Other times, you are totally confused why a campaign isn’t working. Plus, there is a high level of unpredictability because you don’t control Google’s algorithm.
Another thing to keep in mind is that the projections are based on seed keywords. When you rank for a seed keyword, you actually end up ranking for hundreds or even thousands of related long-tail keywords. This helps grow revenue higher than projections.
It’s just better to project low.
One other element to consider is that your total SEO investment will increase as you try to move higher on the first page. That’s because it usually gets harder the higher you go.
Make sure do an SEO competitor analysis in addition to your ROI projections.
Now, let me show you how to calculate actual SEO ROI.
How to Calculate Actual SEO ROI
Working with an agency simplifies the ROI calculation, but that doesn’t make it a better choice.
For example, let’s say you pay an agency $24,000 for SEO over the course of a year. In that time, your SEO campaign resulted in $29,000 is new revenue. This would be an ROI of approximately 21%.
Depending on if you continue working with the agency or not, your long-term ROI will be much larger.
Hypothetically, if you only invested in SEO for one year, your total ROI after two years would be 141.67%. That is, given your total new revenue was the same in year two. This is unlikely because SEO does have a compound effect overtime. Meaning, your growth should continue if the agency did a good job.
Instead of boring you with text, I’m going to give you a sneak peak into Gotch SEO Academy. The video below will show you “How to Calculate ROI of SEO”.
Now that you know how to project and calculate real SEO ROI, I need to cover black hat SEO.
Unrealized Cost of Doing Black HatSEO
All of this ROI discussion has been centered around “white hat” activities. But it’s important that I address black or grey hat tactics as well. As I mentioned in this article about PBNs, you can see a return from using PBNs or other grey hat tactics. The biggest problem is the unrealized cost of doing so.
There is both a financial and psychological cost of trying to trick the search engines.
Let me start with the financial repercussions since it’s simple. If you get penalized and the majority of your traffic is coming from Google, then you will watch your income decrease overnight. If this happens and you are also reliant on a single website, then you will really feel the devastation.
This is why most businesses should avoid black or grey hat tactics.
It’s different for SEOs who are creating multiple niche websites and have multiple streams of income. An income stream can get nailed, but you can recover since you know how to do SEO.
Now, let me ask you:
How can a one-man plumbing business recover after being penalized? Change their business name? Force them to get a new website? You see it’s much more complicated. The point is, most regular businesses should avoid doing sketchy SEO.
This rule doesn’t apply to businesses started by Internet marketers.
It applies to your average Joe the plumber. Don’t jeopardize Joe’s only source of income. Treat his business and his hard work with respect. That “respect” may be you telling Joe not to invest in SEO because he won’t see an ROI.
The financial element of engaging in black or grey hat SEO is pretty scary, but nothing is worse than the psychological cost.
I’m not trying to be condescending when I say this, but I giggle when I see black and grey hat SEOs freaking out about the latest algorithm update.
My reaction is because I’ve been one and know how that feels. I used to feel that stress all the time. It sucked.
That helped me learn/realize that:
There is no psychological security when doing black hat SEO.
It doesn’t matter how crafty you are with “hiding your PBNs”. You will still feel the heat when you watch your rankings drop overnight or when you see there is a new update. Trust me, I still frantically rush to my rank tracker when there are signs of a new update. It’s hard not to.
But I do know one thing for certain: the psychological stress of playing the manipulation game fair outweighs “white hat” tactics.
Unfortunately, stress doesn’t come with dollar signs so I can’t give you hard data. All you can do is experience it. Or, avoid the experience altogether by focusing on a content-driven strategy.
Now It’s Your Turn
How are you currently projecting and calculating ROI for your SEO campaigns? I would love to hear more in the comment section.
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