Calculating ROI for SEO
To communicate the benefit to a client (or to your boss) of SEO, you really need to persuade them of their return on investment. Showing an estimated ROI is key to starting a project and the actual ROI is key to keeping the project going.
A comparison between SEO and other marketing tactics for selling products or services is revealing.
68.7% ROI for SEO
56.4% Email list
41.1% Direct mail
31.2% Online Meda Buys
64.2% Email list
33.3% Direct mail
19.0% Online Media Buys
(statistics were taken from a 2009 Marketing Sherpa study)
If you know your conversion rate, you can calculate an estimated ROI for a specific scenario. You can explain to your client (or boss) that a projected increase in traffic will amount to a certain increase in sales and based on your expenses to generate that traffic you can show the estimated ROI.
To calculate an objective market value of generated traffic, you first need to have in mind traffic generated by specific keyphrases from search results. Take the CPC value for your keyphrase(s) in Google Adwords, use an estimated click-thru rate at various ranking positions OR your estimated increase in traffic. Once you have your estimated traffic number, and the CPC value, you can calculate the market value of that traffic increase (Traffic X CPC) to show what it's worth - if they had to pay for that traffic in PPC.