Calculating ROI for SEO

Guest post by: Michael Marshall
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Calculating ROI for SEO - By Michael Marshall

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.

Products Sites

68.7% ROI for SEO

56.4% Email list

52.7% PPC

41.9% PR

41.1% Direct mail

31.2% Online Meda Buys

Services Sites

69.7% ROI for SEO

64.2% Email list

64.1% PPC

55.4% PR

33.3% Direct mail

19.0% Online Media Buys

(statistics were taken from a 2009 Marketing Sherpa study)

What is really useful is 1) calculating an estimated ROI for a specific scenario and 2) calculating the objective market value of generated traffic.

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.

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Calculating ROI for SEO - By Michael Marshall

About the Author: Michael Marshall

RSS for Michael's articles - Visit Michael's website
I have over 19 years experience in information technology covering a wide range of specialties including: web design, software engineering, e-commerce solutions, artificial intelligence, and Internet marketing. I have degrees in Linguistics, Philosophy and Theology.
I am also a contributing author to SEOToday.com, the premier website for SEM professionals, and a contributor to "Building Your Business With Google for Dummies" by Brad Hill. I am a frequent presenter at Ultra Advanced SEO Symposiums, a meeting of select masters of the search engine marketing industry, at Search Engine Workshops. I am also a certified instructor at the Raleigh-Durham-Chapel Hill Search Engine Academy, an SEO certification program approved by the US educational system.

Three SEO Tools I've created:

SEM SCOUT - Content Relevance
SEO Sniper - Keyphrase Research
SEO Recon - SEO Competitive Intelligence
Click here to visit Michael's website.

More from Michael Marshall
The Tao of Search Engine Marketing Dualism in SEO
Personalization of Search and its implications for SEO
The Semantic Web
Calculating ROI for SEO
Google AdSense and Optimizing the Context of your Copy

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