A Simple Way to Calculate Return On Investment for SEOPosted by Michael Glover in organic search engine optimization, Return On Investment, SEO, SEO Services | 29 comments
What will be my “Return On Investment” (ROI) if I pay someone to provide or manage SEO Services? Now that can be a tough question to quantify. Why you ask? Because the search engine industry is very subjective. In other words, ten different people can look at things ten different ways and still, all of them can be correct. However, in the spirit of simplifying terms, let’s take a stab at it shall we? For people who are new to the World Wide Web, this should be one of their first questions. For SEO’s, this is a question that has been asked over and over by clients since the beginning of the search engine era. It’s an important one. If there is no benefit to ranking well on the search engines then why bother going to the trouble of ranking well on them? So in order to see if there is any true benefit in ranking well on Google, let’s perform a small case study and see if we can estimate some traffic and some ROI for a specific keyword.
“There are no secret sauces in Search Engine Optimization. Only work. If you know what to work on then you can optimize a web site to perform well in the search engine results pages.”
Keyword Research – Arguably the most important part of any successful SEO campaign. If you optimize a web site for the wrong keywords, you will either get NO traffic (because you are flagged as a spammer by Google) or you will get a TON of traffic and your Bounce rate will be through the roof because the content of your site was not relevant to the key word someone searched for and then clicked through to see your site. So let’s start there. I am not going to go into a whole long process of Keyword research, let’s just pick a keyword with some good traffic potential and use the numbers from there to help us estimate some traffic.
“Please remember that all of these numbers (even the ones provided by Google) are simply ‘estimates’. No one in the search engine world is going to give you firm search result numbers!”
So for the purpose of this exercise, I selected the Keyword Phrase [iPhone Accessories]. Note the graphic shown here:
This graphic indicates a couple of things. First, that there are over 201,000 monthly, global searches in Google for this search term. Second, it is a highly competitive keyword. Just imagine how many web sites are out there trying to sell iPhone Accessories. So assuming we can get it to rank well, what kind of traffic can we expect?
“How would you like a large percentage of the Global Search traffic visiting your site monthly? And visiting just for your preferred keyword? Not a bad way to start the day I’m guessing!”
So, to be honest, there is not much out there in the form of statistics for this data. I had to dig really deep and even then I only found a few useful tidbits of information on the subject. The most well known study on the subject was an “eye movement” study by Cornell University.
Here is link to the original study and results: Cornell University Click Through Study
Since this is an “eye movement” study and not actual click through data, it has come under fire from the SEO community and the search engines themselves. So several other resources and “studies” (I use that term loosely) have also surfaced in recent years. The following chart is more of a compilation of the all of the resources I have found and then averaged out across all of them. Nonetheless, it should give you an idea of the general consensus by the search engine community as to what are acceptable numbers for this particular discussion.
So, what does all of this mean to someone trying to sell iPhone accessories? Let’s take a look.
Assuming a modest profit margin of 47%, the following is a rough estimate of the return on investment for SEO (assuming you actually get to #1):
Google’s Estimated Traffic – 201,000 Global Searches per month
If you are ranked #1 for the keyword “iphone accessories” you can expect about 85,405 visitors per month.
Assuming a conversion rate 3% (average being 3-6% with some sites much higher), you can expect 2, 562 sales. If the average sale is $25.00 (or $64.050 in revenue) at 47% profit, you can expect to net $33,946.50 in profit, from this one keyword, per month. Subtract the cost of your SEO program managment and/or consultant and you then have your true ROI.
Disclaimer – There are a LOT of broad terms and numbers shown above. Please try to remember the following; That Google’s traffic estimates are not always accurate, that this study assumes several things (conversion rate, selling price and profit margin), that the site selling this item is an authoritative site and has not only a lot of content, but quality content and that the owner of the site either performed the search engine optimization or hired an SEO firm to help them rank #1 for that keyword. The keyword used is a highly competitive keyword and it may take 9-12 months (or longer) to rank high on the SERP’s.
“Now do you see why some people have the ‘Gold Rush’ mentality when it comes to Google and trying to rank number one for a particular keyword? It’s no wonder why ‘black hat’ techniques and ‘Counter SEO’ techniques are still viable practices going on every day. There is a lot of money at stake here folks.”
Being at the top of the natural search results is every internet marketer and retailers dream. It promises fame and fortune, recognition and validation that you have succeeded in the world of online marketing. The work is hard, the road is sometimes long, but the payoff can also be life changing for a small company or web site. The key is selecting the correct keyword and then optimizing your site and then marketing and growing your site. It does take time, energy, resources and most importantly….patience. But if you have the resolve, you too can reach the top and then you get to see what’s there waiting for you!
For the record, and as stated above, there are many ways to calculate return on investment for any venture. This is just one and yes, it is a simplified measure. But if you start thinking along these lines, you will definetly be headed in the right direction.