How to calculate your SEO ROI using Google Analytics

Last Updated: June 30, 2022

SEO ROI should always be calculated in terms of monetary returns.

The majority of SEOs suck in selling their services.

They ask a lot of money upfront but could not describe/explain/assure what to expect in return in monetary terms.

One SEO agency quoted us $120k/year for their SEO service. And this is one of the most famous SEO agencies in the world. You most likely know them.

But when I simply asked what do we get in return…..well…let’s get on the call.

So I get on the call….the usual blah blah starts…we can build you X backlinks…do technical SEO…X articles per week…rank for X keywords….clean up the backlink profile…

But how does all this work translate into monetary returns?

You can’t do traffic projections. You can’t do sales projection. What the hell you can do then.

How do I justify this spending?

What should I say to our stakeholders?

That we are getting these X backlinks for $120k?

No wonder SEOs have a hard time getting any budget.

The majority of SEOs do not understand this but businesses don’t measure ROI in terms of the number of backlinks built, articles published, technical SEO, semantic SEO, international SEO…

They want to know if they are spending X what they are getting in return in monetary terms.

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Not calculating SEO ROI in monetary returns comes with consequences

The other problem that comes with not calculating SEO ROI in monetary returns is that sooner or later you will have a hard time justifying your spend esp. as you start scaling.

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Most businesses can tolerate spending on marketing campaigns that do not show a clear ROI but only to an extent.

But once you start spending say $10,000 /month on SEO campaigns then you better be ready to justify the spend in monetary returns.

Because no company has an unlimited marketing budget regardless of their size and they want to know what they are getting in return for the enormous ad spend.

That’s why SEOs have a hard time getting the budget they think they deserve.

Demonstrating SEO ROI is your opportunity to rise and shine

Many SEOs do not want to be held accountable for sales and ROI and here is your opportunity to rise and shine

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Imagine you asked your Facebook Ads expert why there is no sales and ROI and he gave you the following reply…

“You can’t expect Facebook marketers to close sales, to bring you ROI, or do CRO. What if your salespeople suck? What if your product or service is not good?

You can’t expect a Facebook marketing team to build or improve your entire business. If it was so easy the Facebook marketers wouldn’t work for you but make a fortune themselves.”

Do you think that Facebook marketer would last for more than a month in his job and not get fired?

There is a common misconception that paid ads professional get the keys to heaven and that’s why they are more successful than SEOs.

A common objection raised by many SEOs is that they have little control over their client’s websites.

That they are not involved in optimizing the front end and the back end of the sales funnel.

And therefore they should not be held accountable for sales and ROI.

News flash. 

Paid ads professionals get even less control over the client’s website and the sales funnel than SEOs.

Many SEOs think that paid ads professionals somehow work in the capacity of a business partner.

That every recommendation they made, every access they ask is given to them on a platter by their clients.

That they are invited to every board meeting where key business and marketing decisions are being made and their recommendations/requirements are taken into account.

And that’s why it is easy for them to generate record sales and ROI.

The reality is that often paid ads professionals just get the URL of the landing page and are expected to generate sales and ROI like the very next day of the campaign launch.

Yes, it is unrealistic but being a paid ads professional is not easy.

It’s a high pressure and high stress job.

You can’t blame Google, you can’t ask for more time. You can’t make any excuses. You can’t hide behind algo updates.

If you won’t deliver results, you will get fired within a couple of weeks.

What is really producing results for paid ads marketers is their willingness to take accountability. That’s all there is.

And that’s why they are being paid the % of total ad spend as their fees.

So as they manage bigger ad spend, they earn even more.

Imagine managing a monthly ad spend of $500k. You could end up earning $50k/month just from a single client.

The market rewards those who are willing to take risks and accountability.

That’s all there is.

Don’t get me wrong, I actually want SEOs to succeed and be considered equal to paid ads professionals and taken seriously.

But this is not possible unless we first expose the SEO agencies who refuse to take any accountability and still demand exorbitant fees.

And on top of all that also encourage other SEOs not to take any accountability and shy away from SEO ROI.

SEO already has a bad reputation and this lack of accountability just makes everything far worse.

Just like any other channel, SEO is measurable.

If you are here to learn to calculate SEO ROI, you are already one step ahead of most SEOs out there who believe that SEO as a marketing channel is not measurable.

If you can demonstrate SEO ROI you could win more SEO projects and you could demand the budget you deserve.

How to get the SEO budget you think you deserve?

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If you are really serious about getting the SEO budget you think you deserve then read this very carefully…

First, forget about all the following BS spewed out by the SEOs who came before you and who may have corrupted your thinking:

  • SEO is a long term game.
  • Companies want instant gratification and therefore they underinvest in SEO.
  • If you want sales and ROI then buy ads. If you want traffic, branding and opportunities then hire a SEO.
  • SEO is not an ad.
  • SEO has no control over sales and cannot guarantee ROI.

These are all faulty reasonings, made up stories that would not help you in getting the budget you think you deserve.

It is true that SEO is a long term game but this fact won’t help you get buy-in.

If anything, stating such a fact over and over again is detrimental to getting buy-in.

What you are unconsciously communicating to decision-makers is that you don’t expect any results.

If they come then it’s great. Otherwise, SEO is a long term game and you may need to wait indefinitely.

SEO is a form of paid advertising and you should start treating it like that.

Companies spend money where they can see clear ROI. It is your job as an SEO to demonstrate that ROI. Show both anticipated and actual ROI.

These ROI calculations don’t need to be 100% accurate.

But at least make some efforts to demonstrate that you are worthy of investment.

Instead of reporting on rankings and keywords, report on direct and assisted sales from organic search traffic.

Report on the volume and value of non-transactional goals (like newsletter signups, leads) attributed to organic search traffic.

Report on the increase in organic search traffic over time.

Do traffic and sales projections for organic search traffic. Again they don’t need to be 100% accurate. But at least make some effort.

I hear this objection all the time, it is very hard to demonstrate ROI or do traffic and sales projections for SEO.

Well, it is not hard for everyone. It is just you.

The ROI of SEO can be infinity but if you can’t demonstrate it then it is zero and no budget for you.

Forget about all the baseless limitations set by the SEOs who came before you, that you have no control over website, sales and ROI and that you are basically helpless.

The paid ads professionals face similar challenges and they are still responsible for Sales and ROI.

And unlike SEOs they don’t even get the time advantage.

If they couldn’t produce results within a few weeks they get fired.

As long as SEOs shy away from showing traffic and sales projections and reporting ROI, they are never going to get the budget they deserve. Instead they would get electric shocks.

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Calculating SEO ROI is extremely important for the longevity of your SEO project or career.

ROI is a very important metric, even more, important than sales or conversions. This is because it takes into account the cost of the investment.

Common business sense dictates that If an investment doesn’t yield a positive ROI or if there are other marketing channels with a higher ROI then the investment from a particular marketing channel should be withdrawn.

This can happen with SEO too as it is not easy to calculate the ROI of SEO campaigns.

If a business doesn’t see any apparent ROI from SEO or finds other marketing channels more lucrative in terms of ROI then it may either choose to cut down the SEO budget or stop the SEO campaign altogether and invest the money somewhere else.

This can happen in companies that run multi-channel marketing, where SEO is not playing a very big role in overall revenue generation or where the SEO has failed to prove the ROI of its efforts.

It becomes very important that we calculate and report the ROI of our SEO campaign even if the client hasn’t asked for it.

This is because if we don’t report the ROI, the client will calculate it himself (often inaccurately) at some point especially during the decision time (whether to continue or discontinue SEO).

Every time we report ROI, we give a solid reason for our client to continue to invest in SEO.

For clients:

ROI always mean ‘dollar returns’.

ROI should not be confused with raw organic traffic, organic conversions, rankings, number of links built etc.

Majority of businesses can’t really understand ROI in these terms.

They want to know if they spend X, then what they are getting in return in dollar value. Is it 2X, 3X ….???

You need to do show the ROI for your own business’ sake.

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Types of SEO ROI

There are two types of SEO ROI that I think are worth mentioning:

  1. Anticipated SEO ROI
  2. Actual SEO ROI

Anticipated ROI is the ROI we report when we are pitching a new client and actual ROI is the one we report during the tenure.

Anticipated SEO ROI

Anticipated ROI = (Anticipated Revenue from SEO efforts – Proposed Cost of the SEO Project)/Proposed cost of the SEO project

Before you calculate anticipated ROI, you need to know three metrics in advance:

  1. Average monthly visits/sessions
  2. E-commerce conversion rate of the website
  3. Average order value

If you don’t have these values beforehand then you can’t do ‘anticipated ROI’ calculations.

In order to find the average monthly visits/sessions from Google Analytics follow the steps below:

Step-1: Login to your Google Analytics account and then navigate to your main reporting view

Step-2: Change the date range to the last year.

Step-3: Navigate to the Audience Overview report:

total sessions

Step-4: Divide the total sessions by 12 to get the average monthly visits to your website. In our case it would be: 1,862,141 / 12 = 155,178 average monthly visits

In order to find the average e-commerce conversion rate from Google Analytics follow the steps below:

Step-1: Login to your Google Analytics account and then navigate to your main reporting view

Step-2: Change the date range to the last year.

Step-3: Navigate to the Ecommerce Overview Report (under ‘Conversions‘ > ‘Ecommerce‘):

ecommerce conversion rate

Step-4: Note down the value of the Ecommerce Conversion rate.

In order to find the average order value from Google Analytics follow the steps below:

Step-1: Login to your Google Analytics account and then navigate to your main reporting view

Step-2: Change the date range to the last year.

Step-3: Navigate to the Ecommerce Overview Report (under ‘Conversions‘ > ‘Ecommerce‘):

average order value

Step-4: Note down the value of the average order value.

Let us suppose that you have got the following data from your prospective client:

Average monthly visits – 50000
E-commerce conversion rate of the website – 0.68%
Average order value – $176

Let us suppose that the proposed cost (or fee) of your SEO project is $20,000.

Now you need to justify this spend to your prospective client. So you need to generate an additional sale of at least $20K during your contract period.

But $20k will only be a breakeven point (the point at which there is no profit and no loss) for your client. So you need to generate much more than $20k through your SEO efforts in order to generate a reasonably positive ROI.

You now need to determine the number of additional orders required to generate an additional sale of at least $20k for the client:

No. of additional orders required for $20k sale

= Proposed Sale/Average order value

= 20000/176 = 114

So when you will generate an additional 114 orders on the client’s website during your contract period through your SEO efforts, your client will break even.

If you fail to generate at least 114 orders through your SEO efforts during your contract term than you will generate a –ve ROI for your client. Your client will actually be at a loss.

The next thing that you need to do is to determine the additional traffic required to generate 114 orders on the client’s website.

Additional Traffic required to break even

= number of orders required to break even / e-commerce conversion rate

= 114/0.68% = 16765 visits

So you need to generate at least 16765 visits to the website through organic search just to break even.

Here I am assuming that e-commerce conversion rate of the website will remain constant (if not improved) during the contract term.

In order to deliver a reasonable positive ROI, you need to generate much more than 16765 visits.

So let us just double this traffic estimate to 33530 visits.

Now we can expect to get around 228 orders (144*2) through our SEO efforts which in turn could result in $40k ($20*2) in sales.

 Anticipated SEO ROI

= (Anticipated Revenue from SEO efforts – Proposed Cost of the SEO Project)/proposed cost of the SEO project 

= ($40000 – $20000)/$20000

= 100%

100% ROI means if your client spends X, he earns 2X in return.

I think it is pretty reasonable to consider delivering at least this much ROI.

Because if your client spends X and he earns X or less in return, then what is the point of carrying out SEO on the website in the first place. It is simply a waste of time and money.

Now at this stage, you need to decide whether or not you can generate additional 33,530 visits through SEO during your proposed time frame.

This will require additional calculations which are beyond the scope of this post.

But just to give you an idea, you can do this by estimating the traffic you could generate through your chosen keywords in the proposed time frame.

You can always go back and revise your proposed fees and time frame for the project if you think 33k visits is too much to deliver.

Once you have done your traffic projections and ROI calculation then it is up to the client to decide whether or not he can trust you on your ability to generate proposed traffic to his website within the timeframe.

In any case, you now know how ‘Speculated ROI’ calculation is carried out and why it is so important.

When you talk about ROI, you speak in a language that businesses understand very well:

ok I will give you X, how much I will get in return?…..

Please don’t say I will get rankings and traffic in return.

Tell me how much I will get in dollar value so that I can justify ad spend.

Note: If you want to know how to charge for your SEO campaign then check out this post: How to Charge for Managing SEO Campaigns

Actual SEO ROI

Actual ROI is the one that eventually decides the fate of your future engagement with a client.

Actual SEO ROI= (Total E-Commerce Revenue through SEO + Assisted Conversion Value for SEO) – cost of running the SEO campaign/ cost of running the SEO campaign

In order to find the total e-commerce revenue through SEO follow the steps below:

Step-1: Login to your Google Analytics account and then navigate to your main reporting view

Step-2: Change the date range to the time period for which you have been doing SEO on the website.

Step-3: Navigate to the Channels Report (under ‘Acquisition‘ > ‘All Traffic‘):

channels report

Step-4: Click on the ‘Ecommerce‘ tab:

ecommerce tab

Step-5: Scroll down the report and note down the revenue from organic search:

organic search revenue

In order to find the Assisted Conversion Value for SEO, follow the steps below:

Step-1: Login to your Google Analytics account and then navigate to your main reporting view

Step-2: Change the date range to the time period for which you have been doing SEO on the website.

Step-3: Navigate to the Assisted Conversions Report (under ‘Conversions‘ > ‘Multi-Channel Funnels‘):

assisted conversions report

Step-4: Note down the Assisted Conversion Value reported for Organic Search.

assisted conversion value organic search 2

I am taking multi-touch attribution into account here because SEO not only helps in generating organic visits and sales but also help in completing sales through direct traffic, PPC, Display etc.

So you must report the role of organic search campaigns in the overall conversions that occurred on the website.

I have talked more about these calculations in the article: How to Analyze and Report the True Value of SEO

Remember:

“ SEO not only helps in completing a conversion but also help in initiating and assisting the conversions which are completed by other marketing channels (like PPC, Email, Display, Direct, Referral etc). “

Remember the real magic is in what you report. If you have got it, flaunt it.

It is critical that you show the value of your SEO efforts. Never blindly assume that the client already knows about your great work.

I can even go ahead and prove to a business that if you do cost cutting on SEO, how it will impact your PPC, Display, social media and email campaigns. I expect the same from you.

Best time to report the SEO ROI

I am often asked the question, when is the best time to report ROI?

The best time to report ROI of your SEO campaign is when you start getting positive ROI. Do not report negative ROI.

It is common for SEO campaigns to show negative ROI for the first few months and this is something you can educate your client in advance.

Once you start getting positive ROI, no matter how small, just report it. Even a 10% positive ROI is worth reporting.

Another article you will find useful: How to analyze, interpret and report data trends in Google Analytics

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Himanshu Sharma

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