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4 Steps to Determine ROI for Search Engine Optimization

Is using an SEO company really worth the money?  Well, there is a great way to decide this age old question.  It is called doing an ROI (return on investment) analysis of your SEO investment or potential investment.

The parts to this equation are quite simple:

  1. Search volume for the Keyword in question
  2. The Click-through Rate (CTR) from the SERPs
  3. Your Site conversion rate
  4. Average customer value or average order value

If you know these values, you can determine if your SEO Online Marketing efforts are making you money or loosing you money.

Search Volume
Use a tool like Google’s Keyword Tool or Wordtracker to pull in the volume of the keyword.

An AOL study cited average click-through rates for the first page as follows:
Page 1 Position 1 – 42% CTR
Page 1 Position 2 – 12% CTR
Page 1 Position 3 – 8.5% CTR
Page 1 Position 4 – 6% CTR
Page 1 Position 5 – 5% CTR
Page 1 Position 6 – 4% CTR
Page 1 Position 7 – 3.5% CTR
Page 1 Position 8 – 3% CTR
Page 1 Position 9 – 3% CTR
Page 1 Position 10 – 3% CTR

Your Site Conversion Rate
Simply put, the ratio of visitors to visitor that produce a goal (purchased, clicked something, signed up for newsletter, etc.) expressed as a percentage.

Average customer value or average order value
This is your average order price.  Total order value divided by total number of orders.

The Caluated ROI

Let’s say we have a keyword with the search volume of 100,000. Let’s say we are currently in the 7th position, which get 3.5% of the traffic.  Our website converts these visitors at 3%, and an average order value of $40. The equation is below:

100,000 x .035 x .03 x $40 = $4,200/mo

If you could change your position to the 3rd on page 1?  You could increase your gross revenue by more than a factor two ($10,200.00/month).  That type of potential is so high you can not ignore it.  Let SocialOXY help you design a SEO marketing plan that fits your budget and we will monitor the ROI as part of our services.

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