What is the Return on Investment (ROI) of SEO?
Return on investment (ROI) in search engine optimization is a performance metric. It is a method of determining how efficient and effective your SEO efforts are. ROI quantifies the value that your strategic efforts are bringing in in terms of conversions, traffic, and subsequent revenue growth. It is useful to know what your ROI is in order to be able to compare how effective your strategies are in meeting your goals.
The organic traffic that SEO brings in is particularly important for SaaS businesses as it tends to convert much better than other forms of traffic. This makes it a crucial component of lead generation (and consequently revenue generation) strategies. SEO is a longer-term investment, it provides consistent growth over time.
However, detractors tend to base their misgivings on the misconception that SEO is slow to yield results and requires significant investment. This is simply not true. Since 2022, advancements in SEO strategies and tools have enabled businesses, including those launching new websites, to rank faster and see results sooner.
With a systematic approach and the right tools, you can easily forecast your revenue and Return On Investment from SEO. Let’s take a look at how to do this.
Monitoring and Evaluating SEO Performance
Tracking your SEO performance involves regularly tracking and analyzing key metrics to assess the effectiveness of your SEO strategy. It helps you stay up-to-date with changes in search engine algorithms and best practices, meaning you can tweak your strategy to ensure it remains effective over time. Overall, you should evaluate your SEO performance to achieve long-term success and stay competitive in the market.
SaaS SEO forecasting metrics
By monitoring SEO forecast metrics, businesses can identify areas for improvement and adjust their strategy accordingly to maximize their ROI.
These metrics are divided into three primary categories: Traffic and Conversions Metrics, Costs Metrics, and Product and Revenue Metrics.
Traffic and Conversions Metrics:
|SEO Metric ||Definition |
|Impressions ||The number of times a user sees a link to your site in a SERP (search engine ranking/results page). |
|CTR (Click-Through Rate) ||The percentage of impressions that resulted in a click. |
|Clicks ||The number of times a user clicked on a link to your site from search results. |
|CR Clicks to Lead ||The conversion rate of clicks to leads, indicating how many clicks result in potential customers. |
|Leads (Demo or Free Accounts) ||The number of potential customers who showed interest by signing up for a demo or creating a free account. |
|Conversion to Sale or Paid Account (Closing Rate) ||The percentage of leads that convert into paying customers. |
|Estimated Closed Deals ||The anticipated number of successful sales or sign-ups for paid accounts. |
|SEO Metric ||Definition |
|Agency Fees or Staff Costs ||The expense of engaging an SEO firm or of retaining an in-house SEO staff. |
|Content Budget ||Allocation for creating SEO-optimized content. |
|Link Building Budget ||The budget for activities associated with obtaining backlinks from other websites. |
|Other Expenses ||Any additional costs associated with your SEO efforts. |
Product and Revenue Metrics:
|SEO Metric ||Definition |
|MRR (Monthly Recurring Revenue) ||The predictable revenue that a company can expect to receive every month. |
|ARR (Annual Recurring Revenue) ||The value of the contracted recurring revenue components of your term subscriptions normalized to a one-year period. |
|Subscription Length ||The average period that a customer stays signed up to your SaaS service. |
|LTV (Lifetime Value) ||The total net profit that a company makes from any given customer. |
|CAC (Customer Acquisition Cost) ||The cost of convincing a potential customer to buy a product or service. |
|LTV to CAC Ratio ||A measure of the return on your investment in customer acquisition. |
How to Measure SEO ROI
Return on Investment (ROI) is the amount of money you make from an investment, less the cost of that investment, divided by the cost of the investment itself. It is your profits divided by your investment.
In practice, figuring out the ROI for your investment in SEO becomes a much more intricate process that starts with data collection and making certain crucial assumptions. In essence, you still calculate SEO ROI by comparing the amount of money you spend on SEO activities to what you make from the resultant increased traffic and subsequent revenue.
Here’s how you would calculate your revenue:
Step 1: Estimate the Traffic From Ranking Keywords
Your approach to this step will vary based on whether you are working with a new or existing website.
For New Websites:
With a new website, you will typically have limited internal keyword impressions statistics. Here, keyword research (KWR) tools like Ahrefs and SEMRush come in handy. Use these tools to estimate the number of impressions for your chosen keywords. For a more detailed recipe for building a solid SEO sales forecast, see our B2B SEO forecasting guide.
For Existing Websites:
Use keyword research tools in conjunction with your own data from Google Search Console (GSC) and Google Analytics. To work out your monthly assumptions, take a look at the impressions and clicks for your targeted keywords over the preceding six months.
Step 2: Estimate Conversions From the Keywords Traffic
Getting an exact figure for the revenue you generate isn’t always an exact science because actual revenue may vary based on the conversion rate and the value of each customer.
The normal conversion rate of SEO traffic from a visit to a lead is between 1 and 5%. However, if you provide a free trial or a free plan, this might increase to even around 10%. So you should calculate or estimate additional conversion stages, such as the Conversion to Sale or Paid Account (Closing rate), based on your product model.
Step 3: Calculate Your Revenue From the Conversions
Here, you will have to consider costs like your agency fee as well as any additional expenditures related to SEO work, such as budgets for link building, copywriting, and guest posts, as well as SEO tool subscriptions (if applicable).
Forecasting SaaS SEO Traffic
Once you have your metrics in place, you can extrapolate your monthly calculations for a 12-month period and set reasonable monthly growth targets. Keep track of your SEO performance with these figures.
SEO Forecasting Using Keyword Tools
Google’s Keyword Planner and third-party tools such as Ahrefs, SEMrush, and Moz help you identify high-value keywords, estimate search volumes and clicks, and project potential traffic and revenue based on historical data.
- Start by identifying relevant keywords to target in your SEO campaigns.
- Use the keyword research tools to estimate search volume for those keywords.
- Analyze difficulty scores and other SEO metrics to identify keyword opportunities.
- Track how your ranking changes over time to evaluate and adjust your SEO efforts.
NOTE: SEO forecasting with keyword tools is great for shorter-term projects or campaigns, where you want to estimate potential traffic and revenue generated by specific keywords or campaigns.
Forecasting SEO Using Historical Data and Past Trends
Tools such as Google Trends and SEMrush’s Keyword Trend tool help to identify patterns and changes in search volume over time – information you can use to predict potential traffic and revenue based on past performance.
- Identify what metrics to track, for example, website traffic, search volume, and rankings.
- Collect historical data for the selected metrics.
- Analyze patterns and changes in the data over time to identify trends. You can use visualizations like line graphs, bar charts or histograms to help you identify these trends.
- Use these patterns to make predictions about potential traffic or revenue and keyword research tools to identify high-value keywords to target
- Estimate search volumes for the keywords you identify and track ranking changes to evaluate how well your SEO efforts are working.
NOTE: Use this method in longer-term projects or ongoing SEO campaigns to track the performance of your website over time and make changes to improve performance. You can also analyze competitor data and industry trends to identify potential opportunities and risks.
SEO Forecasting by Studying Trends
To perform SEO forecasting by studying current trends, follow the same steps outlined in the previous section. Except this time, you will be analyzing the data for patterns and changes like a sudden spike in traffic or an increase in search volume for certain keywords.
Identify the factors that may be influencing the data trends. For instance, changes in consumer behavior or algorithm updates, and use the insights you discover to make predictions about potential traffic or revenue.
SEO forecasting by studying current trends is best suited for short-term projects or ongoing SEO campaigns, where you want to quickly adapt your strategy to capitalize on current trends or make changes to your website to improve its performance and help you stay ahead of the competition, identify opportunities, and take advantage of them as they arise.
Using Commercial Intent Clicks for SEO Forecasting
Commercial intent links – URLs that lead to pages that are intended to generate revenue or sales for a business – can be used to estimate the potential revenue generated by specific SEO campaigns or channels.
These links usually have keywords such as “buy,” “purchase,” or “subscribe.” You can analyze the click-through rate of ads targeting such high-intent keywords, and estimate potential traffic and revenue from these links.
This approach will help you make informed decisions about how to allocate resources to your SEO efforts and identify trends in search volumes and competition levels for high-intent keywords so that you can adjust your strategy as needed to stay ahead of the competition.
Use this when you have ongoing SEO campaigns where you are looking to improve the performance of your website over time.
Forecasting the ROI of SaaS SEO
Forecasting the ROI of SaaS SEO involves predicting the revenue generated by specific SEO campaigns or channels based on historical data.
You first identify relevant data sets to track, collect historical data, analyze patterns and changes, and make predictions about revenue related to traffic volumes for keywords you are targeting.
You then estimate search volumes for those keywords, set goals for traffic or revenue, and calculate your estimated return on investment (ROI) by comparing the potential revenue from increased traffic or conversions to the cost of the SEO campaign.
ROI for SEO Example
Let’s imagine you do some research and using SEO Sales Forecasting techniques, you identify potential for revenue generation.
You decide to spend $20,000 on activities like keyword research, optimizing your website structure, internal links, and other on-page elements, acquiring backlinks, creating high-quality content, and so on.
You then observe the increase in traffic as a result of your investment and the revenue you get. Organic traffic can generate revenue in many different ways. It might be from customers who search for your product or service and then purchase, ad revenue from your website, generated leads nurtured into paying customers over time, and more.
Let’s imagine you generate $30,000 in revenue. Your ROI, in this case, would be ($30,000 – $20,000) / $20,000 = 0.5 or 50%. This means that for every dollar you invested, you earned an additional 50 cents in return.
Use this information to prioritize SEO efforts and allocate resources to the most effective tactics.
Keyword forecasting refers to the process of predicting how certain keywords will perform in the future. It helps us when choosing the most effective keywords to target, ensuring that the content aligns with what users are searching for. This process doesn’t get the attention it deserves, but if done correctly, it can help companies to tailor their strategies to match evolving search patterns, ultimately boosting their online presence and competitiveness.
How to do keyword forecasting
Step 1: Comprehensive Keyword Research:
First, we identify a wide range of relevant keywords related to your website’s content, products, or services. This research involves analyzing search volume, keyword difficulty, and user intent.
Step 2: Historical Data Analysis
Next, we analyze historical keyword performance data in order to understand past trends and seasonal fluctuations. This historical analysis serves as a foundation for building predictive models that take past keyword behavior into account.
Step 3: Market and Industry Trends
A successful keyword forecasting strategy considers broader market and industry trends. Recognizing factors like seasonal changes, upcoming events, and shifts in consumer preferences, helps us to anticipate keyword demand better.
Step 4: Building Predictive Models
To forecast keyword performance accurately, we use advanced statistical methods and SEO forecasting templates. These compute data from our activities and keyword data to predict keyword trends more precisely.
Step 5: Competitor Analysis
Don’t underestimate the importance of understanding the competitive landscape for chosen keywords for keyword forecasting. After all the research is done, this is what helps in finally deciding which keywords are viable targets for ranking.