How SEO generates a profit

Acquire a share of the organic search market

The search engine results pages are still dominated by organic search (Google SERPs). Organic listings account for more than 77 percent of all desktop clicks, according to Advanced Web Ranking data.

The return on investment for SEO is similar to the return on investment for real estate. Allow me to explain...

Purchasing a home is a time-consuming process. And the value of a house does not grow the next day, week, or month after you buy it. However, it could be one of the best investments you make in the long run. Even if you include in maintenance and upkeep expenditures, you'll almost certainly see a profit.

Paid media, on the other hand, is similar to renting an apartment. You should be able to move in soon if you need a place to reside right away. Your monthly contribution, on the other hand, will never yield a positive return beyond the month in which it was made. The longer you rent, the more money you pay without seeing a return on your investment. Does that make sense?

Points to Remember

  • SEO ROI ranges from 5 to 12.2 times.
  • Search engine optimization improves your brand's reputation and equity.
  • SEO traffic is five times that of PPC and ten times that of social media.

So, why do the majority of marketing methods favour PPC over SEO?

It's because marketers aren't sure how to compare SEO's ROI to that of other marketing platforms. As a result, it frequently receives a lower portion of the marketing budget. Make sure you don't make the same mistake. All other digital marketing channels have the potential to outperform your SEO expenditure.

Of course, the worth of SEO is determined by a number of things. However, Stridec clients get an average ROI on SEO that looks like this:

Indeed, Google claims that organic search has a 5.3x ROI compared to merely 2x for paid search. Stridec generates a 12.2x return on investment and reduces customer acquisition costs by 87.41%.

We'll then look at how SEO generates a return on investment. If you want to skip ahead, go to one of the following sections:

  • Methods for calculating SEO's return on investment
  • How long do you think it will take for you to notice results?

How SEO generates a profit

Users who clicked on organic results account for around half of all web traffic. So, straight away, the high-ranking websites are swimming in a beautiful pool dubbed "half the market share of the entire internet."

This organic traffic is around 5X that of paid search and 10X that of social media. As a result, any website that performs well organically will provide a higher marketing ROI than one that relies on sponsored search or social media.

Acquire a share of the organic search market

The search engine results pages are still dominated by organic search (Google SERPs). Organic listings account for more than 77 percent of all desktop clicks, according to Advanced Web Ranking data.

This is where you may begin to develop more useful projections. Assume your website is ranked #20 (page two) for a valuable search query on desktop. According to AWR, you're looking at a 1.03 percent SERP click share. With each step up in the rankings, you gain a little more market share. You've boosted your click share by 313 percent by the time you get to #5 on page one. Once you've cracked the top three, the rise jumps to 852 percent.

Acquire a large portion of the market

Don't peer through a keyhole at the ROI of your SEO operations. Too often, marketers overlook the influence of search engine optimization (SEO) on overall market share (not just click share in the SERPs).

CEOs are increasingly discussing their SEO strategy on quarterly earnings calls, as they have a better grasp of how organic search affects the broader business. When speaking with investors, Cars.com, for example, frequently attributes increased lead generation and financial results to its SEO marketing efforts.

Through our SEO services, Stridec assisted a disruptive home goods firm in achieving a 340,000+ monthly increase in organic traffic. As a result, the brand went from having no market share to having 3% in a $29 billion industry.

Rankings aren't the only factor in determining SEO ROI. It's all about pushing the needle for a company's overall market share and SERP click share.

Increase the number of visitors to your website.

When you just use the SERP share metrics, you can figure out how much more website traffic you'll get by raising your ranks for existing keywords.

The untapped traffic that your brand does not yet receive is an equally crucial payoff. The return on investment in SEO isn't solely based on improving what's already on page two or three. It also hinges on seizing the chances you're now overlooking.

  • Is your target audience searching for anything specific, yet your present pages aren't answering their questions?
  • Are you overlooking high-volume, high-opportunity keywords and topics?
  • Are you missing critical stages in the buying funnel (ToFu, Mofu, and Bofu) in your SEO strategy?
  • Could you increase the long-term, incremental traffic to your website by targeting a few more long-tail keywords with each piece of content you create?

Increased website traffic is one of the simplest ways to show your C-suite that SEO is paying off. As an example, the following are all true organic traffic increases that our clients have recently achieved:

Bounce rates have decreased.

You don't want just any traffic, of course. You're looking for qualified visitors from your target market. You can end up with a high bounce rate if you generate content for the wrong audience.

If you've found that pattern on your site, I recommend taking action right away to lower your bounce rate. Here's the deal: From that article, here are a few pointers:

  • Select the questions that your target audience searches for in a strategic manner.
  • For each query, match their search intent.
  • Make the most useful information for these questions.
  • Beyond the content, provide the finest user experience possible.

Capture traffic from the people who are most likely to benefit from your content and with whom it will resonate the most. As their curiosity grows, they'll visit additional pages on your site and continue on their way to becoming a customer.

When it happens, you don't have a visitor anymore. You've got a potential customer on your hands. That is only one of the numerous advantages of content marketing.

Conversion rates have improved.

You may target new clients at each stage of the purchase funnel with SEO-first content marketing. You can create exceptional experiences that improve engagement by aligning content with search intent. As a result, you'll see an increase in conversions and your pipeline will grow.

Consider the timing of a TV, magazine, or display ad that is out of rhythm. Can you see how SEO helps you get more conversions?

Do you want to increase your ecommerce conversions even more?

When you combine SEO with a great user experience (UX), you get a powerful one-two punch that boosts your conversions even more. According to Forrester Research, improving the UX of web pages raises conversion rates by 200 percent.

Conversions do not have to be limited to transactions. You can establish various conversion goals that reinforce brand loyalty, focus on nurturing, or send high-quality leads to your sales team, depending on the length of your conversion funnel and how your customers convert. Here are several examples:

  • Subscribing to a newsletter
  • Obtaining an ebook
  • Requesting a quote by filling out a form
  • Purchasing a ticket to an event or registering for a webinar
  • I'm looking for more information.
  • Obtaining a coupon
  • Filling out a contact form
  • Viewing a video
  • User-generated content (UGC) contribution
  • Making a reservation
  • Making a donation, etc.

Increased income

As a result, there is an increase in revenue. This is true whether your consumer converts immediately after clicking the checkout button or takes more time to get to know your business, speak with your salespeople, and then converts later.

The more traffic you bring in through SEO, the more money you're likely to make. Not all traffic, however, is created equal. Although some terms have a higher search traffic, they have lower buying intent. Other terms may have a lower search traffic but a higher intent to buy.

You'll need to do well on keywords with a higher purchase intent to get SEO ROI in the short run.

However, you'll be able to calculate a ROI on your SEO programme in the long run if you include traffic from those keywords at the top of the sales funnel, priming your firm for future sales. With this in mind, it's critical to include not only money in your ROI calculations, but also lead quality scores from traffic further down the funnel.

Customer acquisition costs are lower (CAC)

You can typically get new quality visitors and consumers at a fraction of the cost of paid search by using SEO. In fact, Stridec's clients often see a 30 percent increase in acquisitions when compared to paid search. Improved margins and revenue are the results of better SEO ROI.

Surprisingly, CMOs spend millions of dollars on paid search since the link between investment and return is obvious. However, the cost of acquisition can be extremely significant. Profit margins are reduced as a result, and budgets are depleted.

Unfortunately, if you stop paying, you will no longer be able to play. A PPC campaign yields no long-term benefits. If you don't feed the beast on a regular basis, your traffic and client acquisitions will drop to zero.

SEO, on the other hand, is like a flywheel that keeps spinning.

Worse, due to the high costs of the Google Adwords model for certain keywords, many ecommerce firms overlook top-of-the-funnel acquisition. That implies they aren't available when customers are looking for alternatives.

That isn't to say that you should always select SEO over paid search. However, you need reconsider your approach to acquisition costs. A typical CAC is linear and firmly time-bound. When you consider the substantially longer timeline for returns and the new prospects brought into the awareness funnel by SEO, the actual CAC for SEO campaigns drops even further.

Customer lifetime value is higher (CLV)

Customers recruited through SEO are more loyal, according to a study commissioned by Forrester Consulting, resulting in a higher customer lifetime value (CLV). User experience, engagement, alignment, and creating long-term value are all important aspects of SEO. Organic conversions may take longer, but businesses must strike a balance between speed and loyalty.

Brand equity and reputation have improved.

There are numerous branding advantages to taking a comprehensive strategy to SEO. SEO aids you in the following ways:

  • Locate the appropriate individuals.
  • Complement their search purpose.
  • Create relevant pages and content that is truly valuable.
  • Respond to their inquiries.
  • Create a reputable brand
  • Establish authority and competence in a topic or sector.
  • Boost your brand's visibility in the search engine results pages (SERPs).
  • Consolidate outcomes for your branded phrases.
  • Create a content strategy that supports link building by getting people to talk about your brand and share your material.
  • In general, be a brand that others want to link to.
  • Direct visitors to the most important actions.
  • Ensure that your satisfied consumers write positive feedback.

All of this adds up to a stronger brand image.

Enterprise organisations may rebuild their search profiles through online reputation management to highlight positive brand perception. Furthermore, brands can immunise themselves against future dangers and recover from crises faster. When SEO and public relations are combined, the exposure of PR placements is increased even more, resulting in a higher return on investment.

It's big business to maintain a positive online reputation. According to a research conducted by the World Economic Forum, a company's reputation accounts for about 25% of its market worth.

Negative brand search results can also turn off potential customers and damage existing connections. As a result, your company could lose millions of dollars in income and be forced to shut down.

A national furniture shop, for example, was a client for whom we provided reputation management services. For brand terms, Stridec changed Google page one to 100% favourable results. This resulted in a 456 percent boost in click-through-rates (CTR) for positive articles for branded "review" queries. The client was able to recoup $32.7 million in monthly income as a result.

How to Calculate SEO Return on Investment

How do you calculate SEO's return on investment? You may, for example, apply the following simple SEO ROI formula:

Let's put some numbers into the formula. Assume you spend $100,000 per month on SEO and earn $500,000 from organic visitors.

($500,000 – $100,000) / $100,000 = $400,000.

Your return on investment would be 4X, or 400 percent, according to the preceding formula for SEO ROI. However, there is a major flaw in that formula. It is presumptively assumed that every dollar you spend will be returned to you in the same amount of time.

If you're familiar with SEO, you're probably aware that changing rankings and traffic takes time. As a result, the money you put in now may not start paying off for several months, or perhaps a year, if your website requires a lot of technical SEO work or link building.

To address this issue, I'll go over a few different approaches for calculating SEO ROI in the next section.

Decide what forms of ROI you'll track.

Although revenue may be your primary goal, SEO has a much broader significance. Connect incremental indications to a KPI to more effectively convey ROI throughout the organisation. Consider the following scenario:

  • Rankings: Measure positioning improvements for existing search phrases as well as new SEO keywords.
  • Measure the percentage of good, neutral, and negative listings in the top 10, 20, or 100 search results to determine brand sentiment.
  • Increased SERP voice share: To determine anticipated traffic totals, define a competitive set and measure ranks multiplied by the CTR of each position.
  • Acquisition costs are lower: Calculate the cost of your SEO programme based on your overall organic traffic stats.
  • Track the increase in Domain Authority or Domain Rating as the number of backlinks grows.
  • The evolution of the funnel is as follows: Track keyword performance by stage (Awareness, Consideration, Decision) to gain a high-level understanding of movement. On a micro level, behaviour analysis techniques can be used to track onsite funnels.
  • Rates of conversion: In Google Analytics, give soft conversions a monetary goal value. This will assist you in comparing the cost of SEO to the cost of other channels in your attribution model.
  • Revenue: Using ecommerce tracking, determine actual revenue and calculate the CAC. Give each conversion a monetary value, or use the average order value. Then increase the number of organic traffic conversions by the value of each conversion.

Metrics for SEO: tracking and reporting

Because there are so many SEO variables to track, keeping track of them can be difficult. Fortunately, dashboard-based reporting solutions like as Google Data Studio, Klipfolio, Grow, and DashThis can help you stay organised.

To track SEO ROI for organic search traffic, use the following key performance indicators (KPIs) and metrics:

  • Keyword rankings in order of importance
  • The total volume of traffic
  • As a percentage of overall traffic, organic traffic
  • Desktop traffic vs. tablet traffic vs. mobile traffic
  • Different regions' traffic
  • Visitors who are new vs. those who are returning
  • How many people noticed you in the SERPs, according to Search Console impressions?
  • Total traffic across all platforms
  • Keywords connected to a given topic or initiative drive traffic.
  • Bounce rate by page and source of traffic
  • The number of conversions and the conversion rate
  • Conversions from downloadables and subscriptions that aren't too hard
  • Both organic and assisted revenue

Reviewing your month-over-month analytics is critical so you can see what's working (and what isn't) and alter your SEO strategy as needed. The year-over-year success of your SEO efforts is equally as vital to track for determining the genuine, long-term ROI of your work. Keep track of this on a monthly basis as well.

How long does it take to get a return on investment from SEO?

It's a question worth a million dollars.

Within six months, with the appropriate strategy, you should see an increase in organic rankings and traffic. However, you'll notice movement far sooner than that — often as soon as a week or two after implementation.

It may not instantly equate to traffic or income, but if you start ranking at #58 for a high-priority phrase and move up to #30 a few weeks later, that's a sign that Google is gradually learning about the page's quality and usefulness in comparison to its SERP competitors.

Of course, not every visitor converts. However, a sufficient number of consumers will emerge over time. With seasonal enterprises, you should be able to witness traffic and revenue increases from quarter to quarter or year to year.

Examine traffic and revenue gains over two or three years to get a more accurate picture of your SEO ROI. With a longer timeline, you'll be able to see how your improving SEO performance is lifting all boats, resulting in higher ranks, traffic, and revenue overall.

And that is the most accurate computation of them all!