Marketing Charts - The ROI from SEO

This little Marketing Chart is about money.  It shows how SEO increases the revenue flowing into a company.  The light blue shows visits from organic search.  What happened four months ago?  The mystery of the vanishing organic visitors is revealed here.

This chart has a story you can tell.  Every CEO will immediately get it.  With Google Analytics you can make a chart like this and use it to make a case for SEO.

Calculating the ROI of SEO
There are three types of data you can use:

1. Rankings
2. Count of Visitors
3. Revenue

1. Rankings: Why People Trash Talk this Metric

It's absolutely fun to follow your rankings.  There, I said it.  ;)

Yet rankings don't tell the whole story.  Some SEO firms suggest a list of search phrases you should rank for and you see great progress.

• The problem is, these may be obscure, long tail keywords.  Even if you rank #1 you'll receive few visitors because few people ever search for these phrases.  Rankings don't tell the whole story.
• Other times you receive lots of visitors when you rank well, yet the people using these search phrases are mainly looking for free information - so you won't get many new customers.

Still, as long as you know that rankings are not the be all and end all of SEO it's fine to track rankings.

If fact, you should track rankings on a weekly basis because this can be a great diagnostic tool.  Vanessa Fox, author of Marketing in the Age of Google, once noted:  The day the number of visitors to your web site falls by 50% is the day you'll be glad you have this historical ranking data.  You can see whether the drop in traffic is due to a drop in rankings, and if so whether the drop is across the board or only for certain keywords.  When traffic falls dramatically your revenue will fall dramatically, you may be on the hot seat to diagnose the problem and come up with a plan to address it.  That's the day you'll be glad you've been tracking rankings for a large number of keywords on a weekly basis.

Just don't make rankings your official Key Performance Indicator (KPI) for measuring SEO' success.

2. Visitors: This KPI is Better

As you know, the page that shows up in the #1 spot in Google's search results gets clicked on more than anything else on the search results page.  One estimate says the #3 result gets about 8% of the clicks, the #2 result gets about 12% of the clicks, and the #1 result gets about 40% of the clicks.

Although there's a tendency to fall in love with your web site, it's really a numbers game.  Perhaps 1% of visitors become customers.  Tracking Visitors is great.  Double the number of visitors and you'll likely see an increase in paying customers.

To use Visitors as a KPI, people use web analytics to track non-brand organic traffic.

Menu Item in Google Analytics for Displaying
Visitors Who Came from the Regular, Organic Search Results

It's likely that you rank #1 when people search for your brand name.  There's no possible improvement, so you don't want those organic visitors in your report.  To eliminate them, create an "Advanced" Segment.  There's nothing advanced about Advanced Segments as far as setting them up goes.  It's easy.

Advanced Segment Apple Might Use for an SEO KPI

Above, Apple could use Google Analytics to create an Advanced Segment for looking at traffic from organic search.  They exclude traffic where the search term contains "Apple."  They would do this if they already rank #1 for searches like "apple," "apple ipod," "apple computer," etc.

If Apple sets up an Advanced Segment like this and uses it when viewing organic search traffic, they only see organic visits that come from searches such as "music player," "download music," "best computer," etc.

The best way to track non-brand organic visits is to set up year to year comparisons.  You want to be able to say, "Last month we had 20% more non-brand organic visitors than the same month one year ago."  Your Google Analytics chart looks like this:

Year Over Year Comparison of Traffic, by Month

Above, the blue line is the most recent twelve months.  The number of visits to the web site from non-brand organic search is increasing nicely.  The orange line is the previous twelve months and it's easy to see that this web site has been getting lots more visitors compared to last year.  This is a chart you can give to your CEO every month.

3. Revenue: The Best KPI for Measuring SEO Progress

You are not the company accountant.  You will not be able to balance the web analytics checkbook to the penny.  There are simply too many variables.

For example, a hot shot AdWords optimization expert may be able to double the number of people who click on your AdWords ads while keeping your monthly AdWords spend constant.  Later some of these people may find you in the organic results, click, visit and become a customer.  Google Analytics keeps over writing the attribution cookie, so credit goes to organic - but should this be so?

Given the vagaries inherent in complex systems, you'll have to settle for approximations.

Actually you can do a little better than that....

How to Calculate the ROI from SEO

1.  Use AdWords numbers to obtain estimates for organic cost and revenue

• Cost Per Visitor.  If you spend $1,000 using Google AdWords and get 1,000 clicks, then each visitor costs you $1.  You can estimate that using SEO to boost organic visitors by 1,000 per month is a bargain by comparison if it costs only $500.
• Revenue Per Visitor.  If your web site had 20,000 visitors last month and your total revenue was $20,000 then you might estimate that every visitor is worth $1.00 in revenue.  You can estimate that using SEO to boost organic visitors by 1,000 per month is a bargain by comparison if it costs only $500.

It's good to get business people involved in creating these metrics.  If they have participated in creating an estimate of the cost and value for each web site visitor, they will get it when you tell them the number of visitors from Google organic is up 20%.  They will see that 20% as money in the bank.

• You say, "It would have cost us $10,000 to get these additional visitors from AdWords.  Instead we got them for a $5,000 investment in SEO."
• You say, "Each web site visitor results in an average of $2.00 in revenue.  We invested $5,000 in SEO and the resulting increase in web site visitors is worth $10,000 to us in additional revenue.

2.  Use Click Through Rates to Estimate ROI
When people see AdWords ads on Google search pages, the click through rate may be 2% or 5%.  That's normal.  It's enough for Google to make billions, it's low, low, low compared to how often people click on the regular search results.  Some estimates say ranking 1, 2 and 3 gives you click through rates of about 40%, 12% and 8%, respectively.  Ranking high in the organic search results is huge.

Use this data to make a case for SEO, to show the potential new visitors you can get by using SEO to boost rankings.


3.  Make a Chart Comparing the Number of Visitors from Paid and Organic Search
Using a web analytics app like Google Analytics, compare the number of visitors you get each month from AdWords with the number non-brand organic visitors.  People focus on AdWords because the bill arrives every month.  Use this comparison to bring the value of organic traffic into focus.


4.  No AdWords?  No Problem
Just count total visitors per month, get a number for total revenue per month, and divide.

With this simple estimate of revenue per visitor, you are ready to do a quick, mini SEO project, get some new visitors and make a report that addresses a vital concern:  Show Me the Money!

Since links to your web site are the single most important factor in causing your site to rank high in the search results, one approach is to find a highly respected agency that specializes in link building and pay them $10,000 for a month's work.  I have no connection to this agency, but I know they do great work and have the highest integrity - consider talking to Will Reynolds at Seer Interactive.

Or try a quick SEO project.  Whatever you do, follow up with a report that speaks to management:  "I spent 40 hours on this, it resulted in 200 new visitors a month, and that's worth this much new revenue each and every month."


5.  For Managers, Account for the Different Cost Structure

• AdWords:  You may pay $10,000 to get 10,000 visitors - every month.  The day you stop paying is the day those visitors stop arriving.
• SEO:  You may pay $10,000 for a month's worth of link building and see only 500 new visitors a month.  Yet that's 6,000 additional visitors a year.  An investment in SEO is a gift that keeps on giving.

6.  Improve the ROI on SEO by Fixing All Those Goof Ball Web Pages

Do your organic visitors convert as well as AdWords visitors?

Probably you optimize your AdWords landing pages like crazy to get conversions.  They focus on getting the visitor to do something and you track conversion rates.

Often most of your web pages offer no action a visitor can take.

If your AdWords landing pages are money making machines, while your regular web site pages are sort of like an online brochure, no wonder the organic visitors don't convert so well.

Use Google Analytics to make charts showing Conversion Rates for Paid vs. Organic.  Then use those fancy AdWords landing page techniques that already work so well for you on your regular web site pages.  If your home page offers nothing a person can do, with a conversion you can track as a Goal in Google Analytics, you are super duper nutsy!  ;)  At the very least, put a little box at the top right of the home page, offering some sort of conversion action that you can track in Google Analytics.

Now see what happens to your chart that compares Conversion Rates for Paid vs. Organic.

7.  If You Pay Through the Nose for a Search Phrase in AdWords that Converts Well, It's Worth It to Rank Organically for that Phrase Too

You already like some search phrases - that's why you pay to have an AdWords ad appear for them.  If you don't rank organically for these phrases and your competitors do, they are getting a boat load more visitors than you.

Just make a chart showing search phrases that already work well in AdWords.  Compare paid and organic traffic and conversions for these search phrases.

This is a fact based way to pick out an initial list of search phrases to investigate for SEO.  Since they already work well in AdWords, your SEO project for them is front loaded for success.


#8 - Make a Chart for Search Phrases that Currently Rank in Positions 4 - 6

As you move up to positions 1 - 3, you'll experience a dramatic increase in clicks and visitors.  You must already have strength if you rank 4 - 6, so build on that to rank higher and get more visitors.


An SEO Story

Here's a chart and a story that dramatically illustrates the benefits of SEO.

It all began one foggy day in London....

We were focusing on a super search phrase, one with great conversion rates.  In AdWords we were bidding high, pushing our ad text up, so it always appeared at the top of Google's search results.

Red:  Visitors from AdWords.
Light Blue:  Organic Visitors.

What happened four months ago?

Flashback:  We bid on a phrase in AdWords, resulting in visitors in red.  Yet we had zero organic visitors because we lacked a page related to that search phrase.  Simply adding a new page and promoting it to get some links brought in all those visitors shows in light blue above.

The Chart:  We paid for the red every month.  The light blue shows the benefit of adding the new page.

Work Produces Results

You've got to love the light blue.  It represents lots of visitors that we were not paying a dime for.  Month after month we pay for the red.  With the new page, month after month we get five times as many visitors at no further cost.

Pop Quiz:
If visitors from AdWords cost a certain amount, how much did it cost to get five times that many visitors from the organic results?

Pop Answer:
It took about two days to make the new page and over the next few months it took time to promote the page to get the links.  After that the page ranked #4.  We were getting five times the number of visitors produced by AdWords at no further cost, and some of these visitors became customers.  Properly explained, this chart speaks to CEOs.

Oh oh....

Then something bad happened.

The marketing team that produced the new page left.  Then company decided to redesign their site.

The redesigned site looked better, but the new page was dropped.  It never did fit with the site owner's "concept" for the site, and without the marketing and analytics people to defend it, the page was given the boot.

When the new page was deleted it stopped appearing in the organic search results.  People still search with that phrase - now they end up at a competitor's site.

Instead of relying on the site owner's opinions of how the site "should" be, the company should have consulted analytics to determine how many visitors and customers the page was bringing in.

The Facts:  You can rank your AdWords ad in the #1 position but you will not get anywhere near the amount of website visitors from AdWords that you'd get from a well ranked organic listing, and you'll keep paying Google for those AdWords visitors every month.  It's great to rank well organically.

Just don't delete the page.  ; )

   Resources For You   

The single best technical book on SEO is by Danny Dover: Search Engine Optimization (SEO) Secrets.

If you are new to SEO and want a book that's top notch, go for Outsmarting Google: SEO Secrets to Winning New Business (Que Biz-Tech).  Everyone can understand this book but doesn't mean it lacks sophistication.  It's first rate.

A present for your Analytics Ninja - this coffee mug!