How To Predict Your ROI From SEO

SEO, and online marketing in general for that matter, can seem like a daunting endeavour to business owners and marketing execs who are just breaking out onto the web world. After all, you can quite easily sink a large budget into your online activity without being able to accurately predict the return on your investment in terms of traffic and subsequently possible sales. But the same could be said for more ‘traditional’ forms of marketing – billboards, flyers, radio adverts for example. If anything, it’s easier to foresee your ROI  with online marketing, as the statistics are all available if you know where and how to look for them.

Here’s how you can judge the value of SEO and get a grasp of how your online marketing strategy may play out:

1 – Estimate Web Traffic

It all starts with generating traffic. Without traffic, you won’t generate revenue from online search. It’s important to know the size of the marketplace and subsequently how much of that market you will realistically be able to attract to your site.

You can start by targeting one of your products or services to analyse, preferably your most popular. Take that product or service, and create a least of 10-15 keyword phrases that a potential customer may use when searching for that product/service. Easy peasy. Once you have your list, take it into Google’s Keyword Planner, which will give you monthly search volumes based on geographic location. This is a great place to start and will give you a general idea of the online market for your particular products and services.

Using this (estimated) figure, we can also get a rough idea of how much traffic you could potentially get based on your position in the Google search engine results page (SERP). The below table shows the relative average Click-Through Rate (CTR) based on rank:

Average Rank Average CTR (%)
1 17.6
2 9.94
3 7.64
4 5.31
5 3.5
6 1.63
7 1.09
8 1.04
9 0.44
10 0.51

 

So using the above table, we can (very roughly) use a formula to calculate average monthly web traffic you could be getting from organic searches.

The formula is as follows: Monthly Volume x CTR.

Simple right?

Of course it depends where your website is going to rank, and unfortunately you can’t predict this, but you can take a look at how your competitors are ranking for those keyword phrases and garner a rough estimate of what positions you can achieve and therefore what kinds of volumes you can expect from organic searches. We can then use this information to estimate potential revenue.

2 – Estimate Revenue

After determining how much traffic you could be getting a month, it’s possible to get a general idea of the amount of revenue you can generate. To do this, you will need to determine your website’s conversation rate. If you don’t know this information (you can gather this using Google Analytics), you can use the following generic conversation rates instead:

  • For an ecommerce website, use a 2% conversion rate
  • For a lead generation website, use a 5% conversion rate

You will also need to know:

  • Average Sale – What is the value of an average sale across your entire catalogue?
  • Close Rate – What percentage of leads your company receives are closed as a sale?

With all of this data, you can again use a formula to project your potential monthly revenue:

Monthly Traffic x Conversion Rate x Close Rate x Average Sale = Monthly Revenue

Of course, the above will only give you a guideline of what you can potentially achieve, and you will also need to calculate profitability and take into consideration the timeline of your strategy.

Are you looking to utilise online marketing to generate more revenue for your business? Is your company unconvinced by the idea of pursuing online search but you don’t have the time to gather the data above? Fill in your details below and we’ll do it for you, free of charge:

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