James Greenwood

It’s an age old question and one which I hear regularly – why should I pay X for SEO (Search Engine Optimisation) services? What’s the benefit to me? What’s the return on my investment?

It’s a question I’ve heard a lot from people who are comfortable with PPC (Pay Per Click) advertising – PPC is easily trackable, the costs can be easily maintained and managed and a simple “If I spend X on PPC, I get Y back in sales” calculation can be done as all the figures are available.

When undertaking SEO projects, none of the same figures are available. None. Or are they?

As the industry develops, click through rates studies are beginning to appear for the search engine result pages which are more and more accurate. Whilst these may not be true for every keyword or niche market, they do provide a solid enough platform to start trying to calculate what SEO is worth. Again, it’s worth stating again that these are guide figures. Write good meta titles and descriptions and you might find your CTR is better than these guides suggest. You might have the perfect site with perfect meta information and see a lower CTR than these figures suggest. There is fantastic post on this on SEOMoz – you can read it here.

Do you know what a visitor is worth to your site? Do you know what a conversion on your site is worth? If so, we can start to do some thinking…

Where is all this going?

Let’s try this for MadeUp Inc with a conversion rate of 5% and with an average order value of £56.78. We can start to put some of this together.

Let’s say MadeUp Inc wanted to target the keyword “woo hoo” which had 1000 local searches a month (you can find the number of searches a month data in a number of places but we tend to use SEOMoz. Having said that, the Google Adwords Keyword Tool is free and does the same thing). Let’s say MadeUp Inc rank in 8th place currently for this keyword.

8th place has a suggested CTR of 1.7% – meaning from a 1000 possible visitors, we get 17 visitors a month. Our conversion rate is 5%, meaning 0.9 visitors of our 17 incoming visits convert on this keyword. That’s worth £51.10 to us per month (£613.22 per year).

We’ve just valued our keyword. We might have some analytics data that supports the assumptions, but we might have some data which suggest CTR is higher or lower than the one suggested. Either way, we’ve now given ourselves a base on which we can amend the calculations. Analytics suggesting that CTR is 10% higher? Simply amend the CTR rate used in the calculation by 10%. Not seeing the expected CTR rate? Adjust downwards accordingly. It’s important to use the data that you already have.

However, for this example, let’s assume that the CTR study is supported by any data we have on the site and that our calculation above is somewhere near.

If we were to undertake some SEO work for the keyword “woo hoo”, we can now work out what the potential ROI is. Being adventurous, we aim for slot number 1.

1st place has an expected CTR of 18.2% – meaning from a 1000 possible visitors, we’d get 182 visitors. Our conversion rate is 5%, meaning 9.1 visitors of our 182 visits convert on this keyword. That’s worth £516.70 to us per month (£6200.40 per year).

Using these numbers, climbing those 7 spots from 8th to 1st is worth an extra £5587.20 a year.

It’s fair to say that I’ve picked the most dramatic example I could (we’ve gone to the top of the rankings!) but still, we’re providing a guide ROI against any budget being allocated to this process.

Is it reliable?
No – the CTR could be wildly different to the studies suggested expectation. The expected visitor data could be out too which could mean we don’t get the amount of traffic being expected. Of course, the opposite is true too – we could get more.

Should it be quoted as legally binding?
Absolutely not. You’d be a fool to do such a thing.

Does this provide some boundaries though of what could be expected – upper and lower limits, that sort of thing?
As long as it’s explained properly (and I mean”properly”), then yes, I think it does.

Summary

I’d always recommend any SEO work should be tested with some PPC first – it’s cheaper than any SEO project and provides a quick insight as to if the keyword you want is worth having. After that, get in to your data. Do you get traffic for that keyword already? How much? Does it convert? At what rate? What is a conversion worth? At this point, we can use some of the data that is available to us – yes, it’s guide data and yes, it shouldn’t be treat as gospel but it can help when deciding if targeting a keyword is worth yours or the clients worthwhile.