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The real value of SEO
One of the most difficult initiatives I’ve pondered and struggled with is how to establish a value or ROI for Search Engine Optimization (SEO). I’ve attended many meetings with advertising agencies and clients during which Search Engine Marketing (SEM) reporting concentrated on paid search or pay per click (PPC) advertising ROI while ignoring the ROI of SEO or organic search.
It seems agencies don’t often want to show the value of SEO because the cost per click, sale, or lead may be (usually is) dramatically lower than paid search (Google AdWords or Bing Ads). One tin-hat conspiracy theory holds that because agencies receive a percentage commission on paid search spend, it makes sense to essentially ignore SEO. The more an agency spends on paid search, the more revenue it gets. Agencies will rarely roll into the ROI calculation any management fees that could be added on top of the commission, but those types of fees are usually all SEO has. Also, ROI reporting is more readily available through the quite excellent paid search reporting tools. I don’t necessarily think there is any nefarious intent here; it’s just that paid search performance is more readily and easily reported.
In order for SEO to be a valuable pursuit two things must be true. There must be a benefit to possessing high search engine rankings, and you must be able to manipulate the web environment to achieve those rankings. As to the benefits of high rankings, the short answer is traffic, and the correlation between the two is crystal clear. The higher you rank in the search engines for keywords relevant to your web site, the more traffic you receive.
Admittedly, SEO ROI is fuzzier because costs and revenues are less apparent. It’s both easy and difficult to establish ROI for SEO. For the easy example, if you pay me $5000 for SEO (usually including expertise, time, reporting tools, audit and repairs) and my efforts drive you 100,000 additional visits, the cost per visit (CPV) is $0.05 (The crowd cheers.) This could as well be measured against a sale or lead, but requires that spend is figured into the sales margin which is often difficult to determine. Lifetime value of a converted goal makes this even more difficult, but can be included too.
Take HTTPS as an example. As search marketers, we know there is long-term value in transitioning to a secured site. The web is moving in a more secure direction, users want trust, and heck, Google has stated it’ll give preference to secured pages. That’s a big deal! From an impact perspective, however, the site likely isn’t going to see an immediate uptick in search traffic. And with an HTTPS transition requiring time, resources and money (and potentially causing issues), selling the investment isn’t easy. Especially when the business (aka client) wants to ensure they’re getting the biggest bang for their buck. Take a look at what competitors are doing. If you can show that 75 percent of your competitors have implemented the recommended strategy and are performing better than you, that’ll usually get the attention of those in charge.
It’s important to note that SEO takes time to be effective. Breakeven status may not be achieved quickly, unlike paid search, which offers immediate gratification for performance day over day, week over week and month over month. Expecting an ROI for SEO in a day, week or month after execution is unreasonable. Also, SEO is not a one-time activity, but I’m trying to keep this simple.
Another and (I think) harder way to calculate ROI from search engine optimization is to ask how much more would have been spent on paid search if SEO did not exist. (Some think this is inevitable.) This requires that keywords are matched across paid and organic search to assign a per-click cost to performing SEO keywords. This is difficult because a one-to-one match cannot be achieved and Google doesn’t report all organic keywords. It might be better (fuzzier) to use an average paid search cost per click across all organic keywords.