Justifying the Value of SEO

Most people don’t set fair expectations for a search engine optimization (SEO) effort. I was reminded of this while speaking with a prospect, who asked what kind of a return on investment (ROI) he should expect from his SEO engagement.

“I’m expecting exponential growth, something like 20X the traffic that I’m currently getting,” he told me. “If we can get a number 1 ranking for this one keyword, that should be enough to get us there, don’t you think?”

One Top Ranking Isn’t Enough

Your goal can’t be to rank number 1 on one keyword. That’s not a goal.

What happens if you get the top ranking for your keyword and something happens, such as a major algorithm tweak by Google? You’ve then lost your ranking for that one keyword. What then?

Though everyone has one of those keywords that they salivate over, a solid, long lasting presence in the search engines is one in which your presence is balanced across a number of keywords.

A “goal” should be increasing traffic and – at the end of the day – growing your business (more leads, more sales, and ROI).

SEO vs. Paid Search

Many people find it easy to budget for paid search. They understand the basic premise:

• Spend $1 per click.
• Set a budget of $10,000.
• Get 10,000 clicks for keywords I want to “rank” for.

But what if you could potentially get 20,000 clicks by investing that same $10,000 in SEO rather than PPC advertising? Wouldn’t that be an even better deal?

To be fair, the above example is an over-simplification only intended to make a point. This 20,000 might represent a 10 percent increase in “good” traffic – meaning traffic that’s relevant, converts into a lead or sale, or at least shows some quality measurements (e.g., time on site).

After telling this to the prospect, he paused. “I’ve never really thought about it that way.”

SEO ROI: No Guarantees?

Don’t get me wrong. I understand that SEO is very different than PPC.

With SEO, there are no guarantees. There is the chance that, for whatever reason, you will never realize a solid ROI from SEO. Some of these reasons might include:

• You hired the wrong people/firm for SEO.
• Your IT team can’t do what’s necessary to fix things that will lead to better rankings/traffic.
• You can’t / won’t create content which will lead to rankings/traffic.
• Expectations were out of whack with reality.
• There’s no search volume for the keywords you’re interested in targeting – no amount of number 1 rankings could ever equal ROI.

SEO can be high risk, high reward. When I say “high risk,” I’m not talking about the kind of high risk associated with the possibility of being banned/penalized in the search engines for such tactics as hacking, cloaking, spamming, etc.

My point is that, even given that you work within the search engine’s guidelines, there truly are no guarantees because we don’t own the search engines. Search engines are a third party we have zero control over.

A “Good” ROI on SEO

If you’re investing $10,000 per month in an SEO effort (be it in staff costs or with an agency), you need to get a sense as to what a “good ROI” looks like.

Perhaps you’re one of many who have noticed that cost per click in paid search is getting higher and higher for the keywords that you’ve been targeting. Perhaps it’s gotten to a point where it’s challenging to make a case that the money spent is worth it?

Let’s say that you sell a widget for $100, and you net 30 percent from each sale ($30). If your average cost per click is $1 and you convert 1 percent into a sale, that’s $100 invested in paid search for 100 clicks for a $100 sale in which you netted $30.

Unless you care about the branding value (which I would argue folks should consider, at least a little bit, when they’re looking at valuation of PPC and SEO), that’s not a good ROI. In fact, that’s no ROI. That’s a loss.

What would you need your investment to be for this to pay off? Let’s do some math: out of every 100 visitors, we convert 1 percent into a sale in which we make $30. We would need 3,000 visitors to get 30 sales. Those 30 sales would be worth $3,000 (300 X $100/each) and we would net 30 percent of this ($900). Since we’d need about 10 times that revenue to make this work, we’re going to need 10 times the number of visitors (30,000).

Do we feel that we could put $7,000/month worth of resources (money/time, etc.) into a SEO effort to help to achieve the goal of gaining 3,000 visitors? Or, perhaps the conversion rate is way off and it’s more like 5 percent?

Perhaps we need 6,000 visitors? Are we willing to fund this “at a loss” (during the initial months of research, etc.) in order to hopefully realize the potential ROI for the months thereafter?

Tools to Help Determine the Value of SEO

Once you’ve mapped out how, and/or if, SEO can drive ROI then you can begin to discuss how much value/opportunity there may be and what the risks and rewards might be.

I’ve mentioned these tools before, but to get a sense of what the potential value of an SEO effort might be, I would recommend SEMRush and SpyFu Recon. There are certainly many other providers which can also help with an opportunity assessment and I welcome readers to comment below and share with others tools that you might use and why you like them.