At SES London Lisa Myers initiated the first conference discussion on ‘the business of SEO’. It was great to see a new ‘business perspective’ on SEO discussed and the speakers covered a lot of ground, particularly the issues around new business. I covered some of the points from that session in my day one SES post.
Something the speakers touched on, but didn’t have enough time to study in detail, was the importance of measuring return on investment (ROI) for SEO. Several of the conference attendees we talked to over the week also showed an interest in this difficult process.
In an industry of data it’s easy to measure changes in rankings and traffic. But measuring your ROI involves looking at short and long-term conversions, order values, offers and incentives, recency / frequency / monetary value (RFM) analysis and other complex metrics. It’s a hard topic to grapple.
Then a couple of days after SES an interesting post from the Econsultancy popped up, researching the barriers Middle Eastern businesses faced when investing in digital marketing. One section of their data caught my eye after the SES talks. 28% of businesses surveyed said that the inability to measure ROI prevented them from investing.
Image credit: Econsultancy
This was one of the biggest obstacles to their investment, besides lacking the budget or being prevented by the company culture. So even if they did have the money and the support to invest in digital marketing they didn’t want to because they couldn’t track ROI, let alone predict it.
As a side note, this could be a valuable opportunity for SEO agencies that have reach in the Middle East and could help these businesses identify their potential for SEO return.
Still, it’s unsurprising that Middle Eastern companies are facing this issue since businesses have the same problem over here. Measuring ROI is difficult and not always accurate, but it can be necessary to judge the success or predicted impact of an SEO campaign, especially when reviewing your progress or pitching to a client.
Calculating ROI
The easiest way to measure your return on investment is to use Google Analytics or similar web analytics tools to look at the changes in your conversion rates for organic search both at the macro level i.e. the whole campaign or the micro level i.e. keyword group or even individual keyword.
Alternatively, Kevin Gibbons looked at measuring SEO ROI by utilising data from Adwords. Something that Linkdex does well.
But what happens when measuring the ROI becomes a more complex problem?
For example, ROI becomes complicated for multi-channel businesses who make conversions in person or over the phone. If someone finds your site through organic search and then makes a telephone purchase a week later, this sale is largely thanks to your SEO. One useful solution here is to use a company such as AdInsight who track calls back to organic impressions, based on the number dialled. This way you can start to measure offline conversions prompted by online visibility.
At SES Avinash also encouraged businesses and agencies to track actual ‘conversation’ (not conversion) data. For example, when you talk how many people answer?
Which brings me on to social conversations. By increasing your visibility in search, there are bound to be ‘PR’ benefits that can’t easily be tracked. My thoughts here are that you could always measure variations in audience ‘sentiment’ with social media tools such as uberVu, or measure conversions which occurred via social networking channels with Analytics (see more on micro transactions below). You could also measure more traditional in-page links that have been given as a result of social conversations.
Then there’s the offline social multiplier. If a user finds your brand through organic search then tells his or her friends in person, what value is being added thanks to your SEO efforts? What revenue does it earn you offline? The best suggestion I can think of, which still doesn’t leave me satisfied, is to measure how much your direct traffic and brand searches increase through the course of an SEO campaign, to try and measure general awareness. Though this wouldn’t be very accurate, it would be an interesting experiment!
Clearly calculating ROI isn’t just a case of looking at increased traffic or sales. In addition to tracking multi-channel conversions and the social return, you have to consider long term conversions, session transactions and the different forms of attribution.
In-Depth Factors Influencing ROI
SEOptimise posted a nice resource a while back that links to other articles which discuss calculating ROI for an SEO budget. However, at the conference Google’s Avinash Kaushik gave some interesting points I would like to share which could progress this discussion.
Conversion Data and Micro Transactions
We all know conversion data refers to how many visitors performed a specific action on your site and not how many people you convinced to join your strange religious cult. At SES Avinash encouraged businesses to delve deeper into their conversion analysis and look for the micro conversions on a website, as well as the macro.
Beyond online transactions (macro) you can measure how many people sign up to a newsletter, order a catalogue or simply share an article with a friend (micro). By studying the conversions on your site which don’t immediately yield revenue, you can look at the long term profit.
For instance, a site might find they make £1m a year from online sales but make £3m annually from orders made with their printed catalogue. If users find and order these catalogues thanks to organic search, you could potentially attribute that long-term revenue to SEO.
This also raises an interesting point about high-value, long-term customer loyalty, which has been prompted by SEO visibility. To look at this you need to analyse RFM: recency, frequency and monetary value. From this you can determine how valuable different customers can be over different time spans.
Here are some more articles about conversion data you might find useful, including a post on micro conversions by Avinash:
- Occam’s Razor – Measure Macro and Micro Conversions
- SEOBook – Tracking Micro Conversions with Event Tracking for Improving SEO Campaigns
- Search Engine Watch – Predicting the ROI Future for SEO Efforts
- ClickZ – Proving Your SEO Work Is Worth It
Attribution
Attribution is a minefield of a topic with lots of different theory behind it. It is also where ROI becomes hard to measure. Okay your online sales skyrocketed after you launched your month-long SEO campaign, but did that happen because of your increased search visibility, your string of PPC adverts, social media buzz or some other factor?
With the concept of attribution comes that of session transactions. Each time a user visits your site they are engaging in different sessions. Usually this leads to problems with attribution, since they don’t always use the same referral method. Maybe they find you through organic search on their work computer, then go home and visit you directly on their laptop.
The Google Analytics Multi-Channel Funnel tool is useful for seeing the session history of your visitors and their conversions.
When it comes to attributing conversions people argue over crediting the last referrer, the first referrer, both referrers or partially crediting both referrers. But at SES Avinash suggested the best method of attribution was incremental. So basically the closer to the conversion the more responsible the referral method becomes.
When working out your ROI you will likely have to analyse your conversion data and the referral methods to attribute a value to your organic search.
See the below posts if you want to understand attribution and ROI in even more depth!
- Search Engine Land – The Challenge of Justifying Enterprise SEO
- Kahena – Your SEO Campaign is More Valuable Than You Think
Forecasting ROI
In addition to measuring your actual ROI, companies can attempt to forecast their potential return from SEO. This is another kettle of fish entirely. But the Middle Eastern businesses – among endless others – would definitely find it useful in order to identify their potential in SEO.
So how do you go about finding the Holy Grail? Well, this is where Linkdex’s ability to see your search market value really shines. Whereas earlier, when calculating current ROI, you have other personalised data available so you can delve into deep analysis, here when forecasting ROI you don’t have so much to go on. By looking at your market value in relation to that of your competitors, you can plan an SEO strategy based on the potential.
Still, there are other methods available. For instance you can look at the current keyword traffic for your market and target your future (estimated) CTR to calculate the value. Also consider the on-page conversions and the value to you, per conversion.
Interrogate Yourself with 9 ROI Questions
To sum it all up and create some action points, consider the following questions in a kind of interrogation process!
- Are you tracking the ROI for your SEO?
- Have you set up Google Analytics, so you can measure your conversion data and track the Multi-Channel Funnels?
- Do you forecast ROI to help businesses/clients understand their SEO potential?
- Do you take offline channels into consideration and track SEO impact on telephone or mail orders for example?
- Are you tracking micro conversions on your website to understand potential high-value, long term revenue?
- Do you attribute revenue between the different channels (organic, PPC, direct etc)? How much revenue does each channel provide?
- Have you considered the relationship factor of life long customers and increased brand awareness?
- Have you conducted any RFM analysis to understand the value of long term ‘customers’?
- Do you use a tool such as Linkdex to help you measure/predict ROI, market-share and value?
Hopefully by calculating return on investment businesses will be able to understand the potential rewards and more confidently invest in SEO, wherever they are based.
Because ROI is such a detailed and interesting topic we will return to it in the future for more updates. In the meantime leave some comments to let us know how you are tracking your ROI and what your thoughts are on the best methods.
