Putting a Value on Search Engine Optimisation (SEO)

As a small to medium business owner you may be fairly new to online marketing, or just unaware of why SEO is so highly valued for those in the know. That’s completely understandable as many SEOs can be reluctant or unable to explain it in a way that makes sense, and more often than not the only thing you want to know is the ROI you can expect to receive for your investment.

This post will explain the basic methodology behind calculating your ROI based on your desired position in the search engines. Please keep in mind this is a simplified process and although it will give you some ball park figures should not be taken as a fool proof method. If you’re looking for a more accurate and in depth idea of what you can expect from successful SEO, get in touch and we’d be more than happy to help.

Consider this:

Your business is a bricks and mortar jewellery store that has always done reasonably well but you’ve decided to invest in setting up an ecommerce site to reach a wider audience. You know this of your ecommerce website:

• You rank #6 for the keyword Diamond Rings
• This keyword sends 7,000 unique visitors each month
• The average order value is £1,000
• This keyword has a conversion rate of 2%

The question is; what revenue could you expect for each ranking between 5 and 1 and is the investment in achieving these positions worth while?

Calculating Volumes

The first step to working this out is to know what percentage of clicks each position receives and thanks to the data leaked from AOL several years ago we have a rough idea of what to expect.
Knowing that a #6 rank for Diamond Rings provides 7,000 visitors on average we can calculate not only the total search volume, but how many visitors you would expect to see for each position.

7,000 / 4.1 * 100 = 170,731 – the total search volume for this term
From here we can calculate visitor numbers for each position. So position 1 for example:

Total volume / 100 * 42.1 = 71,878

Calculating Revenue

Remembering that our site converts at a rate of 2%, and the average order value for diamond rings is £1,000 we can put a figure against each position with this calculation:

(No. of visitors / 100 * conv. rate) * A.O.V = total revenue

So for position 1:

(71,878 / 100 * 2) * 1,000 = £1,437,560

Here are some calculations I did earlier… and the first thing our diamond ring selling friend will notice is that even an improvement from 6 to 4 would see an additional £68,280 in revenue a month, but a position 1 ranking would increase their revenue 10 fold.

Conclusion

This diamond ring retailer stands to make an additional £1,297,560 per month (£15.6 million a year) if a position 1 ranking can be achieved. The only question that remains is how much are they prepared to invest to obtain this? £10k? £100k? £1 million?

How much would you invest?