One of the advantages of digital marketing over other types of traditional marketing is the possibility of. analyze each of the actions that is performed. This makes it possible to control the ROI (return on investment) of each one of them and adjust them appropriately to obtain the objectives and results set.
Knowing how to calculate ROI (return of investment or return of investment in Spanish) allows us to analyze if an SEO strategy is giving positive results or not.
Calculating the ROI of an SEO strategy is important to know if the results are being achieved. objectives and desired results. At the same time, calculating ROI makes it possible to identify what is failing or not working and to make better strategic decisions, adjusting everything as necessary.
For example, you may have increased the number of visits to a website, but these visits are not converting, which prevents you from achieving ROI and can translate into a budget cut. With the right information, an analysis can be performed to identify what is going wrong in this part of the sales funnel and fix it, with actions focused on conversion.
What is ROI in SEO
When we talk about SEO strategies, ROI usually translates into a increase in conversions. That is, converting users who visit web pages and sites into leads or customers.
However, it is important to identify which type of conversion is the most appropriate for each strategy. Conversions are any action that converts a visit into a lead or potential customer. In this sense, the conversion will depend on the strategy and the medium, and can be: a subscription to a newsletter, a sale of a product or service, the download of an application, etc.
In each case, it is necessary to be clear about what is considered a conversion and to have a tool such as a CRM, which allows us to automate and identify the generation of these conversions.
At the same time, it is important to know how to choose the right KPIs. These must go beyond simple metrics and must allow us to understand the performance of the strategy in depth, as well as identify potential problems.
Along with the KPIs, the following should be established. realistic objectives. For example, it would be unrealistic to set a 300% increase in conversions in two months. With time, it is possible to achieve a 300% improvement, but this should be done through smaller, achievable goals.
How to calculate ROI in SEO
First of all, we establish the time to be analyzed to determine if the strategy is working.
Next, we choose the data we want to analyze. In this case, conversions should be chosen. If KPIs have been established in advance, this task will be much easier, since each indicator allows us to see how each action works.
Once we have this information, we compare the results obtained with the defined results. If the results are not good enough to achieve the objectives, the following should be done adjust each KPI.
With all this information, calculating ROI is not difficult, since it is sufficient to. divide the value of each conversion (subtracting the cost of investment) by the investment cost.
Let’s say that an SEO campaign has generated 50,000 euros and its cost has been 2,000 euros. Therefore, we should calculate: (50.000€-10.000€)/10.000€ = 4.
This means that, for every euro invested in SEO, the following have been obtained. 4€ of return. In other words, we have an ROI of 400%.