Through our experience helping brands build massive audiences with organic search, we’ve developed an SEO ROI formula to help brands understand the return on their SEO investment.
Then we turned that formula into a calculator to make it easy and quick to model various SEO outcomes.
In the next 5 minutes you’re going to learn how to:
Forecasting the ROI of your organic content distribution (SEO) project
Forecasting costs to execute on that outcome
Forecasting best, middle, and worst-case outcomes
The formula to understanding different SEO ROI outcomes is:
Total Monthly Searches * Click Through Rate * Conversion Rate * Average Order Value = SEO ROI.
What are the variables in the formula for calculating SEO ROI?
Total Monthly Searches
Total monthly searches is a super simple variable.
TMS is the sum of the monthly search volume across all of the keywords you found that can drive qualified traffic.
You can figure out the Total Monthly Searches by doing keyword research using your favorite SEO tool.
Once you’ve found every keyword across the funnel, add up the number of monthly searches for each keyword.
If you’re using ahrefs, you’ll need to export this keyword list into excel, then highlight / select the ‘volume’ column.
Click-Through Rate
CTR is the percentage of searches that result in a user clicking through to your website.
Your CTR is a reflection of where your website ranks for the keywords you’re targeting.
The closer to #1 you rank, the more traffic you will receive.
In a large study by SEO superstar Brian Dean, Brian found that keywords in position #1 received roughly 30% of the clicks.
Keywords in position 5, half way down the 1st page, receive about 9.5% of clicks.
And keywords in position 10, the last result on the 1st page, receive roughly 3% of the clicks.
Some keywords are going to rank higher than other keywords, so the # you choose needs to be a blended average across all of the keywords you are targeting.
We generally forecast conservative outcomes using a CTR of 9.5%, representing an average ranking of #5 for the keywords we’re targeting.
Conversion is the percentage of visitors that convert into a customer.
If you have existing data on organic search conversion rate, great!
But make sure you filter branded searches from your analysis.
This means only measuring your conversion rate on pages that don’t rank for your brand name.
Examples of pages that do rank for your brand name, and need to be filtered from your analysis include your homepage, contact, about or FAQ pages.
An easy way to figure this out is to Google your brand name, and see which pages appear.
If you don’t have existing data conversion rate data you can use, that’s OK too.
The variable you choose represents a blended conversion rate across hundreds or thousands of keywords.
But some keywords will convert at 10%+
And some will convert at .01%.
This variance is driven in large part by how much intent to purchase is behind the prospects search.
Keywords at the top of the funnel generally have higher search volume and more traffic, but lower conversion rates.
Keywords at the bottom of the funnel generally convert at very high rates, but also have the least amount of searches.
We use .005% in conservative forecasts.
This is pretty low.
Life Time Value
Life time value is the dollar amount each customer is worth over the life time of their relationship with your company.
You can also use the Average Order Value of each purchase, but we prefer to use LTV because it more accurately forecasts ROI.
Other Variables You Might Use to Calculate SEO ROI
Average Order Value
Brands with more aggressive timelines for recouping their SEO investment, might use AOV instead of LTV to calculate the ROI of the campaign.
Conversion To Lead
You may not allow customers to purchase directly from your website.
In this case, you may want to reflect that in your ROI calculations by adding an additional variable called ‘Conversion to Lead’.
This attribute represents the conversion from website traffic to sales opportunity.
So the new formula looks like:
TMS * CTR * CTL * CR * LTV = ROI
We built a version of the calculator to calculate this extra variable.
Calculating SEO Costs
The #1 cost for any SEO campaign is generally content.
There are hundreds, or thousands of unique pages you need to create in order to rank for all of the ways your target audience is searching across the funnel.
If you are engaging an SEO agency, and content isn’t the biggest cost, I would be very skeptical.
Why?
Because how fast you publish content is the #1 lever you can pull to get the fastest SEO results.
Don’t believe me?
We’ve helped 4 companies go from approximately zero to 100,000+ organic search visitors per month.
Here are two of them.
And this is DoNotPay, the biggest one, which we grew from 500 to 479,000 monthly organics in 16 months.
Combined, these 4 projects have over 100,000 page 1 keywords, and generate nearly one million visitors per month.
And we did it without building backlinks or doing complicated technical SEO.
We did it by focusing on publishing large amounts of high quality content.
Everything on this list scales with the # of pages published which makes estimating costs easy.
And in order to minimize the complexity of estimating cost, we’re not factoring in the time required for:
Strategy
Management
Cross team collaboration
Knowledge transfer
Reporting & analytics
The reason is these costs are fluctuate from project to project, company to company and person to person depending on things like
Size of org
Type of org
Impact on org
Importance to org
Experience level of teams
Ease of cross team collaboration
We have all of these calculated because our systems are consistent and repeatable, but if you’re driving your own SEO campaign you’ll need to calculate these on your own.
Content
Content costs are calculated by multiplying your cost per page multiplied by the number of pages of content you need to publish.
One thing most SEOs have trouble with is forecasting content costs.
Why?
Because it’s very difficult to estimate the number of pages you need to write by looking at a list of thousands of keywords.
Don’t believe me?
Look at this list of 25,000 keywords related to invoicing.
If you’re invoicing software company FreshBooks, how many pages do you need to build to capture that volume?
Well, they built 390 pages targeting slightly different variations of the keyword invoicing and invoices.
And the fact FreshBooks had to publish 390 pages about invoicing to capture all of the variations in the way people search for invoicing is why content is the biggest cost to any organic search campaign.
You simply can’t rank for all of the opportunities to generate qualified, valuable traffic with one page.
Or a dozen pages.
In FreshBooks case, not even 390 pages.
FreshBooks has published over 2,000 pages of content.
And it’s paid off.
Freshbooks is generating 500,000+ qualified visitors each month.
FreshBooks’s estimated organic search traffic via Ahrefs.com
FreshBook’s SEO is very talented, and spent a lot of time
Grouping all of the ways people search for invoicing into unique pages
Identifying variations of the main keyword to use within the content
But you don’t have to.
contentdistribution.com’s keyword grouping tool transforms large lists of keywords into unique pages.
ClusterAi does this automatically.
And it does it using data from Google to determine which keywords can rank together.
It does this by scraping the search results for each keyword, and comparing the pages ranking for each keyword.
If there are 3 or more pages that rank for a set of keywords, it groups those keywords together.
And if there are 2 or less pages that rank for a set of keywords it separates the keywords and looks for new matches.
Why?
Because if 3 or more other websites rank for 2 keywords with 1 page, you probably can too.
But if 2 or less websites rank for 2 keywords with 1 page, you might not be able to rank for both keywords with 1 page.
ClusterAi is going to save you a ton of time. And you’re going to be able to delegate keyword research to junior team members without your level of experience, and they’re going to do it perfectly.
Non SEO Pros
ClusterAi is the only viable way to do perfect keyword research without having a strong SEO background.
So how much do writers cost?
A lot.
The average content marketing salary in Austin is $50,000/year, before benefits, taxes, and paid holidays.
And the average content writer in Austin is probably writing 1,500 words per day.
This comes out to $.24 per word, or $620 for per page of content @ 2,500 words.
And at $620 per page, it’s going to be hard to execute an ROI positive SEO campaign.
Unless you have a very high conversion rate, very high search volume, and very high AOV.
Or, if you don’t have those things.
You have systems to source, evaluate, and hire the highest quality, most affordable writers on the internet.
It would be really great to integrate timeline forecasts into our estimates.
This would allow brands to forecast things like revenue expectations leading up to month 12 of the campaign, or potential year one totals.
It would probably have to be a different chart that models the % of Total Monthly Searches that click through to the website and how that variable increases over time.
This is tricky, because timelines are 100% dependent on publishing schedule, and how quickly content is published.
Because you can’t rank for a group of keywords until you have a page about that keyword.
And you have to create 390 pages about invoicing. 🙂
Our best content
Want to learn how we’ve grown 4 websites from approximately zero to 100,000 visitors per month, with the biggest one doing 500,000 in just 17 months?