The most important thing in implementing your SEO strategy is to track your progress. There are several metrics on which your study and update of your strategy will be based, among them we have the calculation of your ROI or return on investment. We will explain to you how to calculate the ROI of your SEO strategy and the elements to take into consideration.
How to calculate SEO ROI?
There are two methods for calculating ROI. However, in this article we will only focus on one method, namely the % calculation.
The general formula in %
In general terms, it’s easy to calculate ROI return on investment. All you have to do is apply the following formula:
- ROI= The profit / cost of the investment *100, knowing that to calculate the profit you must subtract the cost of the investment from the gross gains
To better understand the principle, we will take the following example
If you invested €50,000 in a business and you had a gross gain of €110,000 your return on investment will be calculated as follows:
- ((€110,000 – €50,000)/€50,000)*100 = 120%
As a result, your gain will be 120% of your investment.
Calculating SEO ROI
The same formula can be applied to the calculation of the ROI of your SEO. However, you should know that this calculation can only be accurate if you precisely define the profit generated following the implementation of your natural referencing strategy. To better understand how this calculation is done, we will take the following example.
You have a business selling artisanal soap, before the creation of your e-commerce site, your net earnings were €90,000. After investing €20,000 in creating your e-commerce site and implementing your SEO strategy, your total earnings have reached €130,000.
Now to calculate the ROI of your SEO you must proceed as follows:
- Define the gains brought by your SEO strategy: 130,000€ – 90,000= 40,000€
- Calculate the ROI of your SEO: ((€40,000 – €20,000)/€20,000)*100=200%
So you have a return on investment of 200% and therefore if you invest €100,000 in your SEO strategy, you will have an ROI of €200,000.
What is an ROI for?
In reality, ROI is a metric that aims to allow an investor to know whether or not investing in a project can benefit them. The same goes for managing your website. This measurement allows you to know if the money spent in creating and implementing your SEO strategy worth it.
Conclusion
ROI is a metric that depends on a number of circumstances, and although it is used to judge the relevance of your investment, it should not be taken as the only parameter for making your investment decision.
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