Understanding the ROI of SEO

In today's special edition of Growth Through Content Newsletter, I'm going to tackle a subject that almost everyone gets wrong.

The ROI of SEO.

By the end of it, hopefully, you'll be able to explain how SEO helps a business.

Firstly...Forget the ROI of SEO

If you're asking what the ROI of an SEO campaign is going to be, you'll be disappointed.

SEO is not direct advertising. And organic search doesn't work that way.

One of the challenges for SEOs is to get more funding, and in the process, people have tried to use Google Analytics to justify SEO spend.

So, we need to bin this right now.

Analytics data is hugely flawed because buyer journeys are infinitely complex and only give you a snapshot of activity in a certain period of time.

And that period of time is the present.

In fact, analytics data can only give you activity over the last 90 days using machine learning with GA4.

Add to this that it doesn't track all your customers for various data protection and privacy issues. Trying to judge the ROI of SEO is a little like the image below.

You'll under value SEO considerably.

And this has led to many a cancelled SEO retainer.

You'd need to work out the average lifetime value of a customer, those you'll likely gain in the future as well as those sales you made now.

With analytics data, you capture a moment in time.

And ROI is an awful metric for SEO.

Care About Reach, Not ROI

Businesses need to be profitable, not marketing teams.

This staggering claim might frustrate the sales teams, but any other thinking is seriously flawed.

Breaking it down, let's say you hire an SEO company, and they charge a conservative $5k a month.

12 months down the road, you've paid $60k to the SEO agency, and now, you're starting to generate some good traffic and rankings.

So, you now try and figure out if paying that $5k a month is worth it.

After all, you could use that money to fund other things.

That's not the way it works.

You can't judge the ROI of SEO that way.

You have to judge it based on the cost of reach.

SEO is simply a way for a business to leverage the code of search engines to reach potential customers.

These customers are in what we call 'buyer states'.

Let's use car leasing as an example.

• Some will be totally unaware you exist and not even thinking of buying what you sell. (They don't need a car, they aren't even aware of what car leasing is/ they might not even have a driver's licence yet).
• Some will be researching the category you sell in (they are thinking of leasing/ buying a car. Also, they are researching cars).
• Some people are ready to buy today, right now (they want to sort out a car leasing deal right now).

To make this even easier, you need to work out the cost of placing your business in front of people in the market to buy and those who aren't.

There are simply only so many ways to do this.

Display ads, TV, radio, print, publicity, social media, tradeshows...the list is long but limited.

And this is how you need to approach your marketing.

What does it cost to reach people in the market to buy and those not in the market?

But I get it. All you care about is leads and sales.

This isn't what SEO does.

The Failings of Last Click Attribution

One of the failings of channel-based marketers is the desperate attempt to prove their worth.

Even this week, a well-known SEO was offering his blog post formats that gained over $10 million in sales for clients.

No, they didn't.

The idea that someone would read a blog post and convert is pure fantasy.

People buy products and services they need and want when they are ready to buy.

And they buy them from a business and brand they know and trust.

Your blog post that compared 2 car models might contain a tracking code that attributed a sale of some kind to you.

But that's going to be because it was the last thing they read before they purchased.

Last-click attribution has resulted in an obsession in channels trying to take credit for sales.

And SEO is sadly no different.

But even though Google is removing last-click attribution soon, it has largely caused this obsession with tracking a sale within its last millisecond.

So, what is going on?

Catching Buyers, Reaching Researchers

For the most part, SEO and PPC work by catching buyers when they are ready to buy.

In a previous post I explained how search marketing works.

Search engines are shelves.

Buyers stroll the aisles of search engines when they want to buy something.

They pick up your goods from the self and read the label, sometimes they buy from you, and sometimes they don't.

And that's how organic rankings and SERP ads work.

They capture buyers.

It's highly unlikely that you'll make a sale with someone that doesn't know you're brand or business already. Sure, in low-risk- high-need categories such as 'emergency plumber' it happens.

But mostly, this is rare.

Just like a person walks up and down supermarket aisles, search engine users move up and down the buyer journey with search queries.

They often click on SERP link ads when they have no intention to buy.

They don't care if it cost you money, but we also know that far more clicks go to organic listings.

This has been confirmed in numerous studies, but even in the last few years, 1 study placed paid SERP ads as gaining just 0.79% on mobile devices.

Desktop faired better with 2.78%.

My point is this.

All SEO and, indeed, PPC does, is catch people as they stroll the aisle and they're ready to buy.

They choose to buy based on a whole range of emotional reasons that they can't post rationalise, but yes, it can be simply because they liked the logo and colours of your website and they remembered who you were.

In this sense, the ad or organic ranking did not do the conversion...your brand did.

Or a better way to put this.

Brands convert, not search engine rankings or ads.

But the volume of reach is a powerful thing, and that's the game of SEO or organic search.

You put your brand in front of more prospects.

And that's it.

That's all it does.

You place your brand in front of more people ready to buy and people researching the category, all in the hope that you slightly increase the chance that they'll remember you and pick you when it's time to buy.

Do this a little more often each month, and you'll grow your sales, brand and business profit.

But what about informational content? How does that work?

Reaching People Not Ready to Buy

Each month in the UK, Accounting software Sage reaches around 326,000 people through organic search.

They achieve this through over 2000 pages.

Some only get a few visitors each month, some thousands.

But either way, they put their business in front of a lot of people that are not Sage customers (and those who are) through information like this post below.

They then use this to try and get inside your inbox by suggesting you sign up to an email newsletter.

This newsletter reaches 500,000 inboxes.

Now, here's the thing.

They are aiming to increase their mental availability (the likelihood that they'll be thought of in a buying situation) by reaching people online and trying to convert them to become an email subscriber.

And what did it cost?

A bit of SEO, some content and a few emails.

This is, of course, the other nice aspect of SEO.

To get organic rankings for purchase terms (physical availability), you do need topical authority, and that topical authority helps to build mental availability.

It's a win-win for SEO.

OK, but what about PPC? Can't I do that?

PPC Reaches a Small Amount of Buyers

The above image is from a post I wrote that caused a lot of PPC folk to lose their minds.

PPC only reaches a small number of today's buyers and researchers.

We know this thanks to clickthru rate studies.

It's estimated that PPC SERP link ads gain anything between 0.5% and, maybe if we're being super generous in some categories, as high as 8-10%.

People are ridiculously good at ignoring the paid listings.

Now, here's the thing.

If you don't have organic rankings, you will have to invest in PPC to reach people who are buying and researching on search engines.

That's the truth.

It's easy to optimise on, and also, because, unlike SEO, you are literally paying for the clicks; you know how much you're spending and what the returns are.

But you only reach a small amount of search engine users.

And because you're in an auction, you'll be competing against the budget of others.

Also, add to this average conversion rate (thanks to Wordstream for this chart).

Now, I don't have a great comparison for organic conversion rates, but we know they get more clicks, so even if they stayed the same, you'd win more business.

But the team at Databox did a small poll that looked as follows:

So, more traffic and some vastly higher conversion rates all point to organic search having massive business benefits.

But we need to nail this ROI thing.

What's the ROI of SEO already?

For the Last Time, It's Not About ROI...It's About Reach

Today, businesses in your category are reaching people who use search engines.

Equally, there are businesses, millions of them, who have decided that search marketing is not how they want to grow their business.

And millions of businesses win customers through other means.

They sponsor football teams, tradeshows, run events and countless other ways.

Search engine marketing might not be for you.

And that's perfectly fine.

You're just not going to show up for the people who purchase or make purchasing decisions through search.

As for ROI.

To cover it finally....it's not about ROI.

It's about reach and what that reach costs you.

Because reach grows brands.

Reach as many people as possible to build mental availability.

Build physical availability by being easy and convenient to buy from. And you do this by showing up where customers are going to buy from you.

You do need to consider what reach costs you when compared to other channels.

And you need to reach people in the market and people who aren't.

The costs of this are what matter

Sure, keep an eye on the conversion figures. Just don't obsess about them.

Thanks for reading.

Andy