What is the ROI of SEO for your small business? There is a lot of hype out there shouting at small businesses about what is essential to their social media strategy. How do you know what works? The small business owner’s “inbox” is flooded with articles, papers, books, blogs, videos, and Tweets, about how to increase site traffic so how will you figure out what works best for your business? One of the hottest topics in social media marketing is search engine optimization (SEO) and this one actually works! Here is a quick break down of what SEO is and what SEO does.
At the core SEO is about understanding how to drive traffic to your site and increase visibility without paying for search engine rankings. Now there are plenty of resources out there to help you understand and apply SEO but that is not the end of the story, you also need to understand what return on investment (ROI) you can expect from your various online marketing efforts and find the true value of your SEO efforts.
SEO allows you to increase your marketing efficiency by identifying what is and even more importantly what is NOT working. Think about this, what you can do with online marketing is nearly limitless but your resources aren’t and SEO helps you make the best use of your resources!
So how do you figure out if paying $.50 per click is not only driving traffic to your site but ending in a purchase?
The answer is two-fold, use an analytic tool like Google Analytics to relate how consumers interact with your social media efforts and how your social media efforts relate to purchase behavior. Small business owners need a few key pieces of information from their analytics.
- Average monthly visits
- Conversion rate – the number of times a visit resulted in a sale, so if 1,000 visits resulted in 200 sales the conversion rate is 20% or 200/1,000 (sales divided by visits).
- Average order value – total sales value in dollars divided by the number of sales
- Cost of the SMM (Social Media Marketing) efforts
- SMM target, how many additional sales orders will be generated by the campaign
With this information it’s easy to calculate the ROI of your SEO efforts!
Step 1. The breakeven point – how many additional sales are needed to cover the cost of the campaign.
Cost of SMM – $10,000/Average order value – $28.00 = 357 additional sales orders
Step 2. How much additional traffic must come to your site to reach the breakeven point?
Number of additional sales orders – 357/Conversion rate- .2 (20%) = 1758 more visitors
Step 3. What is your actual ROI of SEO?
(Actual revenues generated by SMM campaign + Goal Revenue) – Cost of the campaign / Cost of the campaign
Remember to get the best picture the calculations need to be done for each social media channel separately, you definitely want to know if Twitter traffic generated more sales than YouTube or Facebook! The bottom line is you need to know the dollar impact social media has on your business so you
can make the best use of your resources.
Some EXTRA links to help you get a handle on the ROI of SEO:
- SEO ROI Analysis – How to do ROI calculations for SEO
- How to analyze and report the true value of your SEO campaign
- Google Universal Analytics Data Trend Analysis – Complete guide
- Google SEO Starter Guide
- The Beginners Guide to SEO
- Google Analytics
Category: Analytics, ROI, SEO, Social Media Marketing 201