Marketing is only considered effective based on Return on Investment (ROI), and SEO as a marketing vehicle, is always considered one of the best. Long term ROI from a competently executed SEO project is generally extraordinary and many companies owe their rich sales and profits to this fact.
Estimate Your Return On Investment (ROI)
Prior to spending your precious marketing budget on an SEO project predicting the likelihood for ROI on the project is a good idea. To perfectly predict ROI is impossible; but to get a general idea is reasonably simple. Sites involving big ticket sales, with good search volume, and a reasonably niche market are obvious good ROI candidates. Since most sites don’t fit this scenario, a simple mathematical approach works well.For most sites, a bulk of the available traffic resides in a subset of the potential keywords. Therefore, the task at hand is not as daunting as it may first seem. Further, a spreadsheet can be designed with the below formula to model revenue on your highest traffic keywords; modeling various scenarios of conversions, product margins, and keyword positioning.
Building an ROI Estimator for an E-commerce Site SEO project
Monthly margin per keyword = (Conversion Rate % x SERP position % x Monthly Search Traffic) x margin per sale
A site with a 1% estimated conversion,achieving the 3rd search position on the first SERP with 74,000 estimated exact match searches and having a $50 margin per sale will produce an estimated $3,633 margin per month per the below:
(.01 x .0982 x 74000) $50 = $3,633 margin per month
SERP Position 1 = 56.36 %
SERP Position 2 = 13.45 %
SERP Position 3 = 9.82 %
• SERP Position % from a Cornell University distribution of clicks study October 26, 2006
An ROI can then be calculated based on the formula
ROI = (increased margin from SEO investment – Cost of SEO)/ Cost of SEO
Note: Lead gen sites generally have a higher conversion rate but require a second conversion rate in the calculation for “% of leads closed” that needs to be added to the formula.
As stated earlier, this estimate gives a general idea of the gain from an SEO project. However, there are other factors that cannot be calculated in a formula that will dramatically impact the ROI on a project.
Outsourcing Your SEO Project
Many companies struggle with the idea of outsourcing their SEO project or using a 3rd party vendor. Controlling the process by having in-house personnel that can be managed and monitored, combined with building institutional knowledge, is generally the argument for having an in-house SEO team. However, most companies don’t have the sales volume to support a team of focused and experienced SEO professionals. In this case, capitalizing on the experience and expertise an SEO company acquires from their success on many varied sites and markets, combined with a complete infrastructure of experienced professionals, will likely generate more first page results than a small in-house team.
Determine Cost vs. Results
Maximizing ROI on your project requires you to continually measure cost vs. performance and to occasionally do comparison tests. A good test to validate the performance of your in-house team is to outsource a subset of your keywords to an SEO company for comparison purposes. Likewise, comparing your current SEO company effectiveness, is as simple as getting some quotes and analysis from some other respected SEO companies. All reputable companies are only too willing to analyze your site and competitive landscape. This process will either validate your current approach or inspire you to test something different. Validation of an SEO test in most cases will be obvious in 60 to 90 days. Best wishes to you and the success of your SEO project! credit-n.ru
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