Proving SEO ROI for E-Commerce is Simple

How do you prove ROI with SEO? This question is causing a debate in the blogosphere…if only they were to Find Resolution here. The current answer out there is SEO ROI can’t and shouldn’t be tracked to ROI. I totally disagree.

ROI must be tracked if an agency or 3rd party wants to win and retain business (SEO, PPC, or web dev). In fact, I’d be skeptical of any agency that didn’t show ROI performance or question any e-commerce business that didn’t want to see the monetary value generated from a major investment such as this.

Increased Sales from SEO Efforts / SEO Cost = ROI

In my opinion, tracking SEO ROI is simple. Using web analytics (WA) data, add the sales increases of targeted keywords achieving higher positions to sales generated from targeted referral domains and divide by what was paid in employee hours or agency fees for research, implementation, and data analysis.

So why are people overcomplicating this or disagreeing that you can put an ROI on SEO? Here are a few arguments followed by my responses:

- Looking at monthly SEO ROI is too short of a period as ranking results can take 6+ months to achieve.

  • First, ROI is not the only KPI (Key Performance Indicator) to be tracked. And I agree, in the first few months it’s about eliminating technical hurdles, and getting pages indexed. Set short term goals with different KPIs or set expectations on a short-term negative ROI, but the cost portion of the initial months can’t be overlooked in quarterly or annual ROI reports.

- Factors other than SERP Rank effect revenue, such as seasonality, product changes, price, or promotion.

  • Yes, account for those factors in your ROI forecast; adjust that forecast as necessary. Rarely have I encountered a company without months or years of past data, even if it can only be used directionally. Further, ask for the advertising calendar to anticipate lift from a Super Bowl ad or radio push.

- Increase in traffic/clicks, rather than revenue, is a better determinate for success.

  • There is something to be said for the numbers game, but ultimately why waste optimization efforts or bandwidth on visitors whose intent does not match that of the website’s (sales). It’s not too difficult to get traffic; it’s difficult to get converting traffic. Selecting the right keywords to match the desired behavior is an important process with SEO.

- What about a non-e-commerce website or branding intentions?

  • I wouldn’t accept a penny from any client without first establishing and gaining agreement on quantitative goals and KPIs. Be it time on site, clicks, or page views, I can set a monetary value to that success and measure that ROI with the above method and benchmark against past data.

- What if the engine algorithms change?

  • They absolutely will change; “improve” is a better descriptor. If SEO efforts are in the name of providing a good/relevant user experience, providing accessible content, and steering clear from shady practices, the site, and its ROI, should not be in jeopardy.

- What if the site has a poor conversion rate or poor checkout process that hinders revenue?

  • The client should be focused first on converting the quality traffic they are already getting. Every visitor is a potential sale. That said, your benchmark data should reflect the poor conversion rate and it becomes a constant.

Bottom line(s): 1) never optimize anything (or pay for optimization via a 3rd party) without an initial hypothesis on what you plan to achieve, and 2) gain agreement on all quantitative methods and timeframes to track the progress/achievement of that goal. Go forth and measure your success!

Posted by: Jeff Campbell, VP Product Development & Innovation


Leon said...

Absolutely. Not least to say that SEO can affect a site as a whole, and sales on low-margin items will pollute campaign ROI. Really a terrible way of measuring performance!

Copyright © 2008 Resolution Media, Inc. All rights reserved.