Calculating ROI for an SEO Campaign, Lets Explain How...
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Here’s a general way to calculate ROI from an SEO campaign. Anticipated ROI = (Anticipated Revenue from SEO efforts – Proposed Cost of SEO Project)/Proposed cost of the SEO project
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Let’s say you run an e-commerce site. Your anticipated ROI can be calculated based on the average monthly visits to your site, average conversion rate of the site, and average order value.
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For example, suppose your average monthly visits are 50,000, your conversion rate is 0.68%, and your average order value is $176. And your agency tells you that you might have to spend $20,000 for your SEO project.
From there, you can determine your “break even” point. This is the point at which you will generate a positive ROI from your agency and can be determined by proposed cost of project / average order value. If your proposed cost of project is $20,000 and your average order value is $176, then your break even point is 114 sales.
You can also determine the additional traffic you need to break even by number of orders needed to break even / e-commerce conversion rate.
So if you need 114 orders to break even, and your conversion rate is 0.68%, then you need 16,765 visits to your site
Of course, this is just a break even rate. To see significant ROI from the campaign, you’d probably want to see at least double those results as a client. So your ideal number of visits should be over 32,000.
Calculating ROI for an AdWords Campaign Calculating your ROI for your AdWords Campaign isn’t as straightforward as it might seem.
If you have Google Analytics, you’ll notice that there’s a default tab that shows the ROI of AdWords.
Google Analytics combines your total revenue from both your transactions and goals. This could potentially lead to double counting. For example, if a user on your site adds something to their cart, it becomes a “monetised goal.” In addition to this, Google assumes that all your revenue is profit since it can’t add in the costs of your business.