Is SEO worth the money? How to tell if you’re getting a return on your investment with SEO

SEO can be expensive if you are hiring a full-service digital agency. Even many freelancers and consultants will charge an arm and a leg to do their work.

The typical cost for hiring a professional SEO is between $500 and $1000 per month according to an industry survey conducted by Ahrefs. They also found that the most common hourly rate is over $100 per hour.

These prices can be difficult to stomach for small businesses, startups, sole traders or bootstrapped SAAS companies. Especially when these money-conscious clients are beginning to wonder exactly what they are paying for. Furthermore, SEO takes time to see results and no professional SEO can fully guarantee (whatever they tell you) things like first-position rankings, conversions or results.

All this leads to a very valid question: Is it worth it? This post will consider when SEO is and is not worth the money, and how you can calculate the ROI of SEO.

Disclaimer: I am a freelance SEO specialist so have a vested interest in this topic. However, I’m not going to argue on that basis that “yes, it is always worth paying for professional SEO services” because it isn’t.

Second disclaimer: This is a first draft of this post. I will be expanding on the bullet points below.

SEO isn’t worth the money when…

  1. There’s no clear strategy
  2. You have unrealistic goals
  3. You’re not measuring what matters
  4. The focus is on quick wins, tricks and shortcuts

But SEO is worth every penny when…

  1. There is a well-defined strategy
  2. Goals are realistic
  3. Everyone is on board
  4. The focus is on building online assets with long-term sustainable returns on your initial investment

Calculating the ROI of SEO

One way to determine the value of SEO is to think about the return on investment. You can make a rough prediction about this if you already have data on your existing website visitors and are tracking conversions using Google Anaytics.

For example, lets say your e-commerce website sells chairs. 30 people buy chairs each month coming to £1500 revenue per month.

To calculate the ROI of SEO you can segment your analytics by channel and compare organic, social, email and PPC channels.

ROI refers to the return on investment for a given period. It can be calculated using the following equation:

Return on investment = (gain from investment – cost of investment) / cost of investment

For SEO it makes sense to think in terms of 3, 6 or even 12 month periods rather than a single month. Lets take a 6 month timeframe. You pay £500 per month for keyword research, link building, SEO strategy and content writing each month. Over 6 months organic traffic increases and sales increase. You can attribute additional revenue of £4000 to SEO over 6 months on top of the base of £6000 revenue for that period.

Here is how you would calculate ROI for the first 6 months of this SEO project:

(£4000 gain – £3000 costs) / £3000 costs = 0.33

x 100 = 33% ROI

However, this is not the whole story because SEO takes time. Work done in month one pays off 3 months later. So the ROI is likely to grow over time as new keywords and rankings are maintained.

The 80/20 of SEO

During my time as an in-house SEO I read a book called The 80/20 Principle by Richard Koch.

The 80/20 principle asserts that a minority, a small number, of causes, inputs or effort usually leads to a majority of the results, outputs or rewards, so most of the outputs result from a very small part of the causes or inputs.

Koch, Richard. The 80/20 Principle: The Secret of Achieving More with Less . Hodder & Stoughton.

The idea is that 80 percent of output often comes from just 20 percent of input. In other words 80 percent of what we achieve in our work comes from 20 percent of the time we spend working.

SEO is often a perfect example of this. By investing in content marketing and SEO, a company can often see a return on this investment over time that beats any other form of marketing or sales investment.

In my experience analysing traffic for pages with 100k+ monthly visitors I noticed that organic traffic (i.e. non-paid traffic from search) has the highest engagement and conversion rate compared to all others, especially social media. Digital marketing specialists polled by Search Engine Journal support this, stating that SEO has the highest ROI of any digital marketing channel.

This is because, in addition to being highly engaged and more likely to convert, organic traffic is effectively free compared to pay-per-click advertising. You may decide to pay an SEO Specialist to make sure you continue to rank well in Google for the right terms, and improve on your performance, but $500 per month is much cheaper than AdWords is likely to be for the same level of traffic.

Other resources

Whilst researching this post I found some other pages covering this topic that are worth reading too:

Is SEO Worth It For Small Businesses? – Forbes

Featured image credit: “Return on investment stock photo” by lendingmemo_com is licensed under CC BY 2.0