Is SEO Worth it?

Is SEO Worth it for Small Businesses?

Marketing budgets are under intense scrutiny right now, as businesses around the world and in a range of sectors tighten their belts. If you are involved in digital marketing, you need to be able to demonstrate the value of the different aspects of your role – including search engine optimization. How do you show the return on investment for SEO though? How can you prove unequivocally that it is worth the time and expense?

Read on, and we will show you!

Ask yourself one fundamental question

Any analysis of the value of SEO should begin with one basic question:

What is an improvement in your search engine ranking worth to your business, brand, or product?

Now, this question might seem like it is subjective, and thus does not have any value to a conversation about proving value – but it can be explicitly quantified.

What are higher search engine rankings worth?

You can use an easy equation (we promise to keep the math simple) to work out the value of an increase in your search engine ranking. What you do is: take the keyword search volume, the expected click-through, the average conversions rate, and the average order value, and multiply them together, like this:

Keyword search volume x expected click-through x average conversion x average order value

Then, you take that figure and compare it to the investment in SEO – you should now have two dollar amounts, the outgoing investment, and the incoming orders as a result of that investment. As with any cost analysis – you want the income to exceed the expense.

That might seem a bit abstract and hard to follow, so let’s put that equation to work in a real-world situation: something that we know a little about, a digital marketing agency.

Using ahrefs.com (an SEO analysis tool, you can use your preferred provider) gives us an average search volume for the phrase ‘digital marketing company’ of 900 – meaning this term is typically searched for around 900 times per month. This is the first figure for the above equation.

To find expected click-through rates, we turn to Google, or at least an analysis of Google, like this one. Click through rates for the first page of Google results on an organic search are listed as follows:

The number on the right in the table is the second figure for use in the calculation. As an aside, that table alone should be a good demonstration of the value of SEO – the drop-off between the first-ranked and the tenth-ranked results is huge!

The third and fourth parts of the equation depend on your organization – your sales team, web team, or finance team should have those figures to hand relatively easily. For the sake of the example, let us say that our digital marketing agency has a conversion rate of 2% of the visitors to the website, with an order value averaging $2,000.

So, for the first ranked position when a search for ‘digital marketing agency’ is conducted, we get this:

900 searches x 36.5% click-through x 2% conversion x $2000 spend = $13140

That means that $13,140 is the average expected income if you were ranked number 1 for the search ‘digital marketing company’.

That’s the ideal situation from your SEO – ranking number one. Let’s assume though, that for the time being you are not number one, and let’s say that you are currently number 20.

That equation then looks like this:

900 searches x 0.3% click-through x 2% conversion x $2000 value = $108

So you are bringing in an average of $108 per month by way of organic searches for ‘digital marketing company’.

It is obvious, then, that ranking number one is massively better for income than ranking number 20 – but there is one final factor to consider…

How much does it cost to improve search engine ranking?

Once again in our hypothetical world, let us say that you spend $2,000 per month on SEO – whether internally or with a specialist search engine optimization consultant. Over the course of a year, you might reasonably expect to gradually move up the rankings to number 3, following this approximate path:

This gives us an income for the year of $15,876, against an outlay of $24,000 ($2,000 per month, for a year). Obviously, this is a loss – but the story does not end there. In year two, you gradually work your way up to number one, on this trajectory:

Year 2 income then, is $66,960, against a consistent cost of $24,000. That gives us a profit over the two years (negating the loss in year 1), and we are better positioned moving into year 3 and onwards.

What does this mean for your business?

These figures are an example, so to find out if SEO is worth it for your business, with your keywords, your average conversion, and your average order value, you need to enter those figures into the calculation and run the numbers. You will soon see the approximate return on investment, and be able to make an informed, data-driven decision.

Check out Digital Dames SEO serivce packages. We’d love to help you run these calculations for your organization.