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quantify the ROI on SEO and SEMThis question comes up a lot with my clients on an initial meeting. I get this question after confidently saying that SEO and SEM campaigns are a great investment. As with any investment, one would want to know what the return is going to be so that it can be compared to other marketing channels.

The challenge is to be able to quantify the data for my clients who operate in a variety of industries. In order to do so, I need to do some digging on how their business functions. In this article, I’ll show you how you to effectively measure your SEO and SEM campaign using an e-commerce website and small business website example.

As a starting point, we will define the size of the investment. Lets assume we’re talking about a $250 per month campaign resulting in $3,000 for an entire year.

Here is the data that we need: Measure website traffic

1) Your existing traffic count on your website

2) Your average transaction size (or at the very least, an approximate)

3) Conversion rates

Example 1: Measuring the ROI for an E-Commerce Website:

Lets assume that you are a company that sells coffee mugs with the following information available:

1)    The average transaction on the website is $10

2)    The website has a 2.5% conversion rate

Measure e-commerce ROI for SEO and SEM3)    The website has 20,000 unique monthly visits which means that the company currently brings in 500 customers that results in $5,000 in revenue.

With this information available, I propose an SEO campaign at $250/month.

The coffee cup company wants to get 3x their investment back, which means that they want to generate $750 in new monthly sales.

In order to achieve this mark, then I would need to generate 75 new customers in a month. In order to get 75 new customers, I need 3000 new unique website visitors based on the given conversion rate.

Example 2: Measuring the ROI For Non-Ecommerce Websites:

This requires a different approach when you are a business without an e-commerce site. Ie) An electrician, Real Estate Agent, Lawyer, etc. With these businesses, your ROI has to be measured on how many prospects you converted. Start by measuring how much traffic is initially coming to the website, and how many times the call-to action buttons (such as call or email us) are being clicked on. Then keep track of how many phone calls and email inquiries lead to a conversion. This can be verified by whoever is designated for answering the phone and email. The goal is to generate a logistical approximation of these values.

Lets use the example of being a chiropractor with the following information available: Chiropractor internet marketing

1) The fee is $200/hour

2) Each appointment is about 15 minutes long.

3) 1 of every 3 phone calls results in a booking

This means that every booked appointment results in $50 in revenue before paying any office overhead.

Lets find the break-even point: at $250 for a monthly SEO campaign, you need 15 phone calls to fill 5 bookings.

Now we can work on a tangible goal with our client. When Mr. Chiropractor says to me that he wants 3X his investment for his SEO campaign to make this worth his while. This means that he needs 45 phone calls from his website per month to secure 15 bookings. If 10% of website traffic calls to book an appointment, then we would need 450 unique visitors to the website over the course of a month. Although his is an obtainable target, I have to make it clear that it is ultimately up to the business to convert this prospect into a customer since I’m not running the business.

One final point that I will make on these calculations is that I have held the conversion rate constant. I have seen first hand that effective SEO and SEM campaigns can also increase the conversion rate, along with the traffic count. This is a two fold positive gain for the client.

If the results are aligning with your goals then you have a winner. A legit Internet Marketing company should be proactive about measuring these results for you.