How to Measure the Value of Search Engine Optimization (SEO)

Here are some ways to measure the value of search engine optimization.

Cost of Visitor: cost of SEO / # of visitors

If your site receives 100k visitors across a year, and you spent $36k on your SEO during that time, your Cost of Visitor is 36 cents. Meaning, it costs 36 cents to get that person to your site from the search engines.

Cost of Conversion: cost of SEO / # of site conversions

If your site performs at a 10% goal conversion rate on 100k visitors across a year, and you spent $36k on your SEO during that time, your Cost of Conversion is $3.60 cents. Meaning, it costs $3.60 cents to get that person to your site and completing a goal (contacting you/buying product/spending money) from the search engines. Note: this metric includes the performance of your site in terms of effective content, lay-out, and usability. Because of that, the cost of SEO will rarely be the only cost for this metric.

Cost of Acquisition: revenue generated / cost of SEO

This is perhaps the holy grail of marketing measurement. It compares the total expense to Engage, Entice, and Evolve a relationship with an online visitor to an actual customer spending dollars. The goal is to spend the least amount to produce the most revenue. So, if you are able to spend $10 to get a customer to spend $100, you are making a clear, profitable marketing decision. There is no "right" cost of acquisition -- it all depends on the revenue you expect to realize from a customer and your marketing budget.

Let's say your total cost of ownership for digital marketing plan is $100k. Now let's say it drove traffic, which converted to sells, which ended in actual revenue of $1 million. Your cost of acquisition is $10 per customer. If you are selling an item that is $11, that is great! If you are selling an item that is $9, that is bad.

Conversion Revenue: Site Traffic * Conversion Rate * Goal Valuation

This is one of my favorites -- you take the total amount of traffic, multiply the conversion rate, and multiple the "value" of a goal. So, if you seek 1 million in yearly site traffic, and you have 10% conversion, and that conversion is "worth" $1, then you have instantly created a budget of $100k for your digital marketing plan.

The crux of this calculation is the "value" one places on a conversion. I've had clients state that a conversion such as ordering an item was worth 10 cents to them. However, a quick comparison on a marketing evaluation tool (aka the current spend-rate for pay-per-click ad) indicated that the competition was willing to pay $2 for simply a click onto their website. Clearly, the client didn't have a good valuation of the cost to convert that visitor into revenue. Or perhaps his competition was simply willing to spend a lot more to see the revenue.