Return on Investment, or ROI, is a long-lived and venerable marketing buzzword. It has always been easy to calculate and it’s been a great measurement of how effective a particular method of advertising has been. You send out a direct mail campaign, and your cost is fixed; it is a one-time investment. You measure how your profits change due to that advertisement, and you can calculate a direct figure of how that cost affected your profits. A positive ROI is good; a negative ROI is bad. The larger the ratio, the better or worse it is. It’s all very simple.
At least, it was, before the world of websites, SEO and the Internet arrived. Online, ROI is a lot harder to calculate. It’s a lot harder to measure. Unfortunately, the idea of ROI has persisted, despite the difficulty of using it as a valid metric. Today, asking about the ROI of an SEO campaign is like asking to guess the number of jellybeans in a jar, when that jar is constantly changing size, being filled and being emptied. Why is it so hard to use an ROI calculation for your SEO campaign?
SEO is Long Term
SEO is a long term investment. With old forms of advertising like, say, a direct mail campaign or a billboard rental, it’s a one-time cost for a fixed-time or one-time result. You can take the amount of time and analyze ongoing profit changes, and compare that to the one-time expense of creating and renting the billboard.
With SEO, you’re constantly building. What you do today depends on what you did yesterday, and what you do tomorrow depends on the decisions of today. An investment you’re making now could not be made without the foundation laid by the past investments you’ve made. It would be as if each billboard rental you paid for was permanent.
Furthermore, old SEO actions can have long-lasting effects. Just try to calculate the return on investment of establishing your website as a whole; every expense you’ve made related to that website, compared with every bit of profit that has come from that website. Sure, you can calculate that number, if you kept detailed records. What good is it? It’s not as though you can make another website for similar returns.
ROI is a great calculation for one-time events or short-term campaigns. It’s also a great calculation for repeatable investments. A website and SEO campaign is none of those things. You can’t make another website. You can’t do SEO for a few months and ride on that one investment.
SEO is a Way of Life
Everything about the world of search is changing every day. Google updates their algorithm. Your competition changes how they market. You change how you market. Your users chance how they behave. In this kind of atmosphere, it’s hard to begin calculating the effectiveness of any particular change.
SEO is, essentially, a way of life. Trying to calculate the ROI of an SEO campaign is akin to trying to calculate the ROI of your initial decision whether to sell shoes or jewelry or software. Sure, you could make that calculation, but it’s not a valuable piece of information. You won’t change your business to one with a better ROI.
SEO is all about building habits and changing the way you do things. The driving factor for making these changes is profits, yes, and in a sense it’s fueled by a return calculation. However, it’s not strictly ROI. You experiment and see what brings in more users, and then you do more of that and less of whatever you were doing that hurt your bottom line. That doesn’t require a calculation comparing investment and return; it just requires measuring the change in profits over time.
SEO is Affected by Outside Influences
Calculating ROI is a matter of pinning down the variables and tweaking one to see how it affects your bottom line. With SEO, everything is always changing. In fact, there’s one factor that you can never pin down, even if your website is left completely static; the search engines. Your conceptual ROI can be altered drastically by Google making a change, with no input or chance to adapt on your end. Overnight, literally, your ROI calculation can drop.
The thing is, that particular ROI might not even be that bad. You can maintain your profits through an algorithm change, but your expenses go up for a month or so while you adapt to the change and make sure you’re still compliant. It’s a lot more like investing in the stock market than it is marketing. You need to know not to jump ship when prices (returns) dip, because they can rise again and bring you more than they could before.
ROI Ignores Branding and Engagement
ROI is a very limited calculation. It considers your investment and your profits, and that’s it. With a website and SEO, you have a lot more to consider. You might make a series of investments with SEO that give you absolutely no positive ROI, but they are the foundation of future investments with a high return. Branding, for example. It’s impossible to set a value for the profit that comes from broadening the exposure of your brand name.
Customer engagement is another big one. Sure, you can establish a Facebook page and measure your conversions from that page, through the Facebook pixel and conversion tracking code. You can see just how much you make in profits from your Facebook page. Even so, it ignores the value of social metrics like comments and shares. User engagement is a big part of SEO, but it’s impossible to assign a monetary value.
ROI For the Little Things
ROI is a useful calculation in small, limited circumstances relating to SEO. For example, if you’re using pay per click advertising as a component of your overall SEO scheme, you naturally want to target keywords with a high ROI. It only makes sense for fixed investments. It’s only when you consider SEO as a whole that ROI becomes a meaningless and impossible to calculate figure.