Digital marketers are under tremendous pressure at the moment to produce results with their marketing budgets. Gone are the days where a business just threw money at something and no care about the result. Instead we are in a world where every campaign needs evaluating to understand how it is performed against other marketing channels.

The first part of this article will help you understand how ROI is calculated. Then the second part looks at how to predict traffic. The final part will bring everything together to understand how predict what ROI will be achieved as a result of implementing an SEO fix.

What Is ROI and How To Calculate It

ROI is a metric used to measure how much was gained vs what effort was put in. It’s a metric that highlights which campaigns have performed best. Marketing & Digital Marketing managers want to be about to know if they spend X, then how much are they going to get in return 2X, 3X.

The formula for ROI is simple:

ROI = (Increase from Campaign – Cost of the Campaign) / Cost of Campaign

(£72,000 – £5,000) / £5,000 = £13.4

This means that for every £1 spent the client has earned £13.40.

How to Work Out ROI for Non-Transactional Websites

While working out the ROI of a website that sells online is reasonably simple to work out, doing the same for a website that relies on advertising revenue is difficult because we need to carry out a few calculations to use the ROI formula.

For example, if we were working on a campaign for an online magazine, which costs £2700 per month and this months, year on year there had an extra 89,122 sessions what’s the ROI?

What we need to do is first work out the revenue earnt. We use the CPM price which stands for Cost Per Thousand which is a marketing term used to denote the price of 1,000 advertisement impressions on one webpage.

In this example, we will assume that the site earns on average £35 per CPM with 3 different ads running on each page means that the revenue is around: £105 per CPM.

So now we have our CPM price we need to work out how many impressions or more commonly known as pageviews we have had. To do this we use the following formula:

(Sessions x Avg Pageviews Per Session) = Pageview

So, in our working example:

(89,122 x 1.55) = 138,139 pageviews

Now we understand how many pageviews we have achieved we can work out the amount of revenue using our CPM:

1,381 x £105 = £145,005

So now we have the total revenue finger we can now using the formula to work out the ROI:

ROI = (Increase from Campaign – Cost of the Campaign) / Cost of Campaign

(£145,005 – £2,700) / £2,700 = £52.70

Which means for every £1 spent we earn an additional £52.70.

It’s worth considering that this calculation presumes that all the advertising slots are sold and it also doesn’t consider bulk purchase deals which is often happens with buying media placements.

Our data is only an example of how the calculation work however the more arcuate the data the more accurate the result.

Working Out Traffic Predictions

It’s now for the second part which is how to make traffic predictions. Now like any form of prediction it is just a prediction which means its highly likely to be wrong. However, the more predictions you make the better you will get. However, we are going to show you some quick technics to make sure you are as accurate as possible.

The first part of any traffic prediction is understanding where traffic will be heading in the next 12 months if you did nothing, i.e. natural growth.

Now there is so many days to do this, however I will share you just one way I do it, however you are free do use your own method.

To predict future traffic, I go to Google Analytics and I click on Acquisition > Campaigns > Organic Keywords.

Then change the date to display data for the last 18 months. Make sure you set the graph to display the metrics in months and not daily as it is set to by default. Export that xlsx file and open it up in excel. Once open select the third tab called “Dataset2” and carry out the following instructions.

In the first column lists the month and in the second column lists the amount of sessions.

The first thing we are going to work out is the month on month percentage increase. We can do this by selecting cell C3 and typing the following formula:

=(B3-B2)/B2

Then set the cell formatting to Percentage and we have now just worked out the month on month percentage increase, YAY.

More

https://searchenginewatch.com/2016/12/16/how-to-predict-roi-for-seo-fixes/