Client’s SEO Question Series: – Should I Invest _$X.xx_ on my site for _{any-task}_?

A typical question we hear from our clients is – Should I/we invest $_X.xx_ on {fill-in-the-blank} project on the website? One of the secrets of the internet marketing is that there is a way to measure impact of efforts on pretty much anything. Because of this beauty of the Internet Marketing, investing on website can always be tied with the some form of Return on Investment (ROI), allowing us to make insightful decisions.

Here is a typical scenario – A favorite client of ours had a nice website (with eCommece and blog) and they were wondering about if it is worth investing $100 (for easy math) on their blog to add social sharing icons, which will allow readers to share the post with their friends.

Should they spend some money to get social sharing icons installed?
There are 2 answers. Short answer is YES. If you believe me, there is no need to read any further, however if you don’t, then below is the long answer.

How to calculate ROI on your investment on a website project?
Let’s start with your web analytic software – most likely Google Analytics. The first piece of data comes from GA’s Traffic Sources. In this case, we noticed, in last 30 days, there was 287 unique visitors on the blog site who visited 618 pages. From opportunity point of view, the blog missed out 618 times to allow its visitors to share the story in their circles. Techie speak – missed out impressions opportunity.

How many of them would have actually shared your link?
Here, we can assume 1% “Impression to Share” ratio, which is typical. Even if 1% of people had shared the link, 6 people would have shared it.  According to Washington Post Story on Facebook, an average users’ number of friends is 245. Let’s say 200 to be conservative for our math. With 6 shares, there could have been potentially 200×6=1,200 new views on your link. Now, let’s assume 5% Impression to Share ratio. With that we get 5% of people who were exposed to the link clicking on it, allowing our client 5% of 1,200 = 60 additional visitors every month. Isn’t that impressive?

What if the story is great?
Instead of 1%, if 10% would share the link, the new traffic possibility sky-rockets to 12,000 in a month. Out of 12,000 impressions, if we get 5% of them actually visit the site would allows us to have 12,000×0.05 = 600 new visitors in a month.

Taking a step further – calculating Year to Date

Just for the heck of it, we did the same math for the entire year of 2012. Our client had959 unique visitors year to date who with page-views at 2,397. With 1% share and 200 average facebook friends, you are looking at 1% of 2,397 = 23 x 200 = 46,000 possible views. Mind boggling, isn’t it? That’s what the social media possibilities are all about.

Bringing Money into this equation: Calculating ROI

Say, the client blog is about “tips for parenting”. It looks like if they have to purchase traffic from google adWords using this keyword, the cost per visit is around $1.42. (Llooked it up in adWords tool) and for “parenting with purpose”, the cost is $1.01. For simple math purposes, let’s assume the cost per paid visit is $1.00. Techie speak – Cost Per Click (CPC).

What would have been the cost of 60 new visitors in a month?
From last 30 days data, our client’s realistic potential was acquiring about 60 new visitors in next 30 days. That would have cost them approximately $60.

If things move on this average target, the breakeven point is about 2 months (may be 70 days), after which it’s all gravy.

Here is a simple ROI calculation in 6 months:
Income of 60 visitors x 6 months = 360 visitors * $1 = $360 with $100 development cost, allowing ROI to be $360/$100 = 3.6 = 360%.

How data produces insight on Internet Marketing?
If the client were to make an investment of $100,  in 6 months, their ROI would have been 360% with break-even point somewhere around 2 months.

This is how data driven decisions are made on web!

Long answer to the question is still YES.