Link Building Return On Investment – How to Calculate Link ROI

Is link building worth it for you? And if so, for which keywords? To be able to answer these questions, you have to calculate the ROI.

Suppose one speaks in psychology (or in conversion optimization) that all decisions that we consciously make are about gaining pleasure or avoiding pain. In that case, this can also be applied in a similar way to entrepreneurial action.

Business is about increasing profits by increasing sales or reducing costs. This standard applies to every marketing measure and thus also to link building and the question “whether this is now profitable or not.”

The keyword set as a starting point

The starting point for an ROI analysis is the keyword set that you want to optimize with targeted link building. When creating an off-page seo strategy, it is an important task to identify these keywords.

In general, the following parameters are decisive:

  • The keyword has a high search volume. SEO tools such as Searchmetrics, Sistrix, or SEM-Rush provide this data.
  • The keyword has a high transaction probability. “Buy Adidas Original Swift Run” will convert significantly better than “Adidas Shoes.”
  • The keyword generates the highest possible shopping carts or a high margin. You can generate this data via analytics systems such as Google Analytics or Webtrekk, which have eCommerce tracking set up.
  • The keyword does not yet rank at #1. As a rule, it wouldn’t make sense to spend money where Google is already more than happy.
  • The keyword ranks in the threshold area, i.e., between #5 and # ]30.
  • In front of you are competitors who can be overtaken with reasonable effort. In many keyword sets, you will find Wikipedia, the manufacturer of the product, or Amazon in first or second place. Here you have to consider in each individual case whether it makes sense to take money into your hand.

The combination of these metrics makes it. The keyword “paper clips” may have a high search volume, but the shopping cart and its margin should not be that high. On the other hand, there are keywords that are rarely searched for but generate a massive shopping cart (“garden arbor marble”).

So you have to collect the above-mentioned metrics from the various sources and then weight them—such a sorting results in a prioritized keyword set.

How profitable is the keyword set?

After that, there are various ways to work out how profitable each keyword set really is.

Possibility 1: Forecasting the increase in traffic and calculating the additional sales generated

First, you take your initial data:

KeywordSearch volumeCurrent Position
stihl chainsaw16,948 # 5

With the help of your data from the Google Search Console, the next step is to determine how high the click rate from the Google SERPs is, i.e., how many clicks Google is currently sending you at position 5.

KeywordSearch volumeCurrent PositionClick rateClicks
stihl chainsaw16,948 # 5 2%417

Now you add your eCommerce data to calculate how much sales you will get here. In order to get realistic data, you get the generated sales from your analytics software, taking into account your preferred attribution model.

KeywordSearch volumeCurrent PositionClick rateClicksCon version rateØ shopping basketsales
stihl chainsaw16,948 # 5 2%4173%250 €€ 3,127.50 / month

You have now determined the turnover that you are currently generating via this ranking. Now SEO experience comes into play. In order to determine how much you can get with the keyword “stihl chainsaw,” you need to find out which position you can achieve. In this case, assume that places 1 and 2 are “reserved” for the manufacturer Stihl and that it will be difficult for you to come by. Then you can define 3rd place as your goal here.

With the help of a tool like Searchmetrics, it is only possible to determine which click rate is likely to be expected in third place. This data should, of course, be used with caution and should be compared with your own click rates from the Google Search Console.

KeywordTarget positionClick rateClicks
stihl chainsaw34.6% 792

Based on this data, you can calculate the traffic and sales growth and extrapolate this over different periods of time.

KeywordTarget positionClick rateClicksClick growthSales growth / monthSales growth 6 monthsSales growth 12 months
stihl chainsaw3 4.6% 792375€ 2,812.50€ 16,875€ 33,750

You can continue to count on gross profit, DB 1 or DB 2 margins here if you want. The principle should be clear. You can now compare the potential growth in sales to the costs incurred.

An experienced link builder can assess how much effort has to be made in the off page area to achieve the target positioning. The picture becomes more realistic if you finally assume that the forecast can deviate up or down by 30%.

Option 2: AdWords opportunity cost

In many cases, an interesting and perhaps easy to grasp method is to calculate the AdWords opportunity cost. With this calculation, you compare the investments in link building to reach the target position against the costs that you would have to deduct from Google to buy the additional traffic with the same keyword.

To do this, you grab the resulting costs according to the above calculation at “Option 1”. You put these in relation to the average CPCs that tools like SEMRush give you for the same keyword. Ideally, you get the CPCs from your own AdWords account (if you have one and already bid or have bid on this keyword).

The consideration of how much money you would have to throw into Google’s throat to achieve a result similar to that of ranking increases through link building is often very illuminating. Even if you expect a 50% deviation in the link building ROI forecast, you can use this to make a good investment decision in many cases.

The limits of profitability calculations in link building and SEO

With all the calculation models, it is necessary to point out the weak points of these methods. A prognosis about the profitability of a marketing measure is only as good as the assumptions and conditions under which it was created. This is especially true in SEO. When we customers make such prognoses, the assumptions are our life insurance, so to speak.

As already mentioned above, the sum of good rankings is not a recipe in which the individual ingredients and their quantities are known in detail. You can compare it to the Coca Cola recipe. It is kept strictly secret, but we now have a rough idea of ​​what the recipe is.

Sugar, water, carbonic acid, and lots of funny “E” s are definitely included. But it is not clear which sweeteners these are in detail and the relationship between the various ingredients.

Accordingly, it is also the case in SEO that we cannot say exactly how much value the individual link has for the ranking. And the return of a ranking gain to a link is often adventurous.

Links have a direct effect on the ranking of a website, but often also an immediate one. In server logs, you can very well understand when Google bot scanned a document for the first time after setting a backlink. But how quickly Google includes the changes in the ranking varies.

We also know from previous measurements that Google sometimes deliberately does not include new links in the ranking and deliberately delays the effect. It is a question of whether they do it because they don’t just want to rely on a signal or whether they also want to mislead the SEOs. But in any case, it always happens.

Those who do not make assumptions are worse off than those who make assumptions but keep “fuzziness” in mind.

You must always be aware that there is some imprecision in the data determined in option 1 above. The SEO tool can be wrong with the forecast click rate; the shopping cart can change, seasonality in the conversion rate can come into play (e.g., a Stihl chainsaw will probably convert better outside of the nesting and breeding season of birds because only in the pruning of trees is permitted during this period).

The often-used “excuse” that this is only “bullshit bingo” anyway, because there are these imponderables, and one can therefore not make such predictions, I do not accept. Because those who do not make assumptions are worse off than those who make assumptions but keep this “fuzziness” in the back of their mind.

In the end, all you need is an SEO with a lot of experience and someone who is familiar with your target group to keep the blurring as small as possible.

And then it’s definitely worth fiddling around with the numbers before planning your strategy. Because you certainly don’t want to sink thousands of euros into AdWords if link building might be the much better alternative – and vice versa, of course, the same applies.