Present Value Calculations To Show The Hidden Value of SEO

If you pitch SEO as a monthly service, using present value calculations can help you show a much higher ROI to your clients. There is a big difference between most SEO campaigns and other types of online marketing. If I buy a banner or a PPC campaign I receive a nice boost in traffic, but if turn that campaign off most of that traffic will disappear. On the other hand, most good SEO campaigns will grow steadily and gradually over time. If the service is stopped traffic could drop off slightly, but for the most part the increased traffic levels will remain (opposed to what one might tell their clients ;).

Since you are creating future traffic for a client, and that traffic should be converting into revenue, you should be taking credit for those future cash flows. Those future cash flows should be integrated into your ROI calculations. You'll be amazed at how much more attractive your campaigns will look. You'll have to think about how far forward you want to look forward when discounting cash flows back to the present. If you're just going to go 5 - 10 years out you can use simple present value calculations to discount the cash flows back to the present.

Now instead of giving a client or supervisor ROI based off the current time period, you can include all those future cash flows to seriously boost the ROI.