“Money never made a fool of anybody; it only shows them up.”
– Elbert Hubbard
Money: Enterprise Finance & Accounting
SEOs don’t normally talk to finance and accounting departments. In enterprise companies, a professional SEO makes the effort to learn the basics of how the people of this department work, and how the balance sheet / income statement numbers they report relate to the marketing numbers you report. The professional must understand how new vendors are set up, how their invoices get paid, and how much money the SEO team expenses weekly, monthly, quarterly, annually. The professional must understand the fiscal calendar, the budget, forecasts, and actual top lines, margin lines, and bottom lines, and be able to identify SEO’s touch points.
Questions Worth Asking
Find out what your company’s most important financial goal: is it top line sales, gross/contribution margin, net profit? How much of that is SEO?
When planning for a new fiscal year, what are the projected sales, expenses and goals for the company? How do these cascade down to digital marketing? To SEO?
Here’s an example: let’s say you’re aiming to improve product page traffic and sales across the site by adding product reviews and Schema markup.
- Pull up Webmaster Tools’ Search Analytics
- Get product page traffic using the ‘URL contains’ filter for the last 90 days
- Select average position, impressions, clicks, and CTR.
- Let’s say your overall average position is 5, your overall average CTR 8%, and your overall impressions 10 Million. Your CTR will generally remain the same year-round.
- Find out what your annual product page sales are on the site from your internal reporting. Let’s say it’s $1 Million .
- You can then project that if your average product ranking moves up 2 positions, and increases your CTR to 16%, and if your conversion rate remains the same, your sales could double to $2 Million. Perpetually.
Finance will likely have a 5-year ROI estimate template, where you can fill out your assumptions, and calculate projects more objectively. Pop in cost of IT resources, projected sales, and boom, you can get everything from contribution margin, to net profits, to IRR. Your leadership is likely used to seeing major company initiatives estimated impact using these Finance methods. They may not understand the importance of Schema.org, but use these ROI calculators, and earn more credibility in the work you’re trying to do.
To Finance, SEO can’t report all non-brand sales gains as incremental business growth. It’s normal that most of your organic growth might not be true growth – it can simply be a shift from other channels to SEO (all of which depends on your attribution model, customer behavior, cookie settings, etc.). Finance generally has rule of thumbs on how to measure true incremental growth to the business. How should you figure it out, and how frequently should you report incremental sales?
From an accounting standpoint, besides revenue and costs, what other line items can SEO impact to the business?
If you build proprietary/custom tools for SEO for the business, how can you quantify the cost savings in labor?
Should custom tools be charged as marketing expense or capital expenditure? What’s the difference between the 2, and the overall impact on the books?
If you get rid of an expensive vendor, and instead develop your own customer/SEO enhancements in-house for the website, such as your own customer product review platform, how should you account for the marketing expense savings, and gained sales?
How does Finance / Accounting budget for full-time employees on the SEO team?
What about outside contractors, tool vendors and marketing agencies?
How does the company calculate lifetime value of a customer?
Make friends with Finance and Accounting teams. Learn the basics of Generally Accepted Accounting Principles, and the most commonly used Corporate Finance formulas. Apply these standards and ideas to your SEO data. Practice creating your own SEO-finance formulas and ratios.