Link Building ROI: 6 Proven Ways To Calculate It

You’re probably reading this article because you’re at the stage where you’ve realized you need to bring link building in. 

Inevitably, the question of cost comes in – and then that age-old question that haunts most senior marketers or SEOs – how do you calculate link building ROI?

The problem is that link building is not a silver bullet – it may lead to ROI it may not – depending on your current situation. While paid advertising is fairly straightforward (X amount of money put in, should lead to X amount of sales), we just don’t have that luxury with SEO, because of the amount of variables at play. 

The key thing here is understanding why you need link building, to what extent, and what the correct link strategy is to help you reach those goals. 

Look, you won’t ever be able to 100% predict link building ROI exactly, but if you understand all these aspects right, you’ll at least be able to estimate it, and at least reduce any uncertainty.

In this article, we’ll give you a full overview on the different approaches to determining ROI, the variables or common mistakes which will affect (or enhance) your ability to get return

Establishing Calculation Standards

Regardless of whether you are going to do link building or not, having proper attribution is crucial to your SEO strategy.

In most cases, you might be using systems like Google Analytics (GA4) and Google Search Console, and you are getting a measure of the amount of traffic and users you’re getting and which pages they’re landing on. The next stage is to ensure you’re tracking enquiries or sales.

A couple of things you want to do:

• Set up your “Events” and “Conversions” within GA4 so you can access and create reports to track conversions later.
• Set up UTM tags to help track conversions and understand the original source. This is especially important if you want to know if links from specific websites drove conversions and traffic, if it came from social campaigns or something else.

Once you are able to track conversions accurately, is when you get close to knowing your conversions/visits %. This starts to become important once you have a large enough dataset to play with.

I’d generally say once you’re getting a few thousand visitors a month, is when you can say its significant enough, to draw conclusions. More specifically:

• If your conversion rate is around 1-3%, general rule of thumb is to aim for around 10,000 visitors per month for reliable estimates.
• For conversion rates higher than 5%, 2,000–5,000 visitors per month may suffice to reach statistical significance.
• Lower traffic sites with higher variability in monthly traffic or low conversion rates may need to observe data over a more extended period to avoid skewed short-term fluctuations.

Aside from this, you also need to ensure you have these other items in place. Otherwise link building efforts will just happen with no direction, and positive returns will be left down to chance.

• On-page and Technical SEO: This is the foundation of any SEO strategy. Without a fully functioning optimized website, with good page structure and on-page optimization – building links will be like fueling up with petrol, when your car has a broken engine. It might work a bit, it’ll get you some traction – but nowhere near what it should.
• Content creation: In most cases, you also should be writing content – making sure its helpful to users, matches search intent, and is being refreshed on a regular basis. Use tools like SurferSEO, Frase.io or PageOptimizerPro to ensure its optimized to the max.
• Domain Authority (DR or DA): The interesting thing about ranking content is that if you have a site that already has a good base of authority (perhaps you’ve naturally picked up a lot of mentions and links over the years, or have some good PR), you might find that you start building some links, and gain traction pretty quickly. It might be about just ensuring you maximize all that existing link equity as much as possible.
• Conversion Rate Optimization (CRO): The better your website is optimized for conversions, the more revenue per visit you’ll get. So ensure to look at everything like your CTAs, steering people to your email subscriber list, and maximizing the user experience when they buy a product. Every incremental change will add up.

6 Time-Tested Ways To Measure Link Building ROI

Once you’ve established your foundation and have identified that you need to do link building – how are you going to ensure that you can attribute any future results to your link building efforts?

Here’s a few ways to do it.

Evaluating Organic Traffic

Once you establish that you can get a certain conversion rate from your organic search traffic (and assuming your content/keyword targeting strategy stays the same) – more organic traffic = more conversions.

Provided you have your attribution set up correctly, organic traffic and conversions are tangible metrics you can keep track of.

It then simply becomes about getting those organic traffic numbers higher, knowing that conversions will increase almost proportionally.

One of the best ways to measure traffic will of course be Google Analytics, and Google Search Console will be useful when you just want to pull reports on your Google search engine rankings.

Here’s an example of a client in the fashion ecommerce space, where we can see over this 2 year trend, a continual, upward trend in the past year, where we did consistent link building. 

While the client also had a good SEO strategy at play, this had been the first time they’d focused on actively trying to build quality links with an agency who specializes in it. By knowing these trends of what happened previously, versus what happens during a period of link building – this can also help with evaluating the viability of investing in link building further.

Evaluating SERP Ranking Improvements

At the basic level, if you have a specific set of pages/target keywords that are high value, and you know will likely lead you to more revenue if you can get more traffic to those specific pages (whether they convert there or downstream) – this can be one way of testing the waters with link building, and seeing its viability.

The top position of a keyword will get (on average), around a third of the clicks. The exact % differs depending on the SERP type, and the study you look at. (Backlinko’s study says 27.6% while the free Google Organic CTR tool from Advanced Web Ranking gives you more specific numbers).

So knowing this, you can monitor the ranking improvements of those pages – and it should lead to a traffic (and revenue) increase. You do need to take into account keyword difficulty however, as the higher competition keywords may require more effort/links – but we’ll talk about this later.

Now to get this really dialed in right, you need to know your “Average Revenue per Visit”

Average Revenue per Visit = Revenue/Number of Visitors

The table below helps visualize what would happen, if we assume a 20% improvement in traffic, and projected it over a 6 month campaign. I’ve underestimated and considered increases from Month 3 onwards only, since there is often a lag period when implementing link building. 

Where it gets interesting is when we consider the following:

• The total cost of link building during this hypothetical campaign was $24,000
• The total amount of new revenue generated was $40,000

The beauty of search engine rankings is that once you can move key pages into top positions, you’ll hold them for a while and the results (and revenue) will continue to add up, meaning your initial investment in link building continues to bring in long term ROI.

Evaluating Referral Traffic

One of the by-products of building good quality links is that it can also drive referral traffic. This referral traffic can build up over time, and subsequently revenue.

This is by and large, one of the lesser benefits of link building but it is a benefit to consider, and it can have implications when you want to consider the “holistic” ROI of link building. I would suggest only considering this, alongside the main ROI you are getting from organic search traffic.

GA4 (and most traffic analytics software) are notorious for not always being able to attribute incoming traffic to the right sources – but you might also find that Direct traffic will go up ,as your referral traffic goes up.

In the past, we did experiments with a client and used UTM tags on links we were building – this then enabled them to track when referral traffic was coming through. But, oftentimes you’ll lose clicks.

Even without using UTM tags, you can simply look at your Referral traffic on GA4, and look into how much it’s bringing in during the course of the campaign, compared to before.

To get more specific insight on the source of the referral traffic which is leading to conversions, just select “Session source/medium” in the dropdown above. 

Then just look at the sites that are referring converting traffic. 

Caveat: lets keep in mind that certain links may be more conducive to conversions than others. For example, a round listicle of SaaS tools, probably has users reading it, who are further down the buying funnel. While if you’re getting links to blog posts, it probably won’t lead to a conversion. 

Monte Carlo Simulation Method

The Monte Carlo Simulation Method is a statistical method you can use, for forecasting something which has significant uncertainty. At its core, it involves creating tens of thousands (or even millions) of different calculated scenarios  – and the probability of those various outcomes.

The resource I linked to above explains it in much more detail, but in a nutshell:

“The probability of varying outcomes cannot be firmly pinpointed because of random variable interference. Therefore, a Monte Carlo simulation focuses on constantly repeating random samples….A Monte Carlo simulation takes the variable that has uncertainty and assigns it a random value. The model is then run, and a result is provided. This process is repeated again and again while assigning many different values to the variable in question. Once the simulation is complete, the results are averaged to arrive at an estimate.”

It’s commonly used in the financial industry for assessing the probability of success with an investment. It can also be applied to assessing the ROI potential of link building. 

So we’ll touch on this in more detail in this article (and also in our “How Many Backlinks Do I Need?” article) but we first have to make certain assumptions when using this model:

• You need to close a link gap against your main competitors, and most of the investment you’re putting into link building/digital PR will be to close this link gap.
•  After that you need to then maintain a certain link velocity, to keep up with, or stay ahead of your competition. 
• You generally won’t get there quickly, and you need to invest in link building and content, for a sizable period. You’ll want to underestimate your success – if you think you can get there in 6 months, you actually want to assume it might take you 12 months to get ROI. 
• The likelihood is, even while you invest in link building and SEO, you’ll be generating some revenue even before you reach your final goals/close the link gap. But for the sake of assuming “worst case scenarios” you want to factor this out of the equation. 

When you build out your calculator for this (TLG will probably release this as a standalone tool at a later date), you want to get the following data points:

• Planned length of campaign – the number of months to calculator ROI over
• Total Traffic Potential (Per Month) – this is how much traffic you think you can get based on target keywords/pages i.e. your Serviceable obtainable market (SOM)
• Revenue per Visit (RPV)
• Total domain-level link gap
• Number of months to close link gap
• Cost per link – or this could be all your labor, infrastructure costs, cost to outsource
• Link velocity per month

You want to get your upper and lower bound for these numbers. Because it’s rarely going to be a hard number, you will likely have an idea of what’s the maximum amount that metric could be, and what is the lowest. 

For example, let’s say in my calculator, I know that for TLG’s website, we had the following:

The mean numbers are auto calculated, and based on what I put in the upper and lower bound. For traffic potential for example, I know that at a lower level, I could get to 50,000 per month if I reach my goal, as I know my biggest competitor, and the keywords which I’d consider my SOM. 

Upper bound, I’ve inputted as it’s 36% higher than my lower bound. This is based on a ScreamingFrog study that found that Ahrefs underestimated organic traffic by 36%. So we’re assuming that the actual traffic that could be brought in could be higher. 

Links to close domain authority gap, is 360 on the lower, and 540 on the higher. I know the calculations show a 360 link gap, but I’m overestimating on the upper to assume worst case scenarios. The same logic follows for other data points, like cost per link, conversion rate, and close rate. I’m assuming good scenarios, and worst case scenarios. 

You also want to select your ROI period. Which is the number of months over which you’ll be assessing financial viability. I’ve set it here for 18 months, but you could extend this, if you’re trying to look at the viability from a much more long term view.

This then gives you the calculations in the table above. What you basically want to see is a value greater than 0, in the “Probability of positive ROI” box. This means there is a likelihood you will get an ROI. 

Plus, don’t forget that we’re vastly underestimating numbers here. The net return is assuming the worst case, that we do not actually generate ROI until we close link gaps. The reality is, if you have a high probability of positive ROI, you’d get revenue during the campaign as well. 

TAM, SAM, SOM method

We touched on this briefly in the previous section, but this is where you would forecast organic traffic gains, based on keywords you think you can realistically capture.

All keywords you could gain, in theory fall within these buckets.

• Total addressable market (TAM): keywords that could hypothetically be your market, if you assumed zero competition. (broader)
• Serviceable available market (SAM): the segment of the TAM that is your market with your current business model.
• Serviceable obtainable market (SOM): the segment of the SAM you can most realistically capture given the current stage.

The caveat here being you want to be “realistic”.  For instance, for TLG I would include fairly competitive keywords as we could build up topical authority, and there are commercial keywords which are relevant, as well as top of funnel keywords. But, I wouldn’t try to include terms like “SEO consultant” or “what is link building” because it just goes out of our market, or is way too broad and competitive.

So you want to go for your SOM segment.

We talk about an extensive process for calculating this in our upcoming “The Links Guy Academy” course upgrade, but in a nutshell, here’s how you’d calculate link building ROI.

Step 1 – Extract all your target keyword data via an SEO tool

So in this example, we’re extracting everything that TLG ranks for in between position 6 and 30. We can say this is what we think we can realistically try to capture as our SOM in our time period. This will give you the associated search volume estimates.

You want to factor in all of the following metrics or considerations:

• Click-through rate % – e.g. if a keyword goes to position, on average it’ll get 27.6% of the clicks. You can use the numbers from this tool.
• Clicks per search (CPS) coefficient – because even if someone searches a keyword, not every search ends up with a click. SEO tools may have the CPS score for the keyword, or just append a value of 0.36 to assume the average.
• Filtering out difficult keywords – by eye, or by also factoring in Keyword Difficulty (KD) scores. But, take a judgment call. Sometimes you will be able to capture a difficult keyword and its worth including, so don;t be too strict with your KD score criteria. For example, we helped a client capture keywords like this, which were in theory, very difficult.

• Remove junk/irrelevant keywords. Self explanatory but cut out junk that appears from the SEO tools export, as you do always find something there which isn’t relevant.

Note: We filtered for everything between positions 6 and 30. You can expand this, and just include everything that is within your SOM.

Step 2 – Extrapolate the traffic potentials

Take all of your target keyword volume, plot them out on the spreadsheet, and multiple the metrics in step 1, to predict how much traffic you could gain.

So essentially you are doing the following calculation for each keyword:

Search Volume * CPS * CTR
Different schools of thought on this, but one way, is slightly underestimating, and assuming you’ll reach position 3, 4 or 5 for each keyword – and that gives different scenarios.

You can also just calculate the top position for each one, and that gives you your maximum possible traffic potential.

Step 3 – Extrapolate the revenue gains

Next you have a couple of options.

1. Take all that traffic potential from Step 2 and multiply it by your total Revenue per visit. A rustic way of getting this revenue per visit, is just taking a large period like the last 12 months, and dividing organic search revenue by the amount of new organic search users

2. Multiply by Revenue per visit for each landing page. This just means you’ll get a more accurate measure, of how much each individual page will bring in once you gain more traffic. You can get this data from Analytics, although may need to use the Explore feature to build a custom table, or use Looker Studio to blend a datapoints together. The tricky thing here is that if you have no existing data for some keywords to gather from.
3. Multiply by the CPC cost / ROA assumption. If all else fails, or you don’t have enough sample data, you can fall back on the CPC cost. This will at least validate the traffic’s value based on what you’d have to pay on Google AdWords. You can then take it a step further and assume a 2:1 Return on Ad Send (ROAS) – and just multiple the CPC cost of that traffic by 2. This is an underestimation, but at least allows you to attach some kind of value.

Link Gap Calculations and ROI

Aside from the methods above, sometimes you want to drill down your link volume requirements a step further. Maybe you’re at the stage where you have pretty good domain authority, you’re already ranking well – but you just seem to be lagging behind on certain groups of keywords.

I see this commonly with clients that have invested heavily in digital PR or brand building. They’ve picked up a lot of rankings across the board, get a lot of branded traffic, but just seem to be lagging behind a lot of smaller competitors in the SERPs.

Two of the main ways you can do link gap calculations:

1. Domain-level link gap

This is just where you simply compare the number of unique, dofollow referring domains you have, and compare it to your main competitors.

Here’s a snapshot of how one may look. 

What we’re doing here with our in-house tool is flittering for unique, dofollow referring domains, with DR or 10+ and Domain Traffic 100+. This then allows us to get a ballpark estimate against the competitor.

2. Page-level link gap

At the page level, you can also calculate the gap, in much the same way. Except here, you are taking a specific keyword (or group of keywords), and comparing your article, against your SERP competitors.

After trimming down and filtering for just unique, dofollow links, we can see a result on the first page, which on average has 22 links. The median of the results comes at 28. From the average and median, we’d always take the higher one – which is this “SERP Max” value.

In that example, let’s say we had a competing page and we wanted to break into the first page, but only had 1 backlink going to our page. That means, we have a link gap of 27 links.

You would then apply this principle to all of your most valuable pages, and then it will give you an estimate of the number of links you need to build to each of them. With this information in hand, you can then go back to the process we talked about in the “TAM, SAM, SOM method” section, and try to extrapolate potential traffic and ROI gains.

Note: this also isn’t an exact science. You might rank in the top positions with less links, you may be able to get away with building links to other pages, and ensuring your internal linking is on point. But, this helps us understand the competitiveness (or lack of), in the SERPs for our most covered terms.

ROI Calculation: Short Term vs Long Term

Now that you know some of the ways that you can assess the potential (and likelihood) of a return on investment from your link building activity – you also want to be able to assess this ROI over both the short term and long term.

SEO and link building is a long-term strategy, and you do need to be patient. But how do you ensure you are following the correct key performance indicators, and that link building  ROI is going in the right direction?

Short Term Link Building ROI

The reality in business is, you can’t simply wait several months to see if there is likely to be any actual link building ROI.

You need to measure something in the relatively short term – and by that I mean from 3 – 6 months. So a few areas you can look at:

Movement of specific keywords & pages: Once you have estimated some page-level link gaps of very key pages, you can start building links to those, and monitoring the impact. The right link building agency should be going for the lower-hanging fruit, where it is viable to compete on a more short-term basis. So monitor the impact of those. If rankings are going in the right direction, it should then lead to traffic increases and conversions.

For instance here’s an example of an Ecommerce client. We had one specific product category which we knew was a popular product, and would sell if we drove traffic to it. While the traffic is a bit choppy (due to the competitiveness of the keywords), overall, it was still an increase within about 5-6 months.

Referral traffic increase: We touched on this previously, but if you can drive some sort of referral traffic from some very high value links/referring pages – such as product listicles – this can also set a strong precedent for short to medium term ROI. What’s interesting about referral traffic, is that this is almost like a positive side effect of good link building. We can’t always expect it, but if it does happen, its incremental revenue, and even moderate numbers, will add up over time.

Link quality metrics: This especially follows if you’re outsourcing to  a link building agency or freelancer. Goes almost without saying, but you need to ensure the links you’re getting are safe, and of sufficient quality and the link metrics are good. Poor quality links, the type you’d buy off Fiverr, will at best, be a waste of money. At worst, it’ll have a detrimental impact, and cause rankings to drop. You can monitor this in the short term, and often, moving away from a low quality provider, or just knowing what a high-quality link looks like, will set a precedent for later.

Long Term Link Building ROI

Once you can see things moving in the right direction, you also need to think about what the long term signs are. This is important, because if you’re willing to think long-term, that does mean you need to spend a significant amount.

For instance, It’s not uncommon in the SaaS niche, for founders to allocate somewhere in the region of $100,000 a year to SEO – perhaps 60% of that for link building, and 40% to content and on-page efforts.

As time goes on, it will often get harder and harder, especially if you’re in a fairly competitive niche. You are competing against bigger players, trying to grab harder keywords and moving the needle even a few %, which means significantly more effort. So what items do you need to look at?

Domain Authority or Domain Rating growth: This is one way of visualizing growth over the long term. Now, these metrics are logarithmic, so when you’re at the lower range of the authority scale, it’s easier to move up. As the numbers get higher it’s exponentially more difficult.

Of course, these metrics in of themselves, mean nothing. But if you are building good quality links and traffic generally speaking is growing over the long term- the authority number going up, means all that investment into link equity is paying off. Maybe along the way you;’ll have slight dips, and increases, or short-lived spikes. However, this should balance out over time, and because you are a higher authority, it then becomes easier to hold certain keywords, or gain new keywords when you publish a new piece.

Here’s an example below, of a client where we 5X’d the DR, and 4X’d the organic traffic within the same time period.

Solidifying competitive keywords & pages: Just as much as it’s about capturing the low hanging fruit in the short-term – in the long-term, you want to get some of your most difficult, and lucrative keywords. These will be the type of keywords, where you know that if you can capture  these (and hold them), it is the key to unlocking revenue growth, which subsequently means you’d get back your full investment before too long.

For example, we helped a client in the fashion sector gain very lucrative positions for a high value page, during our 2 years building links for them. Even post-HCU, and over a year after we stopped building links, they still hold a top 3 position for this keyword below – the traffic value of this keyword alone is worth over $1,100 a month.

Organic traffic growth: Last but not least is of course the amount of overall traffic growth. There is something to be said for just continuous compounding efforts. The more traffic you get, the more revenue this should lead to. (provided you have your SOM research correct). As we touched on in the “Evaluating SERP Ranking Improvements” section, the ROI may not come as soon as you reach good positions for the keywords you were targeting – but it will come later, when you hold those positions over a period of time, and reap the rewards for months to come.

Making Sense of Your Link Building ROI

So from everything we’ve talked about so far, we can see that.

1. There are a number of ways we can proactively try to estimate/assess the potential of ROI before investing in link building.
2. You can monitor different metrics, while the campaign happens – to assess if ROI will happen, and trends to monitor to keep things on track.

The second point is key, as it is easy to get side tracked and to start hyper-focusing on things which don’t matter in the grand scheme of things. For instance, you don’t want to only look at rankings of specific keywords in isolation, because it may be a high difficulty keyword that will take time to achieve. Or it may not even be a keyword which is that commercially important.

So what you want to do is have a more holistic view of results, and use that to interpret the ROI you’re getting from your link building.

Domain Authority and Domain Rating: Since these are comparative metrics, it is worth benchmarking your target DA/DR, relative to your main competitors. The theory being that if you can reach that level, and those are your close competitors, you should then be capturing a slice of that traffic for your own site.

As per the example below, which is taken from Ahrefs Organic Competitors feature, if those 2 competitors are the standard we have to reach, then our goal should be to eventually reach this 50-65 range. The closer and closer you get to this, the more that your investment is paying off.

Organic traffic: Google Analytics or even an alternative like Fathom Analytics will be your friend here. Just make sure you have your attribution setup correctly for enquiries/sales, assume that some of it will end up in the “Direct” traffic bucket, and above all else, you need to be patient. Even once you see an influx of rankings/traffic, you have to account for the fact there may be fluctuations in traffic in the initial weeks – but once it settles and the traffic numbers across the month start to increase – it will impact revenue.

It’s better to compare 2 time periods that are not massively affected by seasonality, and far apart enough that you can say there is a significant change. I tend to look at the traffic and revenue from before we started link building, compared to 3-4 months in, 6 months and 9 or 12 months. This starts to paint a picture of how successful it has been for the bottom line.

Traffic value: This is another good way to interpret the value of the traffic you’re getting as a result of your link building. We touched on this in our “TAM, SAM, SOM method” section, but you can essentially take the CPC equivalent of the traffic you have gained. This gives you a dollar value, and you can use the assumption of a 2:1 ROAS.

The reality is that much of that traffic will be even more valuable than just that dollar amount, but this allows you to make a quick interpretation of the traffic, and its value.

Common Challenges Faced While Calculating ROI Of Link Building

You’d be forgiven for thinking that the ROI of link building is a sure thing, with the techniques listed here. However, there are also caveats that come along with this as well.

Other variables: Link building cannot exert its full effect, if you don’t have other items ironed out. This could be your on-page optimization, technical SEO issues, or content quality, or how effectively your pages match user intent. If you don’t get traffic or revenue increases, it may not be because of the link building, but because other SEO items have to be resolved.

On top of that, if you do actually get an increase, did it happen because of the link building, or in spite of it? This can be hard to quantify, as you won’t ever really be able to calculate to what extent it was from link building, on-page factors, or just Google changing how it values the site.

External factors: There’s always the potential that something out of our control will affect ROI. For instance, Google releasing a large algorithm update which affects traffic (either positively or negatively). Another competitor may come out of the wings, and pour significant resources/investment into link building and SEO, which we would then need to match, if we wanted to keep up.

Conversion rate optimization (CRO) and Sales process: If your website (or sales process) doesn’t convert that traffic into revenue, that will of course also hold you back. Link building can only do so much, and help you drive link equity and better rankings – but this is where the CTA’s on your site, the user experience, or even how your team/automation handles enquiries, will also play a crucial role.

In fact, as evidenced by theories surrounding NavBoost – if your site doesn’t provide a good user experience  – then this is probably going to have a knock on effect on suppressing the ability of the site’s pages, to rank and attract more traffic. Essentially, better user experience = more traffic in the future.

Wrapping Up

SEO – is not an exact science. And it is dependent on so many variables and external factors, that you can never predict the exact ROI of link building.

At the same time though – you need to at least be able to do projections and be in the right ballpark, rather than blindly investing in it, and crossing your fingers.

There are various ways of calculating ROI, or projecting the potential of ROI – the key thing is to just do something, and take action.

If you’ve already been doing link building and not getting ROI –  then its also an opportune time to re-evaluate your link building strategy, determine if something else other than link building is holding you back, and/or if it’s the quality of the link building at play.

At The Links Guy, we are an ROI focused link building agency. We can not only give you the assurance of links that should move the needle – but we can do it in a way where we keep revenue opportunities top of mind.