How Much is a #1 Ranking Worth to Your Business?

Estimating the Traffic Value of a potential target keyword is a critical step in a comprehensive keyword research process. If you know how much value a top ranking will bring to your business, you can better determine how much time and money it would be worth investing in SEO. You can even calculate the ROI of each keyword you’re considering, and choose to target keywords that will bring the most additional revenue for the least cost. That’s the kind of accountable marketing that even your CFO will love!

The Traffic Value of a keyword is a function of a) the value to your business of a visitor who searched for that keyword (Earnings Per Click), and b) the number of clicks you receive from that keyword (# Clicks). Here’s a simple formula:

In SEO the number of clicks is determined by the total number of people searching for that keyword (# Searches) times the percentage of people who click on your search engine listing (Click-Through Rate), so the formula becomes:

Calculating the Traffic Value of a Keyword – Example

As an example, let’s assume that 500 people per month search for the keyword “Yoga DVD reviews”. The owners of YogaDVDs.net have calculated that each visitor to their website looking for “Yoga DVD reviews” is worth $0.50 (more on how they determined this below).  On average 40% of searchers click on the #1 ranking. The Traffic Value of “Yoga DVD reviews” can be calculated as:

Traffic Value = $0.50 * 500 * 40% = $100/ month

$1200 a year may not sound like a lot, but in practice the improvements you make to gain a #1 ranking for a competitive keyword like “Yoga DVD reviews” inherently results in top rankings for lots of other less competitive related keywords, like “best Yoga DVDs”, or “Yoga DVD ratings”. I call these “Satellite Rankings” because they are effortlessly pulled in by the “gravity” of the much larger keyword. In my experience Satellite Rankings can easily lead to a doubling or tripling of the Traffic Value of a keyword.  In some cases the combined value of primary + Satellite Rankings ends up being 10 times the value of the primary keyword alone!

Let’s look in more detail at how to estimate each component of the Traffic Value formula:

Earnings Per Click

There are two ways to estimate your Earnings Per Click: the Best Way, and the Easy Way. The “Best Way” is to calculate your Earnings Per Click based upon your own sales statistics. For example, if you had 1,000 visitors from the keyword “Yoga DVD reviews”, 5% of those customers went on to make a purchase, and your average profit per new customer is $10, you earned $500 on those 1,000 clicks, so your Earnings Per Click is $0.50.

Earnings = 1,000 visitors * 5% conversion * $10 profit = $500
Earnings Per Click = $500 / 1,000 clicks = $0.50

But how are you supposed to know those numbers if you’re not yet ranking for the keyword? Well, there are a couple of options. First, you can buy some advertisements on the keyword through a pay-per-click ad program like Google AdWords. Track how many clicks you receive from that keyword and how many sales those visitors make, and you can easily calculate your Earnings Per Click. Another option is to estimate your Earnings Per Click based upon the performance of a similar keyword. As a note, we suggest using SEO vs. PPC as your main strategy when starting out as the ROI is better for companies starting out.

If the above sounds like too much work, the “Easy Way” to calculate your Earnings Per Click is to base it upon the average Cost Per Click for that keyword on Google AdWords. The basis for this is that many advertisers are willing to bid right up to the value of a click, so in essence you are piggybacking on the work the advertisers have already done calculating their respective Earnings Per Click. To get the Google AdWords Earnings Per Click, search your keyword on Google’s Keyword Planner (a free Google AdWords account is required to use the Keyword Planner).

The Google AdWords Keyword Planner tool provides estimates for monthly search volume and average Cost Per Click.

 

Number of Searches

Google’s Keyword Planner is also your best source for data on the number of searches a keyword receives. Unfortunately, the numbers that Google provides can be somewhat unreliable, so if you’re interested in a more precise estimate the best method again is to take out an ad on the keyword via Google AdWords (keep in mind that the organic search listings receive 5 times as many clicks as the paid ads!).

Click-Through Rate

The Click-Through Rate (CTR) on your search listing will depend upon your ranking in the search results, and the attractiveness of your listing relative to the other results. It should come as no surprise that the top rankings receive the majority of clicks. Studies have shown that the #1 ranking receives from 50-60% of the clicks, #2 is clicked about 12-15% of the time, #3 about 9% of the time, and the remaining results go down from there. Only 1 in 10 searchers click on a listing beyond the first page.

Most of the clicks go to the top few rankings.

While these figures are for the average search result, sometimes there are factors which cause CTRs to deviate from the norm. For example, brand searches like “Puma shoes” or navigational searches like “IRS Form 1040” are likely to have nearly all the clicks concentrated on a single result (the Puma home page and the official IRS page for the 1040 form, in these cases). Well-known brands generally attract a lot of clicks regardless of where they’re ranked. For example, people searching for “HDTV reviews” are more likely to click on a listing for CNET or Consumer Reports even if they’re ranked #3 or #4, if the #1 result is an unknown brand like Brads-hdtv-reviews.biz. This is one of the problems companies face when trying to outrank Amazon.

To estimate your CTR, consider how attractive your result snippet is relative to the existing results. If there are much bigger companies than yours included and they do a good job addressing the needs of the searcher, count on receiving less than 50-60% of the total search volume even if you do reach the #1 position. This can be particularly important when you’re competing with big brands like Amazon, and need to be using the best eCommerce SEO strategies.

Maximizing the ROI of your Content Marketing

Now that you know how to calculate the Traffic Value of a keyword, your SEO and Content Marketing efforts can be optimized just like any other marketing channel: generate maximum sales with minimal spend. So how do you calculate the cost of ranking for a keyword? That’s where CanIRank’s Ranking Probability scores come in. Higher Ranking Probability scores equate to a lower Ranking Cost. In general, a Ranking Probability score of 90% or above means that your costs will be limited to content production and following your usual content promotion process. A Ranking Probability score around 80% means you’ll also need to dedicate a few hours a week to completing SEO tasks for a month or two. Scores around 70% or lower usually mean that you’re looking at several months work of regular SEO work, or spending heavily on more aggressive promotion.

With a little practice you’ll start to figure out what cost a given Ranking Probability score equates to for your particular website. Then it’s simply a matter of comparing each keyword’s Ranking Cost with its Traffic Value and you are on your way to making much better decisions in your content marketing.