Estimating the keyword profitability for SEO campaign
Profitability of keywords is important for online business success. Assessing the best keywords is tough. It is not always a job for SEO but for the online business owner too. This knowledge is a must. Computing the profitability needs 3 data:
a. Planned Annual Margin from sales.
b. Planned Annual Cost of SEO campaign.
c. Return of Investment factor - positive means there is profit from the campaign.
Planned Annual Margin from sales can be computed as : %CTR of Estimated Google target Position x Estimated Monthly Searches x Keyword conversion rate x Estimated Margin per sale x Number of months keyword at estimated Google positions.
In details:
%CTR of Estimated Google target position : these are %click through rate of respective Google positions. According to one study:
Position1=42.30%,Position2=11.92%,Position3=8.44%,
Position4=6.03%,Position5=4.86%,Position6=3.99%,
Position7=3.37%,Position8=2.98%,Position9=2.83%,
Position10=2.97%
These are the % CTR for the Google Top 10 positions. Precisely: %CTR of Google estimated target position x Estimated Monthly searches = Unique visitors to the site per month
Estimated Monthly searches can taken from your preferred keyword tool.Remember to be as accurate as possible for monthly searches, so make sure the number searches are country and search engine specific. Like knowing how much per month will be searching for “cheap widgets” in UK using Google.co.uk, make sure your keyword tool can give that answer.
Keyword conversion rate depends on how your keyword matches with the product you are selling on the specified landing page. Conversion rate is a ratio of number of successful sales from the number of unique visitors to the site.
Estimated margin per sale : is how much can your profit of every 1 sale qty of “widgets” you are selling. Again this depends on the type of market or products you are selling, some products can give you high margin per sale, others low.
Planned actual cost of SEO campaign: you can allocate this, depending on how much you can afford. You can get this data from reputable SEO companies you trust.
Return of investment factor: The ratio of annual profit to your SEO cost, if it turns positive the campaign will be profitable and you select a profitable keyword, otherwise it is not.
Sample computation:
Keyword: “Cheap widgets UK”,
Estimated monthly traffic=10,000 per month
Landing page: www.widgets.co.uk/cheap-widgets-uk
Estimated target position: Position 4 to Position 10 Google.co.uk (ave CTR%=3.86%)
Conversion rate=2%
Average margin per sale of widgets= 200 pounds
Total annual SEO cost= say your SEO budget/ month is 500 pounds x 12=6000 pounds
Annual margin=%CTR of Estimated Google target Position x Estimated Monthly Searches x Keyword conversion rate x Estimated Margin per sale x 12
Number of months to reach Google 1st page: 4 months
Number of months site will be first page for “Cheap widgets UK”= 12-4=8
Annual margin= 3.86% x 10000 x 2% x 200 pounds x 8 = 12352 pounds
Profit factor= 12352/6000= 2.06
The keyword is very profitable because it turns out that by investing 6000 pounds annually in SEO, the site can profit around 12300 pounds at the end of the year.
