Compute monthly sales revenue from your targeted keyword in SEO/PPC campaign
Google Adwords Keyword tool is now showing search volumes which is extremely helpful for online merchants to estimate keyword profitability. I have discussed before Estimating the keyword profitability for SEO campaign, that provides useful information of web owners wanting SEO services. You may refer to that document for detailed computations such as ROI.
Now I will illustrate how to assess the monthly sales revenue from your targeted keywords. There are basically requirements or considerations before you can compute profitability:
a. Conversion rate of your keywords - specific and direct keywords such as product names on the exact landing page can get around 2% conversion rate typically (5% for very specific keywords). Although this may seem higher in actual or lower depending on lot of factors such as price (not covered in this discussion).
b. Approximate average search volume - the number of searches per month which you can get from Google adwords keyword tool. Procedure: type the keyword in the box, select targeted country and captcha. Look at the approximate average search volume column, use that data for the computation.
c. Your desired position in Google - which will affect % click through coming from search engines. For convenience, I use 2% CTR if I target position 4 to 10, 7% for position 3, 9% for position 2 and 40% for Position 1.
d. Your average sales price for your product - this is the price per unit of the product sold at your site.
Sample computation:
Say I am targeting “Buy guitar online UK”, this is a pretty high converting keyword which could give around 5% conversion rate. The searches according to Google adwords keyword tool is only 58 per month. My desired position is Position 1. My average sales price for each guitar is 60 pounds.
So the amount of sales from that keyword will be:
Amount of sales = Approximate search volume per month x %CTR on target position x %Keyword Conversion rate x Average sales price
Amount of sales per month = 58 x 40% x 5% x 50 = 58 pounds per month.
When my site is on position 1 for “Buy guitar online UK”, my site earns 58 pounds per month in sales. Although the searches is very small, but this is a good keyword since it will convert well and it is not hard to reach position 1.
