Posted by : Amanda Stein Saturday, February 2, 2013

As we all know, there is a lot of value in having your website appear at the top of the search engines. Good SEO is certainly a good investment if used in the right context – but it can also be an expensive investment, so it’s nice to have a slightly more concrete idea of how much benefit your rankings might bring.

The following is a handy way to estimate how much your rankings might be worth, and what value increasing them could have. Exactly how you get there depends a lot on what data you already have available, so we’ll take it a step at a time:

Step 1: What’s A Customer Worth?

Before you can estimate that value of your traffic, you need to know how much money you make from your ‘average’ visitor. The best way to do this is by looking at your current traffic figures and sales figures.

Start by filtering Analytics so that you only view data from search engines. If you have conversion tracking set up you can easily work out the value of each search engine visitor (conversion rate multiplied by average order value).

Obviously the exact process depends on how you monetize your traffic; for e-commerce sites the formula is fairly simple, but if you use your site to generate leads, you will have to work out your conversion rate and life-time value of a client.

If you don’t have any website data (if your site is brand new for instance) then you get estimate the value of a visitor by using Adwords “Cost Per Click” data, although take these figures with a large pinch of salt. What you are effectively calculating is the equivalent cost of your rankings if you were to get the same traffic via Adwords.

Step 2: Volume Of Traffic

Estimating the volume of traffic you will get from a given ranking position is very tricky. Fortunately, some large studies have been done to discover how many clicks each of the organic listings get. There is plenty of data, but for our purposes all we need to know is:

  • Position 1: 18.2% of searches
  • Position 2: 10.1% of searches
  • Position 3: 7.2% of searches

This means that if a search phrase gets 100 searches a month, the site that ranks in position 1 can expect to receive 18 visitors per month from that phrase.

You can use Google’s Adwords tool to get an estimate of the available traffic on Google, although this data isn’t always accurate.

If you happen to already be ranking for the given phrase, you can have a look at how many impressions you are getting (via Webmaster Tools) for an idea of volume. You can also use Bing’s keyword tool to compare figures, although remember that Bing only have about 8% market share, so scale the numbers accordingly.

Step 3: Putting It All Together

Once you have an estimate of traffic, you can take off any traffic you are already getting (if you happen to be ranking for that phrase already). Try working out a hypothetical figure for each of the top 3 positions (since you don’t know for sure whether you’ll get to position 1).

  • #1: ((search volume * 18.2%) – (traffic you got in past month)) * value per visitor
  • #2 & #3: Repeat using 10.1% and 7.2% respectivelyThe three figures you come out with are the monetary value of getting from your current position to position 1, 2 or 3 for that given phrase.
Step 4: So what’s the value of SEO?

Well there is no way to be sure you will get to position 1 of course, in fact you probably won’t get there for many phrases. The best way forwards is to work out some scenarios:

Work out the 3 values for each of the keywords you want to target. If you have a list of keywords, work through each in turn.

You can then take a worst case, best case and medium case.

For a worst case, let’s say that you get to position 3 for 25% of your keywords. Your best case might be getting to position 1 for 50% of your keywords and the medium will fall between these two.
Once you have crunched the numbers you will clearly see whether any or all of the scenarios will result in a positive return overall. There are of course other factors to consider, such as long-tail keywords that you rank for by accident, additional traffic from other search engines and even improvements to your conversion rate.

But in any case, this is a good way to get a ball park figure, which is helpful when judging how much time, money or effort to put into SEO versus other traffic sources.

About The Author: This post was written by Mark and the team at a small SEO agency who like to work with small businesses and who love playing with numbers and analysing data... It’s all about ROI! Read their latest blog post: How To Your Scale Link Building Management With Excel

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