Working with SEO professionally, keyword research and the related eCommerce revenue analysis has become an everyday task, and in this post I intend to share a very simple model for doing exactly that; Predicting the revenue potential of any keyword out there, using just a few handy metrics from Google and your eCommerce. Let’s go:
Step 1: Find your keyword
Whether for actual business potential or for vanity (many clients have a very clear idea about certain words that they need to rank for), it is always a good idea to evaluate keywords for their true SEO potential before investing time, money and other resources into the optimization process. The first step is naturally finding your keyword or keywords, for which Google Keyword Planner is the starting point.
On the tab ‘Keyword ideas’ you will be able to see the monthly search volume for your keyword. For ‘3CE’ it’s 1,600. This metric is calculated as an average of the last 12 months, so to ensure that you can trust this number moving forward, it is a good idea to validate the trend potential using Google Trends to make sure that interest for your keyword is not plummeting. Remember to select the same target market as you did in Google Keyword Planner:
Great stuff. Now that we have found the average monthly search volume and validated that the trend does not seem to be negative, we can move on to some simple arithmetics.
Step 2: Calculate ranking scenarios
At this point we are aware of the total number of people searching for our keyword in a normal month (if the trend continues), but we also know that not everyone will be clicking on our search result, even if it makes its way to the top of the first page.
There are various reasons for this. First of all a few people like to click the sponsored ads on the Google Search results pages (SERPS) called Adwords, and next up our result might simply not be appealing to all searchers. We can however estimate what our share of the clicks will be with different ranking positions, using the study below:
We can now do a few quick scenarios using the monthly search volumes from step 1 and the click-through rates from above:
Position #1: 18,2% of 1600 = 291
Position #2: 10,05% of 1600 = 168
Position #3: 7,22% of 1600 = 115
And so on. However, a first position might often not be realistic if a very heavy website (such as Wikipedia) is currently occupying that space, so for the sake of simplicity let us use an 8% average click-through rate for a position between #1-#5 (our target ranking).
8% of 1600 = 128 potential visits each month.
Step 3: Add a dash of Business Intelligence
Now that we know roughly how many extra visits ranking for this particular keyword will generate for our eCommerce website, we want to calculate the incremental revenue potential of this.
The most accurate way of predicting this is singling out the historic average order value or average basket size (AOV/ABS) and organic search conversion rate (CR) of the particular country or even the particular product category / brand in the particular country, but for the sake of simplicity let us just use numbers from the eCommerce as a whole:
Organic search conversion rate: 3,2%
Average Order Value: 62$
With these numbers in hand, we can now calculate the estimated revenue potential for the keyword ‘3CE’ in Singapore for an eCommerce with a conversion rate a little over 3% and a rather high average order value of 62$ per transaction. Here’s the math:
128 (potential visits) x 3,2% (CR) x 62$ (AOV) = 248$
In other words, we can predict with some safety that ranking between position #1-#5 for this keyword will yield us another 4 conversions amounting to 248 dollars every month. That amounts to nearly 3000 dollars of revenue every year, given that the trend stands still from now on.
An important thing to consider at this step is that ranking for the above keyword will likely result in a much higher incremental revenue because ranking well for this will also make you rank well for a whole lot of ‘spillover’ queries that are tiny in volume on their own but significant in total. I call this the Iceberg phenomenon:
Especially with wide brand queries, I like to multiply the revenue potential with 5-8x for this reason. The multiplier depends on how broad and lucrative a keyword you are researching for, but for this one I would expect incremental revenues at more than 1,200$ (14,400$ every year).
Step 4: Budget and let’s go!
The last thing you need to do before starting the optimization work is figuring out the cost of actually getting to the desired position in the search results. This depends on a whole lot of factors (your landing page and your current ranking being the most important), and is something that you get better and better at assessing as you learn more about SEO.
For this particular query, with the 1200$ incremental revenue figure in mind, I would be willing to spend at least 3600$ to capture this keyword. I normally go for a 3x monthly revenue multiplier, but this depends on the size of your marketing budgets and this particular keyword’s potential as compared to a whole list of other keywords.
From here on, it’s just all about deploying that budget correctly, being it producing amazing content to boost your ranking or sending free products to bloggers and other influencers for reviews (and links). You can naturally also spend this budget on all sorts of Black Hat SEO techniques but I am not an advocate for that.
I hope that the above made sense. Let me know in the comments if you have any questions or additions.