Quite often clients many small business
clients have trouble understanding the real monetary value of a #1
ranking in Google for a search term. Depending on the search term the
results for your business can be game changing. I use some simple math
based on relevant research statistics to give my clients a monetary
value for a #1 search ranking for their search terms. This not only
helps to show them which terms they should go after but also, allows
them to make their budget.
Step One: Find the Search Volume
Google Traffic Estimator gives you a look into how many times any given term is searched per month. It allows you to customize the search based on an exact search query, broad search, phrase search, or as entered. It also allows you to localize a search so that you can determine how many people in your area are searching for your key terms. Pretty cool tool.
Here’s an Example:
Here I entered the search term “Plant Lady” which is the brand name for a lot of different companies who are in the plant industry. I tossed in a big number of $75 for Max CPC because if it’s too low then you run the risk of limiting the results and not seeing all of the data. I chose to keep the advanced settings to “as entered” and localized it for the USA. As you can see each month this term is searched 12,100 across the globe and 5,400 in the United States EACH MONTH. That’s a lot of searches – being the top result could result in a lot more traffic and business if you can rank well.
Step Two: Calculate the Click Through Rate (CTR)
To calculate the click through rate we’re going to use the most recent and relevant data from Search Engine Land showing CTR based on ranking position. Below is the chart that we’ll be working with taken from their report.
Some numbers to point out are the fact that roughly 72.4% of search query clicks are made in the top 5 rankings for the given search query. Additionally 36.4% of the clicks are given to the #1 ranked result for any given query.
The Calculation Formula: Click Through Rate
The formula for calculating how many searchers will turn into visitors for the search query is as follows:
# of searches per month x % of Click Throughs
In this instance we’ll take our data and make the calculation as such
5,400 searches x 36.4% CTR = 1,956.6 visitors per month from that search term
Step Three: Factor in Conversion Rate
Now the next step is to figure out how many of those 1,956.6 visitors are going to turn into customers each month. To do this we need to factor in the most relevant information based on conversion rate – Some businesses may already have this information readily available others may not. If you don’t have this information available to you this is the number that I use 1.5% conversion rate – I don’t like to overestimate numbers and end up missing the bar so I choose 1.5% which is half of 3% (3% conversion rate being a good conversion rate for MOST industries)
The Calculation Formula for Conversion Rate
# of visitors x % conversion rate (1.5% in our case)
So here are the numbers for our experiment:
1,956.6 visitors x 1.5% = 29.48 sales converted per month
Step Four: Calculate Search Term Value
Now that we know 29.48 of our visitors each month for the search ranking of #1 for our search term are going to become customers it’s time to calculate the actual value of a #1 ranking. To do this we need to know the number of conversions for the search term and the Average sale for the company. In this case we’ll use the value of $200 which was given to us by the potential client.
The Calculation Forumla: Search Ranking Value
# of Conversions x Average Order Value (AOV)
In our case the calculation looks like this:
29.48 conversions x $200 AOV = $5,896 per month for a #1 ranking for this term.
Step One: Find the Search Volume
Google Traffic Estimator gives you a look into how many times any given term is searched per month. It allows you to customize the search based on an exact search query, broad search, phrase search, or as entered. It also allows you to localize a search so that you can determine how many people in your area are searching for your key terms. Pretty cool tool.
Here’s an Example:
Here I entered the search term “Plant Lady” which is the brand name for a lot of different companies who are in the plant industry. I tossed in a big number of $75 for Max CPC because if it’s too low then you run the risk of limiting the results and not seeing all of the data. I chose to keep the advanced settings to “as entered” and localized it for the USA. As you can see each month this term is searched 12,100 across the globe and 5,400 in the United States EACH MONTH. That’s a lot of searches – being the top result could result in a lot more traffic and business if you can rank well.
Step Two: Calculate the Click Through Rate (CTR)
To calculate the click through rate we’re going to use the most recent and relevant data from Search Engine Land showing CTR based on ranking position. Below is the chart that we’ll be working with taken from their report.
Some numbers to point out are the fact that roughly 72.4% of search query clicks are made in the top 5 rankings for the given search query. Additionally 36.4% of the clicks are given to the #1 ranked result for any given query.
The Calculation Formula: Click Through Rate
The formula for calculating how many searchers will turn into visitors for the search query is as follows:
# of searches per month x % of Click Throughs
In this instance we’ll take our data and make the calculation as such
5,400 searches x 36.4% CTR = 1,956.6 visitors per month from that search term
Step Three: Factor in Conversion Rate
Now the next step is to figure out how many of those 1,956.6 visitors are going to turn into customers each month. To do this we need to factor in the most relevant information based on conversion rate – Some businesses may already have this information readily available others may not. If you don’t have this information available to you this is the number that I use 1.5% conversion rate – I don’t like to overestimate numbers and end up missing the bar so I choose 1.5% which is half of 3% (3% conversion rate being a good conversion rate for MOST industries)
The Calculation Formula for Conversion Rate
# of visitors x % conversion rate (1.5% in our case)
So here are the numbers for our experiment:
1,956.6 visitors x 1.5% = 29.48 sales converted per month
Step Four: Calculate Search Term Value
Now that we know 29.48 of our visitors each month for the search ranking of #1 for our search term are going to become customers it’s time to calculate the actual value of a #1 ranking. To do this we need to know the number of conversions for the search term and the Average sale for the company. In this case we’ll use the value of $200 which was given to us by the potential client.
The Calculation Forumla: Search Ranking Value
# of Conversions x Average Order Value (AOV)
In our case the calculation looks like this:
29.48 conversions x $200 AOV = $5,896 per month for a #1 ranking for this term.
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