For many companies getting a high ranking on Google is a top priority. But is this a reasonable goal? Is the investment in SEO resources worth the possibility of achieving a top 3 Google rank for your desired keyword?
Good business decisions require some quantified input, so here is an outline of how you might estimate the value of a high Google ranking for your business.
The Numbers
When you look at the statistics, it's easy to see the lion's share of clicks are going to the highest ranked search results. Different studies have put the traffic share of the first position at around 33%, with the second position getting around 15% of share, 9% going to number 3, and steeper dropoffs after number 5. At minimum, 75% of clicks go to the first page of search results.
So at first glance, if you rank at number 1 for a search term related to one of your keyword targets that is searched for 1000 times, you can expect around 300 clicks to your site.
Search Term Dependent
There is a difference between search terms regarding their click-through rate (CTR). Certain search terms are even more skewed towards users clicking on higher ranked positions and neglecting lower ranked results. The following types of searches (let’s call them Winner-Takes-All - WTA - searches) have been shown to involve greater importance of higher rankings:
- Branded searches, for example “eBay”.
- Specific and “navigational” searches, for example “eBay app download”.
- Informational search terms also have a slightly higher weight towards top ranking positions, for example “when was eBay founded” or “eBay fee”.
- Long-tail keywords: “yellowstone family hiking tours” or "ebay best match api".
Other search terms have a more even distribution of clicks throughout the rankings (let’s call them level playing-field - LPF - searches).
- Search terms for items that have more competitive markets, for example “cheap headphones”. Customers are likely to be shopping around, and won’t just go for the first result. The opposite is the case with “tampa newspaper”, which is not a competitive market if there is only one major newspaper in Tampa.
- Commercial searches face a lot of competition from paid ads at the top of the search result.
- The same goes for location based searches, where there is also more competition from sources like Google maps. For example “cheap headphones tampa fl”.
Ranking high for LPF queries or keywords could potentially result in comparatively less share of traffic than for terms in the WTA category. These factors usually result in a variance of up to 50% per search term: “delta airlines” might have 55% of traffic going to the first result (probably more), while “cheap headphones tampa” might have only 25% of users clicking on the first-ranked site.
So the type of search term you are targeting has a big impact on the value of higher ranks.
So What's A Ranking Worth?
We can now think about what a ranking might mean to your business. We'll use a low search volume B2B marketing example to illustrate the process:
Step One: Identify an average value per sale. If you sell a complex software solution then the value per sale could be very high (ie $20,000)
Step Two: Identify how many visitors to your site end up purchasing something (ie 1%)
Step Three: Identify the search volume for your key term. Remember, the the total search volume will probably exceed the search volume listed in tools like Adwords Keyword Tool because similar search terms generate additional traffic. We'll use 500 searches for this example.
Step Four: Decide whether your search term is a WTA type query or LPF type query. Estimate the percentages of clicks you will receive at ranks 1 – 5. For example, a 1st rank position might be worth 30% of the clicks, but could be adjusted upwards or downwards depending on the competition and type of query (ie WTA or LPF). We'll use 9% at the 3rd rank for this example.
Step Five: Calculate your value per rank. In this example the numbers work out as:
$20,000 average sale value x 1% conversion rate x 500 searches x 9% rank conversion = $9000
Now we know that a 3rd place rank on Google will probably translate into about $9000 in sales revenue each month.
Is It Worth The Investment?
But what if you want to invest in SEO to increase your position to the number 2 rank? SEO services aren't cheap, so is it worth it? In many cases the answer will be “yes”. Here's how you can decide for yourself:
First: Estimate the conversion rates for each rank in Google. In this case we'll say that the 3rd rank is 9% and 2nd rank is 15%.
Second: Calculate the increase in monthly value. In this case we are subtracting the 2nd place rank conversion rate of 15% from the 3rd place conversion rate of 9%. This becomes:
$20,000 average sale value x 1% conversion rate x 500 searches x (15% - 9% rank conversion) = $6,000
Third: Decide whether you think an increase of $6,000 per month can justify the increase in SEO investment.
The Main Takeaways
- Decide whether your target search term is a WTA, LPF, or somewhere in the middle?
- If it’s one or the other, estimate the amount of traffic a given position could give you.
- Estimate what % of that traffic you could convert to leads, and then to paying customers.
- What would those extra customers be worth?
- What would it cost, from a marketing resource perspective, to move up to higher rankings? If the return outweighs the cost, it’s a good option. It’s worth bearing in mind that there’s a tradeoff here – it’s hard to rank for all relevant keywords, and high rankings aren’t the last word in online marketing. If you’re facing too steep a climb for a given keyword, consider other options or emphasizing other marketing tactics.
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