Step 1: Choose what product or service you want to promote
Take a product or service that you want to promote. This should be something that delivers huge value for your business. We want to define the keyword value for this product or service. Too many businesses want to promote EVERYTHING, with equal weighting. This is the sign of a spray-and-pray strategy and will rarely get you anywhere fast.
Instead, look at those products and services that are popular, and have high value and/or margin first and foremost. From this you will need to calculate:
- Average Order Value (AOV) – the average amount of money paid for your chosen product or service. Take the revenue generated from your product/service over a period (I would suggest 6+ months of data) and divide by the number of sales. This is your AOV.
Step 2a: Calculate your current conversion rate % to sale
Next up, we need to calculate your current conversion rate % for said product/service, or from your website as a whole if your tracking isn’t that granular.
If you are starting from scratch, you can try to find the average conversion rates for your industry and use them as a guideline.
This will take some research, as the data is a blend of self-reported and aggregated research so it can vary considerably. My advice here is to stick with credible (and unbiased) sources of information. For this blog post, I leaned on a post by Econsultancy for the data:
It’s not clear where ‘garden furniture’ might place under the above list, so I’m going to take the mean average value from the tabled data above as it could be any of them!
(0.4 + 0.6 + 1.50) / 3 = 0.83%
Boom! I now have a conversion rate guideline to use. It’s based on data and is averaged out across three industry categories. Of course, the only truly accurate conversion rate will be the one calculated from your own website, but this shows that it’s possible to do it without that data available – at least as a starting point.
A quick word of caution: it’s likely that as you increase your traffic volume significantly, your conversion rate will drop. This is because not everyone is going to be interested in buying from you, but may well be attracted to your website through your enviable visibility. It’s also reasonable to assume that driving more people to your website (for the right keywords) will yield more net sales or enquiries over all.
If you are generating transactions through your website directly, this is the only figure you’ll need and you can skip to step three.
Step 2b: Calculate your current conversion rate % from lead-to-sale
If you’re a B2B company or selling products with a significant value (e.g. cars) , you’re likely to generate leads through your website, which you then need to close into a sale. This is an extra step in the sales process and must be considered when calculating keyword value.
With this in mind, you need to work out your conversion rate % from lead-to-sale. To work this out, you need to know how many leads it took to generate one sale. Your data will be better if you have multiple leads and sales to calculate, since the average will iron out any lucky (or unlucky!) breaks.
Step 3: Choose your keywords
Now you need to decide on what keywords (that match your chosen product or service) you’re going to attack. This is a whole exercise in itself, and you can read some excellent methods on how to do this, or you can ask the experts like us to help you out. You will need to take:
- Your keywords
- Estimated monthly search volumes
Once we have a list of keyword terms, you can use our free keyword value calculator to do the hard part for you. But first, I’m going to teach you manually so that you don’t get all lazy on me and actually learn something new 🙂
The first thing you’ll need for this exercise is a keyword planning/search tool. The most popular and commonly used is Google Keyword Planner. It’s completely free to use (although you now need a Google Account to access) and will give you the data that you need.
Other tools that are worth exploring for keyword research include:
In our case, we have some of the industry’s best tools available, so I’m going to cheat and use those 🙂
Each keyword has an estimated search volume associated with it that indicates how many times the keyword is searched for each month. There are three important things to be aware of:
- Search volumes are reported as the 12-month average and do not take into account seasonality or other peaks/dips in popularity. Use a tool such as Google Trends to see the seasonality of a given keyword.
- ‘Estimated’ is the key word. The search traffic volume of any keyword is likely to vary, so this volume should be treated as a guideline. Nevertheless, consistency is key here and search volume is an industry standard gauge for keyword popularity.
- Some keywords will report ‘low search volume’ or even zero. This is very rarely the case with short keyphrases (four words or less for example). Someone, somewhere will be searching using that term. This means that there hasn’t been enough searches to provide an estimate. With low/no volume keywords, it’s best to package up a few of them or to run PPC campaigns to generate real data to further prove or disprove interest.
For this example, I’ve chosen Garden Furniture as my hypothetical product-set keyword choice, and I’ve taken the search volume data against each keyword:
Step 4: Take search engine click-through rate averages and apply
You have chosen your killer product/service. YES!
You have your Average Order Value (AOV) all figured out. YES!
You know your conversion rates for said product/service. YES SOME MORE!
You have your keyword list with search volumes relevant to your part of the world (or international if required). YEEAAHHH!
Next up, we need to take some average click-through rate (CTR) data to give us an estimated expectation of what we could hope to achieve if we ranked in a certain position for our given keywords.
There are a number of businesses out there performing this sort of data crunching. Whilst the data can vary slightly, it is typically within an acceptable range to use as an average. Advanced Web Rankings provides the best open-source data for this work in their CTR Study.
The image above shows how CTR drops (mostly) in line with rankings, which of course makes total sense. The lower you rank, the less share of traffic you will attract to your landing pages. The actual CTR will vary depending on other on-page factors such as whether map packs or knowledge graphs show, for example, as these will push down organic results further down the page.
You will need the tabled data so that you can take the figures, but the graph above shows you a pretty standard view of how search CTRs follow the same Pareto-like 80/20 principle as many other things in life.
ALL THE YESES.
Step 5: How to calculate keyword value
You’re almost there! You now have everything you need to calculate keyword value, so it’s time to put this all together.
Thankfully for you, we have a free keyword value calculator that we’re sharing with you to help save some time. This is a spreadsheet that you need to copy into your own Google Drive account, but will allow you to play around with your own keywords real fast.
- Plug your keyword list into columns B and C of the spreadsheet
- Plug your conversion rate % into cell I5
- Plug your AOV into cell J5
You can play around with an optimised conversion rate % in cell L5, but perhaps keep this the same as cell I5 to start. You can also amend cells D5:H5 with your own CTR data if you wish.
The spreadsheet will take care of the rest, giving you a calculated keyword value using the data you have provided. This will allow you to pitch your need for some marketing budget to push through your product or service, and your boss will love it the monetary values provided!
As mentioned throughout this post, this is not to be taken with 100% accuracy (there are too many variables), but is a very credible way to assign a potential monetary value to your keyword targets. Search marketing can take time (SEO) or money (PPC) to gain traction. Knowing the potential that lies on the other side can make both a lot more comfortable.
If you’re tearing your hair out with digital and wondering why you’re not making progress, book in a video call with one of our experts today.