The Value of a Keyword
Value of a Keyword
A ‘keyword’ or ‘keyword phrase’ is a word or combination of words that people type into search engines to find what they are looking for. The search engines search the Internet for webpages containing that particular keyword or keyword phrase. The pages are then ranked and scored using a mathematical formula and with the results displayed to the user as a list in order of most relevant to least relevant.
Properly utilized keywords can provide a great Return on Investment (ROI). Thus, it is very important to gauge the costs associated with marketing a keyword to its potential value to your business. Money spent on a keyword should be proportionate to its perceived value (either monetary or knowledge based) to your company. You do not need to spend a lot of money on a keyword phrase, but its value to you and your competitors is proportionate to its potential income. Some companies generate large amounts of revenue from specific keywords.
Determining the value of a keyword ahead of time is very difficult, and its value will change as your markets and competitors change. A quick guide would be to take the average bid of the top 5-listings on Overture or Google Adwords. These are a good starting point since both are very popular and a higher percentage of businesses make money by using them. There are also tools available that can you can use to get a more accurate gauge for the value of a keyword but most of these can only be utilized once you have some listings for your keywords.
The following formula can be used as a guide to calculating keyword value:
((estimated number searches per month) X (average cost per click on Overture) X (average click potential percentage)) = (keyword value for 1-month) Unfortunately, there are a number of flaws with this calculation as the first 3-variables are estimations/ judgments. Nonetheless, it can be used to compare one keyword against another to gain a grasp of its worth.
Profits and Visitors
Increasing the number of visitors does not guarantee increased sales. Thus, getting high rankings based on generic keywords may not actually be beneficial to a business. Keywords need to be specific to your business so that the right customers are directed to your website. Generic keywords deliver a higher level of value to certain businesses and much less to others. For example, a search for “community college” would result in higher keyword value for colleges that have campuses all over the US or offers on-line courses than for a local college in say, Grand Rapids, Iowa or any other local college. The reason is simple; very few people living outside of the local college’s specific region will actually be looking to attend there.
In the above example, the keyword phrase “community college Grand Rapids” would hold a much greater value for the college because it is more focused and directed towards the people who are mostly likely to attend the college. This becomes apparent when you look at the actual conversion rates of visitors to the website. The rates will show that the greatest numbers of conversions were for the people who lived in and around the Grand Rapids area. As such, the college stands to reap greater profit from the targeted keyword than from the generic one. Hence, it is very important to look at the value a keyword holds for your business than just the number of people searching for it.
This is what the numbers look like if we apply the previously mentioned formula to the case of the above college. Say there were 13,956 searches for “grand rapid community colleges” on Overture with an average bid of $0.10 per-click. Its calculation would be (13,956 X $0.10 X 5% = $69.78 per-month). For “community colleges” there were 80,244 searches on Overture with an average bid of $0.85 per-click. Its calculation would be (80,244 X $0.85 X 5% = $3,410.37 per-month). Now, that value looks ridiculously high! Could it possibly be worth that much? That’s difficult to say, but it could be -to the right business.
When you consider that there are hundreds of colleges in the US, it is easy to understand that the conversion rate for the keyword phrase “community college” is going to be fairly low while its marketing cost is going to be much higher. On the other hand “grand rapid community college” is very targeted making its conversion rate much higher and its marketing cost much lower. Therefore, it would cost less to promote the targeted keyword, and at the same time get better conversion rates than using a generic keyword.
Keyword Relevancy Is The Key!
Promoting the right keywords is essential to attaining a good ROI. Finding the right keywords to promote requires research, and the development of proper content to support them. Once again there are tools available to help do your research but there coming up with the good content is up to you. Or you could work with a search engine optimization (SEO) firm that can work with you to develop a SEO strategy for your business. Promoting specific and relevant keywords allows businesses to promote more keywords and make more profit and that�s why the value of a keyword is something that should not be taken lightly.
Author Name: Chris Genge
Company: 1st on the List Promotion Inc
Author Bio:
Chris Genge is the President of 1st on the List Promotion Inc, a professional website promotion firm. He writes on current and emerging search engine marketing theories. Chris has been involved in the SEO industry since its very early days, and has since 1997, focused on researching and implementing the most effective search engine optimization techniques.
