Valuing organic traffic can be tricky, whether you are looking at your own sites or looking to acquire a new one.
There is a tendency to regard organic traffic as ‘free’, in the sense that you are not paying for each visit, and so it’s often overlooked in budgets for digital marketing. In addition, organic traffic is often overstated or overestimated when sellers attempt to determine the value of their website.
In this article, I’ll give you a relatively easy way of assessing the monetary value of organic traffic.
The Basic Formula
In order to calculate the value of organic traffic, we’re going to use the following formula:
Estimated monthly value = Total monthly searches * CTR[Position] * Value per visit
To be clear, the terms we are talking about here are:
- Estimated Monthly Value is the total value created (per month) for a particular keyword.
- Total Monthly Searches is the monthly search volume of a particular keyword.
- CTR[Position] is the estimated click-through rate for a keyword, based on the current or target page rank.
- Value per visit is an estimated value per visit.
This seems pretty straightforward, right?
The only slight issue is that some of these terms can be a little difficult to calculate in themselves. So let’s go through them one at a time.
1. Total Monthly Searches
Calculating the average monthly searches for a keyword is probably the easiest part of this process, and if you are an experienced SEO marketer you likely already know how to do this.
There are two tools that can be used to do this: Google AdWords’ Keyword Planner, and the Ahrefs Keywords Explorer. The Google system is free, but won’t give you so much data. The Ahrefs tool costs $99 / month, but will give you a lot more detail.
Let’s assume you are using Google Adwords. The process is pretty simple: just tell the system which search terms you are interested in. The results will look something like this:
The data we are interested in here is in the “average monthly searches” column. As you can see, Google will only give you a range, rather than a specific number. Ahrefs will provide the actual number.
In any case, make a note of this number, and also the ‘suggested bid’ value, because we will use that in step 3.
Now we will calculate the click-through rate (CTR). A higher rank on Google will translate to a higher CTR, but up until now it was a little difficult to see the exact numbers.
Now, though, Advanced Web Ranking (and other rank trackers) has made a great tool that tracks search rankings versus the click-through rate (CTR). This tool will tell us what percentage of searchers are likely to click on our link, based on the position that the site achieves in the Google rank.
At this point, you’ll notice that the site that is ranked #1 will get a huge amount of the CTR for a particular keyword. In fact, for most keywords the top-ranked site will take 35% of the clicks, and an additional 31% on top of that if you have the featured snippet. (SEO a winner take most game.)
So let’s say that the site you are looking to acquire is #1 for a particular keyword. You know now the monthly search volume (from step 1) and the CTR.
Let’s say that the monthly search volume for your keyword is 14,000, and the CTR for the site’s position is 35%. We can put these into the equation we started with:
Estimated monthly value = 14,000 (Search volume) * 0.35 (CTR[#1]) * Value per visit
We’re getting there… But now comes the difficult part.
3. Value Per Visit
The value per visit is necessary in order to put a dollar value on organic traffic, but it can be tricky to calculate. In recent years, the best eCommerce platforms have started to calculate this figure for you, but in an acquisition you’ll have to calculate it by hand.
There are a couple of ways of doing that, but I’ll show you a simple one:
Take the figure that we saved from Step 1, the ‘suggested bid’. This is what Google thinks traffic is worth for your keyword, and it calculates this based on the money you would have paid to get those visits to your site.
As a result, this method only quantifies how much you would pay for a PPC campaign to get similar traffic to your website. But it does not ascribe any value to the actual revenue that you generate from it.
Still, this method has the advantage that the numbers are easy to obtain, so let’s run with it for now.
Let’s say that the suggested bid value for your keyword is $0.64.
Now we have everything we need to calculate the value of organic traffic for a site.
Putting It All Together
So let’s pull all these numbers together into the formula we started with. The original formula was:
Estimated month value = Total monthly searches * CTR[Position] * Value per visit
And now we know these numbers:
- Total monthly searches = 14,000
- CTR[Position] = 35%
- Value per visit = $0.64
So now do the math:
Estimated monthly value = 14,000 * 0.35 * $0.64
= $3,136 per month
The Bottom Line
Though we’ve done this process for just one keyword, it’s worth working through the math for a few different keywords in order to see which are most valuable, and give you the best ROI.
Once you’ve done that, it is fairly easy to work out if the money you are planning to spend on an acquisition is worth it. By comparing your investment with the value of the organic search traffic we’ve just calculated, you can see how many months it will take for you to make a return on your investment.
[author] [author_image timthumb=’on’]https://www.google.com/s2/u/0/photos/public/AIbEiAIAAABDCLmpreHrxs34ZSILdmNhcmRfcGhvdG8qKGZjNzJjMjE2YTY0NzNhNjhjMWRkODc2NTUxZGJlYTYxZTVhMDQ1OWQwAeoBL7ynxMJVcxgrwG9jxOmHRckp?sz=80[/author_image] [author_info]Dan Fries is a freelance writer and full stack Rust developer. He looks for convergence in technology trends, with specific interests in cybersecurity, micro mobility, and smart cities. Dan enjoys snowboarding and is based in Hong Kong with his pet beagle, Teddy. His website is danfries.net.[/author_info] [/author]