Estimating the value of a 1st page ranking on any search engine is a straightforward analysis that requires a few minor assumptions. Google already provides most of the information needed for this calculation within the keyword tool. Evaluating a ranking is done by calculating the ranking’s fair market value, or what would otherwise have to be paid to another comparable source in order to receive the same amount of similar targeted traffic to a website.
One of the first important questions to ask yourself before investing in an SEO campaign is, “What’s the value of a first page search engine ranking anyway?” As strategic business decision makers, putting a dollar value on a first page ranking is crucial in deciding how much time, effort and money to invest into an SEO campaign. The How To Value SEO whitepaper outlines a detailed process of calculating the value of a first page ranking. This document also calculates the value of long-tail derivative rankings and examines the present value of organic rankings over the long term. This process is applicable to any keyword phrase in any industry. This white paper will use the example keyword phrase ‘Health Insurance’, and demonstrate how the annual value of a 1st page Google organic ranking for ‘Health Insurance’ is calculated to be $7,471,194.
A fair market value “comp analysis” is often used in purchasing a new home. When performing a home comp analysis, the average price of other homes recently sold in a house’s area of comparable square footage, age, location and features is taken. The theory is that if one can calculate what the market is willing to pay for a comparable home, than the fairness of a seller’s list price can be determined.
This same type of analysis can be performed before undertaking a search engine optimization campaign by analyzing what a company’s competitors are paying Google AdWords per click to rank for a given keyword phrase. Similar to the home comp analysis described above, if an SEO campaign is going to cost more than paying a search engine directly for the traffic, SEO may not be the optimal solution. This is rarely the case; and the vast majority of SEO campaigns end up being five to fifteen times more cost-effective than pay-per-click campaigns. This is before considering that once top organic rankings are attained, they often persist into the future with less ongoing investment (think compounding ROI). Politics aside, being conservative with assumptions when considering marketing investments will always beat the estimates. This can lead to good things, like raises, promotions, new cars, and the avoidance of divorce proceedings. With this in mind, the first SEO valuation described will be conservative because it will not consider organic rankings on search engines other than Google, long-tail derivative search engine rankings, and the perpetual nature of organic rankings. This analysis will determine the annual value of a first page position two through four organic rankings on Google for ‘Health Insurance’. To be conservative, a position one ranking was not considered in the following example because position one rankings can be extremely difficult to attain. The first two figures needed to start the analysis are the Google AdWord’s average cost-per-click for ‘Health Insurance’ and the global average monthly exact search volume. These figures are outlined in red in the keyword tool screen shot below. Please note that Match Type was changed to Exact so that the valuation will not take into consideration long-tail derivative rankings. Technically, when optimizing a website for a specific keyword phrase, such as “health insurance,” top rankings for a number of long tail keyword phrases, like “affordable health insurance” and “individual health insurance” will also be attained. For the sake of being conservative, we will not consider these rankings in this valuation.