How much traffic will you receive if you invest in link building?
This is a question we hear often from prospective clients interested in our white hat link building service.
It’s difficult to make predictions in SEO for a number of reasons:
- New players may enter the space at any time and seize market share
- Competitors can accelerate content and/or link building efforts
- Google’s algorithm changes multiple times every day
- Trends in keyword searches are unpredictable
For these reasons, we strongly advise against working with a firm that makes guarantees. That said, using click curves, it is possible to reasonably estimate ROI.
What’s a click curve?
A click curve tells you what percentage of clicks you can expect at each ranking position. As you can see in the graph below, it pays to be in the top tier–roughly 35% of clicks on mobile are awarded to the top ranking search result, and these numbers drop off significantly after position four.
Click curves can vary significantly depending on the query. Clicks for branded searches, for example, tend to skew even more heavily toward the first result.
Let’s say you’re a reviews blog that wants to rank for the term animation software. This keyword gets searched 14,000 times per month.
First, take the total number of monthly searches and multiply that by the click % at each of the positions.
If you rank in position one, you can expect 4,900 clicks (=14,000 x 35%). Let’s assume a 5% conversion rate, which would net you 245 (=4,900 x 5%) new customers per month.
If the average lifetime value of a customer is $1,000, you just generated $245,000 in revenue in a month!
Of course this is a simplified example and does not take into account:
- Opportunity costs. Could you invest your budget in, say, paid ads, and generate even more revenue than you would with link building?
- Expenses. $245,000 in monthly revenue sounds great, but what does it cost you to offer your product/service?
- Additional costs. Is your content in turnkey condition or do you need help from copywriters, graphic designers, etc.?
How do you calculate TAM (Total Addressable Market) in SEO?
Total Addressable Market, or TAM for short, refers to the revenue opportunity of an entire market.
This is a term used to determine the potential of a business opportunity before making the decision to go to market and invest in SEO.
To calculate TAM, all you need to do is add up the search volumes for all of the relevant keywords in your space.
Industries that benefit most from SEO
SEO done right is not cheap and therefore, it’s not for everyone. Organic search is a primary marketing channel for many industries where the customer lifetime value is in the thousands of dollars, such as:
- Legal – It’s not unheard of for firms to spend hundreds of thousands to acquire 1 SEO lead that returns millions in damages.
- SaaS – SaaS (Software-as-a-Service) businesses have recurring revenue and low marginal costs, so profit margins tend to be high. (Make sure to check out our SaaS SEO guide.)
- Consulting – Consulting varies widely, but many charge highly for support in finance, business, healthcare, litigation, etc.
- Healthcare – The healthcare sector is a profitable sector due to the high costs of delivery (provider salaries, drug costs, etc.)
- E-Commerce – Some industries have relatively lower average order values but high search volumes (like the pet industry).
How long does it take for backlinks to impact rankings?
Something important to consider when you’re tasked with forecasting results is the lag effect of SEO. When creating content and building links, it can take months for that content to begin to make an impact.
This is why we always tell clients to be patient for the first three months of link building–there’s usually not much happening during this time, especially if your site is newer and doesn’t get crawled as often.
Within six months, most clients are able to realize the benefits of their link building campaign.
It’s important to consider the size of the market before investing in SEO. Fortunately, with a few simple calculations, you can better illustrate the channel’s potential.