I’ve worked with countless Internet marketers and website owners over the years and whenever goals are discussed I’m often told that the goal is traffic. The common perception of SEO is that rankings equal traffic equal revenue. But this is not always the case, and it’s at these times that websites get their ranks and their traffic, but not their expected revenue.

It’s every SEO’s responsibility, especially when working for clients, to avoid these problems by calculating the actual value of the traffic they’re working so hard to get. The process itself should not be difficult and can be easily integrated with other initial analysis such as keyword and competition research.

Keyword research is necessary because it reveals the highest traffic search terms to target. Competition research is necessary because it reveals the most viable path to a top ten rank. And traffic valuation is necessary because it reveals which of those paths will be most profitable.

SEO traffic valuation is essentially the process of comparing potential traffic volume with your average conversion rates. Before you can do this however you first need to understand how traffic is typically distributed among the top ten positions of a Google search results page. The following image illustrates estimated traffic distribution.

You can use these traffic distribution estimates along with your keyword traffic estimates to calculate the traffic volume you can expect to receive from various ranks within the top ten. And these traffic estimates divided by your average conversion ratios can tell you if the particular keyword you’re looking at will be profitable for you, or possibly what rank you will need to earn before profits can be expected.

The SEO traffic valuation process

To illustrate the traffic valuation process I will use the example keyword phrase “paleo diet”. This phrase works well for many websites within the weight loss industry and is targeted by a lot of SEO’s as well as pay per click marketers, making it a valuable phrase for health and fitness sites to rank for.

As you can see from the following screenshot this keyword phrase has a daily estimated traffic volume of 27,058 clicks, the #1 ranked site receives an estimated 11,364 daily clicks and it competes with over 8 million other sites. All of these metrics indicate that it is a valuable keyword phrase.

Next we want to look at the strength of the current top ten competitors. For this example we will assume that we have the resources and ability to compete for this keyword phrase, so in the following screenshot we are simply looking for which currently ranking sites we’re going to try to out rank. Using total backlink counts, BLD & BLP, as our target metrics I have selected the three ranking sites to focus on.

To start our traffic valuation I am going to first look back at the potential daily traffic for this keyword phrase, which is estimated to be 27,058. So how much of that does our new target #7 ranked site get? To get this number I’m going to refer to the traffic distribution chart above, which shows that all sites ranked #5 – #10 share in 6% of the traffic. This means the #7 ranked site is estimated to receive 1,623 unique clicks daily.

Now we know that once we’re ranked #7 for this keyword phrase we can expect around 1,600 clicks a day, so next we’ll need to look at our average conversion ratio to determine how many conversions per day this might equate to. Ideally you will want to find your average conversion ratio of actual organic Google traffic, but for this example we will use an average of 1:300. 1,600 divided by 300 equals 5.3 conversions per day, or 160 per month.

With this potential conversion count at hand you can now calculate your expected revenue and use it to determine the value of these conversions to your company. Having a figure like this to work with is especially helpful when planning an SEO campaign, since you may or may not decide it’s worth the investment required to earn the ranking.

In summary, there are many variables that will play a role in both your traffic and conversions which means the traffic values you calculate should always be a loose estimate rather than an expectation. However even a loose estimate is a valuable figure to have since it can predict your earning potential for any number of keyword phrases.