Let me just start off by throwing out a big THANK YOU to everyone! The warm reception to my first official earnings post last week was appreciated very much. I expect to make the earnings posts more of a long term thing because of your great feedback – thanks!
Today I wanted to go in more depth in discussing search volume and Cost Per Click (CPC) values for a potential winning keyword for a niche website. I did discuss search volume and CPC briefly in a recent post that was a general overview of the niche websites strategy; however, I want to go more in depth and hopefully answer some of the questions that you had. For this discussion, I will be referring to the values shown on the Google Adwords Keyword Tool for search volume and Avg. CPC.
Also, as a caveat – these are all just guidelines! I do my best to explain how I look at search volume and CPC, but you need to realize that it can vary from situation to situation. You need to do your best to understand these metrics and then make a good business decision based on your own knowlege and goals. You should never just simply try to copy exactly what I have listed here, because even I will vary from this criteria discussed based on the given situation.
I have stated in the past that the minimum search volume that I will accept for a keyword to target is 1,000 Exact Match Local Volume searches per month. Yes, it must be EXACT match (not broad or phrase) and I always look at Local (US) volume – not global. Google displays results differently for each country. So, using global volume leaves a lot of uncertainty because you may rank well in Google UK but not anywhere else in the world. However, if you are able to look at a local volume and rank well there, you can know with more certainty what sort of traffic numbers to expect.
I still use 1,000 exact match searches as a minimum, but prefer to target keywords with 3k to 10k typically. A keyword with 1k is only worth targeting if you know 2 things:
- You know the actual CPC is really high
- You know you can rank in the top 5
I will discuss CPC further below, but to target a keyword with only 1k searches per month you probably need to get paid on average $1 per click from Google Adsense for it to be worth it. Remember, if the Google Adwords Keyword Tool shows $1 on Average CPC, this is NOT what you will be paid. This is what advertisers pay Google to be listed next to search results on Google.com. Advertisers pay much less to be listed on the content network (your website), and Google takes about a 32% cut anyway (you get 68% of what the advertiser pays). I will discuss this further below.
Secondly, even if you think you can get $1 per click on your site, if you can't rank in the Top 5 results of Google its still probably not worth it. You just will not receive enough visitors to make enough money. Let me break down the numbers real quick. You can figure out your estimated earnings by using this basic formula:
Earnings = Estimated Search Volume x Adsense CTR x Adsense CPC
So, if you think your site is going to receive 2,000 visitors in a month and you have an Adsense CTR of 10%, and you expect an Adsense CPC of $1, then you can expect your earnings to $200 per month. Remember, the 2,000 visitors is actual number of people to your website not the search volume shown in the Google Adwords Keyword Tool. Also, 10% is a pretty high CTR and shouldn't always be expected, but its very possible.
You can determine the estimated search volume (actual number of visitors to your site) by taking the search volume shown on the Google Adwords Keyword Tool and then multiplying it by how many searchers in Google will actually click on your website. The higher you rank, the more searchers will click on your website. I like to use the data provided by Aaron Wall at SEObook.com (originally from some AOL leaked data) to determine search volume. Here is a graphic from SEObook.com that breaks down the volume nicely based on Google rank:
So, if you are ranking #1 in Google, you can expect 42.13% of the traffic for that keyword. So, now we can finally tie it all together. If you are ranking #1 for a keyword that receives a low search volume of 1,000 searches in the Google Adwords Keyword Tool, you can expect 421 visitors ( 1000 x 42.13%) to your website.
Using our Earnings formula listed above and using a 10% CTR and a $1 CPC – your expected earnings for this site would be $42.10 per month (421 x .10 x $1). If you are ranking below #1 in Google, your earnings could drastically decrease, which is why I ONLY recommend going after a keyword with 1,000 exact match searches if you think you can rank well (top 5) and its a high paying keyword.
If possible, its simply more ideal if you can target keywords that get a higher search volume. You can use the formulas I have shown you here to determine whether or not you want to target a keyword.
I do also want to make a comment or two about the “Traffic by Google Ranking” graphic. I think the #1 position of 42% is pretty close; however, I think the other results are not as accurate. I find that ranking 2 or 3 gets almost as much traffic as ranking #1. I also find that ranking anywhere in the top 10 gets more search volume than the graphic shows.
So, I don't know the true search volume by Google Rank, but I believe its higher than shown. The reason? Most people will click on multiple results in Google. So, even though a person only does 1 search on Google, they actually may visit 3 or 4 of the websites listed in Google. This graphic does not take this into account. So, even if you are ranking #5 in Google, I believe you can still get 30 to 40% of the searches on your website.
So in a nutshell, I would recommend targeting keywords that get closer to 3,000 exact match searches a month UNLESS you see a 1,000 volume keyword that looks really easy to rank for AND pays really well. Even then, you should not expect to make more than $50 to $100 per month with such a site. Anyway, hopefully this explanation of search volume has answered more questions than it has raised!
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Cost Per Click
The Average CPC shown on the Google Adwords Keyword Tool is NOT the amount you should expect to make from Google Adsense on your website. This number is how much advertisers will pay to be listed next to search results on Google.com for that keyword. The content network (sites with Google Adsense on them) has a different CPC. However, in general you can expect that keywords that advertisers are paying a lot of money for on Google will also pay a lot of money for on the content network (your website).
It will certainly be less on your website, but by how much is VERY difficult to determine. First of all, Google takes about a 32% cut; secondly advertisers simply pay less on the content network. In addition, advertisers are changing their bids literally everyday. Also, new advertisers are coming into the bidding market and others are leaving the bidding market everyday – so the actual CPC is constantly changing. So, one day you might make an average of $1 per click on your site, and the next you might make only $0.20 per click on your site. Anyone who has used Google Adsense can vouch for this fluctuation. So, things are ALWAYS changing and all your calculations are really just a best guess.
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However, as a quick way to see the value of a keyword – you can estimate getting paid about 30 to 50% of what is listed on the keyword tool. So, a keyword with an avg. CPC of $1, you can expect to make around $0.30 to $0.50 per click. This is a decent rough estimate.
However, I would NEVER estimate making more than $1 per click on average. So, even if the Google Adwords tool shows a keyword is paying $30 per click (yes some do show this), you should never expect to make an average of $10 to $15 per click. Remember these values are what advertisers are paying on Google.com – NOT your website. For this reason, I would recommend simply estimating that the maximum CPC that you will actually earn to be about $1.
Its possible to earn more than $1 per click, but on average I would never plan on it. Due to Google Adsense TOS I can't say specifically how much I have earned per click on certain sites, but I will simply say that I think you will find my above analysis beneficial.
So, a $3 CPC keyword is probably better than a $1 CPC keyword (as listed on the Google Adwords keyword tool); but a $20 CPC keyword may or may not actually pay anymore than a $3 CPC keyword. Hope that makes sense.
I want to also briefly touch on advertiser competition as shown in the Google Adwords Keyword Tool. I usually don't look at this column too heavily, but you do want to make sure there are a good number of advertisers bidding on your keyword. I will usually just go over to Google.com and punch in my keyword – if there are lots of ads then I'm happy. So, if you look at the “competition” column in the keyword tool this is simply showing the number of advertisers for that keyword. So, for this column you want High competition – meaning lots of advertisers. The more advertisers there are for a keyword, the more likely it is that you will make more money from that keyword.
However, always remember that advertisers are joining or leaving every single day – so sometimes a low advertiser competition keyword turns into a high advertiser competition keyword or a high goes to a low. It just happens. One way to know with more certainty if there will be advertisers for the long term is to look at the overall niche (rather than on a keyword level). If the niche is a highly competitive one (based on advertisers), then its a safe bet that is will stay that way for a long time. I will be discussing the future how to analyze an overall niche in the future.
Let Me Know Your Thoughts!
I may have rambled on a bit there, but there is lots to discuss! Remember these are just some general guidelines to follow and should not be looked at as strict rules. Your own business strategy and techniques will determine the search volume and CPC levels that you may want to target. If you are not using Google Adsense to monetize your site, then you may not even need to look at CPC for example. Anyway, I am very interested in hearing your thoughts below. What questions do you have? Are there other details that I should cover? Let me know.