Revenue Forecast - Visualize your financial keyword research
Created by: WriterZen Support
Modified on: Mon, 13 Jun, 2022 at 4:46 AM
A business that invests in Google Ads or SEO campaigns is always interested in the profits made after that campaign. Of course, there are other factors such as brand coverage, getting more new users. But how to maximize profits and minimize costs is a dilemma. Businesses can't launch mass campaigns in their field. That’s why the step of keyword research when SEO or implementing Google Ads campaigns is always an important step to have. Choosing the right set of effective keywords dramatically affects the effectiveness of the campaign.
We have noticed that, when researching keywords, we refer to a lot of seemingly quantitative metrics such as search volume, keyword difficulty, CPC, or long-tail selection of keywords that have a reasonable conversion rate. At first glance, these metrics seem very quantitative, but looking closely at the results after running the campaigns, it is very qualitative. Given the method of choosing keywords based on the above metrics does not show businesses an evident problem when these keywords appear on the SERP when we successfully rank up or run Google Ads, what will it bring? (or more precisely is how many orders, how much revenue, how much profit will it get?)
Mistakes from the method of choosing keywords lead to errors in the results obtained in revenue and profit. The campaign fails, businesses lose money and time, even though sometimes they think they have succeeded when they see keywords that have appeared on the SERP. And the painful truth is that many companies and units, despite having successfully ranked keywords to the top, still fail in business because they do not sell as expected at first.
So how do we choose keywords so that we can most clearly quantify what we achieve even without running a campaign? We have included a method called Revenue Forecast with the metric ESKP.
ESKP is an indicator that relatively determines the estimated sales volume of a business when ranking a particular keyword to the top of Google or other search engines with different positions in an SEO (or Google Ads) campaign.
Method for determining Revenue Forecast
The following formula calculates Revenue Forecast:
ESKP = (Volume Search per Keyword) * (CTR) * (CR)
Volume Search per Keyword: the average monthly search volume of users on google for any given keyword.
CTR: Click-through Rate - Percentage of users clicking on the keyword
CR: Conversion rate - The average conversion rate of 100 sessions, how many sales are sold
Note: Revenue Forecast function with ESKP Metric is only suitable for sales keywords with commercial intent, not ideal for traffic keywords like information intent. This is because the CR rate of information intent is usually not as high as that of commercial purposes.
Revenue Forecast is a fundamental method that helps businesses identify the right keywords and make a decision about which keywords to choose during the keyword research process. This index helps to avoid misjudging the effectiveness received when implementing SEO projects because many companies push too high expectations to bring significant profits when ranking top keywords.
Let us talk about a particular small case. There is a business A that is selling a product called “golf clubs set.” The business desires to earn 100k USD a month. So now, business A needs to choose which keywords are most appropriate. Solving this problem, you will better visualize the effect of ESKP. This index now helps businesses choose the right keywords and gives firms more than one scenario to get the correct keyword list.
The Search Volume of the keyword “golf clubs set” is 40,500, according to Keyword Explorer in WriterZen.
According to the formula of ESKP, we can determine the following:
ESKP for top 1
ESKP (top 1) = Search Volume * CTR (top 1) * CR
ESKP for top 3
ESKP (top 3) = Search Volume * CTR (top 3) * CR
ESKP for top 5
ESKP (top 5) = Search Volume * CTR (top 5) * CR
ESKP for top 10
ESKP (top 10) = Search Volume * CTR (top 10) * CR
Conversion Rate (CR) in each field, each type of article, the quality of the article's content will be different. We collect CR data based on multiple campaigns running Google Ads. For golf, we have a CR of 3% (for the website we used to run for business A, in this case).
You can also get this metric instantly by running a Google Ads campaign for your chosen keyword and then measuring how many sales you sell for every 100 traffic to your website. Let's say you sell 5 orders. Then the CR of this array is 5%. This ratio may change and vary from time to time, but its margin of change is not high.
We also have data for the Click-Through Rate (CTR) of each different location. The average CTR for desktop top 1 is 29%, top 3 is 10.78%, top 5 is 5.07%, top 10 is 1.74%. Note that the top 1 here is including the advertising results and the top organic results. Statistics are taken by X Y Z. WriterZen continuously updates the average CTR data of the fields.
So, ESKP for each position returns as follows:
ESKP (top 1) = 40500 * 29% * 3% = 352
ESKP (top 3) = 40500 * 10.78% * 3% = 131
ESKP (top 5) = 40500 * 5.07% * 3% = 61
ESKP (top 10) = 40500 * 1.74% * 3% = 21
Every unit of the golf set by A is selling for $ 389. And thanks to Revenue Forecast, business A can make a miraculous statement as follows:
“If business A invests in the ranking keyword 'golf clubs set' or runs a Google Ads campaign for this keyword. Then in 1 month:
If the keyword holds the average top 1 position, they can sell about 352 sets for 352 * 389 = 136928 USD.
If the keyword holds the top 3 average positions, they can sell about 131 sets for 131*389 = 50959 USD.
If the keyword holds the average top 5 positions, they can sell about 61 and earn 61 * 389 = 23729 USD.
If the keyword holds the average top 10 positions, they can sell about 21 and earn 21 * 389 = 8169 USD.”
Knowing the cost of running Google Ads based on average CPC and the investment costs to SEO, business A completely calculates the profit from that to determine whether to invest in rank (or run google ads) for the keyword 'golf clubs set' or not. Going back to the original problem, business A wants to earn 100k USD a month. At this point, Company A has a couple of options:
Invest in top 1 SEO for the keyword 'golf clubs set.’
SEO top 2 keywords 'golf clubs set' and choose a few other keywords, continue to calculate ESKP so that enough revenue is over 100k USD.
Have you seen the Revenue Forecast with the ESKP metric that helps us quantify the effectiveness when successfully ranking a keyword?
Note:Revenue Forecast calculated for the top 1 in the above case is 352 sales. This means roughly around 352 sales. And it can't be 3520, or it can't be 35. This metric helps us to estimate the number of orders sold. Don't expect too much revenue, but don't be too pessimistic about income either.
Revenue Forecast is a relative parameter. Still, it gives users an approximate view of the market and the influence of SEO on businesses, helping businesses visualize revenue and profit if they do it. Execute a successful SEO campaign, thereby avoiding unnecessary risks.
Some ways to optimize Revenue Forecast
To optimize revenue, businesses can focus on optimizing the Revenue Forecast index. The higher the search volume keyword, the higher the theoretical Revenue Forecast will be. But it must also be noted that keywords with a search volume of informational intent type often have a lower CR rate than keywords of transactional intent type, even though this type of search volume is low. Therefore, it is important to consider how the ratio (Volume Search per Keyword) * (CR) is the highest.
In addition, Revenue Forecast depends on the effectiveness of the SEO campaign that the business implements. The better the business does SEO, the more keywords with high positions. A high position leads to a higher percentage of users clicking on the website. In other words, optimizing for high CTR will have high Revenue Forecast.
Note: There are three basic types of search queries:
Informational – searches performed to answer questions or learn something
Navigational – searches performed to locate a specific website
Transactional – searches performed to buy something
Furthermore, WriterZen gives you an excellent gift for those who read this far. You do not need to spend too much effort calculating Revenue Forecast for each keyword by location. Do not bother to measure the CR of the array you are operating or research to know the CTR for each keyword position by device each Search intent type. WriterZen does all of the above automatically. You just need to use the Keyword Explorer toolkit and turn on the Forecast feature. Choose a keyword that has a good ESKP Forecast with your targeted SERP position (top1/3/5/10
To see more about any of these tools or their associated metrics, please explore the sections related to our five effective tools as follows: