If SEOs face just one problem, it's this: value estimation doesn't come easy. It's tough to know how much it's going to cost to rank for a keyword, and it's difficult to estimate how much it'll be worth once you get there.
Difficult, but not impossible.
The Value of a Keyword
Ask most SEOs and they'll tell you the best place to estimate keyword value: the Google keyword tool. I'll agree that, in most cases, it's probably the best place to start looking for keyword ideas. But we all know that the traffic numbers are dodgy, and we can't rely on the average CPC as any kind of indication of keyword worth for your business.
There's only one way to test it accurately: PPC.
It's simple. Choose a promising keyword. Build a landing page. Set up an ad.
Use the ad to test headlines. Use the keyword in the headline, not because it promises a better CTR, but because you'll rarely rank for the keyword if it's not in your final headline.
A/B test your landing page. As long as you're spending money, you might as well optimize your landing page to maximize revenue.
Optimize to the point of profit. I'm of the opinion that if you can't earn a profit on ads, you shouldn't be chasing this as a main keyword.
Now dial up your bid price until you're the top bidder. Assume the revenue you earn from the ad is a good estimate of the revenue you'll earn from first page placement. This is generally a good, conservative estimate.
The Cost of a Keyword
And now the million dollar question: how much will it cost to earn the keyword?
Clearly, this all comes down to competitor analysis. You'll need to analyze the front page link profiles to estimate how many links, of what quality, it's going to take.
One important point, though. Branded sites with strong usage data are going to outrank many sites with strong link profiles. Don't get misled by this. A good way to test for sites with strong usage data is to type their name into the search bar, hit SPACE, and see what Google Suggest comes up with. If more than two or three suggestions including the brand name pop up, you're going up against a lot more than just a good link profile.
I typically don't concern myself much with the Page Authority of my competitors. Instead, I look at the links to that page. Generally, I think of links from the same domain just like external links. I look at the top link from each domain, and the page authority of each of those links.
Then I estimate how much it would cost to replicate the top link from each domain three times over. How you answer that question is up to you, because every link building/earning strategy is different.
Undoubtedly, Google's rankings are a bit unpredictable, but not quite as unpredictable as some might suggest. If you use conservative estimates like these and stick to links that will last as justifiable marketing, you'll rarely fail to reach your goals.
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