Category Archives: Target Market

How to Calculate Profit and Traffic for Niche Website

These are calculations that will work with both small niche websites or larger authority type websites . I will give an example of a small niche website keyword, and then I will walk through the calculations of my new authority site.  Overall, I will be calculating the earnings based on Google Adsense; however, with some minor adjustments you should be able to calculate your earnings for any type of monetization strategy; including Amazon, Clickbank, CPA offers, or other methods.  The first thing you need to do is find a keyword that you are considering building a website based on.

Example Keyword and the Formula

Anyway, the primary information you need before you can start calculating is the Exact Match, Local volume Monthly searches and the Cost Per Click.  So, for my example, lets use the keyword “Water Pumps”.  This keyword gets 6,600 Local Exact match searches and has a CPC of $1.61.

I have gone over how to calculate earnings in detail in this post: Search Volume and CPC Criteria of a Winning Keyword.  But I wanted to discuss some deeper nuances that I skipped over in that post.  The formula that I used in my previous post to calculate how much earnings you will receive is simply this:

Earnings = Estimated Search Volume x Adsense CTR x Adsense CPC

However, the formula is actually more complicated than that because we need to first calculate the actual search volume coming to our website.  Then to calculate for our entire website, we need to figure out additional search volume received from other planned keywords AND unexpected long tail keywords.  We also need to jump through some hoops to figure out the Adsense CTR and the Adsense CPC.

So, the REAL formula to use is my updated formula shown here:

Estimated Earnings = (Keyword Search Volume x Google Position Factor) x  Visitor CTR x (Adwords Tool CPC x 30%) x Multiplier for Long Tail Keywords

How to Calculate Estimated Search Volume

The initial problem is that we don’t know exactly how much traffic to expect for our keyword.  We know that “Water Pumps” gets 6,600 searches each month, but we obviously can’t expect to get every last visitor for that keyword.  So, how much can we expect?  Again, I have covered this before, but here is a graph that shows a general breakdown of how much traffic the top 10 sites in Google based on positition can expect.  This is data provided by Aaron Wall at SEObook.com(originally from some AOL leaked data) to determine search volume:

So, if you are ranked #1 in Google you can expect to get approximately 42.13%.  In addition, I don’t really agree with the other positions.  This data is just based on the first website that a visitor clicks on.  So, yes, maybe only 11.90% of searchers click on result #2 for their very first click, but you and I both know that when we search for a keyword, we often click 2, 3, or even more of the results!  So, the actual % of people going to the lower ranked sites is actually MUCH greater.  In fact, I have not noticed a huge difference in traffic between being ranked 1, 2, or 3 for a keyword.  Obviously this can really depend on a number of factors.  I have seen this time and again with my niche websites – I get essentially the same amount of traffic being ranked in any of the top 3 positions.  I also see about the same for positions 4, 5, and 6 – lets say 20%.  Then for the bottom 7, 8, 9 and 10 its probably closer to 5 to 10% of the monthly search volume of the keyword.

So, if we rank #1, #2, or #3 for “Water Pumps”, we can expect about 2,781 visitors per month (42.13% x 6600) for that keyword.  If you think you can only rank at the bottom of the 1st page, you should only expect about 330 to 660 visitors per month.

 How to Calculate Adsense CTR

The Adsense CTR needs some explaining.  The CTR shown in your Adsense account is actually based on the number of Pageviews NOT visitors.  We have just calculated how many visitors we are expecting to our website – which is a completely different number from pageviews.  Honestly, there is no way to know the exact click through rate until the site is up, but I usually just use 10% of VISITORS.

So, if each visitor looks at 2 pages on our site, the actual CTR shown in our Adsense account would be 5% – make sense?  If each visitor looks at 3 pages, then if 10% of visitors clicked on an adsense ad, this would make our Adsense CTR 3.33%.  Hope that makes sense.  So, for ease of use, I just calculate that 5 to 10% of visitors will click an ad.  Obviously your CTR could be significantly lower or higher than you calculate here – this is just a rough estimate.

So continuing on with our “Water Pumps” example, if we rank #1 we are expecting 2,781 visitors for that keyword.  We are then estimating that 10% of those visitors will click an Adsense ad – or 278 clicks per month.  Sweet we are getting close here!  Now we just need to figure out how much we are getting paid per click.

How to Calculate the Adsense CPC

The Google Adwords Keyword Tool shows the CPC based on how much advertisers are willing to pay to be listed on Google.com.  Advertisers will pay less to be listed on your website.  I usually use a factor of around 30%.  So, for our keyword, “Water Pumps” with a CPC of $1.61; I would estimate closer to getting paid $0.48 per click.  Also, this number could fluctuate heavily as advertisers stop bidding on this keyword, new advertisers enter the market, or they change their bids for other reasons.

You can also check out Google’s new Contextual Targeting Tool to get an idea of CPC bids on the content network.  The tool is in beta and I don’t find it very reliable at this point.  I have punched in several keywords from my own websites and this tool was still overstating the CPC by quite a bit on most of them.  I just now punched in a couple of keywords that only pay me about $0.20 to $0.30 per click – and the contextual targeting is still listing the CPC of about $1.20 or so.  I don’t use the contextual targeting tool and don’t really put any weight into it, but I just wanted to point it out – who knows – it could get more accurate down the road.

So, after my long winded explanations, we can finally calculate the estimated earnings for the keyword “Water Pumps”.  We figured that we could expect around 278 clicks per month with an actual payout of about $0.48 per click – that gives us: $133.44.  So, if we rank in the top 3 spots of Google, we can expect to make around $133.44 for this keyword.

Calculating for Long Tail Keywords

You also have to realize that you are likely to get more traffic for a niche website than from just your primary keyword.  You will get long tail keywords traffic!  For a small niche website this might only be 10 or 20% additional traffic to your site although it could be much more. Some of my niche sites get up to 50% of their traffic from long tail keywords.  Some get much less – so unfortunately, none of this is an exact science! However, for a larger authority website, you should be able to expect MUCH more traffic based on those long tail keywords.

So, if we expect to get 20% more traffic from other keywords in our “Water Pumps” example, then we would take $133.44 x 1.20; which is $160.13.  So, if we get 20% additional traffic from long tail keywords, we can expect our niche website on “Water Pumps” to make about $160.13 per month!  This calculation takes a long time to explain, but in practice takes less than 30 seconds to figure out for each keyword!

If we were adding lots of articles we could obviously double or triple the earnings that the “water pumps” niche website is bringing in.

Video Explanation of this Formula

When I got to this point in my blog post, I started thinking about how confusing this might be for some people.  So, I decided to make a quick video of me walking through the “Water Pumps” example.  This is simply meant to help clarify what I am trying to say.  Hopefully it helps!

 

 

My Calculations for My Authority Site

Now that you understand (hopefully :) ) my thinking behind how to project earnings for a site.  So again, I will be using this formula.  But this time I will essentially be doing it twice – once for my primary keyword, and once for my long tail keywords.  I will do it twice simply because I plan to have a massive amount of content so it makes sense to calculate the long tail keywords separately.

Estimated Earnings = (Keyword Search Volume x Google Position Factor) x  Visitor CTR x (Adwords Tool CPC x 30%) x Multiplier for Long Tail Keywords

First, my primary keyword gets approximately 14,800 searches per month.  It has a CPC of $8.04.  I am hoping to rank in the top 3 of course, but lets just calculate the projections based on getting to the middle of the page – or a Google Position factor of 20% as discussed above for middle of the front page search results.

So, now I am going to quickly use the above formula.

14,800 x 20% = 2960

Visitor CTR estimated at 10% – So, 2960 visitors x 10% CTR = 296 clicks per month

The CPC is $8.04 – So, 8.04 x 30% = $2.41 . I usually cap my expected per click earnings at $1.  Yes, you can earn more, but it would be extremely rare to average $2.41 per click.  So, I will implement my cap of an expected CPC at $1 to stay on the conservative side.

So, that gives me a projected earnings of $296 per month just for that keyword.

However, the long tail keywords will bring in MUCH more traffic.  I expect to create 200 pages of content all targeting a new keyword that gets between 200 to 500 searches per month.  So, lets take an average search volume of 350 searches per month on those long tails.

So, 350 x 200 articles = 70,000.  If I rank the middle of the road, that’s 20% of that, or 14,000 visitors.  However, I also expect ADDITIONAL long tail traffic on keywords that I wasn’t targeting.  In fact, I expect to receive just as much traffic from these untargeted keywords as I do from my targeted keywords.  So, that would be 28,000 visitors per month if I double the traffic.

So, 28,000 x 10% CTR = 2,800 clicks.  At $1 average per click, that’s $2,800 earnings per month from long tail traffic.  So, $296 from my primary keyword and $2,800 from long tail traffic is $3,096 estimated earnings per month.  And honestly I think this is a VERY low estimate.  If I didn’t cap my earnings at $1 per click and instead used the $2.41 per click – I am looking at a $6,192 per month website.  And obviously it could fluctuate largely up or down based on traffic and ranking position.  If I was ranking at the top of Google, we could double the traffic estimate to 43% – which would give me a number over $12,000 per month.

Anyway, I think its better to stay on the conservative side and estimate the site has good potential to earn about $3,000 per month.  I know it has potential to do more than that, but this lower $3k is a good estimate of what I should be looking for.

As you can see, this is not an exact science – not even close.  There are just too many unknowns to be able to reliably predict how much a website is going to make you before you even built it.  However, these calculations CAN give you a ballpark figure, and I think that’s important.  You need to know if you are looking at earning a potential $30 a month or a potential $3,000 per month.

So, I hope that my formula and calculation examples made sense!  I was somehow able to ramble on for over 2,000 words here – all just to show a relatively simple calculation.

To Do List for Building Niche Websites

Niche Websites vs. General Websites

In general a niche website is much easier to rank for a keyword than a general website with no focus is to rank.  The searcher also is usually more satisfied because they get lots of articles that discuss their query in detail rather than just one article that they get with article directories.  This is another reason why niche sites are so powerful.

  • Find a keyword that receives at least 1,000 exact match searches.  Remember this is MINIMUM – its BETTER to target a keyword that gets 20k or more as long as the competition is still low.  If you can find a keyword that gets 100k Exact match searches per month and still has very low competition then GO FOR IT!  However, the reality is that you will find many more keywords with low competition in the lower search volume range.  You won’t make very much money on a keyword that only get 1,000 searches every month – so keep that in mind.
  • Find a keyword that has an average CPC of $1 or more. This is generally the rule if you plan on monetizing your site with Google Adsense.  If you are using other methods, the CPC might not be as relevant.  You need to find out how you are going to make money with your site and make sure your chosen keywords will allow you to meet those goals.
  • Check the competition by looking at the top 10 results in Google. I will cover how to judge the competition in detail in a future post, but here are a few things you need to look at in the results.  Is the keyword in the Title of the Pages?  Are the results mainly root domains or subpages?  Look for low Pageranks, zero links to the results pages if possible (not the root domain), site age, .edu and .gov links, and a few other items can be looked at as well.
  • Buy an Exact Match Domain if possible.
  • Install WordPress. I use WordPress on all my sites – however, using regular html or other site builders is just fine too.
  • Install plugins – I will give a detailed list and discussion of plugins in the future.
  • Add content to your site. I like to start with between 5 and 10 articles.  When the site starts to make money or shows promise of growth, I will add more content.  If the site is a dud, I don’t add more content.  Usually only 1 article should have your main keyword in the title.  The other articles will be on related terms – don’t overuse your keyword on your site.  A 1 to 2% keyword density is sufficient on your 1 main article.  I might not even use the keyword in the other articles on my site.
  • Insert adsense or other monetization methods. I do this right away.
  • Build links. I usually wait a week or two before I build any links to my site.  Then I will do a combination of article marketing and other link building.  Most of my niche sites have less than 100 links showing in Yahoo site explorer.  So, don’t go overboard.  Start with 50 to 100 links and then wait a few weeks.  Build more if needed.  Use your chosen keyword as anchor text for added relevance.
  • Add More Content if needed. If your website is ranking well and you are making good money, add more articles.
  • Optimize your site for CTR and overall earnings

My Overall Strategy

My personal strategy is to enter a market where I feel like I can rank in the top 10 of Google (top 5 preferred) very quickly (within a couple of months).  Therefore, I tend to target keywords that typically get lower search volume but also have very low competition.  Keywords that receive small amounts of searches each month are called “Long Tail Keywords”.

However, the long tail keywords will bring in MUCH more traffic.  I expect to create 200 pages of content all targeting a new keyword that gets between 200 to 500 searches per month.  So, lets take an average search volume of 350 searches per month on those long tails.