Everybody knows they want to rank #1 on Google but what’s that top ranking actually worth to you? Can you really put a dollar figure on the value of a #1 Google ranking?

Yes!

Establishing this value is a critical step in creating a proper SEO & Internet Marketing Campaign. The main reason is to set realistic expectations and budgets.

Is it logical to expect a budget of $100 will bring in $100,000 of new business? Probably not.

There’s 2 primary ways that you can establish the value of a top rank:
a) Quick Estimate based on the market cost of the keyword phrase
b) Comprehensive Estimate based on your specific situation

For many businesses, a quick estimate is going to be good enough to get a ballpark. Here’s how to do it:

Plug your keyword phrase into the Google AdWords Keyword Estimate tool.
Multiply the Monthly Searches by the Approximate CPC (Cost Per Click).
Multiply that amount by your listing’s expected Click Thru Rate (CTR).

30% is a rough estimate of how many searchers will click on the #1 listing in Google.

Follow this example:

“Salon Nashville” gets 6,600 monthly searches on Google (phrase match).
The approximate CPC is $2.
6,600 searches times $2 cost per click times a 30% Click Thru Rate = $3,960.

So using the Google tools, we can estimate that we’d pay $3,960 per month to be the #1 listing on Google for “Salon Nashville.” The annual value of that #1 ranking on Google would be $47,520.

Is this a Good Estimate of a Top Ranking on Google?

First, we’re using Google’s number of estimated searches so that’s better data than we can get elsewhere.

Second, the “Approximate CPC” is based upon what your competitors are actually paying Google to show up on that that search.

It might not be what you think it should be but it is the real market value of ranking for that keyword on Google. Finally, we can look at multiple studies to determine how many searchers click on the 1st Google listing vs the rest of the page. Most studies have shown between 34% and 42% click on the 1st non-paid Google result. However, I believe that the average has gone down over time so I’m more comfortable using 30%.

If you wanted to get a more Comprehensive Estimate of the value, you’d need to consider things like:

Actual CTR from Google to your website. Yours might be higher or lower than 30%.
Actual Conversion rate of visitors on your website. How many visitors actually contact you and become leads?
Actual Conversion rate of leads into clients. Do they actually come in the salon?
Average Customer Ticket. How much does your average client spend on a visit?
Average Margin Rate. What’s the profit on your products and services?
Average Customer Lifespan. How long do you retain your clients? How often do they come back?
What’s the lifetime value of your average client?

Once you’ve established the value of your top ranking on Google, it’s easier to set a realistic marketing budget and plan for your growth.

The Small Business Administration and SCORE.org say a proper marketing budget is often between 2% and 10% of sales. However, if your conversion rate or profit margin is very high, a higher budget might make sense.

Either way, knowing the value of top rankings will make your job easier and should help contribute to long term success.