The Road Less Traveled: How to Analyze SEO Opportunity Cost

April 10, 2012
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Matt Quirie
Motorcyclist in forest

What does it cost to make keyword decisions on your (or your clients’) website?

Opportunity cost is the inherent price that you pay when moving from one option to another. When you trade in your sports car for a hatchback, the opportunity cost is the lost opportunity to be a sports-car owner and everything that comes with that. Or back in the business world, trading development of product A for development of product B has the opportunity cost equal to the potential success of product A. Makes sense, right?

When we make these kinds of decisions, we are obviously hoping that our chosen path leads us to better results than the path we didn’t take. In other words, we’re hoping the opportunity cost is less than the realized benefits of the alternate option. But how does this relate to SEO?

When optimizing a site, we target pages or sets of pages for certain keywords or sets of keywords in the hope that they will rank well. We want the pages to show up when you search for them and draw high levels of relevant traffic. So when selecting keywords to focus pages, we’re deciding that our chosen target is better than the existing target. It’s important to be confident of this decision, but how do you make it?

Thankfully, marketing on the web allows us to make very informed decisions in this area. With advanced analytics, we can tell exactly how our site is currently performing, which keywords are converting at what rate, and which have high bounce rates. While online marketers are generally under pressure to move quickly, it’s very important to take the time and consider all of the relevant metrics. Simply targeting a keyword at a page because it has high search traffic levels isn’t always the ideal method. Consider the following simplified hypothetical example.

A page ranks well for “blue shirts,” but a well-meaning SEO re-optimizes this page around “red shirts” because it had 10x the search volume. Unfortunately, the SEO didn’t consider that visitors from the keyword “red shirts” convert to sales at a rate of .01% and the visitors on the keyword “blue shirts” convert at 3%. By re-optimizing this page without considering the opportunity costs involved, this SEO marketer caused the page to lose almost 97% of its conversions in a best-case theoretical scenario — not “optimal.”

So how do we avoid lost opportunity costs in SEO marketing? By using every analytics tool in our kit. This includes ensuring proper installation of analytics and conversion tracking data, as well as cross-referencing other data sets such as back-end sales data, internal search, or PPC data. Proper analysis of SEO keyword competitiveness is also crucial, and not simple at all. I’ll post specifically on this in the future. Until then, keep your tools sharp.

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