Online Marketing Lesson 8: Mastering Keyword Research


Whenever people start working on the Internet, they wonder how much a number one position in the Google search results is worth. To answer this question, you need to evaluate the search query that triggers that number one position. In other words, you need to consider the keywords.

Some keywords are worth seven figures per month while others aren’t worth anything. Some keywords are searched for millions of times per month. Other keywords aren’t searched for at all. Some keywords lead to sales and commissions while others don’t lead anywhere.

More importantly, some keywords are easy to get ranked for, while others are nearly impossible.

To make money with keywords, you simply have to evaluate three things:

  1. traffic (i.e. how many searches the keyword gets)
  2. money (i.e. how much you can earn if you rank well for the keyword)
  3. competition (i.e., how tough it will be to rank well for the keyword)

In this lesson, we will demonstrate how you can evaluate those three factors. First of all, we will estimate how much money you can make with a certain keyword (which takes into consideration our first two factors: traffic and money). Afterwards, we will determine whether you can or cannot realistically get ranked for a keyword (which takes into consideration the last factor: competition)

Keyword Research Tools

Before getting started, it is important to highlight what tools you should be using for your research.

While paid keyword research tools can be useful in certain situations, the bulk of your keyword research must be done with the free tool provided by Google – the Google Adwords Keyword Tool.

Apart from having all the basic keyword research features, the accuracy of the Google AdWords Keyword Tool is going to be significantly higher than the accuracy of other tools. After all, we’re trying to estimate Google’s search volume and Google AdWords’ CPC here.

At this stage, therefore, we wouldn’t recommend using other keyword tools unless you’re simply using them as part of the brainstorming process. If you decide to do that, you will still need to run your keywords in Google’s tool to make sure that your numbers are correct.

1. Estimating the Money Making Potential of Keywords

Before you make a conscious decision to go after a keyword, you should have a pretty good idea about how much you can make with it.

Almost everyone analyzes search volume alone at this step, which is a mistake. For example, if we tell you that keyword A is searched 10,000 times per month while keyword B is searched 20,000 times per month, does that imply that you should target keyword B? Not at all, you can only decide that once you also know the profitability of each keyword. If keyword A has an average CPC of $2, while keyword B has an average CPC of only $0,5, keyword A would be twice as attractive.

In order to estimate the value of a keyword, all you have to do is understand how Google and web visitors behave.

How Many Visitors for the First Position?

The first thing you need to keep in mind is that you won’t get 100% of the traffic for any keyword, even if you’re ranked number one in Google. In fact, if you are ranked in the first position, you will just get around 50% of the overall traffic.

The most reliable source of data in this regard is a study published by Cornell University in 2008. They used an eye-tracking technology to discover what percentage of users would click on each of the 10 results appearing on the first page of Google for certain search queries. Here is an image that illustrates the findings:


In other words, if the search volume of a certain keyword is 10,000 searches per month, the website in the first position of Google for that keyword would get around 5,000 unique visitors from that search query.

How many visitors click on ads?

The second half of the equation is estimating how much value each visitor has. The best way to do that is to assume that you are going to use AdSense to monetize the traffic, and then to figure out how many visitors will click on your ads, and how much each click will bring.

This is a good approach even if you are not going to monetize your site with AdSense. First of all because it allows you to compare all the keywords on the same grounds. Secondly, the CPC number found on Google AdWords is a good overall indicator of the profitability of a keyword, because that number is influenced by people using other monetization methods and using PPC traffic to promote their websites, including affiliate marketers and product sellers. If someone is earning a lot with an affiliate program for a certain keyword, for example, he will be likely to increase his PPC spending, driving the average CPC upwards.

Now the percentage of visitors clicking on your ads is called Click-Through-Rate or CTR. Some websites get CTRs as high as 15%, but that is after extensive testing and with aggressive ad positioning. Most blogs and websites get lower CTRs, usually below 2%. If you optimize your site correctly, however, you should be able to reach a CTR of 5% without problems, so let’s use that number on our equation.

How much will you earn per click?

So far we know how many visitors you will get if you rank in the first position for a certain keyword, and how many of those visitors are going to click on the ads on your site. We just need to find how much each click will bring now.

We are going to do that with the Google Adwords Keyword Tool. Once you have the list of keywords, you just need to open the “Show/hide columns” drop-down menu and click on “Show Estimated Avg. CPC.”

Keep in mind that the number you will see there is what advertisers are bidding on the keyword, and NOT the amount you will earn per click on your site. However, that number can be used to make a basic estimation. Consider that on average you will earn 20% of the CPC when you produce an AdSense click. If a certain keyword has an average CPC of $1,5, for example, you should expect to earn $0,30 for each click on your site (for pages targeting that keyword).

We end up with this equation that can be used to calculate the money potential of any keyword:

Money Potential = (Keyword’s Search Volume) x (0.5) x (Keyword’s CPC) x (0.20) x (0.05)

Applying the numbers

Let’s make a quick exercise. Go to the Google Adwords Keyword Tool, type in one keyword that you are interested in, fill in the CAPTCHA, and click “Get keyword ideas.” You will then see a page like this:


For this example, we used the keyword “cell phones.” To get all the numbers you need to change the “Match Type” to “Exact.” You then need to select ‘Show Estimated Avg. CPC’ in the ‘Show/hide columns’ drop down menu.

You can also hide the extra columns if you would like. Once you have made the changes, your screen will look more like this:


Again, make sure that you have switched the “Match Type” to “Exact” or your results will not be accurate.

Now with the keywords you have, all you need to do is apply the formula. In the case of “unlocked cell phones,” we can see that the search volume is 165,000 and the CPC is $1.29. Here’s what we would put into our formula:

Money Potential = (165,000) x (0.5) x ($1.29) x (0.20) x (0.05) = $1,064.25

At this point you just need to make a huge list of keywords and calculate the potential for each, using the formula. That’s going to help you to see which keywords can yield the highest returns. Once you have that, you are ready to move to the second step.

2. Making Sure You Can Rank for the Keywords

A huge pitfall that most people fall into is choosing the same keywords as everyone else. Usually, the commonly used keywords have high potential, but the competition makes them impossible to rank for unless you have a lot of time and money to invest into it.

The key to any successful keyword research strategy is choosing only keywords that you can rank for. You need to know beforehand that getting into the top spot is realistic. Since most people skip this step, they end up fighting for rankings that they’ll never get, and end up wasting a lot of time and resources.

Figuring out whether you can or cannot get ranked for a keyword isn’t that complicated. It’s simply a matter of taking a look at the strength of your competition and understanding how strong your own site is (or estimating how strong you can make it within a specific time frame).

The Problem with Automated Systems

Many marketers resort to automated systems or metrics to determine which keywords they should go after. This is usually very unproductive. The KEI (Keyword Effectiveness Index), for example, is a quite common metric used for people doing keyword research, and while it can be used in your analyzes, your final decision should not be based on it.
The KEI compares the search volume of a keyword to the number of pages that show up in Google when you search for that keyword. The are several ways to calculate it, the most popular one being:

KEI = (keyword search volume)² / competing pages in Google

In theory, the higher the KEI of a keyword, the higher its attractiveness.

The problem with the KEI is that you could have 20,000,000 weak pages going after a keyword, and in that case you could beat them all easily. You could also have 10 very strong, unbeatable pages going after another keyword. Under this scenario, the keyword with a lot of competing pages would have a terrible KEI, and the other keyword, the one impossible to rank for, would have a really high KEI. As you can see, it is not a completely reliable metric.

If you really want to know if you can rank for a keyword, you need to check each of the pages that rank in the first 5 or 10 positions for that keyword, and determine how strong they are compared to how strong you can make your site.

Google PageRank

The first thing that you need to consider here is the Google PageRank of those pages. A good rule of thumb is: you can almost always beat pages that have lower PageRank, equal PageRank, or a PageRank higher than yours by one.

In other words, if you’re trying to rank a PageRank 3 page, you can usually beat PR0, PR1, PR2, PR3, and PR4 pages. Beating the pages with higher PR than your will just require you to optimize your site more efficiently and to attract more backlinks.
Now you might be asking yourself: “What if I have a brand new website, or if I still need to create one?” In that case, consider that you should be able to beat all the PR2, PR1, and PR0 pages within a couple of months.

If you want to create a website targeting a keyword that has a stronger competition, say PR5 and PR6 pages, you will need to lay down a long-term plan. For example, you could aim to reach a PR4 and the 10th position in Google within six months, and then reach a PR5 and the first position after one year.

Other Factors

If you are planning to target competitive keywords, you should extend your research beyond evaluating the Google PageRank of the competing pages.

It is useful, for example, to visit the competing websites and evaluate whether or not they are optimized for search engines. Analyze their title tags, meta description tags, keyword density and so on. If you find out that the website is perfectly optimized for search engines, it will be harder to outrank it in the search results. If on the other hand, you find that it is not optimized, it means that such website is probably ranking high due to the lack of qualified competition, and it should, therefore be easy to beat.

A second factor that should be considered here is the backlink portfolio of the competing websites. You can use the Link Diagnosis tool to find out how many backlinks the website has, where the links are coming from, with kind of anchor text they have and so on. Once you have that data, you will know if you can realistically gain more backlinks if you can get the same websites linking to you, and if you can optimize the anchor text.


As you saw in this lesson, there are basically three mistakes that might cripple your keyword research strategy:

  1. choosing keywords that are not searched for
  2. choosing keywords that don’t lead to money
  3. choosing keywords that you cannot rank for

If you manage to avoid those three pitfalls, you already halfway there. Over the time you will also gain more experience and be able to predict how keywords will behave, what kind of money they will bring, how hard it will be to rank for them and so on.

Action Points

  1. Go to the Google AdWords Keyword Tool and start researching the search volume and average CPC of different keywords
  2. Open a spreadsheet and create a list with the keywords that you think could be profitable. Initially, create one column for the search traffic and one column for the average CPC
  3. Use the formula described in this lesson to calculate the money potential of each keyword. Add a third column to your spreadsheet with that data
  4. Analyze the top 5 or 10 competing websites for each keyword and evaluate whether or not you could achieve the first position on Google. Add a fourth column to the spreadsheet with the result of this analysis (you can simply use Yes/No, or you could also use three degrees of difficulty: easy, medium and hard).
  5. Start working on the easier keywords, and as you gain more experience move on to the harder ones.

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