Understanding Keyword Valuation

Keywords are the unpinning reference points that the web uses to index and organize itself. Through correlation and contextual referencing, search engines and spiders are able to understand the relevance of a page to a specific topic, and classify it accordingly.

This means that all traffic fundamentally stems from keywords, with the volume of traffic depending on the relevance of the page itself. With that in mind, we need to understand exactly how it is that the value of a particular keyword is established. From there, we can begin looking at the fundamental worth of different traffic sources, and make the decision as to whether or not they are worthwhile.

Keywords are valued by search engines based on the web’s apparent demand for that topic as a paid link. Search engines (Google in particular) will auction off ad space on their search results for particular keywords. This allows them to determine the most efficient price point for a keyword based on webmaster demand. If a keyword’s price is bid up, it stands to reason that it is particularly valuable in its ability to generate revenues.

This is why we see that keywords associated with high-profitability assets (such as dating websites) are worth more than those of lower-profitability (such as with free online video games). From here, we can take a step further up the value chain and look at exactly where it is that this profitability is stemming from.

Websites generate cash flows by selling products and services, just like any store that exists in the real world. Similarly again to the real world, their ability to sell these products depends on the sheer desirability of the product, and the ease with which the consumer can access it. Keyword value represents the value of the accessibility of the product, whereas the sheer design of a page represents the desirability itself.

Once we build up enough of an understanding of how it is that keywords represent the accessibility-value of the page, we can then even come up with a quick valuation model that relies solely on this metric. Essentially, this means that control of the keyword represents control of the fundamental traffic resource. As such, many pages are designed to simply control keywords, and redirect traffic to the highest bidder through an affiliate program.

By controlling a keyword, an asset controls the value-creating potential of that traffic stream. The end goal is to therefore establish a competitive advantage in the page’s ability to control the traffic stream. This can be done through one of several ways. Firstly, the user can outbid their opponents to control the paid traffic stream. Secondly, they can outrank their competitors through relevance.

Lastly, they can seek out indirectly related keywords that drive similar traffic streams (essentially out-witting their competition. While these strategies will be discussed in further detail in a later segment, it is important to note how it is that this last strategy takes advantage of the way in which Short-Tail keywords (ie. highly specific keywords) can outweigh Long-Tail keywords (ie. keywords that are phrased as a question). While both are valuable, a webmaster needs to understand how the two interact so that they can diversify their keyword portfolio in a way that protects their access to traffic streams.

VN:F [1.9.22_1171]
Rating: 8.7/10 (3 votes cast)
Understanding Keyword Valuation, 8.7 out of 10 based on 3 ratings

Speak Your Mind