How to Calculate Average Revenue Per Keyword: A Step-by-Step Guide
By Emil Kristensen CMO
@ Sleeknote

Running a business in the modern age necessitates keeping a keen eye on multiple metrics, but few are as important as average revenue per keyword (ARPK). While it may seem like just another piece of data, understanding and analyzing ARPK can provide invaluable insights into your business’s performance and where you should focus your resources. In this article, we will provide a step-by-step guide on how to calculate ARPK, as well as its importance, metrics, and best practices to optimize it to your advantage.

Why Average Revenue Per Keyword is Important for Your Business

Before we dive into the nitty-gritty of calculating ARPK, let’s first understand why it’s such a vital metric for your business. Simply put, ARPK shows you the amount of revenue generated by each keyword on your website or online platform. By measuring this metric, you can quickly identify which keywords are bringing in the most revenue and focus your efforts and resources on them even further.

ARPK is also useful for identifying trends and patterns in revenue, such as seasonal fluctuations or spikes in sales for certain products or services. This insight can help you adjust your business strategy and marketing efforts accordingly.

Understanding the Basics of Keyword Revenue

Before we tackle ARPK, it’s essential to understand the concept of keyword revenue. Keyword revenue refers to the amount of money generated by a particular keyword, either through search engine optimization (SEO) or pay-per-click (PPC) advertising. It’s calculated by multiplying the keyword’s conversion rate (the percentage of visitors who convert to customers) by the average revenue per order or average order value (the total revenue divided by the number of orders).

The formula for keyword revenue is as follows:

Keyword revenue = conversion rate x average revenue per order (or average order value)

By calculating keyword revenue, you can quickly identify which keywords are generating the most revenue for your business.

Identifying and Measuring Key Metrics for Average Revenue Per Keyword

ARPK can be calculated using various key metrics, including click-through rate (CTR), conversion rate, and average order value. CTR measures the percentage of clicks on your website or online advertisement, while conversion rate measures the percentage of visitors who become customers. Average order value measures the total revenue generated per order.

Calculating ARPK requires combining these metrics to provide a holistic view of the revenue generated by each keyword.

Using Google Analytics to Track and Analyze Keyword Performance

One of the most effective ways to track keyword performance and calculate ARPK is through Google Analytics. This free tool can provide a wealth of information on website traffic, including visitor behavior, demographics, and, more importantly, keyword performance.

To begin tracking your keyword performance on Google Analytics:

  1. Log in to your website’s Google Analytics account
  2. Select the appropriate website profile if you have more than one
  3. Click on the ‘Acquisition’ tab
  4. Select ‘All Traffic’
  5. Click on ‘Channels’
  6. Click on ‘Organic Search’
  7. You will now see a list of keywords and their performance metrics, including CTR, conversion rate, and average order value.

Using this data, you can calculate ARPK and identify which keywords are generating the most revenue for your business.

Calculating Average Revenue Per Keyword: A Detailed Walkthrough

Now that we have discussed the importance of ARPK and identified the metrics required to calculate it let’s look at how you can calculate it step-by-step.

To calculate ARPK:

  1. Select a specific period to analyze, such as a month, quarter, or year.
  2. Identify the keywords that generated revenue during this period using Google Analytics or your preferred analytics tool.
  3. Record the total revenue generated by each keyword during this period.
  4. Record the total number of orders generated by each keyword during this period.
  5. Calculate the average order value by dividing the total revenue by the total number of orders for each keyword.
  6. Calculate the conversion rate by dividing the number of orders by the number of clicks for each keyword.
  7. Calculate ARPK by multiplying the average order value by the conversion rate for each keyword.
  8. Sort the keywords from highest to lowest ARPK to identify the most lucrative keywords.

Tips for Optimizing Your Average Revenue Per Keyword

Optimizing ARPK often involves optimizing the metrics used to calculate it, such as CTR, conversion rate, and average order value. Some tips for optimizing these metrics include:

  • Optimizing website content and structure for SEO
  • Improving the user experience on your website
  • Offering promotions or discounts to encourage sales and increase average order value
  • Experimenting with different PPC ads and targeting strategies to increase CTR
  • Enhancing your product selection or service offerings to improve sales

Best Practices for Using Average Revenue Per Keyword to Drive Business Growth

ARPK can provide invaluable insights into your business and its performance, but it’s crucial to use these insights effectively to drive growth. Some best practices for using ARPK to drive business growth include:

  • Focus on the most lucrative keywords and invest resources in improving them further
  • Use ARPK insights to inform marketing campaigns and strategies
  • Track ARPK over time to identify trends and patterns in performance

Common Mistakes to Avoid When Calculating Average Revenue Per Keyword

It’s easy to make mistakes when calculating ARPK, so it’s essential to be aware of the most common pitfalls and avoid them. Some common mistakes to avoid when calculating ARPK include:

  • Using incomplete or inaccurate data
  • Breaking down performance metrics by page or article instead of keyword
  • Not accounting for seasonality or other factors that affect revenue
  • Using arbitrary time periods instead of aligning with business goals or initiatives

Beyond the Numbers: How to Use Average Revenue Per Keyword Insights to Improve Your Marketing Strategy

ARPK is just one piece of the puzzle when it comes to developing an effective marketing strategy. Remember to use ARPK insights in conjunction with other metrics and data points to develop a holistic view of your business’s performance and inform your growth strategy.

By understanding and leveraging ARPK effectively, you can make informed decisions that drive business growth and prosperity.