Long Tail Keywords vs. Link Building ROI (5 Scenarios Analyzed)

Business meeting

If the response from email readers who enjoyed this post in their inbox is any indication, you’re gonna love this post.

Many readers replied liking it.  Here’s one:

“Awesome piece of content. In fact, this could be your best piece for this quarter ;-)”

Here’s another (I think it means he liked it):

“legit email”

Now that I’ve amped up your expectations, let’s hope this delivers.  Here goes…

I love long tail keywords, but it occurred to me I should actually crunch the numbers to find out what generates the best ROI.

And so I did.  My analysis of 5 scenarios is set out below.

Please keep in mind there are many assumptions in this analysis, including costs, revenue projections, etc.

It’s a big picture view.  There will be many exceptions and it should not totally dictate your niche site / blog publishing strategy.

What should dictate your niche site publishing strategy?

Do what works.

If I knew 5 years ago what I know now, I’d have done quite a few things differently.

But what I know now is the result of being in the niche site trenches day after day, week after week learning, experimenting, adapting and forging niche site growth.

Over time I’ve learned what works and what doesn’t.  I still make mistakes, but fewer of them.

What do I mean by long tail vs. link building ROI analysis?

What I mean is I want to break down whether you’re better off investing in:

  • more content that targets long tail keywords,
  • has low search volume, and
  • requires fewer or no links to get traffic.

OR

whether it’s better to go after:

  • higher search volume keywords, and
  • putting more resources (time and money) into building backlinks.

What if scenarios

A. 3 LONG TAIL KEYWORD SCENARIOS:

The long tail keyword strategy, which I implement extensively across my niche sites, focuses on finding low competition keywords that have some search volume.

The overall goal is to publish LOTS of this content ranking for many long tail keywords so that overall traffic grows over time with little or not time and money put into building links to rank in the search engines.

Scenario #1:

  • Revenue per 1,000 visitors*:  $15.00 (equals $.015 per visitor).
  • Cost to publish the one piece of content:  $70
  • Backlink investment:  $0
  • Estimated traffic per month:  350 visitors
  • Revenue per month: $5.25
  • Profit after 12 months: $3.00
  • Profit after 24 months: $66.00
  • Value of published content**: $105.00

In the above scenario, the content breaks even at 11 months with a 110% ROI after 24 months (a little over doubling money invested).

The above is a very good outcome and while not every piece of content will do so well, some can.

Scenario #2:

  • Revenue per 1,000 visitors*:  $30.00 (equals $.030 per visitor).
  • Cost to publish the one piece of content:  $25
  • Backlink investment:  $0
  • Estimated traffic per month: 100 visitors
  • Revenue per month: $3.00
  • Profit after 12 months: $11.00
  • Profit after 24 months: $47.00
  • Value of published content**: $60.00

As you can see in scenario #2, it can pay if you can get your cost of content down.  However, note the moderately high revenue per 1,000 visitors.  That amount would generally require some affiliate promotion.  That said note the very low monthly traffic.  100 visitors is 3.3 visitors per day, which isn’t much (i.e. fairly low competition keyword).

Scenario #3:

Scenario #3 is identical to #2, except I put the cost of content at $100.  Here’s the breakdown:

  • Revenue per 1,000 visitors*:  $30.00 (equals $.030 per visitor).
  • Cost to publish the one piece of content:  $100
  • Backlink investment:  $0
  • Estimated traffic per month: 100 visitors
  • Revenue per month: $3.00
  • Profit after 12 months: -$64
  • Profit after 24 months: -$28
  • Value of published content**: $60.00

As you can see, content cost does matter.  This is in no way suggesting you should skimp on content.  Instead, this suggests you should analyze your investment in content so that you have a reasonably good chance at generating a decent ROI within 1 to 2 years.

For scenario #3, if you can’t generate the content you need so that it will rank for far lower than $100, you would want to pursue another keyword.

B. 2 LINK BUILDING SCENARIOS

By link building scenarios, I’m referring to going after higher search volume or higher value keywords that in order to rank will require investment in backlinks.

Scenario #1:  Moderately Competitive Keyword

  • Revenue per 1,000 visitors*:  $50.00 (equals $.050 per visitor).
  • Cost to publish the one piece of content:  $100
  • Backlink investment:  $800
  • Estimated traffic per month: 1,500 visitors
  • Revenue per month: $75.00
  • Profit after 12 months: $0
  • Profit after 24 months: $900
  • Value of published content**: $1,500

In scenario #1 above, this would have to be content that successfully promotes affiliate content or target very high CPC keywords for AdSense.  $50 revenue per 1,000 visitors is pretty good, but given the okay search volume is definitely a moderately competitive keyword.

Scenario #2: Competitive Keyword

  • Revenue per 1,000 visitors*:  $25.00 (equals $.025 per visitor).
  • Cost to publish the one piece of content:  $700 (text and custom graphics – whole shebang)
  • Backlink investment:  $8,000
  • Estimated traffic per month: 35,000 visitors
  • Revenue per month: $875.00
  • Profit after 12 months: $1,800
  • Profit after 24 months: $12,300
  • Value of published content**: $17,500

With scenario 3, don’t get your hopes up too much.  Getting 35,000 visitors per month for a single piece of content is quite an achievement.  While many sites have achieved this (somebody always ranks and there are keywords with far more volume than that), you can bet your bottom dollar that if you’re #1 for that kind of keyword, you’ll have competition nipping at your heels all the time.

That said, the profits are stupendous… and to think there are far better keywords than that.  Yes, SEO is a winner take all pursuit.

C. Notes to above scenarios

* I use revenue per visitor and not revenue per page view (RPM).  Converting to RPM is simply dividing the revenue per 1,000 visitors by average number of page views per visitor on your site.  So if your site earns $15 per 1,000 visitors with an average of 2 page views per visitor, the RPM is $7.50.

**Anything that generates cash flow is a saleable asset.  Websites are commonly valued at 20 times monthly net income.  Therefore, I assess value of published content by taking monthly net income and multiplying it by 20 (a 20 multiple).

D. OBSERVATIONS:

1. Risk and Reward:

The most glaring observation I glean from this analysis is that going after more competitive keywords that require investment in backlinks is far riskier, but with much larger potential reward.

Not only is the risk higher in terms of losing more money spent on links, but there’s also the bigger Google penalty risk.

This is why people very skilled at SEO can earn fortunes.  Skilled and experienced SEOs who have ranked for many competitive keywords learn what will work and how much investment is needed, therefore minimizing risk while increasing the chances for a massive payoff.

2. Content Cost is Almost Irrelevant for High Value Keywords

I also notice that when you budget $1,000 to $10,000 for backlinks and promotion, it doesn’t matter whether you spend $100 or $400 for the content since it’s a small amount of the overall investment (especially hyper competitive keywords).

What this means is if you focus on higher competition keywords, you can create a site with absolutely amazing content which could be great in the long run.

3. An amazing business

While 4 out of 5 of the above scenarios are positive outcomes, that’s not always going to happen.  I have plenty of content I’ve published that I lost money on.

However, as you get better at building niche sites, you can see that the potential ROI is amazing regardless of the strategy you pursue.  When starting out, you probably want to keep your costs low to minimize risk, but as revenue grows, you can increase the risk by going after more competitive keywords.

To put it in perspective, a 10% return investing in stocks is really good.  10% return on a website is okay, but many publishers have exceeded that many times over.

4. Not entirely accurate

The failing of my analysis model is that content doesn’t rank immediately.  I did not incorporate ranking delays.  For long tail, which can rank pretty fast, the projected results aren’t impacted all that much.  Moreover, if a site has social media channels and an email list, the content can enjoy an initial burst of traffic, which can generate a revenue pop out of the gates.

However, for the link building scenarios, it’s likely it would take many months to rank number one for such keywords.  Therefore, the actual yearly ROI and profit figures would be delayed by 6 to 12 months.

5. ROI vs. Net Profit

ROI is helpful, but for a small operation like me, I like profit numbers best.  You can have a 500% ROI for a long tail article within 2 years, but the net profit could only be $1,000.

Wheres in the last scenario above, a 200% ROI is a $17,000+ profit.

I’ll take a 200% ROI with $17,000 in my pocket over a 500% ROI that only puts $1,000 in my pocket any day of the week.

That said, and this is an important point… long tail isn’t about ranking one piece of content.  It’s about investing in lots of content.  If you have 200 pieces of long tail content generating a 500% ROI after 2 years, that’s going to add up to some serious profits.

6. Opportunity Costs

Another failing of my model is the failure to incorporate the opportunity cost of money invested.  Every time you invest money, a cost of that investment is the return it could earn elsewhere.  Incorporating opportunity cost in my model would, in my view, overcomplicate the analysis.  This type of analysis is for personal guidance only… not shareholders or bankers.

7. Limited Resources

Whether you do everything yourself or outsource the work, the fact is every single website has limited resources to work with.  For niche sites, the lion’s share of investment goes into content and promotion (i.e. link building).

Therefore, while building up a great niche site, you will be faced with many decisions with respect to where to put your money and time.

Not all keywords are equal.  Therefore, given limited resources, learn how to find the best investment of your time and/or money.  That’s a significant point to an analysis like this.

8. DIY vs. Outsourcing

Obviously, if you do everything yourself, you don’t incur the out-of-pocket expense.  However, it would probably take you a long time to complete the equivalent of $8,000 worth of backlinks on your own to rank for a monster keyword like the one in the last scenario above.

This type of analysis is still helpful for anyone not spending money because you get an idea about projected revenue.  The ROI figures may be skewed, but profits won’t be… which is the ultimate number.

E. HYBRID APPROACH

It’s simplistic to suggest you must choose one strategy over the other.  Nobody does that because sites rank for more unintended keywords than intended.

However, we do happen to do keyword research for a reason and very often you’ll be faced with a decision as to which keywords to pursue.  The above analysis can help with that decision.

I also believe you should pursue a strategy that aligns with your preferences.  I’m not so wild about link building but I sure like mining for great keywords and publishing a lot of content.  That doesn’t mean I don’t build links or go after more valuable keywords.  I do both… but the link building part I prefer totally outsourcing all of it and so it’s fairly costly, which means I must choose competitive keywords carefully.

F. CONCLUSION

I hope you find this as helpful as much as I’ve enjoyed putting it together.  I’m not a hyper analytical person, but I enjoy it to a certain extent.

For this analysis I built a content ROI spreadsheet calculator that’s provided to all coaching students. If you’re inclined to join my coaching some time, it’ll be made available to you.  That said, it’s not terribly complicated to create your own… it took me about 1 hour and I’m a novice at best with Excel.



What do you think? Leave a comment!

  • Fin says:

    Very interesting.

    You’re my new favorite affiliate site btw.

    I wonder what would be your view on a few high value items vs lots of low value items.

    Or maybe one blog vs a few blogs at the same time.

    Comparison articles are cool.

    I’ll take all your advice onboard as I’m about to start.

    • Jon says:

      Hey Fin,

      thanks for the kind words.

      At the end of the day I go after both long tail and high value search terms. For long tail I apply the above analysis often, especially since I have a huge list of topics on my “to write” list.

      As for one blog vs many blogs: if you have a team, running a couple or few blogs is fine. If it’s just you and you don’t earn much from one blog I’d focus on one until it’s doing really well. Take profits from the first doing really well and invest in #2 if you think expanding is a good idea. There are pros and cons to one vs. multiple sites.

      Yes, comparison articles of all types are super cool and work great.

      Jon

  • FAT Stacks Entrepreneur has become my favorite blog. When a lot of other bloggers write long posts about uninteresting subjects, you always provide great value in short articles.

    • Jon says:

      Hey Tomasz,

      Thanks a ton. I appreciate that you appreciate slightly shorter content. While I will on occasion publish long stuff, I find more shorter content is better for user experience. This allows me to cover unique topics and get to the point fairly quickly. Your comment confirms this format is worth continuing.

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