In this short article we will give you some guidance on how to better calculate the return on product descriptions and the expected value of your investment.
Every online store needs traffic to sell. Sure, because if you have 0 visitors in the shop, there is simply no one who could buy your goods.
Visitors are therefore the basis for you to be able to run your business. Certainly many more aspects are necessary, but visitors are indispensable.
How to derive the value of a visitor
We hold: Visitors represent an economic value for your business. You can determine the value of a visitor according to two different criteria.
- Variant: You can plan how much profit you can generate with one visitor? This variant is certainly understandable and sensible from an economic point of view when considering one’s own business. It’s also a good metric for you to optimize your own online store to the best of your ability and to see how it has improved. To see in general, which value your traffic has, this variant is however rather unsuitable, since the purchase price for the traffic does not depend on the own performance, but on the market price (thus supply and demand / in principle the performance and willingness to pay of the other market participants).
- Variant: The consideration of a neutral market price. That is, a price at which, in principle, anyone can buy the traffic at that moment. Here, the most solid data base is certainly the price of a purchased visitor via Google Ads.
From history, we can say the click price on Google tends to get more and more expensive. Demand is therefore still rising significantly in relation to supply.
Depending on your industry, the keyword set relevant to you, etc., the market price in the individual industries is very different. While click prices of over 40 euros per single click have been paid regularly for years in the detective and insurance sector, online retail is still relatively cheap with single-digit euro amounts as click prices (CPC).
So, in a conservative view, let’s first assume that most merchants still find places where they can buy a visitor for about 1 euro per click today. Now you want to generate traffic for your shop not only today, but also tomorrow and the day after tomorrow.
So it makes sense from the start to calculate with an offset / markup. In our experience, a 25% increase in costs per visitor per year is a realistic basis for calculation. A surcharge of 25% therefore gives us an imputed security in the calculation for at least one year.
Let us therefore set the value of a visitor at an imputed price of 1.25 euros.
Now, if you invest in good content, there are two basic areas where content can bring you business.
Area 1: Content can bring you new visitors from the search engines. You get additional chances to sell to more people.
Area 2: Content can extract more economic value from your visitors. This can happen, for example, through higher conversion, cross-selling effects, increased shopping carts, lower returns, less support effort, more referrals, etc. All of this can lead to significantly higher EPVs (earnings per visitor).
In this article, we’ll take a closer look at Area 1.
What is the return on investment from new, additional SEO traffic?
To calculate the economic benefit from the SEO traffic it makes sense to see how many visitors the product description brings from the search engine per month and how many months you can use the text.
With the duration of use it is to be considered whether e.g. the text can be further used after the sales of a product, in order to catch visitors, by pointing to the follow-up product.
Now there are industries with very different product life cycles. On the one hand, technology or fashion with short cycles, on the other hand, e.g. household goods, decorative items or similar, which often have a useful life of many years.
If we look at our customer structure, we can say that an average useful life of a product description of about 3 years is regularly the case.
In terms of traffic per month, it varies greatly, depending on the search volume for this product and the competitive environment, this value regularly varies between 5 and 100 visitors per month. Let’s assume here a conservative value, which many of our customers exceed, of 10 visitors per month.
With 10 visitors per month over a period of use of 36 months, this results in 360 visitors per product description.
For simplicity, we calculate with the above calculated value of 1.25 Euro for the entire duration of 36 months. This conservative calculation results in the highest possible probability that these values also apply to you.
This results in an economic benefit of 450.- Euro (360 visitors x 1,25 Euro) only considering the alternative traffic costs.
This does not yet take into account increased benefits from more coverage in transactions, higher shopping carts, cross-selling, referrals, etc.
As a starting point for the calculation we calculate here with 50 Euro creation costs per product description. (In most cases, the value paid by our clients who use a marketing strategy is even lower).
However, the full cost calculations that many customers make in order to calculate the current creation costs for a product description usually show significantly higher costs.
This includes, for example, costs for:
- Quality assurance
- Communication time with all parties involved
- Software license for SEO testing
- Plagiarism Check
- Non-wage labour costs for own employees
- Costs for the administration of the Künstlersozialkasse notifications for freelance copywriters
- Costs for the Künstlersozialkasse itself
In total, most customers therefore incur costs of between 65 and 250 euros, depending on the quantity of product descriptions to be created and the efficiency of their own processes.
This does not take into account opportunity costs, as these are more difficult to calculate. So what good would the text have done you if he had gained even more customers. How much revenue are you losing because of this?
So in this example, what return does a product description give you?
It is therefore realistic in many scenarios that without all other positive effects, purely on the traffic side, a product description over a useful life of 36 months generates a value of 450 euros from an investment of 50 euros.
This corresponds to a potential return of 800% in three years. Certainly more than with the call money offer of your house bank. 😉
If you have other figures from your company, we have programmed a calculator for you here, with which you can calculate the amortization period yourself on the basis of your concrete figures.
Do you also want to optimize your online shop with our content strategy? Then create a free customer account here or arrange a personal phone call so that we can discuss your project.