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Validating SEO as an Acquisition Channel With TAMs, SAMs, and SOMs
Organic search is a powerful acquisition channel for the right business type.
There’s inferred intent in keyword data, providing useful insights to the savvy marketer.
There’s also naturally occurring growth loops in SEO.
When you begin ranking well for a keyword, you’ll receive backlinks from people doing research and then linking to your content.
The more backlinks you receive, the higher all your pages will rank (assuming strong internal linking structure).
The more pages that rank, the more links and traffic they receive. The more links and traffic they receive, the more backlinks they’ll land — and on and on…
But SEO is also a significant people, time, and financial upfront investment.
Before seriously investing into any acquisition channel, you’ll want to consider its viability.
An organic search market analysis is a useful tool to help uncover the viability of SEO.
In this post, I’m going to cover:
TAMs, SAMs, and SOMs in search
Use cases for organic search market analyses
How to build an organic search market analysis
Organic search market analyses
An organic search market analysis is an examination of the revenue opportunity of a market’s search queries (i.e. keywords).
There are 3 core types of market analyses:
Total addressable market (TAM): the hypothetical total possible market for your company’s product or service assuming zero competition.
Serviceable available market (SAM): the segment of your TAM you can capture with your current business model.
Serviceable obtainable market (SOM): the segment of your SAM you can realistically capture given existing constraints.
TAMs in search
Let’s say your company has a product suite built for content marketers, but you know that you could sell to all marketers if you repackage your suite, build a few new features, and then launch the “new” product.
In this scenario, your TAM includes keywords related to both markets — even though you only have the product and capabilities to monetize keywords relevant to the content marketer market.
TAMs are fantastic sales enablement tools.
When you’re pitching investors and discussing distribution opportunities, you can use a TAM to support your story with data.
You can also utilize a TAM for talent acquisition.
When you’re speaking with potential marketing hires in an interview setting and they ask about acquisition opportunities, you can refer to your TAM and inspire a vision for the future.
But a TAM lacks actionability.
Your business may be years away from being able to serve the entire TAM, so why rank for keywords you can’t monetize yet?
SAMs in search
Your SAM is the segment of your TAM that you can service with your current business.
Continuing the example from above, the SAM is all keywords relevant to the content marketer market, but that doesn’t include the more general keywords relevant to all marketers.
The SAM is more actionable than the TAM because it only includes the market that can currently be serviced.
But even though the market is serviceable, it doesn’t mean it’s obtainable given your current business constraints.
In acquiring organic search traffic, you must consider:
Competition and time to rank
Path to monetization
To answer these questions and suss out the viability of SEO as an acquisition channel, you need to know what percentage or your SAM is actually obtainable.
SOMs in search
A SOM analysis for search is the most actionable of the three market analyses.
Not only can you monetize the keywords in the analysis if you were to rank for them, but you’re also capable of ranking for them on a reasonable time horizon (let’s say no more than 12 - 18 months).
If you’re the marketing leader, you’ll want to see the SOM before making any significant investment into SEO.
If you’re someone on the growth or marketing team that hypothesizes you should be investing into SEO, you’ll want to arm yourself with a SOM to validate your hypothesis and get organizational buy-in.
How to build a TAM, SAM, and SOM
The use case for a SOM analysis in search is more compelling than a TAM or SAM because the insights are immediately actionable.
A SOM is just a filtered down SAM and a SAM is just a filtered down TAM, so you can easily build all 3 assuming you’re willing to spend a little more time doing keyword research.
Here are the steps to build a TAM, SAM, and SOM for search.
Step 0: Reminder! You’re reducing uncertainty, not eliminating it
There’s risk and uncertainty in all business investment decisions, SEO included.
An organic search market analysis should reduce the uncertainty in making an investment in SEO, not eliminate it.
It’s easy to get lost in the data and stuck in analysis paralysis mode.
Be aware of this.
Remember, your goal in conducting an organic search market analysis is to get a directional sense of the viability of SEO — you’re not after a perfectly forecasted ROI number.
Step 1: Keyword research and clustering
An organic search market analysis starts with keyword research.
Keyword research has been written about to death, so if you need a refresher, check out the following articles:
When you’re building a TAM, SAM, or SOM, your keyword research should be comprehensive.
Spend a couple days doing research and pulling keyword lists of synonyms, related terms, and competitor keyword rankings.
Once you’ve got an exhaustive list of keywords, run them through an automated keyword cluster.
Building a market analysis without clustering your keywords is like trying to mow your lawn with scissors.
Keyword clusters combine your keywords together at the page level.
For example, let’s say there’s $250k in monthly revenue potential in 200,000 keywords.
If you cluster the keywords, you may find that you only need to create 1,000 pages to target all of them.
If it costs $1k on average per page of content, you’ll spend $1m to create 1,000 pages.
If it takes 15 months to reach that revenue number and breakeven, then the payback period is 15 months. Afterward, you’re netting $250k per month.
That’s an extremely attractive investment opportunity.
However, if it takes $10m instead of $1m, the payback period will go from 15 months to 51.
Much less attractive.
Step 2: Tag your clusters
Once you’re confident you have a comprehensive set of keywords that are clustered, manually review and tag each cluster.
If the cluster is irrelevant to your TAM, delete it.
Otherwise, tag each cluster with one of the following:
TAM: If you tag a cluster with TAM, you will NOT include that cluster in your SAM or SOM.
SAM: If you tag a cluster with SAM, you will NOT include that cluster in your SOM, but you will include it in your TAM.
SOM: If you tag a cluster with SOM, you will include it in your TAM and SAM.
There’s no automated way to do this because only you know if a keyword is relevant to your business.
Depending on the size of your analysis, it could take a week or two to complete.
Step 3: Get search volume and apply CTR, CPS, and SERP feature curves
Once you have your keywords clustered together and each cluster is tagged, the next step is appending some data to each cluster.
First, append search volume to each keyword.
Once appended, sum up search volume at the cluster level so you know how much search volume each page (i.e. cluster) has.
Second, append serp feature specific click-through rate (CTR) curves.
The curves should be SERP feature specific because, for example, if the SERP has a knowledge panel in it that you’ve captured, you’re going to get more clicks than ranking in a SERP without the knowledge panel.
I recommend including positions 3, 4, and 5 here, because it’s unrealistic to assume you’re going to rank on average 1st or 2nd for every single keyword.
If you assume you’ll average somewhere between 3 to 5, the analysis will be more realistic.
Next, append the clicks-per-search (CPS) coefficient for each keyword.
CPS saves you from creating content that targets a keyword like “NFT definition.”
Google shows the definition directly in the SERP, so many of the users will not even click through to a website.
If the CPS is less than one, it means there is less than one click per search on average.
If it’s greater than one, it means there is more than one click per search on average.
Without including CPS, you risk over or under inflating the amount of traffic you can drive to a page.
Finally, multiply search volume, clicks-per-search, and click-through-rate together to calculate traffic potential.
Do this for position 3, 4, and 5 — you’ll have 3 traffic potential numbers (one for each position).
Step 4: Determine what’s “obtainable”
Now that you have traffic potential for each cluster, determine which clusters are obtainable using Ahrefs.
Export and append keyword difficulty (KD) to each keyword.
Ahref’s KD pulls the top 10 ranking pages for each keyword and looks up how many websites link to each.
The more links the top-ranking pages for the keyword have, the higher its KD.
According to Ahrefs, here’s what KD represents:
KD 0-5 – Top-ranking pages barely have any backlinks
KD ~50 – Top-ranking pages have a couple of hundred backlinks
KD 90+ – Top-ranking pages have thousands of backlinks
Calculate the average KD of all the keywords in a cluster and then set a threshold for what’s obtainable and what’s not.
It’s difficult to give you an exact threshold value because what’s obtainable depends on a number of factors (e.g. the authority your website has, the content quality you’re capable of creating, the technical components on your website, etc.).
I recommend creating different scenarios for what’s obtainable and what’s not.
For example, create 3 scenarios where:
Average KD of 40 and below is obtainable
Average KD of 50 and below is obtainable
Average KD of 60 and below is obtainable
Step 5: Build your organic search market analysis
Now that you have your KD threshold scenarios, you can build your market analyses.
To build the SOM, just filter out any cluster above your KD threshold, filter your column tag to only include SOM, and then sum the traffic potential column.
The total traffic potential is your serviceable obtainable market.
To build the SAM, filter your column tag to include both SAM and SOM, and then sum up the traffic potential column.
The total traffic potential is your serviceable available market.
To build the TAM, sum up the traffic potential column (assuming you’ve deleted irrelevant clusters).
The total traffic potential is your total addressable market.
Step 6: Estimate lower and upper bounds
Traffic potential is good to know, but revenue potential is better.
Paid search data will show you the average cost people participating in search auctions are willing to spend per click for any given keyword.
Append paid search data, specifically average cost-per-click (CPC), to each keyword.
Next, multiply the CPC by traffic potential to get revenue potential.
The problem with calculating revenue potential this way is that it’ll almost always be an undervaluation.
If a business is willing to pay $4 for a click in a search auction, they should be making more than $4 from that click to even want to participate in the auction.
The expected return on that $4 click depends on many factors (e.g. industry, the business economics, etc.), but you can use 2:1 ROAS, which is the average ROAS according to Google.
Multiple your revenue potential number by 2 to adjust for the average ROAS.
Step 7: Estimate costs
In SEO, you have costs associated with creating and ranking content like writing, design, SEO, backlinks, etc.
Depending on the keyword landscape and your internal capabilities, costs will vary.
If you’re creating long-form, evergreen blog content, you can expect to spend $1000 - $2500 per piece.
If there’s a programmatic SEO play, the cost per page will be much less, but you’ll need to consider development costs and time.
If there’s a UGC play where your users create content for you, your costs will be less than if you’re creating it yourself.
To effectively estimate costs, you should have your keywords clustered together.
If you don't, you’ll have no idea how many pages you need to create, or the strategy you’ll use to create those pages.
Step 8: Compare revenue and costs
Now that you know your revenue potential and have estimated costs, build a model assessing the investment opportunity.
Here are two things to consider when modeling various scenarios:
Costs are an upfront investment, but once you start ranking, you usually keep ranking.
SEO results usually follow an exponential curve — results are slow in the beginning, but once you get traction, results are compounding.
Remember, you’re trying to get a feel for the viability of the acquisition opportunity — not accurately forecast ROI.
Step 9: Experiment
Let’s assume the results of your modeling point to there being an SEO opportunity.
How do you approach the opportunity?
The answer is NOT to start dumping all your time and resources into SEO.
Instead, design small experiments.
For example, take a group of related clusters and create content for those keywords.
When you publish the content, in what position do the pages index for certain keywords?
How long does it take to get them to the first page?
Are you capable of creating content that is orders of magnitude better than what’s currently ranking?
How difficult is link building going to be?
Run an experiment to help answer these questions.
SEO is NOT an all or nothing thing.
You can learn a lot by running small experiments and then adjust the resources you allocate to SEO based on the experiment results.
An organic search market analysis allows you to assess the viability of SEO using data, which increases the probability you’ll make the right SEO investment decisions.
Remember, experiments and analyses like TAMs, SAMs, and SOMs should reduce uncertainty, not eliminate it.
Until next time.