Search’s Total Addressable Market (TAM): sizing up SEO traffic opportunities [2 Methods]

If you invest in SEO on a market with limited growth potential, even if you have attained top-ranking positions, you may still end up seeing zero traffic and leads increased. 

When that happens, you know you have wasted your vulnerable marketing budget on otherwise high ROI-driven activities. 

That means before you even consider whether SEO is the right marketing channel, you should first determine its potential traffic gains. 

Then the question becomes how do you evaluate and size up search traffic opportunities? 

What is the Total Addressable Market for SEO and Growth? 

For VCs to decide whether a startup is worth a shot, they look at the Total Addressable Market (TAM) of the startup. 

TAM sets the limit on how large the startup could potentially grow for VCs to determine whether the investment provides exponential returns given the risks they are taking. 

TAM is represented by annual dollar value. A $30B TAM means a market that is worth $30B to be captured. 

For SEO we could use the same concept, and instead of looking from an annual dollar value perspective, we approach from a monthly search volume perspective. 

Why monthly instead of yearly you may wonder? That’s because most SEO tools report search traffic based on a per month basis, however, I don’t think it matters a lot – as you could always use an average monthly traffic volume figure and multiple by 12 to project annual figures.  

Monthly search traffic volume is a good metric to base on when analysing TAM for search opportunities. When TAM is bigger than your current organic traffic, you know there is a potential upside to be captured, and budget allocation can be justified. The extent to which will depend on how big the gap is, and whether it still makes financial sense in relation to other marketing opportunities. 

Whereas, if the gap is small or that your brand has reached the limit, that is where you know SEO shouldn’t be at the top of your marketing list. 

Personally, I’d prefer brands to have at least 100% organic traffic gains potential before considering any sort of SEO engagement. This isn’t a hard rule, but it is a good rule of thumb as I think anything lower, the benefit-cost ratio won’t be as great.

TAM for SEO is either growing, shrinking or stagnant 

That said, the above is incomplete without considering another important fact: the growth and ever-changing nature of search TAM. 

Organic search traffic, after all, is a reflection of market conditions and trends. Searchers must have an interest in the topics first before going to Google for search which in turn reflects on search volume data. 

That means SEO’s TAM is constantly changing, and whatever happens from the real world like climate change, remote working, and cryptocurrency, it is going to influence and shape what people are searching online. 

Google also reported that 15% of daily queries have never existed before.

So suppose your brand has reached its maximum SEO potential, but the market continues to grow at an annual rate of 20%, it may still make business sense to continue investing in SEO to capture that growth. 

Search Traffic is always a lagging indicator in both ways

Consider an event that happens on the other side of the world and someone posts on Facebook. Local news media pick up and write about it which enters your newsfeed. You find the news interesting and important which then you hit the share button. 

Then one of your facebook friends whose parents happen to live in the area is shocked to read your shared post, and decides to do a Google search. Which of course he might have already contacted his parents throughout. 

So here is the thing, he didn’t know about the event from Google search. Rather he learned from a post shared by his friends on Facebook which then he went to search on Google. Had he not known about the event, he wouldn’t have searched.

Next, consider the search volume data provided by third party SEO tools or Keyword Planner (Adwords) often have a 2 – 3 months delay. For evergreen search terms, that is alright since search volume is consistent from months to months. But when it comes to new queries and recent events, search traffic data will be too slow to be relied upon. 

Which comes to an important insight here. Whenever there is a conflict between real-life observation and search data, rely on the former. 

Why you should not look at short-tail keywords alone

The answer is simple, they do not adequately represent the nature of search queries and search volume to provide you with a reliable picture of search opportunities.

You may think that most search traffic volume comes from short-tail keywords so you could just rely on few short-tail keywords to determine search opportunities, but according to research done by Ahrefs, you will miss out on 39% of total search demand with mid to long-tail keywords.

You may think that individual long-tail keywords don’t account for much traffic, but from the same Ahrefs’ study of ~1.9 BILLION keywords, 29.13% of keywords with 10,001+ monthly searches are made up of three or more words. 

Here are is an example:

Noticed how traffic volume on the term ‘lose weight’ is less than ‘how to lose weight

Furthermore, considering that 92% of all searches come from long-tail keywords with ten searches per month or fewer, how much would you miss out by just looking at short-tail keywords?

The reason digital marketers prefer to look at the few big short-tail terms is understandable because it is the most intuitive, quick, and straightforward approach. But good keyword research is more than just entering a few big short-tail terms on the spreadsheet and calling it a day, one has to dig deeper and look at all the relevant keywords. Whether direct or indirect. Short, mid, or long-tail. 

2 methods for sizing up SEO upside potentials

#1. Top-down approach – calculated using competitor analysis 

The top-down approach takes a high-level, macro, big picture view of the search market to evaluate potential upside. In practical sense, you may draw reference from some of the largest SEO competitors relating to your market. 

Since tools like Ahrefs will show all the estimated organic traffic, you would need to remove any brand-related search terms as well as other terms that are irrelevant to your brands such as terms from service or product that you don’t offer. 

The benefits are that it is quick and simple which can be done within an hour or less, and it is usually the first approach every SEOs would take to project potential gains. 

On the flip side, its reliability is only as good as the competition’s SEO abilities. As their sites have to be a good representation of the search opportunities available, which is often a hard assumption to make. Most web owners still fall into the trap of over-focusing on the few short-tail keywords for SEO growth. 

Also, such an approach tends to produce more noise (i.e irrelevant ranking terms), however, that can be reduced by manual filtering.  

#2 Bottom-up approach – calculated using data from keyword research

The bottom-up approach is where most people start when conducting keyword research for a new market. You first generate keyword ideas based on your understanding of the market and potential customers and then input those terms into keyword research tools to compute monthly search volume.

And you work your way up towards building a complete keyword plan. This approach is more reliable, but also more labour-intensive and time consuming due to a wide range of keyword permutations and variations that have to be considered and sorted out. 

It’s my preferred method since you get to understand the intent of the audience, their pain points, the business, and how those keywords will fit into the overall SEO strategy plan from site structure to internal linking. 

The other bottom-up method is to look at your site keyword rankings from position 4 – 10 onward, and project potential traffic gains if they managed to rank for top #3. As search volume doesn’t often translate to clicks, hence you would need to apply an average CTR % of say 15% to the traffic figure. 

So the process will look something like this: 

  1. Export site organic ranking keywords with search volume
  2. Filter keyword positions 4 – 10 onward
  3. Sum up search volume from the keyword list
  4. Apply CTR of say 15%

The issue with this approach is similar to competitor analysis, as you are assuming that all the available keywords relating to your brands have been reasonably represented on the site and keyword research tools. 

Putting them together

The above approaches are not mutually exclusive, and it’s always better to apply multiple approaches since each technique has its limitations. Ideally, by putting them together you reduce any major blindspots and errors that would affect your projection. 

Top-down, competitor analysis approach
Monthly organic (SEO) traffic9.4K 29K27K
No. of position #1-3 keywords   292534565

Potential gains: 198% (9.4K to 28K)

Bottom-up, 15% CTR monthly traffic from keywords positions #4 – 10 onward
No. of keywords ranking #4-10 onward traffic9.4K 
Total monthly search volume150K
Est. increased of search traffic (15% CTR)22.5K

Potential gains: 139%

From the above, you may take a range of 140% to 200% as potential SEO gains.

It’s all about approximation

“It is better to be roughly right than precisely wrong.” by John Maynard Keynes is a quote worth knowing when it comes to sizing search opportunities. The goal here isn’t to be accurate, which is asking the impossible. Instead, focus on getting it approximately right, and most important of all, avoid obvious mistakes like being short-tail biased towards keyword research and market sizing. 


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