Do you want to find keywords for which your site has a good chance of ranking, but that will actually bring you substantial traffic? If so, you may be interested in learning about what professional SEOs call "KEI". Many SEO products will calculate the KEI of keywords that you are trying to get your site to rank in Google for. It is a single number assigned to a keyword, and the higher the number, the better. It goes up when a keyword has lots of traffic, and down when a keyword has lots of competition. For two keywords whose ratio of traffic and competition is the same, the keyword with more traffic will have a higher KEI. All things being equal, you'd prefer more traffic, right?
As far as I can tell, KEI was first proposed by Sumantra Roy, and is sometimes said to stand for "Keyword Efficiency Index", and other times for"Keyword Effectiveness Index"[1]. It is calculated by taking the number of times for which a keyword is searched per day, squaring it, and dividing the product by the number of websites competing for that keyword.
KEI = Queries2 x Competition
Queries = The number of times per day that your keyword is thought to be used as a search.
The number of times for which a keyword is searched per day is determined using WordTracker's "database of searches over the past 365 days[, which] constitutes just under 1% of all US search, and the data is gathered from metacrawler.com and dogpile.com. The database is updated every day, and new data is between 15 and 30 hours old when it hits the live servers."[2]. The upside to this is that it is derived using real search data that is somewhat resilient to incidental and seasonal influences. The downsides are that it is not Google data and it is a small sample size. However the figure doesn't give you any sense of seasonality. So for example, if it is a tax-related keyword it might be heavily queried in the Spring, but you can only get a sense for how many times over the last 365 days it has been queried.
Competition = The number of sites with your keyword in their incoming hyperlinks.
The number of competing websites for a given keyword is determined using something called an advanced search operator—specifically the one called InAnchor [ibid.]. You can use the InAnchor operator in Google to search for pages that are linked to with certain words. For example, if you were to search "InAnchor:TheEspresseo", Google would return pages to which one or more sites link with the text "TheEspresseo". The words that a site uses to link to another site are referred to as that link's "anchor text". So if I were to link to my own SEO website with the words "Coeur d'Alene SEO", then "Coeur d'Alene SEO" would be considered the anchor text. Having keywords in the anchor text of a hyperlink to your site helps your site rank well in Google and other search engines for those keywords. That's why the traditional keyword efficiency metric, KEI, uses the number of sites with a given keyword in any of their inbound links as the number of sites competing for that keyword.
WEAKNESSES OF KEI
KEI doesn't distinguish between links that contain an exact match to your keyword, or those that contain only a partial match. Both kinds of links may be important, and we have actually have reason to believe that in fact partial match backlinks are more highly statistically correlated with higher search engine rankings than exact match backlinks. But KEI doesn't respect the nuance.
In fact, KEI doesn't attempt to evaluate the links to competitor sites at all. How many backlinks do the pages that these links come from have? Are these relevant links or links from totally unrelated pages? What about the links to the sites that link to the competitor sites? These factors matter to Google, but not to KEI.
Not only is KEI simplistic in its evaluation of the link profiles of the competition, it's simplistic in its evaluation of the on-page optimization of sites it considers competitors as well. It is precisely because KEI merely considers any site with an exact or partial match backlink to be a competitor, that it may count sites that aren't really competitors at all. This lends itself to exploitation: since KEI doesn't take into account the fact that anyone can link to anyone else's site from one or more of their own sites, using any anchor text they want, a blackhat SEO could "poison the well" by linking to tons of random, non-optimized sites using a keyword they suspect you might be considering, making it look like your competition is more numerous than it actually is. This could scare away rival SEO's from targeting a lucrative keyword that they could then have all to themselves.
Blackhat SEO scenarios aside, even if there are thousands of sites that are in fact trying to target your keyword and have each managed to get themselves at least one exact match inbound link, you are still only getting an idea of how 'numerous' your competitors are relative to the traffic, not how 'well optimized' each of them is.
It could be that there are thousands of poorly optimized sites out there "competing" for your keyword such that any SEO worth his salt could get your website to the top of Google.
In summary, KEI is a measure of a keyword's efficiency that goes up with increased popularity and down with increased competition, and favors popularity when all things are equal. The weakness of KEI is that it is too simplistic, failing to account for nuances in both off-page and on-page ranking factors.
[1] http://www.link-assistant.com/blog/studying-wikipedia’s-collective-mind
[2] https://keywords.wordtracker.com/help/metrics_explained
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