4 Guaranteed Methods for Determining Total Addressable Market for SEO

Eev Hastings
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Jul 02, 2022

Forecasting against your tam (total addressable market) is an important step when launching a new product or business or making a funding proposal.

The TAM is an essential component of both your SEO campaign and user acquisition plan.

On the basis of your selected keyword sets, it can assist you in forecasting traffic potential and help you prioritise optimisation tasks.

Your whole market is not the same as your total addressable market since, in the absence of competition or alternatives with different USPS (unique selling propositions), your entire market represents your greatest potential opportunity.

Although only a small portion of this market, your target audience is more directly related to your personas and potential customers whose demands are more closely matched to what you are selling.

What is the formula for the total addressable market (TAM)?

In terms of typical business calculations, the formula for determining your tam is as follows:

Competitive position x potential market = TAM

For instance, the number of prospective users is your potential market. For instance, there are an estimated 4.03 billion email users worldwide, but if your competitive strategy is to target just UAE consumers, your TAM is only about 10.08 million.

Benefits of a complete tam understanding

Understanding the income opportunity is the main benefit of a TAM exercise, but it also provides the following ancillary benefits:

Owners' attention is drawn to their next product roadmap.
This provides an up-to-date starting point for evaluating product/market fit.
By demonstrating accuracy and confidence, it draws and placates investors.
Early on places rivals in the line of sight.

But when we examine our SEO TAM, we can make estimates of our entire TAM and then divide it into categories based on anticipated user demands using the tools and data already available (matching your personas).

Creating Your TAM

There are three steps to setting up your SEO TAM:

Clearly define and list the USPs and capabilities of the product (current, and forecast).
Thorough keyword research for your business, service, or product.
Estimates of traffic (click curves and opportunity gap analysis).

Let’s go through the 4 Guaranteed Methods for Determining the Total Addressable Market (TAM) for SEO.

The total addressable market is a metric that expresses the total number of sales expected yearly in a certain market. There are three basic ways of calculating the total addressable market: top-down, bottom-up, and value theory. Let's go through them one by one to have a better understanding.

1. Approach from the Top

The top-down study assesses total market addressability using industry data, market surveys, and case studies. Data and information from industry groups, on the other hand, are not always up to date and may not always shed light on your market criteria. You could choose to employ a TMA analysis, also known as a complete market approach consulting business, to undertake research tailored to your unique needs.

In order to locate a subdivision, the top set of macro data is first chipped away. The only benefit of this strategy is the ability to develop exact statistics for econometrics data. This approach is shown as an inverted pyramid, with the company's customers at the bottom.

2. Bottom-Up Method.

The bottom-up strategy's whole market addressability is more exact and accurate. To estimate revenue and market growth, the approach leverages data from prior sales and price or first-party information. Because the TAM estimations in this technique are based on primary market research, it is more trustworthy than top-down analysis.

The main benefit of utilising a bottom-up strategy is that the company can quickly separate out certain important client groups and omit any that are superfluous or out of context. Instead of relying on debatable statistics, a brand that uses information from its research and case studies would have a TAM guide that is more accurate and relevant.

3. Value Theory Methodology.

The value theory method focuses more on the value customers derive from your products and the amount they are prepared to spend in the near future on similar goods and services. In the value theory method, calculating TAM is based on assessing the value given by the items to certain consumers.

The value theory could be the greatest option for goods and services that are likely to change in the near future or that can benefit various consumers.

Businesses may quickly determine how much an end-user would be prepared to pay for an already-available product with the use of a value theory study. For companies releasing new features, improving old goods, or introducing brand-new items, this technique is a great choice for determining the TAM.

4.Calculating the total addressable market

The formula for calculating your TAM is as follows. The total addressable market (TAM) is a calculation used to determine a market's potential for growth.

TAM = Potential User Count * Competitive Position.

Five billion people used the internet as of April 2022, representing 63 per cent of the world's population. 4.65 billion of these people used social media. However, if you want to sell software in the UAE, where 9.94 million use the internet, then your TAM is around 9.94 million.

Just to help you comprehend the TAM idea, here is an example.

One of the most crucial metrics start-ups and business owners should use to gauge the market's potential size in relation to overall sales and income prospects is the total addressable market. TAM breaks down numbers into a manageable level by carefully and properly separating the data.

The TAM will display the potential total market size for a product under the hypothetical conditions of infinite provider operational resources and unrestricted access to the product. This is only feasible in monopolistic markets when a single operator has the means and scale to service the whole potential market. Generally speaking, this benefit only applies to public utilities and government services.

Conclusion

Allow us at the Watchtower SEO Company Dubai to assist you in finding ways to close the gap between your goods and services and your target audience. By examining the market for your company by our competent team in our Web Design Company Dubai and its approach using a variety of cutting-edge technologies, we will assist you in developing a plan and provide you with the finest options for expanding your company's online presence.