Let's demonstrate the principle by looking at some more real data.
This data was collected over a recent full month of Adwords advertising. I've rounded the results and also averaged them to express all traffic measures as visits per day - this makes it easy to compare to other statistics about visitors per day. The numbers are also quite low as we do very specific targetting of our market. I have three separate grouping of advertising words let's call them pregnancy (PR), gynaecology (GYN) and obstetrics (OB). By multiplying out the visits per day by the CTR you can see that on average I'm getting about 10 visitors per day through Adwords.
Calculating visitors per day
So using these stats indicates that if you optimised for all the words in my groups you could have about 1550 visitors per day! This is of course not going to happen as not everyone is going to click thru.
What click thru rate to apply
Applying the click thru rates (CTR) from my advertising campaigns shows you could get about 10 visitors per day (just multiplying out the stats). Doesn't sound great does it? Well, more visitors will visit you if you are listed on the search results compared to advertising (although I'm saying nothing about the quality of your customers). Remember the stats I showed about click thru on page 1?
Basically you can expect 3-42% of traffic to visit your site depending on your position on page 1. Applying these statistics to my data you'd get 47-650 visitors per month from search. The higher your listing in the rankings the more visitors you'd get.
How would this increase traffic?
These stats show you can increase your visitors by 4-65 times (from my 10 per day stats) through search optimisation. What value do you put on this traffic? That will depend on how your visitors convert into paying customers.
How much money is this saving you on advertising?
If the average cost per click is $1 then this is saving you between $4 and $65 per day. (Not that you're likely to see the same volume of traffic per day through Adwords as it has lower click thru rates).
You can use the same approach with your own campaigns. The approach in summary is:
1. Possible Visitors per day =
Average Adwords visitors per day x Click thru rate for page 1
eg (500 + 500 + 550) x 3% for lower bound and (500 + 500 + 550) *42% for upper bound giving a range of = 47 to 650 clicks per day
2. Value of Page 1 listing =
= Possible Visitors per day * Average cost per click
= 47 * $1 for lower bound and 650 * $1 for upper bound
You may find while your visitors increase your conversion rate drops through native search engine ranking as you may attract a lot more information seekers rather than potential customers.
Don't forget that Adwords reach is actually wider than Google Search so you won't be able to completely kick the Adwords habit.