The Keyword Effectiveness Index or KEI compares the number of searches for a keyword with the number of search results.
Suppose the number of searches for a keyword is 486 per month and Google displays 214,234 results for that keyword. Then the ratio between the popularity and competitiveness for that keyword is 486 divided by 214,234. In this case, the KEI 0.002.
The higher the KEI, the more popular your keywords are, and the less competition they have. That means that you might have a better chance of getting to the top.
The KEI for a keyword should decrease if it becomes more competitive. Competitiveness is defined as the number of sites which a search engine displays when you search for that keyword using exact match search.
Suppose the popularity of a keyword is 4 (this number is found with tools like keyworddiscovery.com) and a search engine displays 100 sites for that keyword. Then the ratio between popularity and competitiveness for that keyword is 4/100 = 0.04.
Suppose now that both the popularity (more searches on that keyword) and the competitiveness (more sites that conform to that search) of a keyword or phrase increases. Assume that the popularity increases to 40 and a search engine now displays 1000 sites for that keyword. Then the ratio between popularity and competitiveness for that keyword is 40/1000 = 0.04. That is, the same KEI as above.
Hence, the keyword has the same ratio between popularity and competitiveness as before. However, as is obvious, the keyword would be far more attractive in the second case. If the popularity is only 4, there’s hardly any point in spending time trying to optimize your site for it even though you have a bigger chance of ending up in the top 30 since there are only 100 sites which are competing for a top 30 position. Each hit is no doubt important, but from a cost-benefit angle, the keyword is hardly a good choice.
However, when the popularity increases to 40, the keyword becomes more attractive even though its competitiveness increases. Although it is now that much more difficult to get a top 30 ranking, spending time in trying to do so is worthwhile from the cost benefit viewpoint.