There are three approaches to calculating TAM. Depending on the available market data, your business model, and your stakeholders/investors, you should consider using the top-down, bottom-up, or value theory approach.

The top-down approach starts with broad market data and narrows it down to estimate the market size for your specific product or service.

This approach is useful when there’s reliable, broad industry data available.

1. Estimate the overall market size in which your product operates, usually obtained from industry reports or research.
2. Apply a percentage that represents the portion of the market your product can realistically capture.

If the global smartphone market is valued at $500 billion, and you are launching a new smartphone accessory, you might estimate that your product could target 5% of the market, which gives you a TAM of $25 billion.

The bottom-up approach builds the TAM by starting with specific, individual data related to your business and scaling it up.

This method is great when you have detailed knowledge of your customer base and pricing. As far as I know, investors prefer this method, which offers the most accurate and actionable TAM estimation.

 

A few birds in the hand is worth billions in the TAM. Early-stage (pre-Series-B) startups shouldn’t worry too much about calculating a precise TAM. As long as it’s in the right ballpark for their thesis, investors care a lot more about the traction you can show with paying customers. That’s why bottom-up is far more convincing than hand-wavy top-down methods that only rely on finding a big enough pie to claim as your market. 

1. Estimate how many potential customers there are in your target market. You can do this by using sources like industry reports, census data, or research from trusted organizations (more data sources at the end of the article).
2. Multiply this number by the average revenue you expect to earn from each customer (ARPU – Average Revenue Per User).

Let’s say you have subscription-based software that helps small businesses manage their finances. You identify that 2 million small businesses could benefit from your software. If your ARPU is $600, your TAM would be 2 million customers × $600 = $1.2 billion.

The value theory approach estimates TAM based on the value your product provides to customers and how much they might be willing to pay for it.

This approach is especially useful if you’re introducing a product or service that disrupts existing markets; traditional market size calculations may not accurately reflect the potential.

1. Assess the value or cost savings that your product delivers to the customer.
2. Estimate how much customers would be willing to pay for that value and scale it across the entire market.

Suppose you have developed a new energy-efficient lighting system that saves companies $10,000 per year in energy costs.

If 100,000 companies could use your lighting system, and each is willing to pay $5,000 for it (because they’ll save $10,000), your TAM would be 100,000 companies × $5,000 = $500 million.

There’s also a fourth option — a middle ground mentioned by quite a few people who offered their insights for this article.

 

I’d say the best method to estimate TAM is usually a combination of top-down and bottom-up approaches. The top-down method gives you a big picture view using industry reports and market research, while bottom-up lets you build from the ground up using your own data and customer insights. This combined approach helps balance out the weaknesses of each method. 

You may encounter the TAM, SAM, and SOM terminology and need to apply it if an investor requests it.

People who prefer this approach treat TAM as a “pie in the sky” number and further refine it with SAM and SOM portions of it.

• TAM (Total Addressable Market) is the total market if you could sell to everyone, everywhere. Your biggest possible opportunity.
• SAM (Service Addressable Market) is the portion of the TAM you can actually target based on where you operate and who your product is for. For example, if you’re a local coffee shop in New York City, your SAM might be coffee drinkers in NYC, not every coffee drinker worldwide.
• SOM (Service Obtainable Market) is the realistic piece of the SAM that you can actually win over, considering the competition and your strengths. Continuing with the coffee shop example, your SOM might be the number of customers you can realistically attract in your neighborhood, given factors like nearby competitors, your unique offerings, and marketing efforts.

TAM is typically used to make a compelling story about the potential for growth, so it’s easy to be over-optimistic and make mistakes that could make your TAM look better.

Here’s an example. I used a tool that calculates TAM automatically based on a URL to find the market size for netflix.com. The tool told me that there are 7B people who “need it (…) even if they’re not willing or able to make a purchase” and 6.3B ready to make a purchase. Something that I find hard to believe since there are an estimated 5.3B people with internet access worldwide.

Also, the way that the tool defines my potential customers doesn’t sound convincing to me, either, let alone logical.

Other mistakes you should avoid:

• Falling into the “everything trap”. This is when businesses assume that their product or service could appeal to everyone in the market, leading them to calculate TAM based on an overly broad audience.
• Sizing the problem instead of the market. This happens when businesses focus on the total number of people who might benefit from their solution without considering how many are realistically willing to pay for it.
• Overlooking market trends and dynamics. The market can grow or contract, consumer preferences can change, government regulations can influence the market, etc.

Search data is information about what people are looking for online. It can help you understand what customers want, where interest is growing, and what regions are most active.

Google Trends provides some of that data for free. For example, you can check if interest in a plant-based diet is still strong and where in the US you could find the most customers.

But that’s how far this tool goes. You don’t know what terms are “inside” the topic or how popular a keyword is (the numbers in Google Trends are relative). Also, sometimes Google won’t have the data, just like for the term “baby food subscription”.

Alternatively, you can use Ahrefs. I’m sure you’ll find more search terms there and a lot more data points. Let me take you through three examples.

Search volume is an estimation of the average monthly number of searches for a keyword over the latest known 12 months of data.

High search volumes suggest a larger potential market. Low search volumes, suggest a smaller market (or that you will need to be more creative to find customers).

By studying the keywords your competitors are targeting, you can uncover untapped niches or areas where demand is high but competition is lower.

Public companies’ quarterly reports (10-Q) and S-1/F-1 filings offer rich data for estimating TAM. They provide detailed breakdowns of revenue by product line, geographic region, and market segment, along with insights into market share and growth potential.

For example, if a company generates $500 million from a particular service and claims 10% of the market, you can estimate the TAM at $5 billion.

Both reports can also provide guidance on future growth trends, helping forecast your TAM’s evolution.

You can use AI like ChatGPT to analyze the documents for you (they can be quite complex). Here’s a sample analysis of an over 500-page F-1 filing by an Esports company.

While reports give you big numbers, talking to real people gives you the practical insights needed to adjust those estimates.

• By speaking directly to customers, you can gauge whether they actually need your product and how likely they are to adopt it.
• Interviews help you narrow down the customer segments most interested in your solution. Maybe not everyone is a fit, but if certain industries or company sizes show more interest, you can focus your TAM on those segments.
• Asking customers what they’d actually pay for your product gives you real data. If you know what your target customers are willing to spend, you can multiply that by the number of similar customers to estimate your revenue potential and refine your TAM.

Remember, TAM is ultimately an estimation. It’s natural to be slightly off, and you’ll probably need to reevaluate every year, after significant changes in the market or after introducing new products.

 

Generally, TAM calculations are not very accurate. At best, you’re relying on partially known variables (number of potential customers and average lifetime customer value). Industries also change so quickly that TAM calculations can become irrelevant within a matter of months.

What’s perhaps more important than the exact number is the methodology behind your TAM calculation. A well-thought-out approach demonstrates how seriously you take the business and the effort you’ve put into understanding the market.

This list is a real mixed bag of PR examples – from newsjacking, to content repurposing, exclusive research, and kooky brand stunts – but one thing they all have in common is measurable success.

In each section, I’ll do a post-mortem of campaign performance, share some analysis tactics, and round-off with a couple of quick tips.

Sound good? Let’s jump in.

This is another great PR example of a brand capitalizing on a film, and waiting for post-event discussion to pick up before newsjacking.

Following a veerryy controversial bath scene in the film Saltburn, UK cosmetics retailer, Lush, jumped on the opportunity to insert their brand into a cultural moment.

In February 2024, three months after the film’s release, they released the “Saltbomb”, a special edition, Saltburn-themed bath bomb.

Parodying some of the film’s most risqué moments, Lush didn’t hold back with their product marketing.

And we loved it.

The campaign led to 135 links, many coming from high DR (Domain Rating) publications, driving real, tangible organic traffic – including Global News, New York Times, Pop Sugar, and BBC.

Press coverage actually went above and beyond this, because Lush’s products are part of a few publisher affiliate programs – but affiliate links are a little trickier to track.

Here’s an example of what I mean.

The site Allure wrote up a feature piece on the Lush bath bomb, but their affiliate link navigates to a third-party platform before redirecting to Lush’s product page.

For that reason, the link doesn’t show up in Ahrefs’ Backlinks Report.

Instead, I found it by monitoring campaign-specific keywords in Content Explorer.

Beyond press and affiliate publicity, the Lush PR campaign was a winner on social media.

The photography and product descriptions made it perfect for meme-ification, which added thousands of views and impressions.

It also won big in search, with global keyword volume reaching 1.3K…

And the product landing page earned up to 800 monthly organic visits in its first month.

Traffic has remained steady since, averaging between 500 – 600 monthly visits, despite the product having been archived – pretty good going for a bit of trendjacking.

Every year, Pinterest taps into their internal platform search data to post their trend forecasts in what is known as “Pinterest Predicts”.

Real estate marketplace, Zillow, surveyed 1,815 homeowners and found that those with lower mortgage rates are twice as likely to stay put vs selling their home.

By creating firsthand research tackling an issue close to their audience’s heart, Zillow earned 235 backlinks from the likes of Bloomberg, Yahoo, FoxBusiness, and Money.com.

Sites referenced the survey for multiple reasons; not just quoting one stat, but a whole variety, as evidenced in the anchor text of their backlinks.

LinkedIn tends to keep their data under lock and key, but in their Future of Work report they released proprietary insights on the growth of AI conversations on the platform, plus the impact of AI on careers.

A great example of exclusive PR, LinkedIn’s report made a splash, landing 383 links in Forbes, Microsoft, Harvard Business Review, and CNET.

Personal finance company, WalletHub, compared the 150 largest metropolitan statistical areas, or MSAs, across 11 key metrics.

Combining primary data with third-party sources like the U.S. Census Bureau, GreatSchools.org, and Yelp, WalletHub created an interactive study ranking the most and least educated cities in America.

This is an example of a PR campaign that doubles as great content marketing.

It snagged 604 unique backlinks from heavy hitters like Wikipedia, Forbes, Business Insider, Bloomberg, and Yahoo – as well as tons of state publications.

Location based PR campaigns are an especially powerful form of PR, since they have both local and national appeal.

Krispy Kreme rode the wave of Olympic interest this year by developing two special edition doughnuts: “Go USA” and “Passport to Paris”.

As we’ve seen already, popular PR campaigns don’t always neatly track back to the sources you’d expect them to.

Krispy Kreme earned only 11 links to their USA doughnut press release, and 20 to their Paris doughnut launch announcement. Not exactly groundbreaking.

But when you filter for mentions of campaign keywords (e.g. “Go USA” and “Paris”) at the domain-level, you find a whole lot more coverage; 95 links, to be precise, from major publications like Yahoo, USA Today, People, and the Food Network.

The special edition doughnuts also drive a cool 45K monthly searches, according to the Matching Terms report in Keywords Explorer.

This next PR example is a campaign of multiple parts. It began with a pair of McDonald’s themed Crocs, and has extended to a full blown footwear collection…

And a novelty product: McDonald’s happy meal mini-crocs keyring.

The coordinated PR campaign has generated huge awareness for both brands, but tracking all the fragmented assets is no mean feat.

To get a better idea of overall brand awareness, I opted instead to search for co-citations at the domain level.

Searching in the Backlinks report, I applied filters for each brand name in the other’s backlink profile.

McDonald’s earned 260 links for “Crocs” related content, but Crocs was the real winner, landing 416 links for “McDonald’s” related press from media goliaths like Business Insider, Fast Company, and Entrepreneur.

From studying the campaign’s individual assets, I noticed something interesting: social posts have the ability to attract links.

Duolingo leaned into their weird yet wonderful brand of marketing with a hilarious superbowl ad featuring Duo, the brand’s menacing owl character.

In 5 (wild) seconds, we witness the explosion of Duo’s butt, and the growth of a mini Duo in its place, accompanied by a reminder to do our Duo Lingo lesson.

The ad creative was repurposed from a widget design that went semi-viral – Duo Lingo knew it worked, so they built on it.

And in a stroke of coordinated PR genius, they simultaneously sent out a push-notification to app users as soon as the ad went live.

“We decided to pair the ad with a coordinated push notification, which would hit learners’ phones right after the commercial aired, reinforcing the idea that Duo is always watching 👀.”

The YouTube commercial has earned 5M views and 130 links from Gizmodo, Lifehacker, and Indy100.

Plus 24M plays on TikTok.

I spent a lot of time:

There were so many awesome examples of PR, but I narrowed it down to the ones that drove either press mentions, links, search volume, traffic, or all of the above.

The best PR campaigns aren’t just about links. They’re about creating conversations, driving awareness, and making a lasting impact on your audience.

Here’s a quick recap of some of the top takeaways:

• Time it right: Launch your campaigns when conversations peak
• Tap into unique data: Use exclusive insights to stand out
• Track holistically: Monitor links, mentions, searches, and social
• Rank and compare: Engage multiple audience “tribes” through rankings
• Take a local angle: Analyze multiple locations to win more press
• Collaborate creatively: Brand partnerships can amplify your reach
• Repurpose winners: Turn successful content into new campaigns

Success is predicated on a campaign meeting its goal(s), and while we don’t know exactly what these brands set out to achieve, their campaigns have enjoyed results that most of us would be pretty happy with.

Hopefully they’ve given you some inspiration for your next project.