Over the past several years, I have done numerous case studies with companies looking at the differences in their paid traffic when they also rank organically for a term.

In this column, I’m going to share some of that data and walk you through some simple calculations you can do to see if you should buy that keyword.

Running Your Own Experiment

When running your own experiment, you need two sets of numbers:

  • Your traffic information when you are only in organic
  • Your traffic information when you are in both

This is a very easy experiment to run, just follow these simple steps:

  1. Find a term you rank number one in the organic results
  2. Add that keyword as an exact match negative in your paid search account
  3. Benchmark the results over a week of time
  4. Buy that same keyword for a week
  5. Compare:
    • Click through rates for your paid traffic
    • Organic referrals
    • Conversion rates

The length of time you need to run these tests depends on how much data you receive based upon budgets and click volume. If you have a small to medium budget, you might want to buy keywords for a week, stop for a week, buy keywords for a week, stop for a week and then aggregate all the results.

If you have a larger budget, and the search volume and conversion rates are fairly static, you might just run each test for a week of time.

As with any testing, the more data you have, the more confident you will be in the results.

The final analysis is to examine your revenue for each time period to see if your total revenue is higher for one period than another. Of course, you need to subtract your paid search marketing costs from your revenue to see accurate pictures.

Evaluate Profit Results

For this company, we ran several tests across various timeframes and keywords. The results were fairly similar for almost every test we ran. Here are the results for one keyword:

In this case, you should be buying the PPC keyword as when you do, you pay $3422 in PPC costs, but that additional spend results in $7,395 in additional profit.

Over all the tests I’ve done, in the vast majority of cases (but by no means all) being in both the organic and paid results at the same time was a good idea.

I have seen some cases where it was not a good idea to buy PPC when you rank organically from a profit standpoint (there are other reasons to do it such as demand generation). Generally, I see that happen for keywords that are early in the buying funnel and they are not high converting keywords, but more awareness and interest focused keywords.

What About PPC Cannibalization?

Another common complaint about buying paid search when you rank organically is that you will end up paying for clicks you would normally have received for free.

Again, some math can solve this problem.

In the first example, we did examine the cannibalization number. The keyword we choose had consistent week over week referral and conversion information. There was some variance, but it was less than 10% over the past 3 months. To give SEO the most credit possible, we looked at the highest referral week in the past three months.

We then calculated the maximum ‘cannibalization’ clicks at 1,421 clicks. During that time frame we received 4,123 paid clicks. Therefore, even if we had removed all of the ‘other clicks we paid for and shouldn’t have’; paid search added another 2702 total clicks to the website.

However, that number was not the one to really focus on. Instead, we want to focus on whether or not the revenue was higher when both SEO and PPC were running.

Does SEO & PPC Convert The Same?

One of the advantages of paid search is that you can create dedicated landing pages that are solely designed for actions. This is not possible (or at least very difficult) with your organic efforts.

Another big question to ask: Does SEO & PPC convert the same?

The answer: it depends.

I hate that answer as much as you do; but it’s necessary. The reason? It depends on the landing page and ad copy.

I was working with a large company that uses a lot of whitepaper download lead forms. Their marketing and design departments did not want to create PPC only landing pages because they already had lots of lead forms across their SEO pages and didn’t think it was necessary to duplicate their efforts.

The whitepapers were targeted to very web savvy audiences (like you reading this column) that knew the difference between organic and paid traffic. Since the audience understood the difference in traffic source, they didn’t think there would be any advantage to creating dedicated landing pages.

They had even done a test to see if there was a conversion rate difference being in both SEO and PPC. Here were their results:

This wasn’t a big difference in overall conversion rates based upon their traffic source (similar or same keywords). In fact, often I see larger conversion rate differences when you are in both SEO and paid search, which is often called the ‘halo effect’.

Most likely, their audience did know the difference between PPC and SEO and therefore the halo effect did not kick in as much to this type of an audience. However, I still thought they should test the difference.

Personally, I dislike when marketers say, “I think….”. I try to tell myself that whenever I say that, I should stop thinking and start testing. Not every thought is correct and only testing will give you a good answer.

After a while, I convinced them to stop staying ‘I Think’ and to create just one landing page focused purely on conversions. We removed most of the navigation, focused on some bullet point benefit statements, and a simple lead capture form. Here’s what happened:

Even Web savvy people enjoyed the conversion focused landing pages. They might be able to tell the difference between organic and paid search; but in the end, they do convert better with conversion focused pages.

The Lesson

In many cases, it is worth buying keywords even if you rank organically for them. Just create a simple experiment following the steps outlined above. If your total profits are higher when you are buying the same keywords, then keep buying them. If your profits are lower (and you are not buying words for other reasons), then do not buy them. It really is that simple.

However, creating dedicated landing pages is often a good idea – no matter the sophistication level of your audience. With SEO, your pages must have certain elements to rank well. With paid search, you can purely focus on conversion actions and not have to worry about a search algorithm’s opinion of your site.

Just remember, don’t just think about what you should or should not do: test your hypothesis and let the numbers tell the story.

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Paid Search Column

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About The Author: is the Founder of Certified Knowledge, a company dedicated to PPC education & training; fficial Google AdWords Seminar Leader, and author of Advanced Google AdWords.

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  • http://www.linkedin.com/in/vargamiroslav mvarga

    Hi Brad,

    this is a nice article. The same question is asked by my clients over and over again. Just to give you some additional ammunition for testing PPC for #1 organic keywords: There is the search term report in AdWords.
    Therefore it’s good to buy the brand name or #1 keyword as a broad match keyword. There are some extraordinary data that you can see in your AdWords report.
    And there is a simple formula everyone understands:

    #visits (without PPC) <= #visits (with PPC) – payed clicks

    If this formula is accurate for your case – than you should run PPC campaigns. Especially if the revenue generated from PPC is showing positive outcomes. But don't forget to calculate the long term conversions or micro conversions (described at http://escapestudio.net/blog/short-term-vs-long-term-conversions/).
    If you don't take in consideration the LTC (long term conversions) you can be mislead by your data and conversion numbers!

  • http://www.receptional.com Barrie Smith

    Nice research Brad – I’m not surprised by these results though. Being number 1 in Organic Search and bidding on the PPC terrm = more exposure to your site :)

  • http://www.brianfosse.com brianfosse

    This scenario goes both ways, even for clients who are paid search driven and looking to build their SEO efforts. The thinking goes something like this, “If we could only build our SEO program then we could replace our paid clicks with free clicks.” The unspoken logic here is that a visit is a visit. However, as your article pointed out, in properly managed paid search campaigns a paid visit can be more valuable than an organic visit. Why? Because of the ability to control the context and landing page of each click.

    The ideal scenario isn’t to replace your paid clicks with organic clicks, but rather to keep buying traffic as long as it is profitable and/or meeting other business goals. Mixing SEO and PPC traffic will likely alter the value equation, but as long as the click costs less than the value it brings keep buying!

  • http://www.frontstreetconsulting.com Justin Freid

    Brian, some great points in your article. I tend to always recommend bidding on well ranked SEO terms for my clients. With SERPs evolving so much with the inclusion of tweets, status updates, pics, videos, news etc.. there is not many traditional spots left. That is why taking up as much real estate on a SERP as possible is so important.

  • http://www.fabulousyarn.com F.Y.

    One other comment – paid gets you places sometimes that organic doesnt – especially if your organic term is not in the first 3 spots, or is volatile, and subject to a lot of movement – examples of this are adsense sites, google mail (!) and gateway link aggregators. I ask my clients to think about who they would be missing if they werent in the paid – and calculate that ROI. Also, I have some problems with the numbers – because numbers do not always track directly. Time and time again I’m seeing that taking down Hi Traffic HLo Conversion/Hi Cost per conv. keywords results in big overall traffic dumps, and erratic sales. I’ve done this too many times to see this as ‘accidental’.
    Again, it goes back to the idea – its ADVERTISING – you can’t always measure who is looking at and being impacted by your ADS (people who type in a URL from an ad instead of clicking – happens more than you think) errors in tracking code (happens A LOT), etc.

  • http://www.conversationware.co.uk/blog mattlambert

    Hi Brad

    The only issue I can see with this – is that not all the extra revenue will be profit. You would have to have a good margin to get all your money back.

    Of course, what I say doesn’t take into account the lifetime value of the customer yada yada yada

    Sorry to point that out.

  • http://www.seocharlie.com/blog Carlos Chacón

    Conversion is not the result of the SEO or PPC. It has many factors including the landing pages of course.

    Trying to compare both scenarios should include how much your SEO is costing and how large your budget is. So, when evaluating profit results every single penny counts. There´s always much more behind impressions, CTR & total clicks.

    In my personal case, investing in SEO & PPC for some specific targeted keywords is a great formula…

  • http://www.bgtheory.com Brad Geddes

    I’ll add a note on the profit here.

    In the revenue and profit above, its for a membership site; so there isn’t any additional revenue (outside of bandwidth) for additional conversions.

    I’ve done similar studies with ecommerce sites where I of course took the cost of goods, margins, etc into the overall profit numbers. Many of them look similar. I’ve even seen times where the average order value increases. That has as much affect on profit as conversion rates.

    As noted above, you should also take LVV into account.

    I was just trying to make this article as simple as possible; as some of these tests have pages upon pages of data in them and don’t make for an easily digestible article.

  • https://twitter.com/#!/SEOzzy Ozzy

    good points however you would be missing significant data and coming up with inaccurate assumptions if you only look at last click data. You need to see the conversion funnel data and analyze each click before the conversion to identify PPC influence on SEO or vice versa. Do not rely on last click data to make such decisions!

  • http://www.stepforth.com/ Scott Van Achte

    I see this as being true in most examples where there are competing Paid ads, but what if you are the ONLY paid advertiser, say bidding on yoru company name. In this scenerio, you will be the absolute first result regardless of it you buy paid ads or not. I would suspect in this case, that buying the ad would be a waste in most cases.

    In the situation where there are competing paid ads, then that changes it as your organic #1, may still have up to 3 listings above yours that are paid, so having that #1 paid spot would make a difference.

    Would be curious to see some solid tests on this aspect…

  • http://www.rimmkaufman.com George Michie

    Scott, Brad, RKG is in the process of conducting exactly this test (brand ads vs no brand ads) and hope to expand the study to look more broadly at different business models and different types of brand names. Our hypothesis is that the extent of cannibalism will depend on the uniqueness of the brand name (say Zales, vs engagementrings.com) and the extent of offline marketing efforts.

    That’s the hypothesis, but as Brad suggests, data is the way to go here. We don’t trust the data we’ve seen published and want to see a clean test run under different scenarios.

    George

  • http://www.meltwater.com/products/meltwater-reach/ Jeremy J Brown

    One issue that hasn’t been talked about yet:

    Some people are more likely to click on organic results whereas other people are more likely to click on the paid ads. A number of studies have pointed this out.

    If you only show up in one area, then you are missing out on some of the people who prefer the other area.

  • http://www.facebook.com/JasonG417 Jason Green

    Just my thoughts on the manner;

    I’m a local small business owner that services the local public, with an online service.

    example
    my.business.com is my site, and it’s also my #1 ranking keyword. With QS 10, 35% CTR, though the conversion cost is 50% of my gross profit return.

    So i’m thinking about dropping this as a PPC keyword and then i’ll increase the budget on all other campaigns and keywords to drive more people to me organically.

    Tracking conversions with analytic’s, i’ll try and post what I find out, but I imagine the long term ROI, would eventually increase.

    Secondly I only considered this if there wasn’t anyone else marketing my site’s name. Otherwise a local competition could get a #1 rank ad above my SEO result.

    Thoughts?

 

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