• 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?