Organic vs Paid traffic ROI? Options

[brassones]

Lets consider a scenario where all is equal (ok I know it doesnt exist!)

if someone clicks a google link for a given keyphrase, overall would you consider the conversion on PPC to be equal to Organic?

I would assume so.

On that basis if a company is only using PPC and its site is completely un-indexable by engines, then theoretically they are missing out on 70-80% of the search market?

I wonder realistically for a well optimized site with a decent PR, what portion of that 70-80% they are missing out on, would be realistically obtainable over a period of say 6 months.. if all of a sudden the site became SE friendly.

Lets assume
1. The PPC market is not competitive for the products it carries
2. Same for Organic

I know its difficult to say...
I wonder.

any thoughts?

[Tim]

I haven't got many thoughts to add, but:

if someone clicks a google link for a given keyphrase, overall would you consider the conversion on PPC to be equal to Organic?

I haven't read any studies, but I would have assumed that organic listings would get a higher conversion rate that PPC listings. The user knows that those pages are more relevent to their search, so they're more likely to visit - whereas they could assume that the ads aren't relevent and are just there because the advertiser has money.

That's my take on it anyway.

[limey]

I'm of the opinion that it depends really on what the user is looking for:

If the user is looking for a specific product or service (lets say a highly specialised lawnmower) that isn't particularly well catered for on the internet. I guess that this scenario would unfold.

Organic Listings:
The user will browse the organic listings until he/she comes to the brand of lawnmower that he/she wishes to buy.

PPC Listings:
The user will browse PPC listings at the same time, until he/she sees the brand of lawnmower he/she wishes to purchase.

I know it's a fairly lame answer, but IMO the casual user will always opt for clicking on the best labeled, most easily recognisable outlet for the product which they wish to buy. If a PPC listing reads 'Super Thrust Mowers from £50' then they'll click on the PPC, if the organic reads the same they'll click on that.

I think it's probably about what jumps out at a customer, not how it's advertised to them in the scenario of a specialised product with little competition in listings.

(Then again, that's just my personal opinion - not the fact!)

[linker]

I am going to say conversion for organic listing regardless of industry will usually offer the higher conversions. Althought PPC has definitely gained some momentum in clicks or else overture and google, especially google would have closed its doors

[Paul_H]

I use PPC for one site which also comes top for the same keywords.

One great thing about PPC ads is you can turn them on and off, and experiment. At first I thought by having an ad show for a word we are number for was just throwing money away, so i turned the ads off, profits dropped, turn them back on profits increase, repeated just to make sure.

Results could suggest a few things,
1. Our ad text appeals more to some people more than the description/title in the serps – can’t please everyone.
2. Some people will click on the ads first, so its either us or a competitor.

No major difference in conversions, if anything the PPC converts better as i make sure the ad is very relevant. Have tried several niches with PPC and lost money, PPC is not always the answer, a lot can depend on the product/service. One thing i would recommend is to continue to use PPC for as long as it makes a profit and don’t stop just because you come top in the serps(test this, each site may be different)

[bwelford]

That's a good point that you make, Paul_H. With PPC you get to choose exactly the text you want displayed. With a SERP organic listing, the snippets may not be the most appropriate to filter out the irrelevant traffic.

[Tim]

I agree, good point from Paul_H.
I might reconsider my usage of AdWords, based on that. I'll do some more testing.

[Paul_H]

One downside to having too relevant ads is your CTR can go down. A low CTR will cost you more per click and if it gets too low will get the ad disabled for that word.

To help combat this you can use negatives, my favourite being “-free”

Sometimes worth while looking through your log files and seeing if there are any words that are completely irrelevant and putting those in the negative list.

[Paul_H]

On the subject of AdWords

A common mistake i see people make with adWords is setting up a single campaign and having it show on the content(adsense) and search network. Extremely costly! In general it’s far cheaper to advertise on the search network than the content network.

Example:
For one keyword i target it can cost £1 a click on the search network to come top, but as little as £0.04 on the content network. A single campaign for both content and search would cost you roughly the same per click. As the content network generates many more clicks it can be very expensive.

Solution is to create two campaigns one for search and one for content, bid £0.04 on the content and bid £1 on the search. At £0.04 I’m also happy to target less relevant traffic and pick up window shoppers.


Another quick tip:
Never set your daily limit to low, my daily limit is usually set 10 times what i spend on average. Your daily limit can effect how often your ad is shown.

If you think you are spending too much a day and feel you need to have a limit then adWords is not for you. Why would £10 and 100 clicks be profitable but not £100 and a 1000 clicks?

As with most things there are always exceptions, one guy was using adWords to generate extra traffic as his sites sponsors fess were based on traffic. Guess new brands and government info ads will also be happy to make a loss for awhile and have a daily limit.

[fthead9]

A well designed PPC campaign should convert at a higher rate than an organic listing since you can control what the visitor sees first by directing him to the most relevant landing page. This is more imporant for targeted keywords than general keywords since the visitor is more likely in the information gathering stage on the general keywords.

[bragadocchio]

Hi fthead9,

Welcome to the forums.

Great point. It's one that hadn't come up in the thread yet, but needed to be addressed. A landing page can be very helpful, and can be tailored specifically for a certain campaign.

That's also a great laboratory for trying out new things on your pages that you may not necessarily want to add to the main navigation of the site quite yet.

The same can be done in signature links from forum posts, or in ads that appear in newsletters.

[WhoIsJohnGalt]

On my site my PPC ads convert better than the organic ones for the precise reasons that fthead9 mentions.

I get roughly 1/2 my leads from organic and 1/2 from PPC but 2/3 of my traffic is organic and only 1/3 PPC.

[cnovela]

I agree. My CTR using adwords is 2%, but my conversion is 5%.
But for organic listings the conversion is close to 0.2%.

A lot of clicks, but few sales for organic listings.

Also, my conversion for Yahoo/Overture listings is higher
than for Google Adwords, but Yahoo/Overture charges
a lot more per click than Google Adwords, for me it is
Yahoo/Overture at $1.50 per click versus
Google Adwords charging $0.30 per click.

I have found that Google Adwords is more profitable
with the cost per sales of about $6.00.

The same keyword using Yahoo/Overture is about $20.00 per sale.

My conclusion is that Google Adwords despite its lower percent conversion is superior to Yahoo/Overture in terms of ROI.

The ROI from organic listings is poor if you factor in bandwidth costs and all the time I spend optimizing pages for Google and asking for links. :x

[projectphp]

A well designed PPC campaign should convert at a higher rate than an organic listing since you can control what the visitor sees first by directing him to the most relevant landing page.

Absolutely 100% true, but missing some of the big picture.

Organic doesn't need to convert at a very high rate to be profitable, but PPC does. As such, the conversion rate on organic, if done well, should be far far lower. No one selling ipods wants to pay for "negative iPod review", as the conversion rate is probably low. But if the cost of such a click is zero dollars, and you have a page anyway that ranks naturally for the term, and it converts a tiny fraction of scared consumers, it may generate additional sales via Organic.

As such, Organic traffic is a splatter approach: all relevant traffic should ideally be captured, even peripheral traffic. That amkes for a lower conversion rate, but still a large volume of sales, which is great for the bottom line.

I wonder realistically for a well optimized site with a decent PR, what portion of that 70-80% they are missing out on, would be realistically obtainable over a period of say 6 months.. if all of a sudden the site became SE friendly.

IMHO, what you seem to be trying to do is make a busines case for fixing the site. That I can't tell you, as I don't know:
1. The costs you unique situation will have.
2. The margin on your sales.
3. Any other metric of site performance.
4. What industry you are in.

What I can tell you is this: you need to understand you break even point, and then assess the rsik / reward from there. The equation you need to use is:
Total cost / (average sale price * margin) = total number of sales to break even.

As an example, if the process costs you $25,000, and your margin is 20% on average orders of $50, then you will need to make 2,500 sales to recoup the costs via SEO.

To make the business case, you then need a table outlining expected traffic levels, conversion rates and sales per month and project how long you believe it will take to break even. From all that info, whomever is in charge of deciding on such a project can assess the risk and choose to either modify the site or let it go.

[gravelsack]

Oh crap

Now I find myself in agreement with projectphp twice in two days.

Has the world gone mad

(we must be getting old, projectphp)

[maitre]

Hi,
You can calculate Adword ROI with this tool:

Adwords ROI Tool

[Black_Knight]

PPC doesn't work very well with the long tail.

Since the long tail can represent an actual majority of search traffic, you are left with either taking big gambles with broad match PPC (very unrefined and difficult to gain any real elegance) or PPC doesn't touch it.

However, conversion rates with PPC should always be higher. Much higher (+50% higher and more). That's because you can target the exact phrse and serve an exactly matched landing page (or better, landing path) for that exact phrase and what it tells you.

However, conversion rates do not factor in CPA (cost per action of getting someone to land there). For short term campaigns, PPC will have the lower CPA, because you pay only for what you use. You don't have to rework an entire site, do link building, or all those other up-front investments of SEO.

However, in the medium to long term, the SEO campaign usually works out as the far cheaper CPA.

It is kind of like the difference between renting (PPC) and buying (SEO) your search placement. If you only wanted something for the short term, then renting would probably be the cheaper way. But there soon comes that tipping point where it would be cheaper to buy outright than pay ongoing rent over a long period of time.

[dgeary9]

I've just learned (helping a client with his very new service site), that PPC can be very helpful when Google is dancing. He ranks first page on BigDaddy, 2-3 page on non-BigDaddy servers. His service also tends to convert on a second or third visit, not the first.

Consumers often find your site on subsequent visits the same way they found you the first time (e.g. searching on the same phrase). He actually had a couple of people thank him for the ads, because without those, they wouldn't have found him again, since he seemed to have "disappeared" from the search results (I assume they got a BigDaddy server the first time they searched, but not the second).

This client also offers a lot of seasonal specials, and PPC are very useful for those. Analytic tracking over the last 8 months would suggest that PPC converts better when those seasonal offers are up (not a big price break, but offering something well tailored for last minute shoppers), organic converts better when the PPC ads don't have something very sexy to say.

[Xenith]

depends on the industry and as blackknight mentioned nature of the searches. I've found conversions are better for natural results as opposed to ppc. But I have seen and heard both. But I would be biased towards natural search too ; - )

[AbleReach]

On that basis if a company is only using PPC and its site is completely un-indexable by engines, then theoretically they are missing out on 70-80% of the search market?

I wonder realistically for a well optimized site with a decent PR, what portion of that 70-80% they are missing out on, would be realistically obtainable over a period of say 6 months.. if all of a sudden the site became SE friendly.

Wow, I wish I had a platter of well-arranged stats to offer up. :-)
I have a feeling that stats are out there but not definitive, because there is soooo much about which to debate and experiment.

These are my instincts.

1. 70-80% un-indexable content = a tremendous opportunity for educating the site owner. Warning - that much un-indexable content indicates a steep learning curve.

2. I pull away from short term costs without at the same time examining long term benefit. I don't see the point in PPC, without content that encourages basics like good WOM, organic SEO and customer satisfaction. However, quick results from PPC can be used to help a site owner feel up to taking on steep learning curve of item #1.

3. Beyond targeting ads to content, higher conversion for PPC (over organic) won't happen unless there's a there there that clicks with the consumer, at the site and within the entity's branding.

4. Not all ducks need to be in a row. Consumers are very forgiving if they feel empowered and trust they're going to get what they need.