RE: Recent figures for % clicks on organic search results vs. paid results

Hi Jon

I guess things rarely are that ’equal’ as it will depend on business, target market and so on. In particular, I think it will depend on how well you already rank in natural search as to what you might need to invest in PPC. Also I am increasingly wary of conversion rates because they exclude all sorts of other, potentially irrelevant, ’noise’ - for example, we must get at least 500 unique visitors a day referred from organic search results which are completely irrelevant and therefore will not convert. Should those be counted or filtered out of our conversion rates for SEO?

That said, I can tell you what we are experiencing ourselves, bearing in mind we are a large content-rich well-ranked site with lots of inbound links (though we’d like more!) and we have quite a niche B2B market:

• Traffic volumes. We get around 20 X more traffic from natural search rankings than we do from PPC. This is in part due to our good rankings and in part due to our relatively small spend on PPC on very targeted search phrases (= low volume, low cost, high conversion rates). We get around 2 X as much traffic from external links from other sites than we do from PPC.
• Conversion Rates. Our conversion rates are highest for PPC (ranging between 0.5% - 5% and averaging around 1.5%). Second highest are the external site links and lowest are the organic search referrals. However, this is hugely skewed a) by the high volume of irrelevant search referrals we get from SEO and b) our very targeted PPC spend which results in low volumes of traffic but which are likely to convert. Interestingly we have found that users who click on both an organic result AND a paid ad (where they occure on the same page) are more likely to convert than a user who only clicks on one or the other.
• Quality / Value of Customers. Conversions are one thing, of course, but customer life time value is another. We have found the value of customers who convert from SEO to be higher than those from external links which is higher than those from PPC i.e. the value rankings are actually the inverse of the conversion rankings. We suspect this may be because our valuable customers are very web savvy, highly cynical, and probably ’respect’ a high organic ranking more than the paid search ads - it helps give us credibility in their eyes if we rank highly on organic search and they are more likely to trust us (and therefore convert) even if they’ve never heard of us previously. So for us high organic rankings have a significant brand component.

The reality for us in weighing up the SEO vs. PPC ROI argument is that for us to get a positive ROI from PPC we have to be targeted in our search phrases (to get low cost clicks and high resulting conversions) and this just doesn’t deliver any significant volume of business. Organic rankings, on the other hand, deliver the volume.

We did an experiment recently where we broadened the phrases that we were bidding on (e.g. from 'e-mail marketing vendor reviews' to just 'e-mail marketing') which usually also necessitated sending the clicks to less targeted pages on our site. This resulted in much higher traffic, much higher costs, and no noticeable increase in conversion rates so we've reverted to the more targeted approach. If we sold advertising on the site we might be able to justify the costs of buying traffic (to re-sell the page impressions) in this way, but as we don't, we can't.

For our 2005 budgeting we’re still actually spending more on PPC than SEO in absolute terms but this is only because of the media costs of PPC and, to be honest, if we dropped it completely it wouldn’t make a huge difference either way (and I’m tempted). Relatively speaking we’re increasing our SEO investment much more in 2005. But you never know when those algorithms might get changed and it is certainly a concern for us to be reliant on good organic rankings.

Ashley

On 10:00:56 2 November 2004 jbovard wrote:

This is a very relevant area but my main question is still: all else equal, how do the conversion rates compare for Organic v Paid clicks?

For instance If I search for a ’Fuji s5000 camera’, am I more likely to buy off a paid click than an Organic click?

and/or how does the conversion compare on more generic terms like ’digital camera’..again all else being equal.

there are costs with PPC and there are inherent costs with Organic SEO. I wonder how the ROI compares for different traffic?

feedback appreciated
Cheers

Jon Bovard