19 Sep 2008

SEO- Search Engine Optimization VS PPC- Pay Per Click

Author: Phil | Filed under: SEO

Recently in discussions with both current and future search engine optimization clients, the conversation has arisen about the value of SEO vs. PPC. These conversations have lead me to do additional investigation into the facts and theories between these two very different online search engine marketing efforts.

Let’s discuss SEO a.k.a Search Engine Optimization:

Benefits of SEO

Trusted visibility, more clicks: Natural Search Results are considered far more reliable by the general public, therefore offering a far better click through percentage then PPC.  Currently in 2008 it has been reported by several authorities and through my own observations that roughly 4 out of every 5 internet users will click on natural search results before they click on PPC (sponsored search results). In other words, 80% percent of internet searchers will click on a natural search result prior to or instead of a sponsored listing.

Long term results: Search Engine Marketing using SEO or search engine optimization techniques offer far longer term benefits. Working with a top SEO company can yield phenomenal results, if your SEO work is done in a very organized and personalized manner: thorough keyword development (do not assume you know your top keywords, often clients are surprised by the data we present them with, when doing our initial SEO consultation); detailed creative on site optimization and reorganization; internal link building; content development and powerful balanced off site SEO. For long term results this all must be included in your search engine optimization project. Needless to say some websites will require far more on site work, and others will require far more offsite work, and this is why cookie cutter SEO will not work.

Work pays off even after it is paid for: The on site work that you do with your SEO company pays its dividends indefinitely. Even though the on site work is long done and paid for, the benefits actually continue to grow as your domain ages and reindexes. Even more important, a good SEO company is teaching you along the way; you can put your new knowledge to work to increase traffic, increase sales indefinitely.

Negatives of SEO:

Results not immediate: Search Engine Optimization takes time to work, and this is a good thing. If you considering working with an SEO company, fast results are BAD! If someone is promising your quick results, run away. Fast SEO is usually accompanied by risky off site SEO tips and techniques will in the long run cost you. Typical search engine optimization results will begin to take hold about 60-90 days after the work has begun and you should see a relatively slow progressive growth in your natural search rankings. The good thing about quality SEO is that this slow growth is viewed as natural to search engines and is often embraced by the search engines algorithms. You often get additional rewards from the search engines by gaining a traditional growth curve.

Results challenging to quantify: SEO is much harder to quantify or track, because results are slow and typically not 100% reliable, you will bounce around in search results, and find yourself often wondering where your money is going. Trust the history of search engine’s behavior, look who is currently sitting in the top 3 positions for your search terms, how did they get there? It was not an accident; they spent money, time and effort getting there. You will need to do the same if not more to take their place.

Complicated, intimidating, mysterious. Your level of control is low especially at first. SEO is not simple, it is not compromised of a list of facts. It’s a mix of art and science’ with a little math mixed in. What worked yesterday, may or may not work today. Success is achieved by constantly testing, tweaking, and monitoring your results. By reading and and networking with others in the industry. These SEO ideals lead themselves to often erratic results especially at first, but over time, quality SEO will give you authority status by sites like Google, Yahoo and MSN, and once you become an authority website, your additional search engine optimization work produces results far more easily.

Now on to PPC (Sponsored Search Results)-

Benefits:

Instant gratification. All that is required is an Ad Words account (Google) or Yahoo or MSN PPC account, a list of keywords and a credit card. In 1 hour your ads can be displayed and you will be getting clicks and new visitors to your website. This is often where new websites start, the barrier to entry is nearly ZERO and you can have top placement TODAY!

Results easily quantified. Tracking PPC is not very difficult. You can use conversion code to track exactly how many clicks you have buy to make a sale, and this can be tracked upon any keyword, any advertisement and time of day or day of the week These results can be hammered down and constantly adjusted to get your best ROI. Control freaks love PPC, and there is certainly something to say for having complete control.

Control. You are in the driver seat from day one, you can rank for anything you want to, you can rank where ever you want and you can turn it on and off as the wind blows. You can set up 100K keywords, and set it to rank number one for all of them, and you will be blasted with traffic like you have never seen before.

Negatives:

Expensive. The costs involved in PPC are very high, and often the bidding goes through the roof as giant companies (Wal-Mart, Dell, Apple, and Best Buy) often consider Pay Per Click traditional advertising, and not really interested in return on investment. They feel like they are marketing their name, and building their brand recognition. Needless to say, us medium and small web based companies struggle to compete with this, in fact it is impossible. So with the control to turn it on, you must have the budget to pay for it, and it may or may not end up profitable.

Far less clicks. It has been proven time and again that similar placement of a PPC ad vs. a natural listing will only result in 20% of the possible clients. People know sponsored results are “PAID” and assume that the people doing this may not be on the up and up, or may not be trust worthy. It’s the exact opposite of how people feel about natural search results. The trust factor on PPC is low, and in fact it is getting worse, as people become more educated about search. As search engine results get better and better, a long term result of hard work and authority, the less often people will click on PPC. This trend will continue.

Little long term benefit. There is virtually no staying power; you shut down your budget; you shut down your traffic. Unless you keep paying, you will not get any traffic at all. If your business has an abnormally high percentage of repeat business, PPC can give a jumpstart. But overall, the future of your website is directly 100% tied to your daily budget for PPC.

Click Fraud. This is something that is being kept under ground, but there is a reason why Google has stopped offering their PPA Pay Per Action ads. They tested it and realized that this would cost them BILLIONS of dollars, as click fraud is rampant and by getting away from PPC would eliminate the profit involved in click fraud. If Google could truly send the qualified leads to your website, maintaining the conversions companies required, why not go to PPA Pay Per Action. It appears the entire online marketing community has run scared from the PPA model, as it would let internet retailers really get value from their online budget and this would be at the detriment to all online marketing and advertising companies including the BIG three search engines Google, Yahoo and MSN.

Time consuming to manage well: If you want to truly scale your PPC your going to need lots of help, on average a website in a competitive space will require either full time employee’s managing PPC or will need to outsource the management of PPC. I think PPC is expensive enough to begin with but adding insult to injury adding another 4-7% on top for it to be outsourced or dedicated an employee to this is tough.

To overview these comparisons, let’s circle back to the numbers: in 2007 12 billion dollars was spent on search engine marketing (source sempo), of this 12 billion 87.5% was spent on PPC (Pay Per Click) or 10.5 billion, yet only 10.5% or 1.25 billion was spent on search engine optimization. In the US there was approximately 120 billion searches in 2007 (source comscore). In looking at the fact that 80% of the search engine traffic is the result of natural search results and 20% of search engine traffic comes from PPC, it doesn’t make sense that webmasters are spending so much on PPC. Lets do some crude math, so we can understand the magnitude of this:

120 billion searches, and all traffic costs $12 billion (for total search engine marketing).

PPC is 20% of 120 billion or 24 billion searches.

24 billion search queries costs 10.5 billion dollars.

Based upon this math, the average PPC visit cost .44 cents each.

SEO (Natural search engine traffic) is 80% of the 120 billion or 96 billion searches.

96 billion search queries costs 1.25 billion dollars.

Based upon this math, the average SEO visitor cost .01 cents each.

So based upon my crude math, a PPC visitor costs 44 times as much as an SEO visitor.

I know I’m an SEO, so you may say I’m biased. But the numbers (and logic) speak for themselves: your money should be spent to obtain 80% of the traffic at 1/44th of the cost.

Don’t get me wrong, PPC has its place. Once established, it is a great reinforcement (not the primary source of traffic) of your natural search efforts and brand, as long as it is kept under control.

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