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SEO vs. PPC - Which Provides You the Better Value?

Organizations of all sizes are realizing the importance of online marketing, especially through search engines. Nowadays, people are more likely to end up on your website via a search engine than going directly to it. In fact, according to Jupiter Research, a Forrester Research company, 81% of users find their desired destination through a search engine.

This research makes it clear that it's very important for your brand to have a strong presence in the search engines, ensuring that you're in front of your target audience. However, there's still a big decision to make - whether to use SEO (Search Engine Optimization, or naturally ranking high in the organic results) or PPC (Pay-Per-Click ads, the Sponsored Links and purchased ads on a Google search) to get in front of your target?

Done correctly, both can get you on the front page of the search engines for targeted terms and in front of your desired audience. However, each has its respective benefits and costs. SEOmoz, a great SEO resource, recently published an article by the team at Enquisite quantifying the effectiveness of SEO vs. PPC.

The article details that organic results are 8.5x more likely to be clicked on than paid search results! That's a large disparity and is likely attributed to searchers gradually learning the difference between organic and sponsored results, and recognizing that organic results are typically the more respected resource. Also, researchers have used heat maps to show that searchers' eyes focus on the top organic results, with people barely noticing the ads to the right.

However, PPC holds a slight edge in conversion rates, as paid search results are 1.5x more likely to convert click thrus from the search engine. The SEOmoz article attributes, to the fact that the paid search result's "text and landing page is custom optimized by the advertiser."

So, looking at both of these numbers, it can be concluded that "the opportunity from organic search is 5.66x that of paid search."

So, given the flat out choice of ranking high organically or having great PPC ads - the overwhelmingly logical choice is organic. However, we all know it's not that easy or else those "Rank #1 in Google TOMORROW" robo calls would be much more effective. True SEO takes time, not get rich quick schemes.

PPC's true strengths are its speed and expansiveness. With a PPC campaign, you can be on the first page for a multitude of targeted terms within a day. However, the terms can cost anywhere from pennies to many dollars per click; also, for a PPC campaign to be done correctly, it's usually best to hire a firm that can manage it full time. This can mean that PPC campaigns can get very expensive, very quickly - especially when done correctly.

SEMPO, the Search Engine Marketing Professionals Organization, estimates that 87% of search engine dollars are spent on PPC vs. 11% spent on SEO efforts. That's more than $10 billion spent on PPC vs. just $1 billion spent on SEO. That means the strategy that's over 5x more effective, SEO, is only receiving 1/8 the media spend in the market! It's hard to justify the expense of a PPC campaign, knowing that SEO is more successful and the overall better longterm value.

Don't get me wrong, there are certainly times to use PPC - when you're first launching your company, it's a great way to get your name out there and build brand awareness. For a limited time offer or special event, PPC is an effective way to get exposure that SEO wouldn't have time to contribute to.

Also, PPC is more effective for products than it is for service companies; for example, we focus SEO efforts on terms such as Raleigh web design and Content Management Software; however, we do not engage in PPC advertising for these terms, because they're usually a waste of money for a services firm like ours. Yet we have an electronic payments client that runs a PPC campaign focused around its specific product offerings, and this strategy makes sense for their market.

However, when it comes to the long term lifeline of your internet marketing, the result is clear - SEO offers the better value in search marketing. You won't rank #1 overnight, but SEO is more affordable and the longterm benefits have been proven. All of these facts demonstrate that your company should spend more of its time and resources focusing on SEO vs. PPC.

What are other people's experiences in this realm? Anyone think that PPC is the more value-driven choice than SEO? Let us know your thoughts!

Comments

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Trevor

Agreed. Jumping behind SEO is cheaper and converts more efficiently, but PPC has a lot more flexibility as you mentioned. Companies are limited to a select few keywords and phrases - if they're lucky - through SEO efforts. But, with PPC they can affix their brand to terms outside a domain's natural keywords and get on the first page the first day. PPC's flexibility also means that keywords can be bought ad hoc and dropped soon after for individual ad campaigns, a PR crisis, or marketing efforts outside those select SEO keywords they have chosen to build there site around. For a marketer flexibility, and speed DO have some unquantifiable value. Perhaps your post holds more true for smaller firms but for companies with the budget, running concurrent campaigns is a good idea to stay in-line with the ABT (Always Be Testing) mantra. Even if they run leaner PPC campaigns, they might want the assurance that they have the know-how to use PPC when SEO won't and can't help. -Trevor

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Ryan

This research doesn't take into account average order value or the likelihood of the customer to become a repeat buyer. I'm not saying the research above is wrong, but I did read a study in Direct Magazine earlier this year that showed paid search did edge out over organic when taking these things into account. I'm not vouching for the validity of that research, I'm just saying this research could be biased as well since it is put out by an SEO organization. It'd be nice for some truly independent research that covers CPC, CPV, average order value, value per visitor, and lifetime buying patterns of each type of customer.

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Clay

Thanks for the comments!\r\n\r\n@Trevor - very good points. As I noted in the post the speed and expansiveness of PPC are valuable - especially for marketers with specific goals. So, for companies with large marketing budgets, it can be worth it to run PPC campaigns, however, they should always be striving and dedicating resources to SEO too. Too many large firms just do PPC and figure that it's enough coverage.\r\n\r\n@Ryan - First, sorry for the SPAM Alert message on your comment - our SPAM protection gets a little over zealous at times. Average Order and Repeat Buys are two very interesting criteria that I'd love to see statistics on. I'd be wary of how the study was conducted though - since PPC is best for products, it makes sense that there would be repeat buys on PPC conversions, whereas good SEO may be for a services company only looking for a one-time purchase. If you have the study, send it over, I'd be excited to see it. Also, while this post was heavily based on SEOmoz, all of the data was gathered from SEMPO, which is a relatively independent source. \r\n\r\nThanks for your thoughts!

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SEO China

I am not clear why PPC is good for products while SEO for services. You mean if I do SEO for my products, It is not as good as ROI from PPC?

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Seo Firm

The right choice for website depends on particular needs and desires. Most websites get benefit mostly from utilizing a combination of these two approaches. Using PPC marketing can help quickly identify your best performing keywords, while implementing a longer-term SEO strategy will increase chances of ranking well in the organic listings to get long term good traffic.

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Clay Schossow NMC team member

SEO Firm,

Thats a great observation. Depending on the purpose of your site, PPC can be a good choice. Also, I think PPC can be effective to target periphery terms that you might not target through blogging or that just may be hard to win. So, while Staples should not pay for ads for their name, they could do well buying the phrase "buy pens online." There is definitely a time and place for both PPC and SEO, but SEO will offer the best long term gains at the least cost.

Thanks for the comment!

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George NMC team member

While I am certainly an advocate for implementing a comprehensive online strategy that *includes* SEO, the heat map example used above clearly shows a bias towards SEO. The majority of the time, SERP's will place the top 3 PPC ads right in the "hot-zone" represented above, top-left portion of the page. In addition, the previous comments of a more detailed report that includes the ultimate result of these clicks is what any business owner interested in profit margins should be concerned with.

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Robert

I always wonder when people talk about PPC vs SEO as if both cannot coexist. PPC is used for one thing, strategic advertising, and SEO is an ongoing process of optimisation. The best companies spend time, and money on both.

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Bulk Flash Drives
This article is written in 2008 and I have some doubts about it's information. The author says about PPC ads as they only appear on the right side of page. I'm not sure when Google changed that, but PPC adds have been appearing in top middle for a while... first 3 results are always PPC, and not all the people know the difference, and I still think that that will most likely click on first 3 results. And as studies show first 3 results collect as much as 87% of clicks. And even if you get #1 position with organic listing, you will still be only #4. However, I have started SEO campaign a month ago and will certainly give it a try.
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Search Engine Optimization
SEO and PPC are two different things but both have equal importance. PPC is a quick process and one time investment for bringing traffic to your website but results are visible after a long interval of time
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Alexander Spencer
So your assumption that Cornell Universities Google Heat Map is displaying organic results at the top of the page is a bit off. I use the same image in physical presentations for some of my larger clientele. Look closely at the top result, it is a sponsored one... says it very clearly: Sponsored Links and a highlighted narrow box that encompasses the first result on the Digital Camera Search they are displaying. Kind of refutes a lot of this... You see it isn't truly about SEO vs PPC or Organic vs Paid, its simply human psychology, we read left to right top to bottom. If the organic listing is the top result it will get more traffic if a PPC listing is the top it will get more and the most competitive phrases almost always have 3 PPC results above the organics. People truly need to stop looking at one vs the other. THEY GO HAND IN HAND. SEO encompasses everything from Social Reputation Management to Article Writing to HTML Coding, it makes no sense that it doesn't include PPC just because the first SEO companies were directly competing with the first PPC companies. Internet Marketing is Internet Marketing is Internet Marketing. If you make the misinformed decision to use only one or the other you are damaging your ROI potential, who am I more likely to click on, the page with only 1 result at the top or the page that is a Sponsored and multiple Organics? Simple as that.
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Clay Schossow NMC team member
Alexander,

Thanks for the feedback! You're correct that the top spot on that particular image is a sponsored result, but I don't think that fact "refutes a lot of this" article. As you point out, people are going to look at those top results due to the way humans read -- the top spot could be a sponsored ad or it could be organic. Just depends on the term. Organic can guarantee you a spot up there without the cost.

Furthermore, the rest of the facts in the post still hold true, independent of that image. Conversions, click thrus, etc. are still statistically better with organic rankings than PPC.

I still (and always have) advocate that a combination of both tactics is the best strategy, but there's little doubt that organic is the more cost effective way to appear in the upper crust of rankings that people gravitate towards.
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VPS Hosting Queensland
As my experienced. for fast result we can use PPC & for Long term result we can use SEO.
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Marco M
I think that it's generally better to focus on SEO as a significant portion of people have adblockers that block PPC ads. And even if they don't I still think that most savvy internet users know to avoid PPC ads because they know that they have poorer relevance to the keyword, and that it's most likely going to be a commercial site.
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Website Designing Ajmer
Wonderful explanation. I agree with you but I think PPC and SEO marketing are very different systems in terms of time requirements and retention of users - many businesses wind up using a little of both services to reach different kinds of audiences during different stages of their website development.

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