Conversion Rates: To Pay, Or Not To Pay?

by Gareth on December 17, 2010

This is a guest post by Ben Morel, who is the search engine marketing specialist at a Surrey digital marketing agency. He has a background in marketing, offshore finance and radio astronomy.

———————————————————————————————

While Gareth and I were deciding on the subject of this guest post, we ended up discussing the differences between paid and natural search. Paid search has often been maligned: many of my clients have had bad experiences in the past with agencies who have sought to look at the number of people coming to the site. On the other hand, at the agency I work for we often recommend paid search to new clients as the easiest way of bringing new customers to the site. This has been made that bit more topical over on SEOMoz where the old question of “SEO vs PPC: which would win in a fight?” has recently been discussed. So, Gareth and I decided it could be interesting to look at site engagement and conversion rates for paid and non-paid search.

At the agency we have several clients for whom we do both PPC and SEO, from a variety of industries including:

  • An online kitchen appliance store
  • A New Zealand wine merchant
  • An interior design and hardware showroom
  • An overseas volunteering charity
  • An outdoor e-commerce store
  • A chain of tile showrooms.

The data for the above has been amalgamated over a six month period and analysed, and I shall try to explore what it means.

PPC vs SEO: The Rivalry

 

First of all the usual arguments for and against each. These are arguments that we certainly present to new clients. I won’t do a table of pros and cons because my opinion is that things are a bit more subtle than that

PPC Starts Quickly, SEO Takes Time To Build

For a business wanting to get off the mark today, this is definitely a pro for PPC. In the long term, however, the build up for SEO allows testing of on-page elements and application of conversion rate optimisation on a small audience so that when it finally starts pulling in traffic that traffic converts well. Of course you can also keep your PPC budget low while testing on-page factors before ramping it up to keep ROI high, but then you lose some of that initial acceleration of sales. So which is better? It depends: on a brand new site I would say PPC. On a mature site, though, both can be used to meet different objectives.

PPC Costs Every Time Someone Clicks, SEO Costs Are Initiative-Based

This means that it’s easy to count the cost of PPC: just take the amount you spent in a month and add the amount spent on your agency or in-house team. Calculating ROI then follows on smoothly, as long as your website tracking is set up properly. With SEO are a bit more difficult to track. We can track costs to build a certain number of links in the month, keep social media up to date, create articles for distribution and all the other things that take up our time as SEOs. But measuring ROI from each is a lot more difficult. So which is better? Well, in some ways PPC – you know your costs and returns immediately. But links will keep on giving juice, and visitors, for months to come, so ROI for a certain amount of resource spent on SEO keeps going up.

You Can Share Results between the Two

As Danny Dover comments on the SEOMoz Whiteboard Friday (see below), PPC best practices are very different to SEO best practices. PPC landing page tests generate huge amounts of duplicate content and cannibalise keywords from other pages, which is exactly the opposite of what you want in SEO. However, the results from those landing page tests can be very useful for SEOs as well, so both teams can derive benefits. Also, rel=canonical tags can be used to minimise overlap.

At least as important are the SEO and CRO benefits of ad testing. Now, you may think I’m slightly daft for saying this. But: the aim of ads is to entice people to your site as often as possible and get them engaged. The aim of meta titles and even the headlines on your landing pages are exactly the same, so if a PPC ad has a higher CTR for the headline “Blue Widgets 30% Off” than for “30% Off Blue Widgets” you can almost guarantee that using the text this way round for the page headline will result in improved ROI.

Engagement and ROI

 

Now that the question of which to implement is solved, that is campaigns for both if you can, what about results?

The New Zealand wine merchant makes a good case study. Over the past six months we have seen that for non-branded traffic natural search has a conversion rate 60% higher than paid search. However, the aims of this client are long term – getting the best lifetime customer value they can. For that they have their email list and both segments have around a 2.70% sign-up rate for the monthly newsletter, meaning that LCV will be very close in a couple of years time.

With the tile showroom, things are even more interesting. As you may expect, local search plays an important part in their campaigns and this importance is especially high for paid search, where local terms have a conversion rate four times greater than the rest of the PPC account. While conversion rates are again lower for PPC overall, conversion rates for local keywords are the same for paid and non-paid search.

So how do clients fair overall? The table below gives an impression of success by looking at conversion rates and using bounce rate as a measure of engagement. We have also included Google Product Search results out of interest and excluded keywords containing the clients’ brands.

Medium Visits Bounce Rate Conversion Rate Per Visit Value
PPC 157009 31.43% 3.04% £2.98
Natural 92096 51.04% 4.84% £4.15
Products 15762 57.03% 7.18% £1.96

 

As you can see, PPC advertising does have a place: engagement is higher than with other media, even if conversion rate is the lowest of the three. These PPC accounts do seem profitable, which can never be a bad thing, but they evidently need refinement.

This is perhaps the crux of the problem with PPC: although an account can be set up and set live in a day, it takes much longer to refine keyword lists, test ads and improve landing pages. In getting them up to speed, then, PPC and SEO are in many ways on a level footing and as the first section of this post postulates which is better depends on your short- and long-term goals, budget and how to please the person who pays you.

SEOmoz – SEO Software

email

Previous post:

Next post:

Web Analytics