Pay-per-click Facts

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A 2007 study has shown that about 85% percent of search engine users do not click on Pay-Per-Click (PPC) ads and instead trust organic results. But some markets do enjoy a higher percentage of PPC users, like the real estate industry. So, how do you decide if your marketing dollars should go to organic Search Engine Optimization (SEO) or Pay-Per-Click ads?

First of all, what is pay-per-click (PPC)? When you search a keyword on Google, for example, sometimes there are yellow sections at the top of the search results called Sponsored Links. These links pay a certain cost every time someone clicks on their listing.

Each website that uses PPC places a bid on how much they are willing to spend per click for a certain keyword. The highest bidder is placed in the number one position, the second highest bidder is placed at number two, and so on. Each bidder also specifies how much they are willing to spend per day. Once their daily budget has been exhausted, the clicks stop until more money is added to the account.

The costs can be expensive, especially if you are bidding on a highly sought after keyword or phrase. One important thing to take into account is that it’s possible to spend thousands dollars on Pay-Per-Click without converting the clicks to actual sales. Conversion rates are usually 1%-3%. Most people using a search engine are seeking information, not necessarily planning on buying any products or services. This doesn’t mean, however, that search engines don’t bring business to your site. They certainly do, especially if your site ranks high on standard search results. That’s where the importance of Search Engine Optimization (SEO) comes in.

It’s important to diversify your internet marketing efforts by PPC, SEO, and having the ability to measure traffic to see where visitors are going on your site. A good marketing strategy may be a nice balance of both PPC and SEO. You can start driving traffic to your site now through pay-per-click while gradually building organic search rankings. As the site starts to rank high for certain keywords in organic search, you may decide to stop bidding on those keywords on the PPC side.

Of course, no single advertising method is perfect for everyone. It all depends on your urgency to get sales, the amount of time and money you’re willing to invest in your site and your long-term goals for your website.

Advantages of Pay-Per-Click Advertising

  • Nearly Instant Traffic: After you setup a PPC campaign, your ads will often start showing up within a few minutes.
  • Laser Targeting: It’s easy to monitor which keywords bring visitors that convert into sales and which don’t. You can focus your ad spend on the highest converting keywords.
  • Powerful Money-Making Tool: If you could spend a dollar to make two dollars, how many dollars would you spend? That’s how a well optimized PPC campaign is supposed to work.

Disadvantages of Pay-Per-Click Advertising

  • Visitors Cost Money: Some visitors may remember your site and come back again, but many times when you stop paying, the visitors stop coming.
  • You Can Lead a Horse to Water: If your website itself doesn’t convince visitors to at least make contact, money has been wasted.
  • Competition: The amount of competition for those top 10 ad spots is growing every day, which drives up the cost of keywords.

Advantages of Organic Search

  • Visitors that find you through organic search results are totally free, so there’s a very high ROI.
  • Statistics show that searchers click in the organic search results 85% more often than the PPC ads, so a #1 ranking in organic will bring you more targeted traffic than paying for #1 placement via PPC.
  • Most searchers trust Google, and when they see that Google considers your site the #1 authority for their search term, most will inherently trust you as well, making it easier to convert those visitors into customers.
  • You may not see immediate results, but by investing a little time and money each month, you can gradually build your site up to attract lots of traffic.

Disadvantages of Organic Search

  • You may not start seeing noticeable traffic increases for a few weeks to a few months. It all depends on the competitiveness of your industry.
  • You’ll need to commit more of your time to get good organic rankings, building a site full of good content that is useful to your visitors and portrays your company as the authority on the topic.

Source: Advertising Age: Search Marketing Fact Pack 2007