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Thursday, March 13, 2008

Relative Complexities of Paid and Organic Search, and Implications for Marketing Effectiveness

Because there have always been more professional SEO advocates and amateur SEO junkies than paid search practitioners and advocates, many have come to assume that organic search somehow "performs better" than paid search.

In one ugly distortion of reality, an analytics vendor we like continues to give truncated examples showing that bounce rates (or very short visits) on paid search are higher in many cases than they are for organic search. This "might mean you should stop wasting money on paid search and begin focusing more on organic optimization." It might, but it probably doesn't. The premise doesn't lead to the conclusion. Obviously this man isn't a marketer.

I just had a conversation with a client - one with a big site and lots of both kinds of traffic - that noted their revenue per paid visit is more than double what it is per organic visit. Why the disparity? Doesn't everyone know that organic is better and we should be doing better with those visitors?

Table 1

Organic search referral revenue per click: 8.5 cents
Paid search referral revenue per click: 19 cents

(Varies wildly by page and keyword - but these are the averages.)

Not at all. Let's look at some numbers.

How many landing pages do Google and marketers collectively need to keep track of on the paid side? Back of the envelope, assume 600,000 AdWords accounts of any size or active significance.
Assume, generously, an average of 100 landing pages being used for each. No - let's assume very active ad testing that includes somebody varying destination URL's as part of the test. 150 landing pages per advertiser, on average. That's 90,000,000 landing pages in the whole Google paid search universe. That's probably a bit high, but let it go for now.

On top of that, Google knows that the majority of those pages are of a certain caliber and can check them more carefully. They aren't indexing them per se, but most of these things "make it into the index." There isn't a whole other job of kicking spam pages out of the index (though there is something analogous going on... it's just a lot harder to create AdWords accounts than to spam the organic index).

Google's whole organic index (not counting the pages they don't index) has, perhaps, above 20 billion. That's more than 200X larger than the paid search index, with less ability to "know" about the intent behind the pages. In terms of where to rank pages on which queries, hey, the organic algo is trying, but it's bound to be less accurate.

On the other hand, paid search advertisers are telling the sorting system which keywords they think they'll profit from. They're shaping messages to ensure that only high-intent buyers come to their chosen landing pages. If they send them to the "wrong" page, they don't make as much money, so they learn to send users to right pages. The organic search engine might be fond of sending people to "wrong" pages, from a business model standpoint for the site owner, anyway.

The subject probably needs deeper treatment than I'm able to give it here, and my math might be out a bit, but the principle is clear: it's a no-brainer that revenue from organic searches will be lower than that from paid searches, in part because high-ranking pages may be "wrong" pages from the site owner's business standpoint.

If that's such a no-brainer, how come all those SEO's keep telling you different?

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Posted by Andrew Goodman




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