The Battle of PPC vs. SEM: Part 1 of 3

By Scott Gardner
Posted Saturday, February 14, 2004

Before you began using pay-per-click (PPC) advertising to drive Search Engine traffic to your website, how often did you click on the Paid or Sponsored Listings? Put yourself in the buyer's shoes; clicking on the Sponsored Listings occurs probably 10-20% of the time. More often than not, your targeted buyer will go straight to the "true" search engine matches, where they can find the most relevant websites out of thousands of millions of page matches. Take an inter-office poll; ask your co-workers to perform a search for an unrelated topic/product/service and watch their click-thru trends. The majority of the time, they will skip right over the paid results. On the other hand, YOU will notice the Paid/Sponsored Listings because you know about them and you spent a lot of company resources to put your website there. The buyers who have no interest or stake in a PPC campaign, just simply overlook these paid listings and are conditioned, much like Pavlov's dogs, to go straight to the main results.

Now time for the most important question of all: Where is your site positioned in the main Search Engine results of Google, Yahoo!, MSN, AOL and the other primary search engines that receive 90% of all Search Engine traffic?

If your company is allocating a substantial portion of its online marketing budget & efforts to the main PPC models, then you seriously need to look into getting your website highly positioned in the true search engine matches. There are only a handful of established, reputable Search Engine Marketing (SEM) companies that can deliver the results you need to dominate your industry; which can yield greater profits than your PPC campaigns. If you are tapping your monthly budgets and not experiencing the ROI that you need from PPC, then it is time to get your site firmly positioned in the main results of the world's leading search engines and reach the majority of your target audience, not the minority.

PPC models are excellent for short-term marketing campaigns. You can adjust your bids and consequent Sponsored Listing positions in real-time. I have clients who do both types of search engine marketing. But when you compare apples to apples and oranges to oranges, the problems that have slowly evolved with PPC are:

Your top competitors determine the bids, forcing you to either pay even more for each visitor or completely bail out of the top 3 bids. If you do the latter, then your traffic is significantly diminished; now what's your plan?
Paid Listings capture only a small percentage of total Search Engine traffic as noted above. Wouldn't it make more sense to target the majority?
Many studies have shown that sales conversion rates are lower in the PPC models; averaging about a 1% sales conversion rate for the traffic received from these bid listings.
It's a very time consuming process to constantly monitor your bids, positions, and traffic. With Yahoo!'s acquisition of Overture, a likely scenario is that the big 4 search engines will have their own PPC models. If this happens, you'll have 4 campaigns to manage!

With true search engine listings from SEO efforts, the benefits consistently out-weigh those of the PPC model:

Relevance is king when it comes to a user's decision to click on your website. A site appears to be much more relevant and reliable when it is found in the first 10 results of millions of page matches. Google, Yahoo!, MSN, AOL, etc. have deemed your site to be "The One" that best meets their needs.
Highly effective SEM campaigns should yield acquisition costs of ~$0.07 - $0.15 per visitor (Significantly less than PPC bids).
Sales conversion rates can be as high as 10%, but are typically an average of 2% - 4% (2 - 4 times that of standard PPC models)
Your site will receive the majority of the searching traffic; search engine users are conditioned & prefer to access those listings most recommended by the search engines.
Once your site is ranked, you can stay there without your competitor manipulating a bid every 30 minutes throughout the day. The literal cost & aggravation of dedicating an employee to monitor your "Max Bid" for many keywords is difficult to swallow.

Put everything into perspective. The Internet is obviously a rapidly growing marketplace. As this "child" continues to mature and as thousands of new Internet users get plugged in every single day, there is a growing audience looking for your products or services. Are you willing to use PPC models, which have tripled & quadrupled in average bids over the past two years, for the next year(s) to come? Longevity, ROI, and making the right decisions are key to your company's success.

A great analogy for SEO vs. PPC is a piece of cake. The main Search Engine results should be your foundation & bulk of traffic, much like the cake itself. PPC models, email marketing, and other traffic-building vehicles should complement your SEM, much like the icing on the cake.

Use true Search Engine results as your primary source for website traffic just as more than 1,000 active clients currently do with my company. When you crunch the numbers from your PPC campaign, Search Engine Optimization makes more sense.

Stay tuned for Parts 2 & 3 of this series which will break down visitor numbers and the value of each visitor to your company from both PPC & SEM.

About The Author
Scott Gardner is the Director of Sales for WebSourced, Inc (parent company of KeywordRanking.com and ProRanking.com), leaders in Search Engine Marketing.