The Battle of PPC vs. SEM: Part 2 of 3

By Scott Gardner
Posted Sunday, February 15, 2004

In Part 1, we overviewed the pros and cons of Pay-Per-Click listings and Search Engine Marketing. Now, let's take a closer look at the PPC model:
Are You The Average PPC Client?

The following is a case study into one of the most popular PPC models. To protect this company's best interests, this study does not include their URL or the exact keywords they are bidding for on this popular PPC model. This information was derived from their stat logs, for one day's activity.

Below is a summary of seven essential aspects of this company's PPC campaign: total keywords, total searches, total received traffic, click thru rate, total missed traffic, average cost per visitor, and total cost. This analysis breaks down the efficiency of "Sponsored Listings", specifically for 7 of the 50 primary keyword phrases that they utilize. All of these keywords were in bid positions #1 or #2:

Total Keywords: 7
Total Searches: 3228
Received Visitors: 404
Click Thru Rate: 12.5%
Missed Visitors: 2824
Average Cost per visitor: $0.29
Total Cost: $117.00

Note: The above information was compiled from only 7 of 50 keyword phrases that this company bids for with their PPC model. As a result, their daily costs are much higher than shown above.

Let's take a look at the total number of searches that were performed in one day for the 7 keyword-phrases. Of the 3,228 total searches that were performed in one day for these 7 keyword phrases, this client only received 404 total visitors and they are in the #1 or #2 positions of the Sponsored Listings. As a result, they missed 2,824 total visitors in one day, or 87% of the available traffic.

To dig even deeper, for every 1 targeted-visitor they receive, they are missing 7 targeted-buyers!! If these averages hold true for 365 days of the year, then this client should expect to receive 147,000 visitors if they continue to bid for the #1 or #2 positions for just these 7 keyword-phrases. Looking long-term, if they strictly depend on PPC for their Search Engine traffic then their concern is now two fold: 1) They will miss ~1,029,000 visitors over the course of 365 days (The 1:7 ratio) AND 2) They will spend $40,000+ to miss 7 times the traffic ($117/day x 365 days).

So, where are these 1,029,000+ visitors going? They are going to the main results of the search engines and finding those companies most relevant to their search; the ones the search engine has chosen to be the best match!

According to comScore Networks, the number #1 & #3 used search engines in the US are Google and AOL, as of May 2003. This study found that Yahoo! and MSN combine to reach about 40% of the user market, while Google & AOL combine to reach ~ 50% of the searching traffic. The Overture PPC model does not reach the traffic that uses Google & AOL. If you are not using Google Adwords, or more importantly, are not ranked on the first page of Google's and AOL's main search results, then you are missing an exponentially higher amount of targeted traffic.

After reviewing the above PPC case study, let's sit back and reflect on this industry-driven model. It is painfully obvious that your competitors' bids have reached an out-of-hand level. Why would the trend of continually increasing bids come to a screeching halt? Even if it plateaus, it still is a high visitor acquisition rate for thousands of companies. What is your option for qualified, highly targeted buyers at a reasonable rate? There is only one other viable approach when it comes to search engine traffic: Search Engine Marketing, not Search Engine Advertising (a.k.a. PPC).

How To Reach The Majority Of Search Engine Traffic?

Throughout the entire process, your company has one primary goal; reach out to the targeted buyer and pull them into your website. A point that we covered in the previous article (Part 1 of 3) was about putting yourself in the buyers' shoes; why not put yourself right in the buyers' path? Of the thousands and millions of pages that are somehow related to a given search query, the first 10-15 main results combine to make the popular path that SE users have known for years. The users perspective of the main results is that these 10-15 websites were chosen to be here; they did not buy their way here. When your website reaches first page positioning in the main SE results, you have your website directly in their path; or as I like to phrase it, sitting in "the eye-of-the-hurricane". Again, relevance is king when it comes to your buyers' click-thru decisions. This, without question, plays a critical part in your company's ability to capture the visitor and convert that targeted buyer into a paying customer.

It is imperative that you find a reputable Search Engine Marketing company that has some, if not all of the following traits: excellent track record, exceptional testimonials, proven growth, long-term stability, expansive resources, client-friendly contracts, and unparalleled vision. Unfortunately, many so-called SEO firms have burned thousands of companies in the past with very low cost services that produce minimal rankings, traffic, and revenue growth. Do your research and hire a company that has a large staff of entrenched, industry-leading experts, all dedicated to the search engine ranking process.

Our clients are strongly positioned in the first 3-5 results of the true search engine matches, out of millions and millions of pages. Being #1 of 2,500,000 website pages means a lot more to the search engine user than being #1 of 3 paying advertisers. Even being #3 of 2,500,000 pages carries more weight with your targeted buyer than being #3 of 3. If you are a company that is in the fortunate position of a healthy Internet marketing budget, then you should definitely utilize both models. If you are a company that has a tight budget, that requires fixed costs & the best ROI possible, then you need Search Engine Marketing as the foundation of your traffic.

Stay tuned for The Battle of PPC vs. SEO: Part 3 of 3. We have evaluated the PPC model and touched on Search Engine Marketing. Part 3 will cover additional benefits of having your website positioned in the main SE results through the art of Search Engine Optimization.

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.