Pay Per Click Advertising (PPC) vs

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Pay Per Click Advertising (PPC) vs Powered By Docstoc
					Pay Per Click Advertising (PPC) vs. Natural or Organic Search Engine
Optimization

Why do more netizens and internet newbies utilize Google to search for products,
services, images, information, news, or anything else under the proverbial internet
superhighway sun? Well, Google's search technology has been proven smarter (in the
minds of the average web surfer) than the rest in regards to returning relevant, valuable,
and fast results for any given search query - this would explain the almost 50% market
share that Google now commands for online search. Google co-founders Larry Page and
Sergey Brin bet the farm on the quality of their search, and it has paid off marvelously in
stock options and an almost inconceivable market capitalization (142.58 billion as of
April 1, 2007) for a company that has been in existence for less than a decade. Google's
immense market cap is partially a product of its revenue stream, but where in fact does
Google actually generate the bulk of their proceeds from? Gmail, website analytics,
images, web searches, all can be performed for free (provided you are among the over 1
billion humans who have access to an internet connection and a PC). The answer is
advertising. And not just any old type of advertising - Google generates up to 95% of its
revenue from what is known as Pay Per Click advertising; specifically it is the Google
Adwords and Adsense suite of programs. Google Adwords enables businesses, young
and old alike, to infuse their advertising message to the masses. Adwords works like a
standard auction. Businesses bid on keywords that are relevant to their industry. The
highest bidders, who also maintain a high advertisement Click Through Rate (CTR),
appear towards the top of the screen when conducting a search. Lower bidders get the
lower valued placement real estate as web surfers’ eyes scroll down the browser window.
Google monitors the ads, but it is the business owner who chooses what amount he or she
is willing to pay per click. Once your ad is clicked by a user, your business is charged a
certain amount relating to your bid price. You, the business owner essentially choose
where your advertisement is displayed and for what keyword or keyword phrases to be
included.

Who Controls What I See When I Conduct A Google Search?

Now, this brings up my initial, yet critical point. I will say it again. Businesses (and
individuals) have the power to place their unique message or advertisement on Google’s
search engine results pages (SERPS). What is the big deal about that? Well, internet
surfers tend to have difficulty discerning between advertisements and actually search
engine listing results. Try it for yourself. Go to Google and conduct a search for "AT&T
cordless phone." The first three listings you see are not listings at all- they are Google
Adwords results - Google typically shades these "sponsored" results to help differentiate
them from the actual organic or natural search engine listings, but they are still shown in
similar formats. Even this advertisement shading in the last few weeks however, has
slowly been supplanted by a crystal clear background which makes the advertisements
and listings almost indistinguishable. Besides the shading and the conspicuously grayed
out and small "sponsored results" text the two "listings" and "advertisements" look very
similar. In other words, most web surfers could confuse an advertisement for an actual
and factual ultra-democratic Google certified search result. The more web surfers that
click on Google Adwords advertisements, the more money Google generates, keeping the
board of directors and stock holders sleeping soundly tucked in Egyptian cotton. Isn't that
directly contrary to Google's mantra that its "mission is to organize the world's
information and make it universally accessible and useful?” The answer is yes, but don't
tear down the walls of the kingdom just yet. Most of the businesses that advertise on
Google are legitimate - the point is that when you click on a PPC link, the quality of the
site cannot be vouched for by Google. When you click on the first organic search engine
listing from a Google query, you are implicitly getting Google's stamp of approval that
this site is the best result as per your associated search based on their algorithm or rules.
The push vs. pull reasoning that I have read in various search engine forums and articles
may be completely off base. If you don't know that you are clicking on an advertisement
then you are not being pushed to take an action. So, what does all this mean?

Educated Web Surfers Or Buyers Know The Difference Between A Pay Per Click
Advertising And A Natural Search Engine Listing.

I have found that educated internet users tend to utilize the organic search engine listings
more than the pay per click results (both Adwords and Yahoo's Overture - now Yahoo
Search Marketing). They do so because they understand that the sponsored results are all
businesses that have chosen to be listed among the SERPS. Organic results are also
different because a lower percentage of these are actual businesses selling goods or
services. Google and Yahoo organic results give precedent to valuable web pages - pages
that give information, tools, or news to web surfers. There is no guarantee that your
search for "AT&T cordless phone" would bring up anything more than a website with a
schematic of transistors and speed dial features. Educated buyers comprehend that the
first few organic results that are in fact businesses providing what they need will most
likely be the most reputable companies around. This fact is indeed more consistent with
the Google corporate philosophy. As we have just seen, Pay Per Click "PPC"
advertisements and natural results do put forth two conflicting messages - click on the
listing because it is relevant, or click on the advertisement because Google has to pay its
utility bills.

What Does All This Have To Do With My Business?

I've looked at hundreds of Overture and Adwords reports; I usually see an average PPC
advertisement click through rate of between 1- 4% (although inter-industry numbers vary
dramatically). I also study statistics (often from the analytical tool called Google
Analytics) that shows me the number of visitors a site gets for both PPC and natural
search engine listings. My findings show that organic listings on the average drive more
traffic than PPC ads. This isn't always the case, but it is the trend I have seen when
analyzing the data. If educated surfers are more likely to click on natural search engine
listings, it also seems logical to think that the website conversion rates would also be
higher. My look at the numbers do suggest that this is true more times than not. Does
Google publicize the click through rate or conversion rate for typical organic search
queries? No way - that may encourage businesses to utilize natural Search Engine
Optimization (SEO) companies as opposed to PPC advertising programs. That wouldn't
be so good for Page, Brin, or Dr. Eric Schmidt (Google CEO).

Does That Make Google Adwords or Yahoo Search Marketing Definitively Bad?

Now, I own stocks, bonds, CDs - and an occasional mutual fund - my financial portfolio
is diversified. Diversifying your business's advertising is something that I also advocate.
If PPC advertising is reaping a profit for you, then by all means, continue to utilize this
valuable service. What I am suggesting is that you don't put all your eggs in one basket.
If a search engine rule or algorithm changes, your organic search engine rankings may
drop, costing you revenue and potential profit. If a new player enters your industry and
decides to outbid your PPC advertisements, you will also be pushed down in the search
engine shuffle - again affecting your business's bottom line. I don't recommend having an
undiversified financial portfolio, nor do I recommend obtaining all your search engine
traffic from the same source. Experiment with Overture or Adwords, and talk to an
ethical search engine optimization firm to find out if organic optimization makes sense
for your organization.