Goal Conversion: What's better, SEO or PPC?

Just a few short years ago, advertisers would spend thousands on ads placed in traditional media to drive people to websites in order to sell a product or service.  Flash forward to today and we all know what happened:  traditional advertising is declining, web advertising is increasing, and people are still buying (albeit at a lower rate) — all at an incredibly low cost to advertisers (as compared to past years).

Blame it on the economy, but most advertisers still demand even better results from even lower budgets.  How can that be accomplished?

The debate often centers on search engine optimization (SEO) versus pay per click advertising (PPC).  Both cost money — SEO being upfront and through keyword buys related to the content optimized on the site, whereas PPC is purely by clicks on ads that appear on seemingly unrelated sites.  Both get results, depending on the industry/product/services offered.  So which is better?

I’ve always liked PPC.  It costs you nothing except the service, until someone clicks on your ad.  Then the price is anywhere from ten cents to ten bucks per person and even higher based on auctions.  PPC can be targeted geographically and behaviorally, and also directed toward those viewers who have shown an interest in products or services similar to the clients’ offerings.  The key is getting the person to fulfill your goal before you lose them.

I was pleasantly surprised to see the results of a new study by Engine Ready who analyzed the goal conversions of 26 e-retail sites over one year ending this past June.  According to the results, visitors who arrive at a retailer’s site from paid search ads (PPC) are 50% more likely to buy at that time than those who arrive at the site from clicking on an organic search link (due to SEO). The conversion rate from PPC is 2.03% versus 1.26%.

Those who are most likely to buy are consumers who arrive at a retailer’s site by typing in the web address or clicking on a saved bookmark, as their conversion rate registered at 7.38%.  These are people who learn about advertisers through other methods, like word of mouth, traditional advertising, and general searches.  Consumers who linked from a different e-commerce site or from an e-mail were buyers 6.58% of the time, per the study. The overall conversion rate for all traffic was 3.6%.

The study found that:

Paid search visitors spent the most with an average order value of $117.06 compared to the $109.27 in sales that were derived from links from other sites.  $106.64 was spent on average from visitors who originated from organic search. Last, an average of $95.29 in purchases came from direct referrals, such as from a bookmark or from directly linking to a web address.
This Engine Ready study is based on an analysis of 20.8 million visits and 108 million page views to 26 e-commerce sites from July 1, 2008, through June 30, 2009. 21 of the 27 companies in this study also provided data for an earlier Engine Ready study.

By the way, this study is analyzes purchases made after the viewer clicked on links.  It does not take into account those people who visit a site one day (via any method) but do not buy, only to return at a later date to finalize the purchase.  Many sales are made after the viewer compares sites and prices, so I’m interested to find out more information related to viewers who return to sites.

One Comment

  1. Helen
    October 12, 2009

    I also prefer pay per click. Why would you want to spend all of your money on SEO which is not guaranteed to give you visitors. When you use PPC you know that you are paying for the amount of visits you are getting and I would think that anyone who is clicking the banner actually has interest in what you’re selling (unless they click it by accident). If you are going to spend money somewhere, I think PPC is the way.