pay per click (PPC) ads and organic SEO

We’ve often told clients that showing up in both the organic listings and the sponsored (pay per click, or PPC) listings “super-validates” your site as one to be clicked. Now, a study from a couple of NYU Stern professors has confirmed that organic search engine results can play a direct role in whether or not a paid listing is clicked. In essence, they’re saying that if your business has both a paid result and an organic result appear at the same time, you have a better chance of your paid result getting clicked than if the organic result had not appeared. Presumably, the reverse is also true: that your PPC listing increases the odds of your organic listing being clicked.

Professors Anindya Ghose and Sha Yang have highlighted the following findings:

• On average, the impact of organic listings on paid advertising is 3.5 times stronger than vice-versa, possibly because of the tendency of consumers to trust organic listings more than paid ads.
• The positive association between paid and organic listings increases advertisers’ profits by at least 6.15% when compared to profits in the absence of either of them. The positive association is strongest when advertiser-specific keywords are used and weakest when brand-specific and generic keywords are used.
• Click-through rates, conversion rates and total revenues are higher when both paid and organic listings are present simultaneously than when paid search ads are absent.
• The combined click-through rates are 5.1% higher when paid and organic listings are present simultaneously than when only the organic listings are present.
• The combined conversion rate increases 11.7% when paid and organic listings are present simultaneously than when organic listings alone are present.

The professors used “a unique panel dataset of consumer responses to keyword ads on Google” to conduct their research. The complete findings from the study are available in a paper entitled “Analyzing the Relationship between Organic and Sponsored Search Advertising: Positive, Negative or Zero Interdependence?” It’s 52 pages long and a bit academic.

Windows Secrets recently reported that the ads served by Bing and Google along with your search results are linking more and more often to sites trying to infect your machine. For example, if you recently have used either Google or Microsoft’s new Bing search engine to find the popular Malwarebytes Anti-Malware utility, chances are good that the sponsored ads alongside your search results contained links to the very malware that the security tool is designed to remove.

Such “malvertisements” are showing up as paid ads on non-search engine web sites, too.

The article from Windows Secrets offers some suggestions on how to avoid such sites, and how to report them if you get stung. But, sadly, their recommendations are neither foolproof nor convenient.

As for your own searches, It’s best to be somewhat wary of sponsored links until the search engines address the problem.

A report by Internet market researcher ComScore, reported by InfoWorld, detailing a 7% decline in the number of times U.S. consumers clicked on ads next to Google search results in January sent analysts scurrying to explain the decline. Rival web tracker Hitwise disagrees and shows that traffic from Google to retail sites continues to increase.

If overall traffic is increasing, and pay per click (PPC) ad traffic is declining, does that mean that people are increasingly avoiding the PPC ads and that therefore organic SEO is growing in importance? Hmmm …..

A recent report from Advertising Age revealed some surprising facts. A few that really jumped out at me are below. You can read the entire report in PDF format here.

As much as 88.5% of the time people don’t pay attention to pay-per-click (PPC) ads, which means that they get just 11.5% of clicks from searches. That means that visibility in “organic”, or natural, search results is more important than ever.

There’s a big shift focus by marketers away from outbound marketing (print and direct mail) to inbound marketing (links and search engines) based on the fact that the budget spend on inbound tactics has been growing. Advertising Age reports a 16% shift in spending from direct mail to search engine marketing and a 20% shift from print advertising to search marketing.

Guess how many searches are performed in the US each second. … It’s 2,500. In the month of August last year, the number of searches performed in the US was 9.82 billion.

Gone are the days of single word searches (“vacations” or “movies” or even “Britney”).  Of all searches, about 31% contain 4 or more words, while about 33% searches involve unique and long search phrases.

Increasingly I read and hear about people in the Internet marketing business arguing over whether paid search (pay per click ads) is more valuable than organic SEO, and vice versa. While there are some fascinating and relevant arguments on either side, research shows that marketers are quite satisfied with both.

A recent report by Click Forensics alleges that incidents of click fraud have spiked to 15.8 percent across the internet. Subsequently, a story in Infoworld says both ad networks and advertisers may be guilty of a lack of transparency and questionable math.

According to Click Forensics, click fraud within all PPC networks, including Google and Yahoo, jumped from 21.9 percent in 1Q 2007 to 25.6 percent in the 2Q this year.

The Click Forensics study accused Yahoo of doing little to combat click fraud, but Yahoo disputes that, calling their vigilance against click fraud a “top priority”.

The controversy surrounding click fraud comes up every year, but it apparently reached a fever pitch during December’s Search Engine Strategies conference in Chicago when participants voiced concerns over experiencing fraudulent click rates ranging from 20 to 40 percent, threatening the entire paid search industry.

Late last month, Google issued a statement on the Inside AdWords blog that insisted invalid clicks consistently remain under 10%, typically in the single-digits, and that virtually all malicious activity is found by Google’s filter. Many advertisers take issue with that estimate.

In February, Google outlined the three-layer filtration process it uses to combat and eliminate click fraud using both proactive and reactive filters, which is described in an article at Site Pro News.

In April of last year, The Click Fraud Index reported an industry-wide average click fraud rate of 13.7 percent. The click fraud rate was broken down as follows:

• Tier 1 search providers — 12.1 percent
• Tier 2 search providers — 21.3 percent
• Tier 3 search providers — 29.8 percent

As of December, their overall rate was 14.4%.

Google says they are already filtering more than 98% of invalid clicks. Their goal is to filter 100% and suggestions they are not doing enough are misguiding in their eyes. Andy Beal of Marketing Pilgrim reports on a conversation with a representative of Google.

It’s fair to say, though, that many webmasters disagree.

According to a new report on the scope of fraudulent clicks on search-related ads cited on C/Net’s News.com, the click-fraud rate among top-tier search sites like Google and Yahoo is dropping. It fell to 11.9 percent in the third quarter, compared with 12.8 percent in the previous quarter.

But at second-tier search providers, it actually rose to 23.2 percent from 20.3 percent. The overall industry rate inched down to 13.8 percent from 14.1 percent, according to figures released from Click Forensics, which operates the Click Fraud Index. The index compiles data from more than 2,500 online advertisers and agencies.

Business Week has run an extensive article on click fraud, in which they say “Its roots are deep, and while much has been done to stem the problem, the fixes aren’t happening fast enough.”

And they conclude, “Advertisers like us want only for the system to be more honest and fairer for everyone. That is not too hard to accomplish if the will to make changes is there. Whether Yahoo will come around willingly or as a response to stronger counter-pressures, such as advertisers’ new Click Quality Council, more lawsuits, or government intervention, is the next chapter in this drama.”