Does PPC Complement or Cannibalise Organic Traffic?
- June 20, 2013
- by Malthe Karlsson
If you work in the field of PPC marketing, chances are that you will have heard questions such as “why waste money on PPC ads for terms where we already rank high in the organic listings?” The question is normally a result of the belief that anyone who wants to visit your page will simply click your organic listing; so why would you want to pay for traffic you could have had for free?
PPC ads have numerous features which are more advantageous for advertisers in relation to driving both traffic and conversions:
- PPC ads can have much stronger Call to Actions and can emphasise Unique Selling Points.
- The sitelinks on PPC ads can be manually set to communicate Call to Actions, Unique Selling Points, different products or promotion and can be changed almost instantly.
If you do not bid on the generic keywords you rank high for in the organic listing, your competitors probably will.
Experiment and Results
Latitude commenced a trial were we started displaying PPC ads for a number of generic keywords which we ranked 1st for in the organic listings. By comparing key metrics before and after the implementation of PPC ads, we can map the impact the PPC ads had on the organic traffic.
- Before the test, organic links received 430 clicks per week.
- During the test, organic links received 321 clicks – a 25% fall.
- PPC accrued 512 clicks per week
- Total clicks per week increased to 833 clicks once PPC was added.
Thus, although a certain degree of cannibalisation is taking place, PPC ads increase the overall volume of traffic; PPC generated 453 incremental clicks (overall clicks minus normal SEO click volume).
However, the question is, at this stage, is the additional traffic worth paying for?
Sales and Conversion Rate
As it happened, the advertiser for which we conducted this test was promoting online sales. Thus, we can directly monitor the impact our PPC activity had on the number of sales.
- The average number of weekly sales from SEO remained constant before and after PPC activity commenced.
- The average number of weekly sales from PPC was 263% higher than the average number of weekly sales from SEO.
After PPC activity commenced, the average number of weekly sales increased by 188%. Also, conversion rate for PPC was 1.85% while the conversion rate for organic clicks was 1.27%. PPC ads are much better tailored for driving sales than organic listings, as the ad messaging of the PPC ad can be manually modified to emphasise Call to Actions and Unique Selling Points.
How about the actual return? Was spending the money on the PPC ads worthwhile doing?
Return on investment
During the time where PPC ads ran alongside our organic listings, the return we accrued from sales through our PPC ads exceeded the return from sales through organic clicks by 177%. Furthermore, and more importantly, the total cost for our PPC activity amounted to 28% of the return we accrued through PPC alone.
To put this into perspective; say, for instance, that we accrued £500 return on sales through organic clicks. The return we accrued on sales through PPC would then amount to £887 (177% of the organic return) and the cost of this PPC activity would amount to £248 (28% of PPC return). By running with PPC ads alongside our organic listings, we turned a £500 return into a £1387 return at the cost of merely £248. Thus, our profit was increased to £1139 (total return minus cost of PPC) equal to a 227% increase.
In the light of this experiment, it is clear that:
- Running PPC ads on terms where you rank high in the organic listings drive a substantial amount of additional clicks.
- PPC ads a more tailored for generating sales (and therefore revenue) than organic listings.
- Running PPC ads on terms where you rank high in the organic listings increases the return from the keywords in question – by more than enough to compensate for the cost of running PPC ads.