IAB and ComScore recently released the first major study on the effectiveness of sponsored search advertising. Not surprisingly, considering the study was sponsored by Overture and Google, the report was very favorable towards sponsored search, often at the expense of organic search.
My concern is that if you don’t look beyond the numbers presented in the ComScore/IAB Study, you would assume that organic search is a waste of time and budget. For reasons I’ll go into shortly, this is simply not the case. The other danger is that most readers wouldn’t have any other numbers to judge the Comscore findings against. At Enquiro, we do. Our Traffic Program tracks these same numbers for a number of our clients. Granted, our sample size is not nearly as large as the one in the ComScore study, but there are some significant holes in their data that you should be aware of.
ComScore’s Methodology
ComScore conducted the study over a 2 month period by monitoring traffic to a number of well known sites in the Travel and Financial Services industry. Their tracking allowed them to measure click throughs from both paid and organic search results to client’s sites, and then monitored conversion rates. In the Travel Sector, the sites included were Expedia, Delta, American Airlines, United Airlines, Hertz, Avis, Marriott and Holiday Inn. In the financial services sector, the sites included were Bank of America, Wells Fargo, Citibank, American Express, AllState, Lending Tree, State Farm and Schwab.
The Envelope Please
So, with the methodology out of the way, let’s take a look at ComScore’s numbers.
Across all categories, an 18.3% click through rate was recorded for the paid search results. For organic search results, the click through rate was 4.3%. The study also tracked conversions, with an overall conversion rate of 1.4% for Paid Search versus a .6% conversion rate for organic search.
In the travel sector, paid search had a click through rate of 16.1% while organic search had a 5.4% click through rate. Paid search achieved a .8% conversion rate while organic was half that at .4%.
In the financial services sector, the click through rate for paid search was 26.3%, compared to just 3% for organic. The conversion rate was 2.1% for paid and 0.7% for organic.
Numbers can be Misleading
On the face of it, the news looks grim for organic search engine optimization. Paid search registered click through rates over 4 times as high as organic and at least twice the conversion rate! Why in heaven would anyone bother mucking around with search engine optimization? Simple, these numbers have some serious flaws in them.
First of all, all the sites that were part of the study use paid search to some extent. In many cases, these are aggressive paid search marketers that make sure they bid enough to capture one of the top 3 spots. If you do a search for a prime keyword in these industries, chances are at least one of the survey participants will show up, and often you’ll see 2 or even three of the top sponsored slots occupied by these sites. Of course they’re going to have a high click through rate on sponsored listings, they dominate them!
The same is not true for the organic search results. In looking at the 16 participating sites, few, if any, of them appeared to have been expertly optimized for search engines. In most cases, the dynamic nature of the sites prevented them from being properly spidered by the engines and gaining proper search visibility. Do a search for the popular search terms such as “New York Hotels”, “Low airfares” or “Las Vegas Vacations” on Google and you won’t find one of the participating sites in the top 10. We know over 70% of people don’t go past the first page of search results. So it’s little wonder that the organic click through rates are anemic for these sites. You can’t click on what you can’t see. Given the lack of organic search visibility it’s a wonder that these sites managed even a 4.3% click through rate.
By the same token, when you do search for those terms on Google, you get a gaggle (which I’ve decided is the new industry term for Google’s search results, a Google Gaggle!) of knock off affiliate sites and portals that do little to inspire trust in the searcher. Given the choice between a sponsored link to a trusted brand like Expedia or Marriott and an organic link to www.cheap-new-york-hotels.com (which, ironically, is a doorway domain for hotels.com), which would you choose? This goes a long way to explaining the disparity between the click through rates on paid vs organic in the study.
A Question of Conversion
Perhaps the above can explain the skew in click through numbers, but why the difference in conversion numbers? The reason is the same. These sites can control the keywords they appear for with paid search marketing. They can drop irrelevant words and focus on the ones that bring them the highest converting traffic. Because none of these sites appear to be actively using a search engine optimization service, they tend to rank for irrelevant words that the search engine spiders have stumbled across. No one has actively managed their organic search visibility.
So, if you bid for a keyphrase like “discount Manhattan hotels” but somehow got an organic ranking for “linens cleaned daily” is it any wonder that the paid search result will have a higher conversion rate with people looking for a hotel room in Midtown Manhattan?
As a comparison against ComScore’s numbers, we also track conversion rates for our clients on both paid and organic search. We have found that the conversion rates are roughly equal, with a slight edge going to the paid search traffic. No big surprise here. You can tweak for optimal conversion rates much easier with paid search than you can with organic search. But we haven’t seen anywhere near a 2 to 1 conversion rate advantage for paid vs. organic on any of these clients. If you’re actively managing the organic search campaign, you should expect similar conversion rates.
A Compelling Economic Argument
I hope you see the flaws inherent in this study. But for the purpose of my next point, I’m going to assume that the numbers presented by ComScore are completely accurate and representative of search patterns. Even given this, I’m going to give you the best reason not to give up on organic search. It’s an unbelievable bargain!
We took the travel industry and identified 50 high traffic terms that a site like Expedia would want to be found for. The terms included phrases for hotels in major destinations such as New York and Las Vegas, as well as phrases used to find the best airfares. For these 50 phrases alone, we estimated over 2.8 million searches were launched last month. If you accept ComScore’s click through numbers, that would result in 456,000 visitors for paid search and 153,000 visitors for organic search.
We then found out what the going bid prices were for these terms on Google AdWords and Overture. The total cost for those 456,000 visitors would be well over half a million dollars, at an average cost per click of $1.18. We did some quick research on the leading search optimization services, ours included, to see what a typical rate charged would be to optimize for these 50 words. The rates ranged from $1000 per month to $10,000. Let’s go with the highest one (not ours, by the way) for a monthly cost of $10,000. Again, if we accept ComScore’s numbers, that would result in 153,000 visitors at an average cost per visitor of $0.07.
Let’s now apply ComScore’s conversion numbers. With paid search, you would have 3647 converted visitors at an average cost of $147.08 per converted visitor. With organic search you would have 611 converted visitors at a average cost of $16.37. Let’s run over those comparisons again:
Total Monthly Budget
$500,000 (Paid) vs $10,000 (Organic)
Average Cost per Visitor
$1.18 (Paid) vs $0.07 (Organic)
Average Cost per Converted Visitor
$147.08 (Paid) vs $16.37 (Organic)
Even given all of ComScore’s built in biases with the numbers involved, it still seems to me that organic search optimization is very much worth the time.
Bottom Line
It’s not really surprising that the ComScore study came out solidly on the side of Paid search. It was commissioned by Paid Search providers, including Google, Overture and Sprinks. These companies make no money from organic search, but paid search pulls in billions yearly.
Also, I certainly know the value of paid search and recommend its use highly. It offers several advantages over organic search. One of the assumptions I made in this column was that a search optimization company would be able to achieve top rankings for some highly competitive terms. With paid search, if you’re willing to pay enough, you can get the rankings. Also, paid search gives you control over what the searcher sees. This is often not the case with organic search.
My point is that search marketing should not ignore one strategy and focus solely on the other, as is implied by the ComScore study. Search engine user studies have found that over 70 percent of users click on organic results rather than sponsored listings. In our own research, we’ve found that during the research phase of a buying decision, consumers show a strong preference for organic listings. Even when it comes to actually buying online, a significant percentage of searchers purposely avoid sponsored listings. By ignoring search engine optimization, you’re ignoring these customers.
Organic search optimization is a frustrating and tedious process and I can understand the temptation to say the heck with it and bid for the terms you want. But the fact is, by doing so, you’re saying no to a strategy that could literally save you hundreds of thousands of dollars a year, or even, as we saw in the previous example, a month. Remember, $1.18 a visitor vs $0.07. How could you say no to a deal like that?
Note: The cost of the full study report is $995, but you can access a pdf file that presents the basic findings at www.iab.net/events/pdf/search/comscore-MediaSolution.pdf
Gord Hotchkiss is the President and CEO of Enquiro, whose goal is to push the search engine optimization industry forward both in terms of measurable results and client satisfaction.
