By 5 years ago in PPC SEO

Paid Search: An industry in decline?

Ever since Google launched the AdWords program there has been huge disparity between the amount of money businesses are willing to spend every month on PPC compared to organic SEO. Although quite understandable (every business likes guaranteed ROI) it’s also extremely frustrating because organic search has the potential to send so much more traffic at a much lower cost.

This week it seems like the balance of power might finally be turning away from PPC as data released from both Hitwise & Comscore shows a decline in the number of paid clicks compared to organic clicks.

The Hitwise data shows that:

In the four weeks to May 9, 2009, 7.25% of search engine traffic to All Categories of websites was from paid clicks. This compares to 9.84% in the same four week period in 2008 – representing a 26% decline in the share of paid clicks.

If paid search traffic has a 7.25% share of traffic then for every £10,000 you spend on AdWords you should be spending £127,931 on SEO assuming all keywords have equal value (which of course they don’t).

Paid clicks declining

Longer queries

The Comscore data shows an even more interesting trend – the number of paid clicks is growing at a much slower rate than the number of search queries. The raw number of queries carried out is up 68% over the past 2 years and yet the number of users clicking on a PPC advert is up just 18% over the same time period.
comscore-search_volume_us
comscore-paid_clicks_us

The decline is apparently due to a reduction in ad coverage (the number of search queries that trigger a PPC ad) from 64% to 51% of searches.
comscore-ad_coverage_us
There are a number of possible reasons for this, including:

  • A reduction in advertisers due to the current economic situation
  • Google using the Quality Score to improve user experience by stopping advertisers bidding on irrelevant keywords just to get cheap traffic
  • An increase in the number of words per search query making PPC campaigns have less coverage

comscorewords-per-searchus

This last theory is interesting because it can be fixed by a decent PPC manager. Most campaigns limit the use of broad match keywords because they are more expensive and rely on exact match and phrase match instead. However if searchers are entering more words per query and ad groups are expanded to have more exact match terms they can very quickly become large and unmanageable.

On the other hand just turning on broad match to catch a large variation in queries is likely to be less cost effective.

One conclusion we can draw from all this is that PPC campaigns need very careful management to increase ad coverage while keeping costs under control.

The most important take away however is that companies need to start spending a similar amount on organic search as they do on paid search.

By Patrick Altoft. at 8:30PM on Saturday, 16 May 2009

Patrick is the Director of Strategy at Branded3 and has spent the last 11 years working on the SEO strategies of some of the UK's largest brands. Patrick’s SEO knowledge and experience is highly regarded by many, and he’s regularly invited to speak at the world’s biggest search conferences and events. Follow Patrick Altoft on Twitter.

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8 Responses to “Paid Search: An industry in decline?”

  1. Paid Search: An industry in decline?: Ever since Google launched the AdWords program there has been huge dispari.. http://tinyurl.com/pb7cvz

  2. I don’t think a generalisation of this sort can be made. One principle we have followed is that on site set up we have used PPC and then reduced the usage.
    If you want to drive traffic from a particular site use PPC. To explain further, if I am offering scuba diving service off the coast of Mombasa, waiting for searches through SEO may be stupid. A PPC on relevant sections of kayak and other Kenyan sites would be relevant.
    The sort of genralization in bold print at the end should be avoided or qualified.

  3. Eloi says:

    Well, it makes complete sense to me:

    Searches are using more and more words, but the Google system now doesn’t let you bid on keywords with low search volume (the long tail), so of course there will be less clicks from Paid Search…

    Google should allow you to bid on long tail keywords if your account (and not campaign) has accrued a good QS overtime – that way it would make sure that ads presented on the long tail are relevant advertisers, and not spammers looking for cheap traffic.

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  7. [...] especially with clients who want more bang for their buck. Then Hitwise came along with proof that PPC is on a decline while organic search and social networks pick up the lion’s share of traffic. What is an online [...]

  8. Joe says:

    If you want to drive traffic from a particular site use PPC. To explain further, if I am offering scuba diving service off the coast of Mombasa, waiting for searches through SEO may be stupid. A PPC on relevant sections of kayak and other Kenyan sites would be relevant.

    The article is about search engines not affiliate advertising.

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