Is PPC Necessary? Why? If So, When Do I Need To Do PPC?

Author: Gab Goldenberg

Is PPC necessary? Why is PPC necessary or not? If so, when do I need to do it?

These are questions I recently got in fielding a proposal for search marketing services. For others who might have the same question, here’s the answer, and an explanation.

(Related post: The Complete Guide To Brand Building Online)

PPC is necessary when you’re just entering a market.

At that point, you have no idea what keywords will or won’t convert. By buying ads on those keywords, you can tell what does and doesn’t convert. This is essential to keyword research; you can’t perform SEO that delivers a positive ROI without knowing whether you can make money with traffic from a particular keyword.

Additionally, pay per click ads are extremely valuable to compare the value of keywords before you start your SEO campaign. When you’re just entering a market, you may know that two keywords you’re targeting are commercial, but not which will deliver higher conversion rates, average order sizes, or bottom line value per visitor. PPC can tell you that in a few weeks, whereas SEO would take several months.

Arguably, if you need to compare the relative value of keywords that you know will convert, you can skip PPC. If you’re going to make some money, and that’s enough for you, then you can go straight to SEO.

But if you want to prioritize more lucrative keywords to make the most money – which you MUST do if you’re in a competitive market – then PPC will be necessary.

Why is testing with PPC a MUST for competitive markets?

It’s a must because competitive markets are driven by ROI. Testing keywords, copy and landing paths is the way to generate a higher value per visitor.

In competitive markets, most players are using such testing to maximize their value per visitor and thus their ROI. This means that they can afford to spend more to attract those visitors in the first place.

It’s like a lemonade stand and a Ferrari dealership competing to buy ads in the local paper. Guess who’s going to get the ad inventory? The Ferrari dealership will get to buy the ad space, because it makes more money from the ads, so it can spend more on the ads.

Well, what about if two Ferrari dealerships are competing to buy the same ad space? In that case, it still boils down to whoever can make the most money from the ad. It comes down to better ad design, having salesmen who close a greater percentage of sales, selling more expensive Ferraris or leases etc.

The same thing happens online. Whoever makes more from a given piece of ad space will buy it instead of their competitors. If you content yourself with whatever ROI you can get, competitors who are more serious about maximizing their ROI will eventually price you out of the market. Over time, this means you won’t get any traffic at all.

This is equally true of SEO. If you can only afford some crummy directory submission service, and I can afford advanced link building tactics like linkbait, guess who’s going to rank first?

My backlink research (see also backlink research part 2) shows that in most commercial markets (not just the most competitive ones), you need to build links constantly – just to keep up!  Let alone surpassing others in the rankings.

Testing with PPC makes your business more efficient and grows profit margins. That means you can to spend more on link building and have a chance to succeed with SEO.

When is PPC not at all necessary?

If you’ve already worked in a market and know what keywords convert and what their relative value is, you can skip buying PPC traffic.

Well, kinda. While PPC is great for getting data on the value of a given keyword, it’s also valuable for testing ad copy and landing paths. And if you’re in a competitive market, your competitors are buying PPC traffic to maximize their value per visitor.

And furthermore, the organic search results get more competitive daily. So if you want to be able to afford the SEO services it takes to rank, you need to test with PPC.

To summarize:

  • PPC is necessary when you’re new to a market, because PPC lets you test keywords out. This tells you which keywords are worth more money.
  • PPC is also valuable to maximize your value per visitor, by testing different messages and landing paths to find out what ads and versions of the website make the most money.
  • Competitive markets require PPC. Otherwise, you’ll get priced out of buying any ads or buying seo services to get organic traffic.
  • If you already know what keywords are most valuable, you have a lesser need for PPC.
  • You probably still need it to be able to test and maximize your profitability, however.
  • Update: Josh Sciarrino, of Tampa internet marketing company Refuge Design, highlights that PPC can also be more valuable when bidding on brand, by driving additional marginal sales (be prepared for some cannibalization of your SEO-driven brand sales.

p.s. If you found this interesting, you may want to check out my buddies at Wordstream, who offer keyword research and organization software.

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Comments

  1. Definitely agree with you that PPC can be extremely useful to SEO's when testing keyword selection etc. However its worth noting that these aren't the main reasons to run PPC campaigns. If you can make your PPC campaign turn a positive ROI you'd be crazy not to run it or to limit your budget in any way. When you get PPC right (particularly in ecommerce) its a licence to print money. The problem is most advertisers don't get it right and don't know what they're real ROI is!

    Comment by John - August 19, 2009 @ 5:28pm
  2. Hey Gab, Great post. I would add that PPC tends to complement SEO listings so while there might be some canibalization, more often there is incremental traffic to be had. That said, the either or argument is hard to justify in most cases. In a combined strategy an advertiser's visibility increases and so does overall ROI. I would recommend that advertisers analyze their SEO and PPC traffic on the same keywords and measure the ROI on each to gage the true value of each tactic. Ex. What is the ROI from SEO and PPC on the keyword "Beverly Hills Ferrari Dealer" if you rank well on both PPC and SEO for this keywords? Using this evaluation method, advertisers will get a better idea of whether it's worth investing in PPC. It's worth noting that if the ROI on PPC or SEO is lower than the other it could be because there is an opportunity to improve the performance there. Just the same, over a number of keywords compared a clearer picture of performance should reveal itself. Analytics is definitely your friend here because like you`re pointing out ROI is more important than simple ranking when it comes to profits.

    Comment by Xurxo Vidal - August 20, 2009 @ 2:05pm
  3. Fantastic post. I try telling my clients that they need to do PPC before beginning an SEO campaign, but they would rather save the money! Any tips on convinving them otherwise?

    Comment by Puneet Vaghela - August 25, 2009 @ 11:19am
  4. An ROI projection might help. You can adapt my seo roi projection technique to show what money they're leaving on the table. Also, I've heard from others that proposing it as a small budget initially would be an easy way to get buy-in. When that works, you can get a bigger budget.

    Comment by Gabriel Goldenberg - August 25, 2009 @ 4:26pm
  5. Puneet, Some of the things you could tell your clients to convince them to invest in PPC before investing in SEO are: That SEO can take some time to get going while PPC is much more immediate. Also PPC as Gab points out, will allow you to discover top performing keywords with conversion data that you can then use to refine your SEO strategy. This alone will save your clients time any money by eliminating a lot of guesswork. You could also mention that PPC is very flexible in that they control the budget and exposure. They can target part of their intended market for testing purposes and expand as data comes in and performance increases. Your clients can also control the message and rapidly push out promotions in PPC text ads where SEO is not as responsive. Another good point is that PPC will help them protect their brands from competitors who may already be bidding on their brand names using PPC, thus stealing some of their traffic and clients. These points should help convince your clients that investing PPC especially before a full blown SEO strategy is implemented is worth the effort and investment.

    Comment by Xurxo Vidal - August 25, 2009 @ 4:51pm
  6. Very well said and articulated there, Xurxo!

    Comment by Gabriel Goldenberg - August 26, 2009 @ 12:47pm
  7. Happy to add in my 2 cents!

    Comment by Xurxo Vidal - August 26, 2009 @ 1:42pm
  8. wow, its such a great post Gabriel, keep it up, I have given try to PPC to once but didnt get gr8 results coz m not gud in it, will surely come again to your blog to learn more about SEO and PPC

    Comment by Rohit - September 14, 2009 @ 6:33am
  9. PPC is absolutely required in my field unless you have one of the 10 year old sites that organically rank highly for terms surrounding the KW "Atlanta Real Estate." RN

    Comment by Atlanta RealEstate - September 15, 2009 @ 4:53pm
  10. Have you done studies that examine the conversion rate lift of being on both the PPC and SEO listings at the same time? I've found that for many companies, being in both positions not only brings in more traffic, but also leads to a higher combined conversion rate. Add display to the mix, and often the display does not get many clicks but further increases search CTR and conversion rate. If you do not measure the changes in search patterns while buying display - you are missing the real metrics. You should also track your branded terms. If you create a brand, and start to lose clicks to competitors who are buying your terms on PPC - do the math to see if it's worth buying the clicks. It's not a black and white answer - it's some math.

    Comment by brad - October 2, 2009 @ 9:24am
  11. Excellent points there, Brad! I've often heard about that combined positions lift, but never been in a position to observe it firsthand. I'd love to see a case study or what math you use if you'd like to write a post on it :).

    Comment by Gabriel Goldenberg - October 2, 2009 @ 4:51pm
  12. We do both PPC and organic SEO, but most of our traffic is from organic SEO, however PPC did increase the traffic by 25%

    Comment by benard - October 22, 2009 @ 9:11pm
  13. Thanks for giving a clear idea about how PPC and SEO both can be useful for your online business..

    Comment by articlescreen - November 12, 2009 @ 4:29am
  14. Using PPC marketing can help quickly identify your best performing keywords, while implementing a longer-term SEO strategy will increase chances of ranking well in the organic listings.

    Comment by seooptim - February 8, 2010 @ 5:28am

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