Marketing Cost vs. Results: The Benefits of SEO and PPC Contrasted
Polar Design has traditionally focused on Search Engine Optimization (SEO) as an important internet marketing method, as varied as e-commerce retailers, dentists, lawyers, technology companies and manufacturers have attained first page positions in Google leading to long term flows of organic search engine traffic. However, in the recent recession, like many companies using web sites to generate leads, Polar Design’s search engine traffic and conversions dropped precipitously. This exposed a critical weakness of SEO: lack of control. In seasonal or economic cycles, or with new product launches, Pay-per-Click (PPC) is an important antidote to that lack of control that ensures sales continue to flow through the pipeline.
Experimentation and success with the use of PPC for our own campaign in January and February convinced us to further develop expertise in PPC for our clients. A recent campaign for a mortgage broker demonstrates how a campaign that uses both strategies, and conforms to certain best practices, will yield powerful results.
Differences Between SEO and PPC
There are many benefits an internet marketing campaign derives from PPC, especially when paired properly with SEO. While SEO delivers lower cost traffic, the use of PPC gives a campaign much more control over what visitors see. In paid search listings, you can create targeted advertisements that will send people to a specific page custom designed for those visitors; using carefully crafted copy and design, those visitors are more likely to be interested in your offer than if they land on a page that a search engine determines is appropriate. PPC traffic in this way can have a higher conversion rate.
An example comparing both SEO and PPC conversion for an extended period for one of our clients, a cleaning products company, confirmed this assumption. For this company, the conversion rate for traffic due to SEO was 1.61%, while the conversion rate for PPC traffic was 8.913%.
Pay-per-Click also garners faster results, whereas SEO tactics that are meant to increase search engine page rank often require patience and can take months to have an effect (due to the delay in search engines “recognizing” the work done). Both methods have a different effect on return on investment. The following chart demonstrates the difference between a PPC-only and SEO-only campaign where the campaign budget was the same and spent over a 3 month time period; as you might expect, the PPC campaign will only garner traffic while a budget is in place and money is being spent on buying adwords. Once a PPC campaign is over, the traffic to the website ceases. On the other hand, SEO may take a couple of months to take effect due to the time involved in off-page SEO activities.
Despite the longer slope of SEO traffic, the results are long-lasting, so cost per visitor is much lower given a long-term time horizon. Traffic from PPC costs more, but it brings sales sooner. If your company relies solely on SEO, you won’t see results right away, but if you rely only on PPC your marketing costs will be higher, over the long run, then what they could be. Knowing how much to spend on both tactics, and when, is crucial to optimize long term costs and ROI.
Since PPC does deliver traffic at a higher cost per visitor than other methods, it’s important to make the most of traffic that you generate. There are a number of guidelines for both SEO and PPC that can increase conversion and keep customer acquisition costs attractive even if the visitor acquisition costs are high.
An important principle when using PPC, where you can control the destination of traffic, is testing. Using a variety of tools, you can serve different ads to the same adwords, as well as randomly serve different versions of web pages to the same adwords. Using web site analysis tools, it is possible to then evaluate whether the visitors from one ad or who visit one of the landing page variations “convert” (by taking a desired action like contacting you) at a higher rate than others. Simply put, testing allows you to compare the effectiveness of different ad copy, landing page designs and even product offers to see which generates more leads or revenue.
In a recent PPC campaign, Polar Design ran four different variations on the landing page. The difference between the pages was quite minor – for example, the main headline of the landing page changed from “Searching for a Low Rate Mortgage?” to “Need Help with Your Home Purchase?” The winning combination used the first headline.
The minor differences in copy led to dramatic differences in conversion, as shown by the graph below:
It is difficult to determine what text to use in the advertisement and on the landing page, so by using the Website Optimizer, we were able to distinguish what combination of ad text was most appealing to visitors. The winning version, “Combination 2,” converted visitors to leads at a rate of 16.8%, which was nearly 100% higher than the worst performing version, “Combination 3” with a rate of 8.72%. The results of testing have proven time and again that one cannot know in advance the most effective combination of copy, design or offer. Using testing, you can find the right elements of a campaign that convert far higher than a campaign developed based on opinions or common sense.
In addition to testing, other considerations include maintaining a high quality score on keywords paid for in Google, which can reduce your bid cost, as well as utilizing medium and long-tail keywords that generate less traffic at a lower cost. PPC is now an established advertising medium with many agencies and companies competing and bidding up the price of keywords, so knowing what best practices can generate the most from your PPC traffic is essential to using this method cost-effectively.
The Financial Impact of Conversion
Landing pages are not the only element of a campaign that can be tested. The effectiveness of product offers, ads, keywords selected and in some cases, the geography or demography of visitors can be tested.
In the campaign example above, we ran multiple ads in combination with the landing pages. In a two month period, the best ad group and landing page combination converted at an impressive 16.8% rate. It turned 383 clicks into 62 leads – a cost of $9.62 per lead. The worst performing ad group and landing page combination converted at 0.76% generating only 1 lead from 137 clicks – a cost of $113.81 per lead.
This reinforces the idea of the importance of testing and the importance of extending it to all aspects of a campaign.
Conclusion
The solid results from the example campaign shows that the choice between SEO and PPC is a false choice. The two strategies actually complement each other. PPC delivers traffic and customers quickly, but at a higher unit cost. That cost can be managed with certain best practices. For new products or campaigns, it is the best option since cash flow and sales throughput is more important at that stage.
SEO delivers traffic at a lower cost per visitor and customer – it is an important long term strategy that lets you optimize marketing costs, increase marketing ROI and reduce reliance on paid advertising. Both types of promotion provide substantial benefits while compensating for each others’ weaknesses. Equipped with this new knowledge we have begun to integrate PPC into our work with other clients, and will continue to monitor how well the two strategies can work together effectively to increase traffic and sales.
Polar Design continues to develop insights and best practices in comprehensive online advertising and marketing management. Please don’t hesitate to contact us with questions about your own initiatives.