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What is the right allocation of budget to PPC & SEO?

The question of budget allocation to paid search (PPC) versus natural search (organic SEO) is one that has been written about at length by online publications and agencies alike. It is a pervasive issue that every single business wishing to build its online presence through search is required to consider.

However, there is no simple or standardised answer. The balance between PPC and SEO is as dynamic as the multitude of business elements that differentiate one business from another, from situation, cash flow, product, market, consumer behaviour etc.

Search Engine Listings and Traffic Benefits from SEO

Assuming your business has crossed the hurdle of understanding that both PPC and SEO are critical to developing your business' presence in the SERPs and the decision has been made to proceed with both. Now comes the question of degree – how much to allocate to PPC and how much to SEO?

Painting a clearer picture

CNet News reported in mid 2008 that search advertising (PPC) should continue to experience the most significant growth in the online ad spending category, growing from $9.1 billion in 2007 to $20.9 billion in 2013 in the U.S. market.

Whereas SEMPO reported that in 2007, SEO spending reached $1.3 billion.

There is a massive difference in spend between PPC and SEO, however preliminary 'eye-tracking' studies by Enquiro and Did-it, two U.S. search marketing firms indicate that the majority of searchers focus on the top organic results when searching online. The results are broken down as follows:

Organic Ranking Visibility
(shown in a percentage of participants looking at a listing in this location)

Rank 1 – 100%
Rank 2 – 100%
Rank 3 – 100%
Rank 4 – 85%
Rank 5 – 60%
Rank 6 – 50%
Rank 7 – 50%
Rank 8 – 30%
Rank 9 – 30%
Rank 10 – 20%

Side sponsored ad visibility
(shown in percentage of participants looking at an ad in this location)

1 – 50%
2 – 40%
3 – 30%
4 – 20%
5 – 10%
6 – 10%
7 – 10%
8 – 10%

This study is in its preliminary stages but clearly indicates the suspicions that search marketers have been 'preaching' for a few years. The key to a successful search marketing strategy that lifts your business' bottom line is by placing your website at the top of the search results, both through organic and paid search.

The above results indicate that people still pay far more attention to the organic rankings than the paid search results, with 100% looking at the top organic results versus 50% at top sponsored listings.

The way in which to allocate an optimal budget is through thorough analytics analyses to understand what works for your business. It does not make sense to cut out a paid search campaign that is converting neither is it wise to continue to pay a recurring cost for clicks that are expensive and do not convert.

There is a fine balance in the synergistic strategy between PPC and organic SEO – finding that balance for your business and tweaking it accordingly should be the priority, rather than arbitrarily allocating