When people hear about online marketing, they often think of two of the more popular methods that a company can use to enhance its visibility on the Web: organic search engine optimization and pay-per-click advertising. In an ideal world, you would use both strategically to maximize your site's profile. However, budgetary constraints often make this impossible, and trying to do both on a limited budget or with minimal resources can result in neither campaign producing ideal results. In this case, it's usually better to focus on one or the other. But which is best for you?

Organic Search Engine Optimization

Organic search engine optimization campaigns offer several distinct advantages over pay-per-click advertising campaigns, as many recent studies have shown. What follows is a brief listing of some of the findings.

Propensity to Click

Study after study indicates people are less likely to click on paid search ads rather than on results from organic search engine optimization. For example, one study found that search users are up to six times more likely to click on the first few organic results than they are to choose any of the paid results (1), while an eye tracking study (2) showed that 50 percent of users begin their search by scanning the top organic results. Other studies have shown that only 30 percent of search engine users click on paid listings, leaving an overwhelming 70 percent who are clicking the organic listings (3). And a 2003 study found that 85 percent of searchers report clicking on paid links in less than 40 percent of all of their searches, and 78 percent of all respondents claim that they found the information they we searching for through sponsored links just 40 percent of the time (4).

Trust

Studies are beginning to indicate that the trust level for organic results is much higher than that of paid results, and that paid results are looked upon as a nuisance by some searchers. One study found that only 14 percent of searchers trust paid listings, and 29 percent report being "annoyed" by them (5). Another study found that 66 percent of customers distrust paid ads (6). Clearly, it's not generally a good idea to upset potential customers before they even click on your link.

Value of Visitors

Organic search engine results tend to be seen as non-biased, and they therefore are able to provide visitors that are more valuable. The overall conversion rate, or the rate at which searchers take a desired action on a site, is 17 percent higher for unpaid search results than the rate for paid (4.2% vs. 3.6%) (7). Trends also have shown that more of the sales that result from search engines originated in organic search listings (8).

Visitors Becoming More Aware of Pay-Per-Click as Advertising

As more and more people turn to the Internet for research and information, more searchers are becoming aware of paid results as a marketing tool. One study showed that not only are 38 percent of searchers aware of the distinction between paid and unpaid results, 54 percent are aware of the distinction on Google, which is widely recognized as the most popular search engine (9).

Pay-Per-Click Costs Rising

Meanwhile, pay-per-click costs are rising steadily. Between October 2004 and December 2005, average keyword prices rose from around $25 to just under $55 (10). And the cost of keywords can increase by as much as 100 percent during the holiday season (11). These costs aren't going unnoticed either; one study of problems experienced by U.S. companies found that 57 percent of respondents felt that their desired keywords were "too expensive," while 51 percent expressed concern that they are overpaying for certain keywords (12). On the other hand, when you outsource to an organic search engine optimization firm, your costs will likely remain more stable than the prices for pay-per-click advertising.

Long Term Results

While a pay-per-click campaign may produce results more quickly than an organic search engine optimization campaign, organic search engine optimization campaigns can give you results that last. When the budget runs out for a pay-per-click campaign, or when your company decides that the pay-per-click campaign should be terminated, the results end as well. With organic search engine optimization, the optimized site content and other changes made to your site can have an impact on your search results until the next change in a search engine's algorithm, or possibly even beyond.

Relevance

Users also have rated organic search engine results as more relevant than paid results. On Google, 72.3 percent felt that organic results were more relevant, while only 27.7 percent rated paid results as more relevant. Yahoo offered similar results, with 60.8 calling organic results relevant compared to only 39.2 percent for paid (13).

Pay-Per-Click

While the above statistics may make organic search engine optimization seem the clear choice in all cases, in certain situations it actually can make more sense to do pay-per-click advertising. For those looking for fast results on a small budget, a pay-per-click campaign may be the answer.

Results

As previously stated, the results from pay-per-click advertising are immediate. On the other hand, an organic search engine optimization campaign may take up to three months or more for results to be apparent. In this case, pay-per-click is advantageous for those who are looking to promote an initiative that will go live in a short amount of time, or whose business is seasonal in nature and who only do promotion during certain months of the year.

Budget

Small businesses with extremely tight budgets may find that pay-per-click is a better investment than organic search engine optimization because a pay-per-click campaign will almost always cost less--good search engine optimization companies simply do not work for $100 per month. By limiting a campaign's keyphrases to highly specific terms relevant to a company's business, there will not be a large amount of traffic generated, but the traffic that is generated will be specific to the desired result. Plus, choosing such specific phrases can make them less expensive on a per click basis. Moreover, in niche markets with a high average dollar sale, where there's not a great amount of search activity because the prospect pool is limited, it may not make sense to engage a quality organic search engine optimization firm at several thousand dollars per month when you can instead buy varying niche-specific keyphrases and generate traffic in that way.

Easier to Handle In-House

Non-complicated pay-per-click campaigns can be handled much more easily in-house than an organic search engine optimization campaign. Such campaigns generally involve business to business and high-end, service oriented companies, not those geared toward a large consumer base. Since organic search engine optimization requires a steep learning curve and since there are so many questionable tactics that can put a site at risk of penalization (the tactics that neophytes to search engine optimization are likely to use), it may make more sense to run a pay-per-click campaign. Since you are dealing directly with the engine, i.e., Yahoo Search Marketing and Google AdWords, you don't need to pay a middleman, and these sites offer helpful tutorials on how to use pay-per-click marketing. Perhaps most importantly, the concept of pay-per-click is much easier to grasp and understand at the outset.

No Contracts

Most organic search engine optimization campaigns require a contract of a certain length because SEO companies know that meaningful results will rarely happen overnight. When dealing with an in-house pay-per-click campaign, obviously a contract is not an issue. But in general, even when you are dealing with an agency, you will not tend to need to sign a contract because the agency instead makes money on a percentage of the spend, although there may be a setup fee. Without a contract, you are free to reallocate marketing dollars elsewhere if you discover that the pay-per-click campaign is not providing the desired results.

Conclusion

Clearly, organic search engine optimization has some distinct advantages over pay-per-click advertising. However, there are undoubtedly certain situations and scenarios where pay-per-click advertising makes more sense fiscally and strategically. With a high enough budget, you would be able to have an effective organic search engine optimization campaign running in tandem with an effective pay-per-click campaign. But if you have to choose one, look into your unique situation before you decide.

Sources

1. Oneupweb study
2. Enquiro, July 2005
3. Are Corporate Web Sites Optimized for SEO? by Paul Bruemmer, Search Engine Guide, August 2005
4. WebAdvantage.net 2003 Survey
5. eMarketer, April 2003
6. eMarketer 2003
7. Marketing Sherpa, August 2005
8. Are Corporate Web Sites Optimized for SEO? by Paul Bruemmer, Search Engine Guide, August 2005
9. Pew Internet and American Life Project, 2005
10. Performics, 2005
11. Ibid
12. Jupiter Media, June 2003
13. iProspect, Survey Sampling International, WebSurveyor, and Stratagem Research, April 2004