The stats around Google’s pay-per-click (PPC) advertising is quite mind-boggling. A full 97% of Google’s revenue comes from PPC advertising. This totals to a whopping $21 billion annually. For a company which owns YouTube, Android, WhatsApp and dozens of other profitable brands, the sheer percentage it gets from PPC speaks volumes about how lucrative PPC is.
A glance at AdWords (Google’s PPC program) reveals why it is such a cash cow for Google. Here’s a snapshot of the top 10 most expensive keywords on Google AdWords, and the top Cost Per Click (CPC) for each of the top 5.
- Insurance ($54.91)
- Loans ($44.28)
- Mortgage ($47.12)
- Attorney ($47.07)
- Credit ($36.06)
The rest of the top 10 are (6) Lawyer, (7) Donate, (8) Degree, (9) Hosting, and (10) Claim. The top CPC for “hosting” and “claim” are $31.91 and $45.51 respectively. If this seems a contradiction, then it is important to note that the figures are for “Top CPC” i.e. the highest CPC recorded for the keyword. Their ranking though is based on average Top CPC.
Why should you care about these stats?
The reason is simple. Because Google is the king of search engines. If you want your web presence to count, you need to be on Google. And Google provides you with two options to rank highly on its Search Engine Result Pages (SERPs). These are PPC and Search Engine Optimization (SEO). You could also refer to these as “paid search” and “organic search”.
Paid Search vs Organic Search
PPC is the paid search. You basically pay Google to include you onto the SERPs related to specific keywords. If you Google up anything, you can see the paid search results at the top of the SERP. They usually have a little box with the word “Ad” immediately to the left of the link.
As the name suggests, every time someone clicks on the link, you pay Google a specific fee. The fee can range from a few cents to – as the above figures indicate – tens of dollars. This option can be quite costly for someone with a limited advertising budget. The costs are especially biting if visitors to your website don’t end up making any purchases.
SEO is the organic search. You don’t pay Google anything to get onto the SERPs. Google’s search algorithm simply ranks your websites using a number of metrics (e.g. content quality, content authority, number of backlinks, user experience, etc). The websites are then presented in SERPs in the order of their rank in the search algorithm.
Google Search E-Commerce Statistics
Google isn’t the only beneficiary of its search engine. Businesses are willing to pay as much as $54.91 per click because they know that the right kind of traffic can be quite lucrative.
The following e-commerce statistics prove this:
- 43% of traffic to e-commerce websites comes from Google search (i.e. organic search), while 26% comes from Google AdWords (source: Wolfgang Digital – https://www.wolfgangdigital.com/uploads/general/eComKPI2016-Public2.pdf)
- 22% of e-commerce sales are from organic traffic, 20% are from email marketing traffic, and 19% are from PPC traffic (source: Costora – http://www.smartinsights.com/ecommerce/ecommerce-analytics/important-e-commerce-traffic-sources/)
- 57% of B2B marketers report that SEO has the greatest impact in lead generation (Source: NewsCred – http://www.slideshare.net/NewsCred/50-best-stats-presentation)
- Organic searches generate $53 billion a year in online sales
PPC vs SEO – Choose One or Both?
The above statistics clearly show that both PPC and SEO are key drivers of e-commerce. The ultimate question is: which option should you as a website owner choose? Should you opt for one, or both? If you’re to opt for one: which one should it be?
Unfortunately, there are no clear-cut answers to these questions. The best option for any particular business will depend on a number of factors. We’ll not get into those factors here. However, let’s take a more detailed look at both PPC and SEO.
The statistics above show that SEO clearly beats PPC when it comes to both generating traffic and driving online sales. This means that SEO is the best option, right? Well, YES, but not in the short run.
For SEO to generate the positive results, you need to invest some time. To truly benefit from SEO, you need to rank among the first SERPs. This is easier said than done. For your SEO efforts to pay off, you may need to put in 6 to 12 months of continuous effort. That is quite a long time.
For PPC, the process is much quicker. As soon as you select the right keywords and format your ad perfectly, you can be up and running in a couple of days. Of course you have to set up your landing pages, as well. The point here is that setting up the AdWords campaign is far easier when compared to the SEO route.
The challenge with PPC is the cost. Let’s say that you’re paying $5 per click. If 1,000 people click on your ads – and none of them makes a purchase – that’s $5,000 down the drain. For a multinational company with a huge advertising budget, that will be nothing. But for a start-up, that can be a significant expense.
To make matters worse, established brands sometimes deliberately bid higher on keywords just to freeze out newcomers. That is how you get to costs of over $50 per click. If your competition has hundreds of thousands in advertising dollars (and you don’t), then you’ll be unlikely to compete favorably.
However, it isn’t all doom and gloom for PPC. For non-competitive keywords, the cost can as low as $0.05 per click. Even for competitive keywords, CPC isn’t the only metric Google considers when selecting ads. The keyword relevance, quality of content, quality of landing page and other metrics are also considered. As such, even if you don’t tip the scale in terms of your CPC, you can still compete favorably on other metrics.
In Summary – What is the best Option?
The best option is to have a long-term SEO strategy, and use PPC for achieving short-term goals. For instance, if you’re launching a new product or service, you can use PPC to get the word out. The same applies if you’re just starting to establish a web presence.
Similarly, you can use PPC during peak business period or seasons. This will depend on the nature of your business. If your business has periods where purchases spike (e.g. tour and travel businesses in the summer or general supplies businesses during the holiday period), then PPC can be effectively used during such periods. The greatest advantage of Google AdWords is that you can turn your campaign on an off whenever you like.
Perhaps the best news is that PPC and SEO aren’t mutually exclusive. An investment in PPC ultimately contributes towards SEO. It does so not just by driving web traffic, but because the other PPC metrics (i.e. content quality, keyword relevance and landing page quality) are also great for boosting SEO. Therefore, you shouldn’t feel choosing PPC will take anything away from SEO. Just don’t forget to have the bigger picture in mind.