Many advertisers just don’t understand why they should pay good money for clicks when search engines deliver traffic for free in the organic search results. It seems obvious: you’re #1 in the organic search results, so why should you pay for an ad? Nevertheless, studies that ChannelAdvisor has done numerous times (and written about on this blog) confirm that bidding on your brand term results in greater revenue and more profit. Now, a new study from Google lends additional support to this still-controversial topic. In this post, I’m going to share the data we’ve collected, provide a process for conducting your own test, and discuss Google’s results.
The Big G Studies Paid Search Lift
Now despite the fact the report is from Google, we’ve found that analysis from Google Chief Economist Hal Varian and his team to be of high quality. In a detailed report covering six months of data and 400 studies, Google statisticians found that 89% of clicks from paid search would not go to the organic results for the same advertiser. Seems pretty cut and dry, right? Well, not quite, as the lift varied with the ranking of the organic results. The higher the organic ranking, the less lift from the paid search ads. Google concedes, “Organic results triggered by branded search terms tend to have a higher ranking on average and this may lead to a low [incremental click benefit]. However, a low [incremental click] value is not necessarily a deterrent to investing in search advertising.” We agree, but then the question is left unanswered: should you bid on your own brand name?
To answer this question definitively, do a real world experiment. Simply put, turn off the ads and measure the results. If total revenue and profit go down, the argument is settled. For additional confidence in the test results, run the ads on a staggered schedule to minimize the impact of seasonality or other changing conditions.
After the first week with the ads off, check to see if you have enough data. It may be you need to lengthen the test period. As in any testing, the more data, the more confidence in the conclusions. When you look at the results, focus on the total profit. In one test we did, the total revenue increased 10-18% with the ads running, and the incremental revenue came at a very healthy ROI of 1000% or higher.
Brand and Non-Brand
Finally, this same testing process can be applied to non-brand terms as well. Perhaps years of search engine optimization has rewarded you with a number one rank for some of your best selling products or product categories. Try pausing the ads for one or a couple of these terms and see for yourself that the paid search ads pay for themselves.
Why does this work? The answer isn’t entirely clear, but there is an old idea in marketing that buyers need multiple touches before they will buy something. Perhaps the two links to your site, paid and organic, even though they are on the same page, work in the same way as multiple touches. Or perhaps the more controlled marketing message in the paid search ad is ultimately more compelling than the natural listing, where it’s harder to introduce promotional or seasonal messaging.
After all this, you may not actually want to perform this test yourself: turning off your search ads will likely lower your sales! Try this test if you need to be sure or if you have good reason to believe these results won’t apply to your business. Keep an eye on the results, and if sales are going down, you may just want to end the test early.
If you’re interested in learning more, here are several other articles to look at: