SEO Vs. PPC

[the_internets]

Agree that it is not either/or, and would offer some additional thoughts.

PPC is an investment and as such should be carried out as long as it has a positive ROI. Now what does this mean exactly? If you operate a single-proprietor e-commerce site and cash flow is a major issue, this means that the return on investment is positive if your net profit per click is higher than the cost you pay per click. As long as your conversion rate isn't miniscule, this should be pretty easy to figure out just by buying a few hundred clicks by the law of large numbers.

If cash flow isn't an immediate concern, you might think about the follow-on effects of purchases, or "word of mouth." If you're selling t shirts, each customer becomes a walking advertisement, so each incremental sale is likely to generate follow on sales in a "multiplier effect." This multiplier is difficult to estimate, but you might be able to get a rough estimate by surveying your customers. Then your "adjusted profit per click" equals your profit per click x the "multiplier." If this number his higher than your PPC, then by all means keep buying ads.

If you are in a venture-backed business where businesses are commonly valued on revenue, rather than profit multipliers, then this reality should be reflected in your internal valuation of "clicks" generated through PPC. If revenue growth of x is needed to secure the next round of financing, then the implied ROI of those purchased clicks.

An additional caveat is that you should always allocate your budget to the highest ROI options first. So if hiring someone to redesign the website costs a few thousand dollars but could double sales, then you'd rather spend the few thousand dollars there than on an PPC campaign, even if you have good reason to believe (based on past PPC results) that the PPC campaign will boost sales by 50%.

The good news is that ROI is easy to figure out -- all you have to do is run a couple of low-cost tests. Unlike in the brick-and-mortar world, testing is easy, cheap, and predictive online. Plus you have the law of large numbers on your side, meaning you can easily generate enough data points to project your future ROI without worrying too much about concepts such as "measurement error."

All this needs to be contrasted with the approach to organic SEO. If you're doing it yourself, organic SEO is free, which corresponds to a very, very high return on investment. So regardless of whether PPC is profitable for you, you should always, always be optimizing organically. It may take a while to see results, but this can be a good thing for you. Why? Because maybe your competitors get frustrated with the slow speed of progress and opt to invest only in PPC instead.

It's a bit like Warren Buffett's view on investing -- he's actually happy when investments go down in value, because he can buy more at a lower price. The more frustrating you find organic SEO, the more likely your competitors are to get frustrated and quit. But as long as you follow the well-known SEO path, you will eventually see positive results, at zero cost.

[Ecommerce web design]

To be honest Im not a fan of PPC as its difficult to predict your future marketing budget requirements as the competition drives up your CPC, where as with a dedicated SEO campaign you can usually get good rankings that can be easily maintained for much less than people expect. Its all about having an online startegy over a set time frame 1-3 yrs etc.

In saying that if you are testing a product then PPC has its benefits as you can quickly check if the product will sell in the first place, prior to investing in a professional SEO campaign.