Pay Per Click Comparison with Free Search Listings

Many people are pondering the question of which is better, pay per click listings or traditional/organic search listings. Once you start investing a significant amount of money in PPCSE’s you find yourself wondering if you should spend my resources on non paid listings. Thankfully the IAB (Interactive Advertising Bureau) has conducted a study quantifying the results of traditional listings versus that of pay per click. Below is a summary of what they have found.

This study included two specific industries, travel and finance. It evaluates click through rates and final sale conversion as well as value of the client and sale. The study was conducted with 1.5 million active consumers who agreed to be passively observed on the web. The technology implemented tracked all the users web usage including searches and purchases. This technology tracked 16 major brands in finance as well as travel. Those brands are listed below.

Travel Industry

• Expedia
• Delta
• American Airlines
• United Airlines
• Hertz
• Avis
• Marriott
• Holiday Inn

Finance Industry

• Bank of America
• Wells Fargo
• CitiBank
• American Express
• Lending Tree
• Allstate
• State Farm
• Schwab

As well as these brands major pay per click sites as well as web portals were also tracked.

• Overture
• Google
• Sprinks

Non pay per click includes the following:

• About.com
• Ask.com
• Google
• AOL
• Lycos
• MSN
• Yahoo

The data was collected over a two month period ending in May of 2003. The results are in favor of paid search over free search listings. Search click through rates are over four times higher on paid listings versus free listings. This, in my opinion is due to the fact that sponsored search allows you to define the best titles and descriptions, offering a more clear catch phrase, where non paid listings generate the titles and descriptions based on page content that may or may not be as relevant to the search term or product.

Conversion to sales for sponsored paid listings is 1.6% compared to .6% on free listings, over twice as much. Once again this has to due with the model of paid listings and allowing those to direct traffic to pages the have a primary selling message. All in all paid search in much more profitable than a large lump sum investment in free search.

A good plan to have is to use paid search and always be increasing your traditional optimization over the long haul. Long term investment in traditional search listings will only help supplement your pay per click listings. Remember pay per click advertising is catching on very quickly and a long term solid plan of search marketing includes traditional search optimization. As your traditional listings increase and your paid listings get more expensive the profit gap between the two will close. The best plan is to leverage paid listings with free listings.

For more information or to download a summary copy of the IAB report click here.