According to a new study by Engine Ready, based on traffic to 26 e-retail sites in a 12-month period that ended June 30, visitors who arrive at a retailer's site from paid search ads are 50% more likely to buy than those who come from clicking on a natural search link. The conversion rate from paid search is 2.03% versus 1.26% from organic search, according to the study as reported by Internet Retailer.

From Wikipedia:

Pay per click (PPC) is an Internet advertising model, used on websites, in which advertisers pay their host only when their ad is clicked. With search engines (SEO),  advertisers typically bid on keyword phrases relevant to their target market.

The current study is a follow up of a completed two year study in 2008 to identify the magnitude of any visitor behavioral trends based on traffic source in a way that could help marketers adjust their strategies to maximize value. Although there can be an almost endless number of individual traffic sources, notes the study, this study, identified and measured 4 primary traffic source categories that encapsulate all source origins:

  • Organic listings
  • Paid listings
  • Direct access and bookmarks
  • Other referrer  

Most likely to buy are consumers who navigate directly to a retailer's site by typing in a URL or clicking on a bookmark, as their conversion rate registered at 7.38%. Consumers who came to an e-commerce site from another site or an e-mail converted at 6.58%, the study shows. The overall conversion rate was 3.6%.

The study found that:

  • Paid search visitors bought the most, with an average order value of $117.06 versus $109.27 for those coming from other sites, $106.64 for visitors from organic search and $95.29 from direct referrals, such as from a bookmark or direct entry of a URL
  • Average order value for all retailers in the study was $104.21, down 31.7% from a previous Engine Ready study that analyzed data from a two-year period that ended December 2007. Retailers said average order values from all channels have declined in the past 12 to 18 months
  • The average time on a site per visit increased 5.8% from the previous study to 4 minutes, 33 seconds. Consumers who navigated directly to a site spent 5 minutes, 8 seconds. The study found consumers who spent more time on a site were more likely to buy, but that their average order value was not higher than that of other buyers
  • Site visitors on average viewed 5.2 pages per visit, up 15.6% from the previous study. Those who came directly or from other sites or e-mail viewed the most pages, 6.2 on average
  • Average number of seconds on a page dropped 9% from the earlier study to 53 seconds, which could be a sign marketers are doing a better job of presenting information on their pages in a more easily readable format, the study says. Paid search visitors spent the most time on a page, 66 seconds on average.
  • 43.9% of all visitors left after viewing just one page, down slightly from 44.5% in the earlier study. Organic search produced the highest bounce rate, 48.5%, and direct access the lowest, 39.2%
  • Direct access produced the largest share of site visits (40%), followed by other referring sites and e-mail (27.9%), paid search (19.8%) and organic search (12.3%)

This study is based on an analysis of 20.8 million visits and 108 million page views to 26 e-commerce sites from July 1, 2008, through June 30, 2009. 21 of the 27 companies in the latest study also provided data for the earlier Engine Ready study.

For additional information from InternetRetailer on this report, please visit here, and to access the PDF file of the 2008 study, please go to Engine Ready here.

5 comments about "SEO or PPC".
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  1. Warren Cowan, August 13, 2009 at 11:01 a.m.

    What this research tells you is that paid search has a higher conversion rate than natural search. However, these results are gained by attributing sole value to the last click, ignoring the value of the other channels that lead to it.

    This research puts SEO in a corner, saying more people are likely to buy from paid ads than natural ads. This is simply not the case. The fact that 50% more people saw a paid ad prior to purchase simply means that the last click is getting the credit for the conversion, without taking the entire purchasing cycle into account.

    Engine Ready’s research paints an interesting but largely naive picture as it doesn’t take account of a consumer’s multiple visits to a site and the bounce between paid and natural search. It underattributes to one medium and overattributes to another . This will lead to marketers spending more money in PPC than they need to.

    Greenlight research has found that the number of sales attributed to SEO on a last click basis increases by as much as 30-50% when the first click is taken into account. This indicates that the entire customer journey needs to be evaluated in order to accurately assess the value of each marketing medium and allocate budget optimally.

  2. Ruth Barrett from, August 13, 2009 at 12:47 p.m.

    Agree with Warren Cowan. This is an issue which has plagued all of us who have marketed in the RM model of complex, expensive sales (Enterprise Software) with a long buying cycle and multiple marketing and sales touch points. One of the mistakes made was to view the process from a sales, rather than a buying perspective that when coupled with an inability to track these multiple touch points resulted in making decisions based solely on actions very late in the buying process. Hey, we generated the lead! Rather like making decisions about successful engagement processes based on where and on what date the offer was made and accepted with only a cursory understanding of how the parties got there.

  3. Ramakrishna Gudipudi from gudipudi, August 13, 2009 at 2:16 p.m.

    great insights

  4. Joe Cibula from InverSearch, August 14, 2009 at 5:25 a.m.

    If InverSearch had a click-through rate it would be 100%.

  5. Susan Martin, August 17, 2009 at 11:20 a.m.

    Interesting points Warren, do you have any information on this subject as it pertains to selling professional services?

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