The Folly of PPC Independence

Merchants often tell me they’re using PPC (define) search temporarily, just until they can get their organic listings high enough in the rankings to get free traffic. These merchants seem to think it’s a good strategy to declare themselves “PPC search independent.” But independence from PPC search isn’t a good thing for most marketers. Nor is overdependence on either paid or on pure organic search campaigns, both of which are likely to be provide suboptimal results.

In this column, I’ll discuss ways you can help determine the right level of PPC search independence and how to think about search strategically when it comes to media mix decisions.

EBay, in an “experiment” over the last month (and at least partially to punish Google for aggressively promoting Google Checkout to eBay merchants), shut down its entire U.S. Google AdWords campaign. After 10 days, eBay returned, but reportedly not at the same spend level as before.

Perhaps eBay learned something from its experiment. Scott Wingo, who runs ChannelAdvisor Blog, monitors eBay sales through his customer base. He reports while the mix of sales changed, “when we look at our overall GMV [gross merchandise volume], there are enough sellers that came up during the same time that it washed out overall. (For example, consumer-electronic businesses did well in the week).”

Wingo and others have concluded eBay used other media more heavily during the period when the Google campaign was turned off, therefore changing the mix of visitors and, subsequently, buyers. Overall sales volume wasn’t dramatically affected, yet some eBay sellers were likely impacted in both directions as the mix changed from the long tail to listings promoting general merchandise.

EBay similarly stopped advertising in Yahoo search results during Q4 2006 for about five days, according to published reports. While this was also termed an “experiment,” I wouldn’t be surprised if it was caused by a technology or accounting glitch.

EBay’s experiment proves several things. First, there are several ways it can drive traffic and sales for its business. We don’t know the relative efficiency of PPC search compared to other media, but when evaluated in a silo, obviously the two forms of tested media bring in a different type of customer. Second, there must have been something about at least some of the search visitors that worked well, as eBay has resumed PPC search spending on Google.

If I were at eBay now, I’d be looking at constructing a test that best measures the interaction effect between other online (and offline) media and PPC search. Through analysis and use of some proprietary tools, we’ve come to some interesting conclusions, some of which have been duplicated by others in the marketplace and others that are still used only by my team (I hesitate to share too many details on these). But our data support the basic idea that you probably don’t want to declare full PPC search independence for the following reasons:

• Online media drives search behavior, particularly toolbar-driven search behavior. Curious consumers engage in search, but you can’t guarantee they’ll search for your brand or for a term for which you have a high organic position. Failure to be in the SERP (define) when you’re spending on media elsewhere means you’re missing significant opportunities. Even worse, you’re handing those opportunities to your competition.
• Your competition’s media (online in particular) drives search activity. You have an opportunity to be in the SERP, piggybacking on their media dollars. If you have the ability to track your competition’s media spending and can determine how this spending will stimulate search or your campaign management systems are set up to monitor sudden spikes in search behavior, you can go heavily into search when your competition goes heavily into media.

When a client has high organic position and PPC search is layered on top, nearly every test we’ve conducted has resulted in a positive incremental ROI (define), particularly when messaging is different.

If you’re under pressure to declare PPC independence, do what eBay did: an experiment. You don’t need to turn off your entire campaign, nor do you need to simultaneously ramp up other media as you test the relative effectiveness of PPC search. Doing so may even skew results as you drive searches on your brand terms (for which you have high organic positions).

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