Some believe that running a pay-per-click (PPC) campaign when you already rank high for a given keyword is a complete waste of money that eventually leads to click cannibalisation.
However, others believe that no matter how high you rank on a given search term, you should always compliment it with an aggressive PPC campaign.
So, which camp is right? Does it make sense to run a PPC campaign when you are already rank high in online searches?
If you’ve successfully optimised your website’s design, and nailed down the highest possible click-through rate (CTR) on incoming traffic, then increasing revenue comes down to increasing that traffic.
The only question that remains is whether using the PPC campaign cannibalises organic clicks and results in a loss or a profit.
Ultimately, it’s a question of how much the PPC campaign costs relative to how much additional revenue can be derived from the campaign. So, how does a webmaster go about figuring this out?
Related: Which ad platform is right for you?
Organic Search Alone Versus Organic and PPC Campaigns
Answering that aforementioned question comes down to comparing two variables. The first is your website’s traffic with organic search.
This is your current website where you rank high in a given search term.
The second variable includes combining your organic search with a PPC campaign.
- Current website traffic through organic search only.
- Website traffic when PPC is combined with organic search.
The test involves defining revenue solely through organic search relative to the revenue you generate when you combine organic search with a PPC campaign.
In this case, we are going to compare one month of organic only traffic versus one month of organic and PPC traffic.
Organic Search Only
The table below outlines the first month where the company relied solely upon organic search. In this case, the company’s website generated 5000 clicks from organic search.
The company didn’t pay for these clicks because they resulted from its high ranking in its chosen keyword.
The website’s CTR is 2.15% which translates into 107.5 conversions or sales.
The 107.5 is simply the CTR of 2.15% multiplied by the 5000 organic clicks that sent visitors to the company’s website. Each conversion results in a £95.00 sale.
Therefore, the company generated £10,212.50 in sales, which is 107.5 conversions multiplied by £95.00.
Organic and PPC Campaign
For the next month, the company combined its organic search with a PPC campaign. They defined the number of organic clicks relative to the number of clicks generated through the PPC campaign.
They then added both in order to come up with the total clicks for the month. In this example, they generated 7,500 clicks by combining organic and PPC together.
The company paid £0.75 for each click generated through their PPC advertisements. The CTR % remains at 2.15%.
However, because there are 2,500 more clicks, the company’s conversions increased to 161.25 from 107.5 in its previous month.
Finally, they’ve taken the £95.00 sale per conversion and multiplied it by the 161.25 conversions. This calculation gives them £15,318.75 in sales for the second month.
It’s important to note that there is click cannibalisation occurring within the second month as the number of clicks generated from organic search declined when it was combined with the PPC advertisements.
However, the total clicks are much higher and the sales increased as a result of the increase in clicks.
Explanation and Summary of Experiment
First, it’s important to note that the company’s conversions in these tables relate to the number of website visitors that place orders once they arrive at the company’s website.
In this case, it’s not the amount of traffic that indicates success or failure. Instead, it’s the number of additional conversions that result from that additional traffic.
However, did the company benefit by combining organic search with its PPC advertisements?
This final table provides the answer to our aforementioned question. First, the entire PPC campaign cost the company £2,437.50.
This is simply the cost per click of £0.75 multiplied by the number of clicks generated through the PPC campaign (3250).
The increase in sales is £5,106.25 which is simply the second month’s total of £15,318.75 minus the first month’s sales of £10,212.50.
Finally, the company deducted its costs of the campaign from its increase in sales in order to define the additional revenue of £2,668.75 (£5,106.25 – £2,437.50)
It’s obvious from this test that the company benefited from running a PPC campaign. Even though there was some click cannibalisation, it still was beneficial for the company to combine its organic search with PPC ads.
This type of test is fairly easy to implement. However, to help, here is a summary of the steps you should take when looking to answer whether you should combine your organic search with a PPC campaign.
Granted, it costs money to run a PPC campaign. However, if the benefit of doing so means an increase in revenue, then it’s no longer a question of click cannibalisation.
Ultimately, you’re in business to increase revenue and if combining organic search and PPC campaigns together increases sales, then it’s worth pursuing.
Finally, you don’t need a huge budget to run this type of test. You can start small and compare results week-to-week before going on a month-by-month comparison.
Please leave a comment if you have any questions about PPC and click cannibalisation, and let us know if you have done a similar experiment – what were the results?