April 5, 2007
Why do more netizens and internet newbies utilize Google to search for products, services, images, information, news, or anything else under the proverbial internet superhighway sun? Well, Google’s search technology has been proven smarter (in the minds of the average web surfer) than the rest in regards to returning relevant, valuable, and fast results for any given search query – this would explain the almost 50% market share that Google now commands for online search.
Google co-founders Larry Page and Sergey Brin bet the farm on the quality of their search, and it has paid off marvelously in stock options and an almost inconceivable market capitalization (142.58 as of April 1, 2007) for a company that has been in existence for less than a decade. Google’s immense market cap is partially a product of its revenue stream, but where in fact does Google actually generate the bulk of their proceeds from?
Gmail, website analytics, images, web searches, all can be performed for free (provided you are among the over 1 billion humans who have access to an internet connection and a PC). The answer is advertising. And not just any old type of advertising – Google generates up to 95% of its revenue from what is known as Pay Per Click advertising; specifically it is the Google Adwords and Adsense suite of programs.
Google Adwords enables businesses, young and old alike, to infuse their advertising message to the masses. Adwords works like a standard auction. Businesses bid on keywords that are relevant to their industry. The highest bidders, who also maintain a high advertisement Click Through Rate (CTR), appear towards the top of the screen when conducting a search. Lower bidders get the lower valued placement real estate as web surfers’ eyes scroll down the browser window. Google monitors the ads, but it is the business owner who chooses what amount he or she is willing to pay per click. Once your ad is clicked by a user, your business is charged a certain amount relating to your bid price. You, the business owner essentially choose where your advertisement is displayed and for what keyword or keyword phrases to be included.
Who Controls What I See When I Conduct A Google Search?
Now, this brings up my initial, yet critical point. I will say it again. Businesses (and individuals) have the power to place their unique message or advertisement on Google’s search engine results pages (SERPS). What is the big deal about that? Well, internet surfers tend to have difficulty discerning between advertisements and actually search engine listing results. Try it for yourself. Go to Google and conduct a search for “AT&T cordless phone.” The first three listings you see are not listings at all- they are Google Adwords results – Google typically shades these “sponsored” results to help differentiate them from the actual organic or natural search engine listings, but they are still shown in similar formats. Even this advertisement shading in the last few weeks however, has slowly been supplanted by a crystal clear background which makes the advertisements and listings almost indistinguishable. Besides the shading and the conspicuously grayed out and small “sponsored results” text the two “listings” and “advertisements” look very similar. In other words, most web surfers could confuse an advertisement for an actual and factual ultra-democratic Google certified search result. The more web surfers that click on Google Adwords advertisements, the more money Google generates, keeping the board of directors and stock holders sleeping soundly tucked in Egyptian cotton.
Isn’t that directly contrary to Google’s mantra that its “mission is to organize the world’s information and make it universally accessible and useful?” The answer is yes, but don’t tear down the walls of the kingdom just yet. Most of the businesses that advertise on Google are legitimate – the point is that when you click on a PPC link, the quality of the site cannot be vouched for by Google. When you click on the first organic search engine listing from a Google query, you are implicitly getting Google’s stamp of approval that this site is the best result as per your associated search based on their algorithm or rules. The push vs. pull reasoning that I have read in various search engine forums and articles may be completely off base. If you don’t know that you are clicking on an advertisement then you are not being pushed to take an action. So, what does all this mean?
Educated Web Surfers Or Buyers Know The Difference Between A Pay Per Click Advertising And A Natural Search Engine Listing.
I have found that educated internet users tend to utilize the organic search engine listings more than the pay per click results (both Adwords and Yahoo’s Overture – now Yahoo Search Marketing). They do so because they understand that the sponsored results are all businesses that have chosen to be listed among the SERPS. Organic results are also different because a lower percentage of these are actual businesses selling goods or services. Google and Yahoo organic results give precedent to valuable web pages – pages that give information, tools, or news to web surfers. There is no guarantee that your search for “AT&T cordless phone” would bring up anything more than a website with a schematic of transistors and speed dial features. Educated buyers comprehend that the first few organic results that are in fact businesses providing what they need will most likely be the most reputable companies around. This fact is indeed more consistent with the Google corporate philosophy. As we have just seen, Pay Per Click “PPC” advertisements and natural results do put forth two conflicting messages – click on the listing because it is relevant, or click on the advertisement because Google has to pay its utility bills.
What Does All This Have To Do With My Business?
I’ve looked at hundreds of Overture and Adwords reports; I usually see an average PPC advertisement click through rate of between 1- 4% (although inter-industry numbers vary dramatically). I also study statistics (often from the analytical tool called Google Analytics) that shows me the number of visitors a site gets for both PPC and natural search engine listings. My findings show that organic listings on the average drive more traffic than PPC ads. This isn’t always the case, but it is the trend I have seen when analyzing the data. If educated surfers are more likely to click on natural search engine listings, it also seems logical to think that the website conversion rates would also be higher. My look at the numbers do suggest that this is true more times than not. Does Google publicize the click through rate or conversion rate for typical organic search queries? No way – that may encourage businesses to utilize natural Search Engine Optimization (SEO) companies as opposed to PPC advertising programs. That wouldn’t be so good for Page, Brin, or Dr. Eric Schmidt (Google CEO).
Does That Make Google Adwords or Yahoo Search Marketing Definitively Bad?
Now, I own stocks, bonds, CDs – and an occasional mutual fund – my financial portfolio is diversified. Diversifying your business’s advertising is something that I also advocate. If PPC advertising is reaping a profit for you, then by all means, continue to utilize this valuable service. What I am suggesting is that you don’t put all your eggs in one basket. If a search engine rule or algorithm changes, your organic search engine rankings may drop, costing you revenue and potential profit. If a new player enters your industry and decides to outbid your PPC advertisements, you will also be pushed down in the search engine shuffle – again affecting your business’s bottom line. I don’t recommend having an undiversified financial portfolio, nor do I recommend obtaining all your search engine traffic from the same source. Experiment with Overture or Adwords, and talk to an ethical search engine optimization firm to find out if organic optimization makes sense for your organization.
Author: Brian Ortiz is the CEO of SEOMatrix: Ethical Search Engine Optimization. He has been specializing in search engine marketing and most notably conversion analysis for both national and international clients for over five years. SEOMatrix is a Connecticut search engine optimization company.