Click Cannibalization: A Checklist When Running Paid Search and Organic Search Together

Paid Search vs. Organic SearchIt doesn’t matter if you’re an online publisher, a real estate agent, or a marketing professional looking to increase website traffic, in the end, you want to benefit from both organic search and paid search. However, how do you account for click cannibalization? Should you even pursue paid search when you already hold one of the top positions for your chosen keyword? After all, aren’t you just stealing clicks from your existing high PageRank?

Before we answer these aforementioned questions, it’s important to note that there are those who believe you should never pursue paid search when ranking high. These are the webmasters who believe you should continue to build upon your existing high ranking by leveraging that ranking across similar keywords and keyword phrases.

However, there are others who believe that leveraging that ranking is becoming more and more difficult as the internet continues to expand. These are the individuals who believe that the only viable solution to increasing traffic in today’s online marketplace is to run paid search in conjunction with organic search. Ultimately, the only way to know for sure is to define the potential returns of running pay-per-click (PPC) campaigns when ranking high in organic searches.

Others Have Read: Getting Started with Google AdWords – Pay Per Click Advertising PPC

The following spreadsheet provides a simple and straightforward process to tracking the overall benefit of pursuing paid search when you already enjoy a high position in online searches. It is allows you to define the costs of running online campaigns while defining the overall impacts of click cannibalization.

Running PPC Campaigns With Organic Search

Let’s assume you own a website and currently benefit from 25,000 monthly clicks from organic search. (That would be amazing by the way).  Your website’s conversion rate is 3.10% (This is pretty standard). This gives you a total of 775 leads for the month, which is 3.10% multiplied by 25,000 clicks. Your value for each order is $8.75. Therefore, your total revenue in the first month is $6,781.25.

(Let’s say you are a real estate agent who works on commission rather than direct sales. You can figure out value of each lead by determing your lead to conversion rate. Example, let’s say you  close 1% of all your leads that come from the web as an average. Let’s say you after closing, you average $10,000 a sale. If you had 775 leads, and closed 1%, you would close about 8 of those leads. 8 X $10,000 = $80,000. $80,000/775 = $103.00 value per lead.)

Let’s use the First Example.

First Month

Organic Search (Clicks)

Conversion Percentage

Number of E-Commerce Orders

Sale Value Per Order

Revenue (Month 1)

Organic Search Only

25,000

3.10%

775.00

$8.75

$6,781.25

In the second month, you decide to run an online advertising campaign in the hopes that paid search will drive more traffic to your site and lead to higher revenue. However, your concern is that by pursuing paid search you may be inadvertently stealing clicks from organic search.

At the end of the second month, you notice that you generated 19,750 clicks from organic search. Now, you’re immediately concerned because your organic clicks declined. However, you don’t yet have all the information you need to decide whether the decision to run this campaign was worth it or not.

Your paid search generated 11,250 clicks for a total of 31,000 clicks. There was click cannibalization, but running the PPC campaign increased the total number of clicks, so what’s the overall impact of combining the two? Answering this question involves totaling the cost of the campaign relative to the additional revenue you generated.

You currently have a cost-per-click (CPC) of $0.10/click and your conversion rate remains unchanged at 3.10% as does your $8.75 value for each order. However, the total number of orders received increased to 961. This is an increase of 186 orders.

Second Month

Organic Search (Clicks)

Paid Search (Clicks)

Total Clicks

Paid Search Cost-Per-Click (CPC)

Conversion Percentage

Number of E-Commerce Orders

Sale Value Per Order

Revenue (Month 2)

Organic and PPC

19750

11250

31000

$0.10

3.10%

961

$8.75

$8,408.75

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Summary Table

After reviewing results you notice that your revenue increased in the second month to $8,408.75, which means you generated an additional $1,627.50 in sales. Your costs to run the campaign were $1,125.00 which is your CPC of $0.10 multiplied by the 11,250 paid clicks. Therefore, you increased your revenue by $502.50, which is simply the additional sales of $1,627.50 in the second month, minus the $1,125.00 cost of the campaign.

Revenue Change (Month 1 to Month 2)

$1,627.50

Total Paid Search Expenditures

$1,125.00

Change in Revenue

$502.50

In this case, it made sense to run paid search with organic search. While you did see some click cannibalization, the overall returns justified the decision. In the end, your e-commerce website generated an additional $502.50 in revenue by combing both organic and paid search.

In the end, it’s about driving more traffic to your website and using both organic and paid search together to grow revenue. However, you have to be willing to investigate whether it makes sense to combine organic and paid search when you already enjoy a high position in online searches. This spreadsheet should help make this decision a much easier process.

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