Why SMEs still value paid advertising – whatever eBay says

eBay put the cat among the pigeons last week when they published academic research on the effectiveness of paid advertising for their brand. Their results showed that “brand-keyword ads have no short-term benefits……resulting in average returns that are negative”.  By pulling their Google paid ads and analysing ‘before and after’ traffic, they concluded that organic (unpaid) listings were generating just as many visitors.  But as small companies without a globally recognised brand, how important are adwords to the rest of us?

Many businesses see paid and organic listings as quite separate, optimising their sites for organic search but concentrating less on paid ads, or vice versa.  Being embedded in the industry, it’s very easy to think that everyone knows the difference, and certainly I avoid clicking on paid ads – a deep-rooted instinct to save advertising spend.  However, last year an article on searchengineland.com, ‘The Most Destructive Lie in Search Marketing’, made me think again, when it suggested that around a third of all searchers don’t even know the difference between a paid and a natural search listing.

I’ve started watching friends carefully when they are searching on Google, and I’m always surprised to see them happily clicking the paid listings at the top of the results pages (albeit on a very pale shaded background).   “I didn’t realise it was an advert”, they say.  Now, most of these friends are pretty web-savvy.  It served to remind me of one of the golden rules of marketing – not to assume that your customers will act the same way that you do: always look for the evidence.

How do paid and organic listings interact?

This raises the question for companies about whether they should use paid search even if they are also appearing well in the organic search results.  There have been a number of studies to show that having a paid and organic listing in the same search results can either cannibalise (why pay when you can get the clicks for free?) or have a synergistic effect (the ‘halo’ effect of paid & organic working together to deliver bigger profits) on search traffic.  The problem is that you don’t really know which is more prevalent without giving both a try.

eBay’s research certainly shows that for brand names, paid listings can ‘cannibalise’ because users search on the brand, and click on the first relevant listing they see – regardless of its nature.   If you are already hitting good search positions for particular terms, why pay for the clicks?  The value of paid advertising lies in managing paid terms to complement organic success.

SMEs have the upper hand

According to the SEL article, many large companies are employing different individuals or teams to handle organic and paid search separately.  These teams may not share the same goals or even be fully informed of each other’s activities leading, potentially, to the use of “destructively competitive tactics”.  Typically, this is not something that affects SMEs. Most SMEs I know don’t have the luxury of employing teams of specialists, and they are focused on achieving value for money in advertising.  For once, the SME has the upper hand: managing both organic and paid search on a limited budget can prove an advantage.

So, next time I tell a client that they’re doing well in organic search, I must remember to tell them that they might do even better with pay-per-click advertising, too.