Paid and Organic Search: Lift, Cannibalism, or Both?

‘Why are we buying our brand keyword when we already rank #1 in the organic results?’ ‘Why are we paying for traffic if we’re already getting it for free??’ It turns out that the question isn’t whether or not you should be buying your brand keywords. The question is how much should you be willing to pay for that ad, and what should it say

For search marketers like me (and probably you), the question of the paid/organic dynamic has been around for years. So why is there such an amazing dearth of good information on this topic? Why isn’t there any kind of industry-accepted framework with which to address the age-old question?

I believe that the reason for this is that the conversation around the interaction between paid and organic search has historically been sorely lacking any good data. As a result, we get stuck talking about opinions and assumptions, and we typically don’t come to any meaningful conclusions. I am grateful that at this point in my career, I am surrounded by savvy marketers who understand how search results pages (SRPs) work. They understand that the SRP is a complex landscape, that each link has its own clickthrough rate (CTR), and that any link’s CTR is affected by the other links with which it shares the SRP. This is the path to meaningful dialogue on the subject, so I encourage everyone to get intimately familiar with the data around the paid/organic dynamic.

So how do we look at the data in a way that can help us understand this phenomenon? First let’s get a few ground rules straight:

  1. What keywords are we really talking about? Those that match exactly with your brand name or branded product name, where there is generally no competition. So if you are the Acme Widget Company we would be talking about keywords like ‘acme’ and potentially ‘acme widget’.
  2. What are we actually trying to compare? Ultimately we want to compare two different conditions: a) a SRP where the organic link for brand kw is ranked #1 with no PPC ad (and no competitors’ ads) present and b) a SRP where the organic link for a brand kw is ranked #1 with a #1 rank PPC ad (and no competitors’ ads)
  3. What phenomena are we trying to measure? In the above cases there are two things that normally happen. I call them cannibalization and lift. ‘Lift’ is the net amount of traffic that is added to the mix by virtue of the PPC ad. Cannibalization is the portion of PPC ad traffic that comes at the expense of the organic link. If you can quantify cannibalization and lift in any situation, you can then begin to think intelligently about what to do.

One thing we need to also acknowledge is the fact that the many variables affecting paid and organic search traffic – search volume, page layout, keyword bids and rankings – prevent us from doing any rigorous scientific testing around the paid/organic dynamic. It’s simply impossible to isolate all the variables necessary to completely understand what’s going on. However, there are some terrific ways that you can at least gather some meaningful data that can be interpreted and analyzed, and from which we can actually draw very useful and actionable conclusions.

Next, let’s agree on a few basic principles:

  1. Internet (and search) traffic patterns move in weekly cycles
  2. Search volume is affected by seasonality, media, and other factors
  3. You’ll want to ‘test’ in a period of minimum volatility (avoid holidays and seasonal peaks and dips if possible)

Now, consider the following approaches to gather the data required to quantify cannibalization and lift:

  1. On/off weekly: Pause your paid ads for one week and then resume. This is the simplest approach and takes the least amount of time. If you have more time, try alternating weeks as long as you need.
  2. On/off daily: For a two week period, alternate pausing and activating your paid ads on consecutive days. Why two weeks? This is the minimum duration required to get both ‘on’ and ‘off’ data for each day of the week.

These are just examples. Use your imagination to design something more elegant if you have more time or budget.

Now What?

Now, you need to gather your data and estimate your lift and cannibalization. The incredibly tricky (and potentially inaccurate) part of this is trying to establish a baseline for organic traffic. Naturally, you will want to use the organic traffic during ‘off’ periods as a baseline, but what about the ‘on’ periods? What would the organic traffic have been without the paid ads present? For this you will need a third data point. Either use averages of organic traffic during ‘off’ periods that bookend an ‘on’ period, or if you have access to data like search volume for a given keyword, you can use this trend to estimate what your organic baseline should be.

The key here is to come up with an approximation for cannibalization and lift. It doesn’t have to be perfect, because you’re going to use this data to determine, based on your business goals, what you should be willing to pay for a click on your PPC ad. Here’s an example:

Let’s use a day’s worth of data, and suppose we determine that our organic baseline traffic is 100 clicks. When we add a PPC ad, that ad provides us with 100 clicks, but when we do so, our total organic+paid total is only 180 clicks. That means that of the 100 PPC clicks we bought, 80 were ‘lift’, and the other 20 were ‘cannibalization’. Then, all other things being equal, you should discount your maximum allowable CPC on your brand keyword by 20% to account for the cannibalization, and adjust your bids accordingly. Make sense?

Now let’s look at the extremes. If your PPC traffic is 100% lift, then you can confidently say that buying your brand terms is absolutely justified, and you have the data to prove it. What, then, if all your PPC traffic is cannibalized organic traffic? If that’s the case, then you had better have an incredibly good reason for paying for the PPC ads. One reason might be that you want to put a differentiated message in front of people, a message that’s not reflected in your organic link. Possible reasons for this might be a brand re-launch or a strategic event like an important product launch or corporate milestone.

This may sound complicated, but I can assure you it’s both do-able and worthwhile. I just completed a study for one of our keywords and I can tell you that I am ecstatic about the results. I can’t wait to share them around the company! Good Luck!

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4 Responses to “Paid and Organic Search: Lift, Cannibalism, or Both?”

  1. Enhanced Brand Keyword Ads = Industrial Strength SEM Says:

    [...] few months ago I wrote about how advertisers should think about buying their brand keywords on search engines. Since then I have been happily buying a number of brand keywords and can safely say I’m [...]

  2. Enhanced Brand Keyword Ads: Five Ways to Maximize Your Profit « Industrial Strength SEM Says:

    [...] few months ago I wrote about how advertisers should think about buying their brand keywords on search engines. Since then I have been happily buying a number of brand keywords and can safely say I’m [...]

  3. Paid and Organic Search – Now, With More Math! « Industrial Strength SEM Says:

    [...] mentioned in my previous post about paid and organic search traffic that the goal in any analysis is to determine if the paid ad is a source of lift, cannibalization, [...]

  4. technology jobs Says:

    technology jobs…

    [...]Paid and Organic Search: Lift, Cannibalism, or Both? « Industrial Strength Search Marketing (SEM, SEO)[...]…

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