Since launching this blog a year ago I’ve received a number of requests to guest post. I’ve turned them all down. The goal of this site has been to share my (I think) unique take on marketing and analytics and I wasn’t interested in diluting that. Since I’m not an academic, professional writer or consultant, this has meant I just publish whenever I find the time. The exercise I think has been a success. I’ve gone from not having a Twitter presence to being a Top-5 CMO on the platform. And I’ve had a number of interesting connections (and at least two job offers) from people who have found the blog.

Today I am finally branching out into Guest posts. David Nefs (@davidnefs) reached out to me with some questions on incrementality and he shared some of his own findings. I thought the findings were interesting enough (and well written enough) that I asked him if he was interested in having them published on the blog. He was, and this is that post.

David is an internet and marketing enthusiast and pursues both these interests working for HomeAway, the world’s leading vacation rental marketplace. Prior to HomeAway, David was a management consultant for Bain & Company and began his career working for Groupon. David loves travel, having toured extensively through Europe, Asia and South America, and his hobbies include running and struggling to learn Mandarin. Currently he lives in London, the home of his beloved West Ham United FC, of which he is a long suffering fan. David graduated from the University of Cambridge with a 1^st class degree in Economics and an MPhil degree in Industry and Management.

A common fear of many executives is that spending on branded terms is just throwing money down Google’s drain… ‘why are we spending money on traffic we would have got anyway?!’ you’ll hear them exclaim.

This risk isn’t imagined. A couple of years back a study by eBay concluded brand terms were largely ineffective. For companies that can’t commission a 26 page research paper AdWords’ Paid & Organic report sheds some light on this dilemma. By showing CTRs for queries where organic results were displayed both with and without paid ads, we can get a view of the impact of PPC on SEO.

How it works

The Paid & Organic report in AdWords creates the output below for all queries where your site appears in Google showing you performance when you have Paid only, Organic only or Paid & Organic results showing for a given query.

By classifying each query as ‘brand’ or ‘non-brand’ and then analysing how CTRs change dependent on the results displayed we can create a controlled experiment on the impact of PPC ads on SEO and form a view of the incrementality of PPC visits.

Snapshot of AdWords’ Paid & Organic report

Note: It is often necessary (especially for non-brand queries) to control for average SEO position in this analysis as this can heavily influence Organic CTR.

Brand Queries

Paid and Organic report results for brand queries

In the above example for brand queries we can see that when the organic result is shown independently it has a 55% CTR and when it is shown alongside a paid result CTR falls to 36%, evidence of PPC ‘cannibalising’ SEO. However, when both paid and organic results are shown there is a lift in total CTR to 89% meaning PPC generates an incremental 34 visits for every 100 brand queries and is not completely cannibalistic. To quantify, 34 incremental visits are created for every 53 paid visits meaning the paid traffic is 64% incremental.

For the 10+ brands I have looked at the incrementally of branded paid search varies between 16% and 73% and is around 50% on average. The practical implication of this for most brands is to continue to spend on brand terms as they generate incremental traffic cheaply enough to be (often highly) profitable .

Non-brand Queries

Paid and Organic report results for non-brand queries

So, how does this picture look for non-brand queries? Here we see that organic CTR actually increases in the presence of a paid ad and 13.6 incremental visits are created for every 11.9 paid visits meaning the paid traffic is 114% incremental! In other words, paid is generating organic traffic you would otherwise not have realized. Often lip service is paid to the ‘branding’ effect of PPC and how taking up more of the SERP real estate improves organic CTR but it is fascinating to see this bear out in hard data.

For the brands I have analysed the incrementality of non-brand paid traffic varies between 93% and 134% and is around 115% on average, which means your non-brand spend may well be a little more profitable than it first appears.

Comments welcome.