Search and Display Ads: Closing the Loop

Internet Marketing

Ian Lurie Dec 21 2006

Search is great, but search and paid ads are even better. We’ve always assumed that was true. Now two separate studies seem to bear that out.

closing the loop

Yahoo, Avenue A/Razorfish and comScore have worked together to research how display and search ads reinforce each other. The conclusion? A combination of paid and organic search, as well as display and search advertising, leads to more traffic and far higher conversion rates.

So grabbing the #1 spot on Google for ‘widgets’ is great, but it doesn’t mean you should shut down your paid search campaign just yet.

You can read more about the studies on dmNews.

Question is, does any of this apply to you?

Watch Your Wallet

Don’t just run out and spend thousands on display ads, though. Let’s take a quick look at who sponsored these studies:

Yahoo. Of course they want to sell more ads. If organic, unpaid search is all we need, why would we buy any? They needed to prove that paid advertising still has a place, even if you have strong organic search rankings.

Avenue A/Razorfish. They’re an ad agency. Their clients pay them, in part, based on ad dollars spent.

These reports do pass the smell test, but how do you make sure you’re striking the right balance between paid ads and natural search rankings?

Test over time. Keep track of just when you purchase or modify a display or paid ad. Watch sales over time and see if sales improve. If sales from natural search clicks increase even though your ranking hasn’t, chances are your display ads are helping.

Be skeptical. Don’t just assume that the paid ads are helping, though. Get consumers in and test how they respond to the combined paid- and unpaid ads. Prove your point before you spend $10,000 on a paid ad campaign.

Be holistic. You already measure your individual campaigns’ ROIs, right? Well, measure them all together, too. If the return on investment for organic search, paid search and display ads combined is 3:1 or 4:1, you probably owe some of that success to your paid campaigns, even if you can’t track it 100%. You can prove it, too, by testing over time.

An Example

We started working with a client in November of this year. Their sales were flat. We revamped their pay per click campaigns and increased their spend a bit. At the end of November, they’d had a record month, but they’d only seen a 1.5:1 ROI on their paid search. They saw that and panicked, until they realized that sales increased the day the new paid campaign launched, and realized that their overall ROI, between search and paid ads, was over 5:1.

I was still a little skeptical, though (it’s my job). So we reduced their spend for a day in December. Sales dropped. Then we increased it again. Sales rose. Clearly paid search was contributing in ways that couldn’t be directly tracked.

Where Does this Leave You?

There’s very little question that paid online advertising and organic search rankings interact. That doesn’t mean you have to jump in with both feet, though. Test it, play with small ad buys, and see what your results are. Online advertising is relatively inexpensive. A smart buyer won’t risk much, and the results could be tremendous.

tags : conversation marketing

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