You’ve devoted considerable time to SEO and take great pride in constantly providing your audience with engaging content. Your website’s landing pages are optimized and you have a high PageRank in search results. Unfortunately, you’ve hit a wall and can’t generate any more traffic through organic search. You’re entertaining the idea of running a Pay-Per-Click (PPC) campaign to increase traffic but you’re concerned that it might cannibalize your organic search results. What is search cannibalization and how do you measure it?
What is Search Cannibalization?
Search cannibalization occurs when you already rank high in organic search results for a given keyword or keyword phrase and then see that organic traffic decline after you’ve enacted a paid search campaign. While it can be somewhat alarming to see your organic traffic decline, it doesn’t mean that you’ve wasted money on paid search. In fact, it’s often the exact opposite. However, you won’t know until you determine the net benefit of adding paid search to your existing strong organic search position.
Average Monthly Organic Search Results
Our example is a relatively simple one that could apply to an e-commerce website. However, this process can just as easily apply to any situation that involves measuring a website’s click-through rates (CTR) or conversion rates, etc. In this case, the company generates 5000 clicks (inbound traffic) per month from its strong organic position.
The company’s website conversion rate is 2.5%. Their sales are simply 5000 multiplied by 2.5%, which is 125 units sold. Their average sales value per order is $35.00, which means their total revenue for the month is $4,375.00.
First Month Running PPC Campaigns
In your first month of running paid search, you generate 2600 clicks. Your website’s conversion rate stays stable at 2.5%. An increase in this conversion rate would imply that your online advertising campaign is attracting more qualified leads. A decrease is a sure sign that perhaps your campaign is not properly targeting the right prospect. For the sake of simplicity, we’ll keep the conversion rate as is.
Once again, your sales are simply the traffic generated multiplied by your 2.5% conversion rate, which in this case gives you 65. You again multiply the 65 by the average sales value of $35.00 to get revenue from paid search of $2,275.00.
You now need to determine the cost of the online advertising campaign you’ve run. Simply take the cost per click of $0.22 multiplied by the number of clicks generated by the PPC campaign. For our example, the total cost of the online campaign for this first month is $572.00.
Defining the Revenue Generated by Combining Organic and Paid Search
After reviewing the results of the first month combining organic and paid search, you immediately notice that the number of clicks generated from organic search declined by 650 (5000 – 4350). Again, your conversion rate is 2.5%, which means the number of sales you generated declined (4350 x 2.5%) as well, which in turn means your revenue declined from $4,375.00 to $3,806.25.
There has definitely been search cannibalization and your sales from your organic search have obviously declined. However, you’ve generated more traffic from paid searches. In that analysis, you see that 2,600 clicks at a conversion rate of 2.5% means you generated 65 sales. Keeping the same average sales value means you generated an additional $2,275.00 from paid search.
You will now combine your new organic search revenue with your paid revenue. The new total revenue is $6,081.25. It looks good and is higher than when you just relied upon organic search. The question is whether you’ve benefited from this exercise.
Did You Come Out on Top?
The final step includes taking your new combined organic and paid search revenue of $6,081.25 and deducting your original average monthly organic revenue of $4,375.00. This gives you $1,706.25 and after you minus the cost of running the PPC campaign of $572.00, you’re left with a net benefit of $1,134.25.
So, there was definitely search cannibalization. Yes, the organic revenue declined, but in the end, it simply didn’t matter. The company generated more traffic and revenue through paid search, and after accounting for the costs of running the paid search campaign, the company came out ahead by over a thousand dollars.
Multiple variables can impact the results. We’ve already mentioned what an increase or decrease in your website conversion rate after running PPC campaigns might imply. You may find your conversion rates on PPC campaigns are higher when compared to your organic traffic. They might be lower but your average sales increase. It’s important to constantly review the results of your PPC campaigns to identify possible improvements. Here are some things to consider.
When thinking of search cannibalization, think about your all-important keywords and keyword phrases. These critical search terms help customers find your business, better understand what you’re offering, gain insight into how to reach you, and most importantly, help them make a purchase.
When cannibalization occurs, it’s sometimes a result of the keywords in your PPC campaigns being too similar to the keywords in your content and website. For our example, cannibalization was a non-factor. However, trying to get as close to your original search traffic totals as possible, without sacrificing your paid search results, means you’re improving both your organic and paid search return on investment (ROI). Continuous improvement is key here.
Start by researching different keywords and keyword-phrase combinations with Google Ads. You could then run subsequent online advertising campaigns with keyword phrases you’ve tweaked. Some companies run multiple variations of campaigns and then use the same exercise in the hopes of finding that perfect combination, or put differently, that magical elixir. A small increase in conversion rates or traffic could lead to a substantial increase in revenue.
At PBJ marketing, we know how overwhelming it might be to get started with online advertising. This is why we make it a point to provide in-depth analysis on results while using our business know-how and SEO expertise to increase your returns. Call us now if you’re looking to get started with paid search.