Buying Paid Keywords When Organics Are Free

A number of people followed up to last week’s ‘Bidding on Brand Terms‘ post and asked how the logic applied to the broader world of buying PPC keywords where you already have organic rankings. Generally I think the logic does apply, but with a slightly different set of rules and conditions:

• If an organic keyword is highly profitable, I would assume the paid keyword would be profitable and incremental unless proven otherwise. There certainly could and will be exceptions – if it’s a highly competitive keyword with insanely high prices for example – the competitive PPC bidders may be acting irrationally and you may be better off to take the free traffic and let them kill each other. Another example might be broad terms with a lot of organic clicks and just a few conversions. But determine this via tests not assumptions.
• Cannibalization should be more than offset by incremental traffic. Yes some people who click your paid ad would have clicked your organic ad. But many who click your paid ad would not have clicked your organic ad. I firmly believe that there are paid clickers and organic clickers and a smaller minority who’ll go either way.
• Marginal Net Revenue is all that matters. If you’re making $1000/day with organic alone, and make $1200/day (net profit not gross revenue) with organic plus paid, then organic plus paid is better. The internal fact that some of that revenue could have been had at a lower acquisition cost is irrelevant.

And More Importantly Organic results are all exact match. When you rank highly for an organic search, in most cases you don’t rank equally well for any/many of the thousands of variants of that query. Every organic result is computed independently. But when you buy that same organic keyword as a paid keyword, you get to use match types to cover hundreds or thousands of queries – the vast majority of which you’d never win – or perhaps even appear on the first page for organically. So when you find a winning organic keyword and transfer it to paid, you’re not only buying space on that results page, but if done correctly (by expanding the word or phrase and using match types fully) you can leverage that winning word 1000:1 or more.