September 28, 2006, 12:00 AM

Conversion rate off paid vs. organic search about equal, says WebSideStory

Analytics provider WebSideStory reviewed 57 million searches to find that paid search converts at a rate only 9% higher than organic. The two play different roles in acquiring customers.


How good is the conversion rate off paid search vs. organic search? About equal, according to a new study from WebSideStory Inc., which determined in data drawn from users of its on-demand HBX analytics application that conversion off paid search was only about 9% higher than conversion off organic search.

In a study based on eight months of data from the B2C e-commerce sites, WebSideStory found that paid search terms on engines such as Google, Yahoo and MSN had a median conversion rate of 3.40%, compared to 3.13% for keyword terms found by organic search. The study, using data from January through August, analyzed more than 57 million search engine visits. Order conversion took place within the same session as the search.


Both forms of search resulted in conversion rates exceeding the average 2% conversion rate at B2C sites. The findings underscore that both paid and organic search – along with other marketing channels – have a place in online customer acquisition campaigns, says Rand Schulman, CMO at WebSideStory.


Schulman compares the roles of paid vs. organic search to the perceived value in consumers’ -- and therefore in advertisers` -- eyes of an ad purchased on the back page of a newspaper versus an editorial story on a product on the same newspaper’s front page. Because the advertiser does not control the editorial content on the front page – equivalent to organic search – that content has to make a compelling argument ever to see print, says Schulman. “The assumption is if it does, it is going to have a higher content value for the reader,” he adds.


However, the advertiser-controlled back-page ad placement -- equivalent to paid search – also is critical to moving the reader toward purchase: it contains offers, a specific call to action, and other elements that are absent from the editorial content but needed to allow consumers to complete a purchase. “One needs multiple touch points if it`s an acquisition marketing campaign,” Schulman says.


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