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On paid vs. organic search investment

August 18, 2010

I was recently admitted into the prestigious Google Technical Council, which is a high honor. Nine B2B tech companies each get one delegate, usually the person in charge of search strategy for the company. I am now the IBM delegate, with all its privileges and obligations. The privileges include sharing best practices with my counterparts who, by the very nature of their work, share the same challenges I do.  One of my obligations is I can’t talk publicly about what goes on behind closed doors at Google.

This leaves me with cocktail-hour conversations with anonymous counterparts to share with you on this blog. At the recent council meeting in San Francisco, we had cocktails at the waterbar across the street from Google’s offices.  We slurped oysters and washed them down with beers from the Gordon Biersch Brewery, also across the street from the bar. I was enthralled by the ships and sailboats passing under the  the Bay Bridge with puffy white clouds overhead and a nice breeze blowing towards Oakland. I was sad when the group broke up and we all trudged back to our hotel rooms, or to early SES events. Before my happy hour was over, I had numerous memorable conversations with my esteemed colleagues about our mutual challenges.

Just before we left the table, a colleague made a bold statement that I’ve been trying to come to grips with ever since: “I cannot possibly invest enough in the enormous opportunities from search–both paid and organic.” The subtext of his words are, don’t see paid and organic as competing for funds. Convince your executives to invest in both.

Fighting for dollars

The conversation was about how many marketers in our companies prefer to invest in paid search over organic because they can demonstrate their return on investment, cost per click and all other important metrics finance cares about. Yet paid accounts for a little more than 1 percent of traffic to our sites. Against this, I have always argued for more investment in organic, which is not nearly as traceable, but accounts for between 30 and 40 percent of our external referrals. Even though we can’t demonstrate organic ROI to the penny, it ought to be several times what we get from paid. Still, we have not invested in organic as heavily as paid precisely because it is not as measurable.

The idea my colleague proposed is to take from other media to fund search. He has been in marketing for a leading tech company for years. He’s bought tens of millions of dollars of TV, print and event advertising over that time. And none of those media offer anywhere near the ROI that paid search does.Paid search also offers a degree of accountability that no other advertising medium offers. He still does some print advertising, but he has consistently shifted his media budget towards paid search and he has never seen a slowing in his ROI.

He also agreed with my assessment of organic: He’s confident that the return on investment is roughly 30 times what he gets from paid, even though he can’t always demonstrate that. He found it odd that we cannot demonstrate ROI from TV or print either, but companies still readily buy ads in these media. Unlike these media, we can at least track referrals from organic search, even if we can’t demonstrate to what extent these referrals result in revenue. To this I offered the obvious (my specialty): Marketers continue to buy TV and print because they are sexy. Organic is just content and content is boring to many marketers.

Despite my experiences with budgets, I was encouraged by his bold claim. I still want to figure out how we can do a better job of demonstrating organic value. The simple reality is it will always compete with sexier media for funding. But maybe, just maybe, executives with foresight will see the wisdom in funding organic for the huge opportunity it represents, regardless of whether we can make an air-tight case for it.

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