As PPC Costs Rise, Brands Diversify with SEO

Paid search has always seemed to be the marketer's precision tool: fast, focused, and financially predictable. The go-to tool in most marketers' toolbelts.

Or at least it was.

Between the pandemic and new data privacy regulations, search engine marketing (SEM) has grown less effective and less dependable. Companies looking for alternative means of maintaining a digital presence in an increasingly virtual economy are naturally turning to organic search and SEO.

But they're not looking to replace SEM. They're looking to supplement it by diversifying with other channels.

Traditionally pitted against each other in a tug-of-war for marketing budget, SEO and SEM are emerging as equally essential components of an effective, integrated marketing mix. In this post, we'll explore why leading e-commerce brands are doubling down on SEO in 2022 and how organic search insights can support paid campaigns.

Companies pay more than ever for fewer clicks

The number-one reason marketers are revisiting their SEO strategies is that paid search has become more costly than ever before. Much more costly.

When COVID-19 put the world on lockdown in 2020, adults started spending 28% more time online, which in turn sent pay-per-click (PPC) competition into overdrive. The sudden lack of supply has caused cost-per-click (CPC) rates to skyrocket. US companies are now paying more for fewer clicks than they were pre-pandemic.

While advertisers were reckoning with diminishing returns, Google reported $61.2 billion in ad revenue for Q4 2021, a $15 billion year-over-year increase. According to Gareth Cleevely, senior VP and head of search at Dentsu Media U.S., CPCs in 2021 were "some of the highest we've seen in the past four years."

Brands are understandably struggling to justify the ad spend in this keyword economy. While they wait for the market to stabilize, many are choosing to reallocate budget to organic search.

The third-party cookie crumbles

Paid search isn't just delivering low (and increasingly unpredictable) returns, however.

It's also entering uncharted technological waters. Changing expectations around digital privacy, catalyzed by the GDPR and Apple's App Tracking Transparency (ATT) feature, have led browsers to begin phasing out third-party cookies.

Cookies have been a staple of targeted digital advertising for more than 25 years, so marketers are bracing themselves for a protracted adjustment period. Google Chrome, which occupies two-thirds of the browser market, plans to phase out support of third-party tracking cookies by 2023, replacing them with Federated Learning of Cohorts, or FLoC.

Unlike third-party cookies, which give advertisers detailed insight into consumer behavior (including which sites they visited and when), FLoC targets groups of consumers that share a common interest, such as classic rock or household appliances.

Marketers worry that this comparatively general targeting will reduce their ads' relevancy and devalue paid search. After all, someone interested in household appliances will be unlikely to click on a washing machine ad if what they're really looking for is a blender.

E-commerce leaders turn to SEO for stability

This period of volatility and uncertainty in search engine marketing has e-commerce leaders looking to SEO as a means of shoring up their marketing portfolios.

Whereas PPC guarantees a near-immediate payoff, SEO promises compounding returns over time. Paid marketing campaigns inevitably reach a point of diminishing returns when competition over a keyword becomes too costly to continue. SEO, conversely, takes time to build but delivers higher and higher yields the longer it matures.

As notable growth advisor Eli Schwartz puts it in Product-Led SEO, "Paid marketing is like renting a house; you never build any equity. SEO is like owning a house; you may have a big mortgage, but every month you earn a bit more equity in your home."

This is why platforms like Botify can deliver an average 584% ROI in three years' time.

E-commerce leaders like Alltricks, a French bicycling and running equipment retailer, are taking this opportunity to diversify their marketing portfolio. At this year's Hubday Retail & E-commerce conference in Paris, Alltricks CMO Yohan Michel said SEO was critical to reducing the company's dependence on advertising as a means of securing their position in search.

"Nowadays, on mobile, you really have to be in the top five, or even in the top three results," says Michel. "Because between advertising and Google Maps, natural results are almost invisible."

But the precipitous rise in CPC has made SEO the more cost-effective way to compete for visibility, particularly on mobile. "We've really seen the cost per click on Google Ads skyrocket lately," he continues. "And so the best way to get away from that, I would say, is to master your organic search strategy."

We've really seen the cost per click on Google Ads skyrocket lately. And so the best way to get away from that, I would say, is to master your organic search strategy.

Yohan Michel, CMO of Alltricks

With PPC going through a period of instability, marketers stand to see higher returns from their paid campaigns if leveraged in tandem with SEO. As Gartner maintains, "It should never be an either/or discussion with SEO and SEM, because each will elevate the other's performance with an integrated strategic approach."

How SEO supports and augments SEM

SEO enables SEM by endowing your advertising with the glow of earned trust, ensuring a positive website experience for ad targets, informing paid keyword strategies, and serving as a resilient and evergreen pipeline source.

1. Consumers are more likely to trust your ads if they know and trust your brand. SEO is fundamental to promoting brand awareness, and brand awareness increases the likelihood that potential customers will click on your ads. A survey of 506 people by research firm Clutch found that 26% clicked on paid search ads because they mentioned a familiar brand. Not only that, but when searchers see the same brand appear in both organic and paid results, it lends the ads an added air of legitimacy while confirming that, yes, yours is the brand they seek.
2. SEO drives retargeting campaigns. Retargeting website traffic is one of marketers' highest converting paid channels (and, conveniently, relies on first-party cookies rather than third-party cookies). The more people who visit your site, the more you can scale your retargeting campaigns elsewhere on the web. Broadening your website's visibility with SEO accelerates this channel's growth potential.
3. Organic keywords inform paid keyword campaigns. Paid ad conversions tell part of the consumer intent story - but only part. This boils down to the disparity between inbound and outbound tactics: paid ad conversions confirm your hypotheses around buyer intent while organic conversions broaden the pool of possible intents. During this period of high volatility in PPC, organic keyword research could prove especially valuable in detecting shifts in demand and, therefore, new paid search opportunities.
4. SEO "equity" offsets SEM losses. Ad budgets can be astronomically high, and not every click leads to a conversion. When paid ad campaigns fall short of expectations and deliver disappointing returns, good SEO fundamentals will ensure your overall digital presence doesn't decline as a result. Even if a paid ad campaign goes poorly, SEO can sustain your digital marketing footprint while replacing some of the money spent on ads.

E-commerce leaders taking this integrated approach to digital marketing know that investing in SEO, while a long-term strategy, does not come at a cost to short-term gains. On the contrary, a full-funnel approach to SEO, coupled with SEM, promises steadily increasing perennial returns resilient to changing economic and technological tides. To learn more about how Botify is helping enterprise e-commerce brands weather the storm, get in touch.