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The State of the Australian Search Market

by Marc Elison, Bruce Clay Australia, February 16, 2010

In order to better serve subscribers around the world, the Bruce Clay, Inc. SEOToolSet Newsletter has partnered with Bruce Clay Australia to feature news and events from the fast-growing Internet marketing industry in Australia. Be sure to look for this international news and content, which will be identified with an icon of the Australian flag.

Australia has always had a healthy obsession for a few things that make this country great. Things like your favourite sports team, a great day at the beach and a backyard BBQ, are topics that can consume a large amount of time and conversation. There is one oddity that continues to boggle my mind, which is the focus on PPC when it comes to online marketing spend with lower regard for other search activities, like SEO for example. Even now with more and more knowledge emerging it seems that PPC still has the advantage on SEO in Australia by a large margin.

The Market

When online marketing came to the fore a few years ago, the benefits and how to implement PPC were almost immediately understood while SEO was portrayed as a mystical black art, with a bunch of geniuses sitting in a closeted room deciding the movements of Web sites up and down the rankings. Even now with more and more knowledge emerging it seems that PPC still has the advantage on SEO in Australia by a large margin.

Specific search spend figures for the Australian market are a little hard to come but IAB reports that the total search spend was around $900 million for 2009. Of that figure, the brain's trust at Bruce Clay Australia believes that approximately $100-$135 million is spent on PPC management fees (that doesn't include the actually money spent with Google and other services for actually buying the keywords) while roughly $30-$40 million was spent on SEO billings. SEMPO International 2008 data indicates that out of 100 percent of search spend, 87 percent is spent on paid placement (PPC) while the remaining 11 percent was spent on SEO (the remaining budget was spent on paid inclusions and SEM technologies). Yet PPC is said to yield a much lower volume of traffic. It is estimated that it is that 70 percent of Google's search enquiry click-throughs are to search listings provided by the 'natural' search results. So people are more likely to click through to 'natural listings' and it has a significant long term ROI benefit so why do companies and agencies insist on using the majority of their online spending budget on PPC .

Why PPC Dominates

Well for one PPC is a lot easier to explain and understand than SEO, especially when you are trying to explain the differing concepts to a client with limited expertise. Spent $5,000, made $20,000 is a lot easier than explaining that the new optimised content you have written had gained 1,000 visitors and 875 uniques with a decreased bounce rate due to the longtail traffic targeted. Another reason for the promoting of PPC over SEO is that the ROI is actually easier to measure with PPC campaigns. PPC is more like traditional billboards than SEO so traditional advertising agencies have an easier time understanding it as an old fashioned media spend and it's easier to recommend and deliver to their clients.

SEO also needs more feedback and initiative from the clients' side. It means working with the client to conduct keyword research and may even require substantial technical investment on the client's Web site to make it 'SEO friendly' whereas with PPC, clients can have a more peripheral role with the running of the PPC campaign with less demands placed on their time and resources.

Yes, PPC results are immediate and the budget can be controlled. Yes, you can geo-locate advertisements to appear in certain states and towns. Yes, PPC campaigns are relatively easy to implement and fairly easy to measure. However, many reports indicate that the long-term ROI of PPC campaigns are limited, while the opposite occurs with regard to natural or organic traffic (as can be seen from this graph to the right from elliance.com).

Why SEO is Starting to Fight Back

The good news is the tide is turning, a quick Google trends search worldwide shows how SEO has slowly eroded the lead that PPC has had and even overtaken it (red is "PPC" while blue is "SEO"):

The chart below is for Australia and shows a similar phenomenon as to what is happening worldwide (red is "PPC" while blue is "SEO"):

A report from Eyeblaster in October 2009 found that "Australia and New Zealand are among the least likely nations to click or dwell on online display advertising". The explanation given by Eyeblaster was as follows "In less mature markets, where users are novice in online advertising, they receive ads with more open arms. When the market matures, the users' fatigue together with increased competition for their attention reduces engagement significantly. The users' propensity to engage with ads should be taken into account when comparing benchmarks between geographies and verticals."

Essentially Australia is becoming more 'ad-blind' and this is extending to PPC advertisements. SEO has traditionally been giving a bad rap, and the constant flaming efforts by some people in the industry to create linkbait certainly have not helped. However, there is a movement growing behind the art of SEO these days and education is the key. More and more CEOs and CMOs are becoming educated due to more and more SEO information filtering into the mainstream news. More SEO companies are also taking it upon themselves to educate potential clients through free and paid training sessions. The decision makers are beginning to see the value of SEO over PPC, if they need some further proof, here is a great infographic from DIYSEO.

PPC is also becoming more expensive. With more and more companies becoming active and visible in the online realm, more bids on terms will push prices for high visible PPC positions higher and higher, good for Google, bad for companies using PPC to advertise their wares. In fact research suggests that the cost of popular keywords on Google has increased by up to 300 percent in the last three or four years in Australia. SEO has been criticised for its lack of transparency in the past, i.e. how and what exactly we do to help our clients achieve SEO key performance indicators. The industry as a whole has recognised this and most reputable SEO services providers have tried to make their workings as clear and transparent as possible to appease any uneasiness associated with the so-called "smoke and mirror" approach of the past.

The Future

I have a dream. I have a dream where PPC and SEO can exist peacefully and co-inhabit our online world; where these two technologies will be used together to create a symbiotic relationship that will increase ROI for the companies and agencies using them. A recent report by Frost & Sullivan states that "Search Engine Marketing (SEM) and Search Engine Optimisation (SEO) continue to attract advertiser spend in Australia and in a change to previous patterns, the two strategies are becoming more widely adopted simultaneously rather than exclusively" and I think that's a pretty good direction for the Australian online market to be moving in. Studies shown by iCrossing show that clicks, actions, orders, page views, visitors and time on site all increased when SEO and PPC were used together in a complimentary fashion.

I myself am an organic search evangelist. It's something I live and breathe every day. Sometimes I want to shout from the rooftops Gordon Gecko-esque "SEO is good", and a strange shift is slowly happening. Many other people around Australia are starting to feel the same way. We can see that by the way that SEO is catching up to PPC in not only ad spend but searches and mentions around the Web. The more transparent we make the SEO process and the better the education and news around SEO becomes, the more traction it will get and I can't wait for SEO attain its true place alongside PPC in the Parthenon of online spend.


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