A study conducted over three months by Professors Anindya Ghose and Sha Yang from NYU Stern, has been released this week and it proves that the presence of both organic and paid search listings can have a positive affect on paid search performance.

Ghose and Yang conducted tests using an “unique panel dataset of consumer responses” to hundreds of keyword phrases searched for on Google, collected from one of it’s major advertisers, a nationwide retailer, over a three month period.

The study is the first of it’s kind, as it is the first to test the impact of both paid and organic search engine advertising on consumers, advertisers and also search engines and has revealed some interesting results:

  • Firstly the study has shown that, on average, the impact of organic results on paid advertising is 3.5 times stronger than the impact the presence of paid search advertising has on the organic results. This is most likely to be due to the fact that search engine users trust sites that rank higher in the organic results, more than the ones just using paid ads. Most users realise that if a site ranks highly for a particular phrase in the organic results then it must be a ‘good’ site and therefore the paid ad should be worth visiting.
  • The study also revealed that when an advertiser’s website appeared in both the organic and paid search results, that this helped to increase the advertisers’ profits by 16.5%, when compared to when only one of the paid or organic results were present.
  • The report also proves that the presence of both types of results on a search engine results page has a positive affect on, not only click-through-rates, but also conversion rates:
  • Compared to just a natural result appearing, click through rates were up an average of 5.1% when both paid and organic results were present.
  • Similarly conversion rates increased by 11.7%, when both were visible, compared to when only organic appeared.
  • And finally, 54% of the total growth in revenue generated due to both ads being present was provided by paid search.

Professor Ghose seems to think that this report will encourage search engines to exploit these findings, as he has said, “these findings have important implications for the incentives of search engines to strategically modify the rankings of their organic search listings in order to boost their revenues from paid search advertisements.”

This statement is a little far fetched, as the pay-per-click listings and cost-per-clicks are not directly affected by and do not affect the organic results.

However the report does clearly show that having both paid and organic results present on the SERP’s on searches for a sites important keyword phrases can be very beneficial to advertisers’ overall revenue.

It shows that a paid search ad is more likely to be clicked on and, more importantly, convert, if the website also appears in the organic results than if it didn’t.

This shows that advertisers should not only focus their budgets on paid search, as time and money should always be spent on SEO to achieve higher organic results, as this will not only generate free clicks and conversions but increase the performance of the paid ones.