I'm often asked about the best method of getting quality visitors to a website; is it Pay-Per-Click Advertising or Search Engine Optimization? Without taking into consideration many other techniques that generate high-quality visitors for a website, let me address the PPC vs. SEO question.
Before getting into this, let me start by saying that for most business owners with a website, their first question should not be PPC or SEO, but what do they want to happen when someone visits their website. Does the website owner sell products? If so, are they simple products that can be purchased online with a credit card, with minimal product information, with just the need to answer basic questions using an FAQ page? Or are the products more expensive and complicated, potentially requiring a phone call or possibly a visit from a sales person? The same types of questions need to be answered for service businesses as well.
For low-cost products that are very competitive, meaning there are lots of websites that sell similar products, PPC may be too expensive on a per-click basis. As an example, the keyword/phrase "replacement ink cartridges" has lots of bid competition on Google AdWords (over 100 PPC advertisers). One click on a popular PPC keyword/phrase like "replacement ink cartridges" on Google will cost the PPC advertiser $3-$5 or more.
If you are selling a $15 ink cartridge, your cost- of-sale would range from 20-30% if you are paying $3-$5 per click. (That is if 100% of everyone that clicked, purchased.) If five visitors land on your site from PPCs and only one purchases (a conversion rate of 1:5), you will lose money by spending $15 to $25 for that traffic. That is not to say that repeat orders and multiple cartridge purchases wouldn't help, but it might take you months to find out that PPC won't give you the sales you want at a reasonable cost–of-sale.
Don't give up on PPC just yet. I suggest that if you can purchase PPC traffic from Google and other engines for less-popular (less expensive) keyword/phrases related to your products, you should do so. Then test to see if your conversion rate per sale is acceptable. If it takes eight clicks at $0.25 per click, or $2.00 total, to obtain a purchase of one ink cartridge at $15 (a conversion rate of 1:8), your cost-of-sale would be just 13.3%. That's far better than losing money with more expensive clicks. If your PPC bids are lower, you will most likely get fewer clicks, but with your conversion rate staying the same, you will lower your cost–of-sale and make more profit.
I'm not anti-PPC; they do have a place in almost anyone's marketing mix to maximize market reach while holding down cost. The key to PPC is to test, test, and test!
However, most users of search engines know that when they see the words "Sponsored Links" or "Ads related to . . ." they are looking at a list of paid advertisements and not real search results. Most searchers click on the real search results, the "Organic Search" results, instead of the "Sponsored Links" or Ads related to . . ." listings.
On the other hand, one professionally written and crafted, optimized SEO web page on your site that gets listed high in the search results on Google and other major search engines can generate 100s to 1000s of visitors to your website. That same result would have cost $300 to $5,000 if you went with PPC. If you have deep pockets like large companies, then go ahead and spend your money on PPC.
If you have a professionally written SEO page created for you, it will appear high in the search results on all major search engines, not just Google, but MSN, Yahoo, AOL, Netscape, ASK, and others. When utilizing SEO pages it doesn't matter if someone clicks on the search engine link for a page 100 times or 10,000 times, you get all of the traffic without paying anything to the search engines.
What is the answer to the question of which is better, PPC or SEO? The answer is there is no best one. My recommendation for all clients is that they need to use a mix of PPC and SEO. Use PPC for the low-cost keyword/phrases and SEO when the cost for PPC is greater than $0.50 per click. If a keyword/phrase is likely to get 100 or more clicks per month at $0.50 per click, your monthly cost will be $50 per month. Multiply that times 10 keyword/phrases and you will be paying Google or other PPC engines $500 per month or $6,000 per year. Ouch!