One question we get a lot is whether investment in PPC drives SEO lead volume. It’s a question online marketers think about because there seems to be a relationship between the two.
We have a large data set and a talented data scientist at Bizible, so we decided to investigate the relationship between PPC ad spend and leads that come in through organic search.
Can we prove there's a direct relationship? Can we rule out other factors like company size, industry sector, business model, and marketing spend?
We tried. And we learned a lot in the process.
Is There A Causal Relationship Between PPC and Organic Search?
The short answer is: it's complicated.
While we found a statistically significant correlation for a large number of companies, it’s not enough to establish a causal relationship.
However, the “gotchas” from our analysis provided numerous take-aways that help us better understand the complexities in online marketing.
First, we ran some basic counts of leads from PPC, leads from organic search, and ad spend.
Here’s an example from a SaaS company (whose identity is omitted).
SaaS Company's Lead Volume and Ad Spend
Ideally we want these lines to have a positive direct relationship, i.e. when ad spend increases, the number of leads from paid search and organic search should too.
We ran these descriptive statistics for nearly 200 companies.
Here’s what ours looks like:
PPC Ad Spend, PPC Lead Volume and Organic Search Lead Volume For Bizible
You can see that when our ad spend increased so did our PPC lead volume, although in late 2014, that number dropped.
There are a number of factors that can affect the number of leads generated via paid search and organic SEO. For example, offline marketing campaigns, average deal size, and sales cycle length can affect lead counts as people search and click for on our ads.
Despite these factors that go unaccounted for, we were curious if there is a strong correlation. So we ran a correlation analysis for all 200 companies.
What Does All That PPC Data Say?
In the chart below you’ll see the correlation between PPC ad spend and organic search lead volumes for 200 companies. We want this number to be positive (when spending goes up, so does the number of leads derived from paid search). This is Y-axis.
Click the image while holding command for Mac or control for Windows to view it in full size in a new tab.
We also ran the correlation between paid search leads and PPC ad spend. This is the X-axis.
Industry sector and significance levels are indicated by color and shape.
To answer the primary research questions, we want companies to be in the top right quadrant, and farther to the top right corner. Here the correlation is strongly positive. This means: when a company spends more it is correlated with more organic leads and increased paid search leads.
We want the color to be purple, green or blue, indicating statistical significance.
This is a lot to take in. So let’s break it down and discuss in more detail.
A Deep Dive On PPC and SEO Lead Volume Data
Let’s talk about the top right quadrant, shown below (click to enlarge).
When companies are close to zero, the data follows a horizontal flat line. This means when they spend more nothing happens, they don’t get more leads.
The thing with correlation is that it only measures how closely data follows a straight line. There could be trends that follow an exponential curve, a U shape, or a wave. Here, correlation wouldn’t accurately capture these trends.
You can see whether the results were statistically significant, a measure of whether the result can be attributed to chance. Though this could mean the data set from the company was not clean, or there wasn’t enough data.
Our plot only captures whether the correlation is positive or negative, i.e. when spending goes up and lead volume goes down (negative relationship), when spending goes up and lead volume goes up (positive relationship).
A company’s position on this chart does not measure the order of magnitude of the relationship between spending and lead volume. For example, company A can spend $1,000 and generate 100 more leads, while company B has to spend much more, say $10,000, to generate 100 leads. This is the steepness of a trend line plotting spending and lead volume.
What’s It Mean Overall?
Let’s look at the plot again. The lower right quadrant shows the companies who spend more in PPC and generate more PPC leads but less organic leads.
The lower left quadrant shows companies who spend more in PPC but get less leads from both channels. Frightening.
The top left quadrant shows companies who spend more on PPC, get less PPC derived leads but more organic leads.
You’ll notice they are the pink color, which indicates the results weren’t statistically significant.
You’ll also notice that many of the companies in the middle of the plot are also pink. Their correlation results were not statistically significant.
This is good. We want to companies to be in the far right of the plot, quadrants 1 and 4. And their correlations to be statistically significant. This means they either enjoy more PPC leads, or more PPC leads and organic leads.
Here’s a reminder of quadrants.
We’re data nerds and revenue geeks here at Bizible. So we had a lot of fun doing this analysis. We’ll be sharing more analyses too, stay tuned!
Special thanks to our data scientist Kai Lau for running the analysis for us!