In some of my very recent consultations, clients and prospects have been asking the difference between search engine optimization (SEO) and paid advertising, and which is better for them. With a lot of chatter lately, too, about diminishing click rates on paid advertising banners, it’s a good subject to revisit and discuss today.

You know those results that appear at the top of Google’s search pages, and in the right side bar, with the colored background and within the section entitled “Sponsored Results”? Those are paid advertising spots – - technically, those advertisers are not paying to be there; rather, they have bid a price to be paid to Google should a consumer click through the ad to the advertiser’s web site. It’s called “cost per click” or “pay per click” advertising, and it is Google’s main source of revenue. By revenue, we are talking billions, by the way.

One of the e-zines I read daily published an article this week on Google’s click rate on sponsored results, and the attendant hit Google’ stock took on that news. I’m not sure I buy the statistics or the reports relied upon in the article, but the suggestions was that consumers are clicking less on those sponsored results, and the columnist was wondering if advertisers would become more discriminating in their Google Adwords campaigns as a result.

Whether the reports are correct or not, and it’s always hard with Google because it’s a black hole when it comes to releasing internal information, I’d answer the question the same way. If you have to choose between spending your money in a CPC campaign or an SEO campaign, and you really could afford only one, I’d still recommend SEO. I would do so for several reasons:

1. Effective management of a CPC campaign requires a great deal of research on site traffic and conversion rate to calculate a “Customer Acquisition Cost.” The CAC, coupled with the average profit per order, helps you determine how much you should be willing to pay for each click. There’s a wealth of information on these formulas in our newsletter archive elsewhere on our site, and I’d recommend reading it. If you don’t know these numbers, you may well be bidding too much per click and losing money.

2. Bought traffic stops coming when you stop buying it.

3. Effective SEO that achieves the desired results (high organic rank positions) is far more permanent and far less expensive to maintain if you engage in SEO Best Practices of regular content growth, solid keyword research/monitoring, and a regular frequency of content updating.

Sometimes, too, those Best Practices mean simple and modest adjustments in home page content, like writing a good heading for the H1 tag, and some supporting copy for the paragraph beneath it. And, sometimes a simple and modest adjustment like that can bring quick results. Earlier in the year, we wrote some new copy for a Irish web site, www.golfglider.com, with structure (headings, paragraphs) after researching their business and applicable keywords. Within weeks, the site moved to the #1 position on Google for one of their top keywords. Go to www.google.ie and search the keyword “electronic golf caddies” – - – www.golfglider.com will be your #1 result. Try “electronic golf caddy” and you’ll find the site is ranked #3. Before those simple adjustments, the web site was not in the top 20 results. By engaging in SEO Best Practices, Golf Glider should be able to maintain those high rank position in the future.

As I said, if I had to choose one over the other, I’d spend the money on search engine optimization for my site. I would recommend you do the same. The results will be more permanent, and the cost to maintain will be less. The methodology really does work.