I was reading through an interesting academic paper about a new approach to improving the efficiency of sponsored and organic search performance and came across two interesting statistics.
First, the impact of appearing in the first page of search results in extremely potent. According to analysis conducted by the authors on a data dump from Microsoft’s Search team, the top-ranked link on the second page of search results is, on average, 65 times less likely to be clicked than the last-ranked link on the first page of results.”
Second, the sponsored search market is highly concentrated. In analyzing 10,000 advertisers, the authors found that fewer than 5% of the advertisers got 66% of the clicks available.
The data drives two connected conclusions. First, that driving organic search results on the first page of a search engine has a significant economic benefit for a marketer. At the same time, relying on sponsored search requires a high degree of intelligence in selecting relevant terms, in order to increase positioning among the top sponsored results.
The paper presents an approach to determining the co-occurrence in words in order to improve efficiency in both organic and sponsored search. The conclusions point to a direction of using increased semantic intelligence, along with clustering algorithms that are inspired by complex systems theory, to understand the organization of content predicted by patterns of consumer queries. The chart above presents a graphic visualization of the impact of correctly identifying related search terms on click-thru rates.
The math is fairly complex and the research esoteric. You can review an abstract of the paper, titled Complex Dynamics of Sponsored Search Markets, by Robu, La Poutre and Bohte, here.
For those of us who want to know what to do right now, the direction is fairly clear: Investment in organic search, which is largely driven by fresh and relevant content, will have a far more certain pay-off than investment in sponsored search at a relatively lower cost.
