Organic traffic isn’t necessarily worth more than paid traffic
After several years in the industry of buying and selling websites, and in my current position running a website due diligence agency, I tend to speak to website owners with various levels of knowledge and experience.
This article aims to break a widespread myth that sites getting organic traffic from search engines are more valuable than those getting traffic from Pay per Click or Display Ads. A large number of webmasters and buyers alike, even experienced ones, tend to severely over-estimate the value of organic traffic, as opposed to that of paid traffic.
To a degree, it’s understandable. I’ve even seen several self-proclaimed ‘experts’ go as far as suggesting first time website buyers to stay away from any sites that rely on paid traffic and only deal with those that receive “natural” organic traffic from search engines.
From the last 50 or so website acquisitions that I’ve overseen either as a broker or as a due diligence consultant, the sites that had over 70% of their traffic originating from Google sold, on average, for a multiple 37% higher than those that relied mostly on paid traffic. In other words, buyers are still willing to pay a premium for sites that get organic traffic.
We’ll look at some of the main reasons why in reality organic traffic is far less valuable and more risky than its paid counterpart.
1. Overall Instability and Risk
Not many site owners realise that there’s an extremely high degree of risk and instability associated with search traffic.
Even sites that have had stable rankings for years can have their traffic disappear overnight as a result of a small change in the search engine’s algorithms (and if that engine happens to be Google, those changes can happen often!). Contrary to popular belief, this is a risk not just for sites that utilise unorthodox or blackhat SEO tactics but also for the perfectly legitimate ones.
Having a quick look around webmaster forums at the time of a major Google update will give you a good idea of the seriousness of the situation. Every update leaves hundreds of thousands of website owners puzzled as to why the rankings of their once-so-popular websites have diminished overnight.
With paid traffic however, none of these risks are present.
2. Due Diligence Burden
Needless to say, websites that have been aggressively “SEO-ed”, and especially those that have used “black hat” SEO tactics, are at an even greater risk of having their search rankings disappear overnight.
Changes in search rankings often take time to come into play, so when you’re buying a site it’s important to not only be careful with the SEO that you will perform on your newly acquired website yourself, but also take a close look at the SEO activities that the previous owner has performed. Often enough, illegitimate SEO strategies only backfire months (or sometimes years) later.
Because of this, the buyer’s due diligence burden is usually much higher when dealing with search traffic than it is when dealing with paid traffic. This is both because traffic characteristics need to be looked at more carefully and because it can often take extreme effort and great investigative skills to spot potential issues and illegitimate SEO tactics that have been used in the past but are likely to backfire in loss of traffic after the purchase.
As a buyer, this results in quite a lot of work, and as a seller, it’s in your interest to make your buyer’s life as easy as possible.
Naturally, this problem doesn’t really exist with paid traffic. Provided you can verify the source of the traffic, how much it costs and how well it converts, you can usually assume things will continue to go in the right direction.
3. Fighting Competition
Another important aspect to bear in mind when acquiring a site that depends overly on search traffic, is that you’re often limited when it comes to competing with other sites ranking for the same search keywords.
With paid traffic, who gets the top spot is mostly decided on which of the competing advertisers is willing to pay the higher price.
The size of your ad budget of course depends on how good you are at converting your leads into business, which ultimately depends on how good you are at running your business!
And that’s exactly how it should work. The website that is better at what they do gets more business. With search however, it’s a whole different story. If your site relies on search traffic then it’s effectively the search engine that decides whether the buyers should go to your site or your competitor’s site, and there is very little you can do about it other than more SEO (but this comes with a completely new set of risks).
4. Scaling Up
Something that many webmasters only realise once they’ve been running a site for a while is the lack of possibilities for scaling up organic traffic. Quite obviously, the only way to increase the traffic that your site gets from search is moving up in rankings. However, this is more often than not an extremely difficult task that can result in the exact opposite if done incorrectly.
At the same time, most paid advertising campaigns can be scaled up quite easily. If you’re running Pay Per Click then you can simply increase your budget or widen your selection of keywords, and you’ll see an instant increase in traffic. With direct ad buys, you can sign more ad deals or increase the impression caps that you have in place for the existing ones and the result is similar.
Whilst it is also possible to scale up organic traffic sites by simply adding paid traffic to the equation, you need to bear in mind that when buying a site that is already getting paid traffic, you’re also buying all of the preparation and testing that has already been done. More importantly, you will then have proof that paid traffic does indeed work for this particular site.
Often times, starting to drive paid traffic later on only results in hundreds of hours and thousands of dollars spent, simply because many websites out there could never survive if they had to pay for their leads, effectively demonstrating a flawed business model where the business is only profitable if leads are provided free of charge!
5. Optimising the Conversion Process
Last but not least, search traffic provides a poor playground for split testing and experimenting to see what works or converts at a better rate.
As a split testing junkie, I find search traffic extremely difficult to work with. Not only do search engines provide no control over which part of my site clients first see, in many cases changes done as a result of a split test can have disastrous effects on the site’s search rankings in general.
What works for your leads and best turns them into clients isn’t necessarily what a search engine deems best content.
This can create a situation where you end up optimising your site’s main landing page for conversions, only to find out a couple of months down the line that the changes that you’ve made have lowered your search rankings and as a result, the number of leads that the page is meant to convert has decreased considerably.
With paid traffic, especially Pay Per Click, split testing is extremely simple and you can run several tests at the same time to keep increasing your conversion rate.
If you’re a buyer then it’s important to see whether the site you’re about to buy depends overly on search traffic and take it into your consideration when valuing the asset and performing due diligence.
Not only can you better analyse the risks associated with the site, but an educated buyer can also use the market’s overall ignorance to pick up high quality properties that depend mostly on paid traffic at lower multiples.
If you’re someone thinking of selling your site in the future and the site currently relies on search traffic then it’s in your best interest to start diversifying before it’s too late and add in some paid traffic components. Starting a Pay Per Click campaign is a simple and straightforward process, and the nature of PPC allows you to start experimenting even on a very tight budget.
Currently, many buyers are willing to pay a premium for sites like this but buyers are getting smarter daily and because of the reasons laid out above, this situation is likely going to change in the near future.
What about you? Do you place a higher value on organic traffic, or have you learned to love paid traffic sources?
Thanks to liquidnight for the photo!