What is PPC Cannibalization ?
PPC cannibalization occurs usually when you have strong organic search engine ranking and you are running a PPC campaign on top of that. It’s the % of organic clicks you would have had but that you ended up paying for because the PPC campaign attracted the click.
You may have heard that running both increases the % of searchers going to your website and that it is basically a good thing. It’s sadly not always the case, but you can measure that, at least, and it’s one of the best things you can do to optimize a PPC campaign. The basic problem is, a % of the traffic you would get for free is becoming paid traffic, and that messes up the ROI of both the SEO and the PPC campaign. Knowing exactly where to put your SEO and PPC money for the best ROI is an admirable advantage in the SERPs war.
Avinash Kaushik suggests in his book: “Web Analytics: An Hour a Day” a method to measure cannibalization. You can either pause some Ads Groups of your PPC campaign and then measure Key Performance Indicators of the organic traffic during a week and then put the Ad Groups switch to On and measure the difference in the organic traffic. Or, you can even stop PPC completely for a week and do the same thing. The difference between the 2 weeks of results is what is called cannibalization. Try to choose a week that you do not expect to be affected seasonality (don’t use Christmas week, for example).
Using this method you have a way to calculate the real return on investment for your PPC campaign. Let’s say your PPC and organic campaign convert at 3% on your brand name keyword. After having made the blackout test, you realize than you lose 35% of your organic traffic on this particular keyword when the PPC campaign is on. To make thing simpler, let’s assume you get 1000 visitors a week by organic (when PPC if off) and 500 visitors from PPC in a week on that keyword. The average CPC of this particular keyword is 1$ and the average conversion worth 50$ in revenue. Doing some basic math, here is the real cost of your PPC campaign.
You can see from the table that you are making less profit by doing PPC on this particular keyword, even if you are generating more conversions. You may want to go that way because more sales can equal quantity discounts for you and end up with more profit. But usually, you are wasting money pursuing this kind of strategy, and you should move your PPC budget towards more profitable keywords (like ones you don’t rank on organically).