This is a big question with serious implications for online retailers in the months before the holiday buying season.
A recent article at Clickz throws some light on this topic.

Here is an excerpt:

The [WebSideStory ]study looks at traffic and conversion data from 20 business-to-consumer e-commerce sites during the first eight months of 2006. Paid search had a median order conversion rate of 3.4 percent, while organic search results produced a conversion rate of 3.13 percent. The data set included more than 57 million search engine visits.

There are arguments to support both sides, Rand Schulman, WebSideStory's CMO, told ClickZ.

"On the one hand, because you control the message of paid search, you'd expect higher conversions. On the other side, because people value the 'editorial integrity' of organic, you'd expect higher conversions," he said. "Ultimately you need to do both. I think the eye-opener here is that neither side has a significant edge."

It would have been interesting to get some more details on the variables within the study.

For instance, were they comparing organic vs. paid, regardless of the position of either link on the page? In other words, did they compare an organic listing in position two with a paid listing also in position two? Or was the comparison between the two listings, on the same page, but regardless of position?

And did they compare paid and organic links which pointed to the exact same page? Paid links almost always point to an optimized offer page. But that often isn’t the case with organic links.

And were those 20 companies in the study of similar sizes? And did they represent a fair spread of industry categories?

However, putting aside those questions, and assuming the basic validity of the test, there is a big lesson to be learned here.

Keep your PPC campaigns going...but also pay attention to your organic search positions.

Remember, organic search traffic costs you nothing per click. So if you get the same conversion rate from organic listings, your net revenue could make a nice jump upwards. (Assuming you don’t spend an arm and a leg on search engine optimization.)

For those of you who are unaware, our next certification course covers the topic search engine marketing (SEM). In response to that, I have received several emails as to how the curriculum will pertain to Yahoo, in the midst of the Panama Update.

First, Yahoo’s Panama Update:

Later this year or early next Yahoo is scheduled to lunch a major change to its Search Marketing platform. This change is labeled “Panama Update” and will replace the old Overture platform with a platform similar to Google Adwords and MSN Adcenter.

The Panama Update will eliminate the transparent bid platform which allows users to bid on the position they want based on the CPC they are willing to pay for that position. They will be replacing it with a platform which uses a ranking formula.

Rather than the straight forward formula which is Position = CPC (Cost Per Click), Yahoo will use an algorithm which is similar to Google’s which is Position = CPC x CTR (Click-Through-Rate) x Quality Score.

What is “quality score”? Quality score is something Google recently added to adwords to help determine a sites ranking. It is the terminology applied to Google’s attempt at artificially ranking sites based on content. Strong related content receives a high quality score, little or non-related content receives a low score.

So how will the Panama Update impact advertisers? Essentially, it will place more responsibility on advertisers to build strong adcopy and send traffic to high content pages. It will also eliminate bid slamming (jumping up to one penny under your competitors bid) and Yahoo is no longer expected to have a waiting period for ad approval.

The Panama Update will help to promote those merchants who spend time to test and build strong ads.

Now, as to how it might affect the SEM Certification Course:

Since, Yahoo has not announced when the Panama Update will take place, we are proceeding with the curriculum based on the current platform. However, if the Panama Update goes live prior to the class on Yahoo Search Marketing we will cover the new platform.

We are committed to making this course as practical as possible and want to make sure the training covers the most current optimization techniques.

Thank you to everyone who participated in the small ppc search engine clinic last Wednesday.

Following this clinic I received several questions regarding the ways that these search engines are driving their traffic. Specifically, how the small search engines are using domain traffic and why the quality of this traffic would be poor.

First, let me elaborate on what domain traffic is, domain traffic is using a domain to drive traffic. This traffic can come from domains that once had sites but no longer do, misspelled domains receiving accidental traffic or generic domains receiving direct navigation traffic (this refers to finding a site through the use of your browser bar rather than a search engine).

So, if the small search engines do indeed drive less qualified traffic and some of the small search engines are using domain traffic, is domain traffic less qualified?

Certainly not ALL domain traffic is less qualified. Direct navigation, where people looking for cellphones type cellphones.com into their address bar and end up on a page filled with cellphone advertisements, can be extremely qualified and people are now making very large investments for these types of domains. Rather it is the other methods which domains are driving traffic that concerns us.

This can be difficult to visualize so let’s take an example I found with a quick search MySSpace.com (SS). If you visit this misspelled domain you will notice that one of the first links on this page is to something called “friend search”, and if you click this link a page is displayed filled top to bottom with advertisements to personal/dating sites and people finders. Undoubtedly, some of these advertisements are clicked by individuals looking for MySpace.com.

Now, if this visitor looking for MySpace.com finds them self on a dating site rather than MySpace.com, they may stay and subscribe, though the likelihood of them being interested is far less than if they arrived at the site intentionally.

This is an example of how domain traffic can be less qualified. Seeing as how the traffic from the small search engines was of such low quality, we can only assume this is the type of domain traffic these engines are utilizing.

If you sell products online and are looking for information on which products to feature on the home page of your own site, spend some time on Amazon.com.

Amazon is becoming a remarkable and free research resource for other online marketers.

First, within each of their 35 product categories, there is a “Top Sellers” tab.

If, for instance, you sell garden furniture, you can quickly find out which items, and which kinds of items are best sellers on Amazon.

While this doesn’t mean you no longer have to test and research which products sell best on your own site to your own, unique audience, the Amazon top 100 for each category can give you a very solid starting point.

Beyond that, Amazon also provides some extraordinary data on related purchases. Once again, this is freely available to anyone.

If you sell books on personal growth and development, consider the value of this information.

Right down to the exact percentage points, Amazon is providing an extraordinary insight into which books you might want to feature together on one page.

A few years ago this kind of information would cost you thousands of dollars to access, and now it’s free.

Most marketers understand the importance of online testing. But how can one best convince senior management?

While online marketers in large and medium-sized companies and organizations know from case studies and other published data that a testing program can yield dramatic increases in revenues, they often find it hard to sell the need for testing internally within their own companies.

What is the best way to present the benefits of testing to your manager or senior management team?

In our next brief we will provide a guide, with examples and tools, to help you build your case.

The examples we use will help you show just how much additional revenues can be generated by improving key page conversion rates.

And the tools, both in PPT and Excel, will help you build a compelling custom presentation, based on proven data, methodologies and formulae.

In other words, we will give you the tools, templates and guidance to build a solid case for investing time and money in an online testing program.

As always, there is no charge to attend the webinar, but you do need to register.

Register to take part in The MEC Guide to Presenting Your Case for Testing

A recent article in BrandWeek goes over some research from Jupiter Research in which the data suggests that people have a very low level of trust in information they find in blogs, forums and social networks.

This comes as something of a surprise, as many marketers believe that blogs and forums at least are more credible than corporate web sites.

Not so, according to this research.

The figures are interesting, but in a way they miss the point.

What is important is not the channel...whether it be a site, a blog, a forum or a page on MySpace.

What is important is your credibility and reputation. We have written extensively about this under the topic of Transparent Marketing.

And as we see an increase in advertising in blogs, forums and social networks - as well as on web sites - the issue of trust and credibility will become increasingly important.

In the rush to “be there” and “be seen”, too many marketers forget that trust is something that is built up over time. And it builds only if you are honest and transparent with your readers.

Ultimately it doesn’t matter about the channel through which you present your message. Every and any channel will work, so long as your reputation for honesty precedes you.