Using Organic Ranking Profits to Subsidize Paid Search Ads

Alan Rimm-Kaufman recently wrote an article about allowing your most profitable keywords to subsidize your less profitable ones. This strategy is obviously needed if you want to grow your business via search because you first have to create awareness before you create sales.

Paid search can also be used effectively as a branding and link building mechanism, and help reinforce your organic search rankings.

As the web gets more efficient, companies doing well in organic search will plow more of their organic search profits into paid search even if it loses money, so that they may lock out competition, maintain momentum and exposure, build a strong relationship with Google, minimize business risks, and support the ecosystem which provides their profit.

In after hours trading today Amazon eclipsed Yahoo in market capitalization! Seeing Amazon add more editorial content, extend into new markets, and have expanding margins while Yahoo! has went nowhere in the last year shows Google is still gaining marketshare, and that the search ecosystem is going to become more self reinforcing as time passes.

Published: July 25, 2007 by Aaron Wall in internet


August 2, 2007 - 8:28pm


I have always wondered what is the etiquette around pointing out what may be a spelling error on a blog article title.

Do you tend to avoid it or view it as helpful?

August 2, 2007 - 8:31pm

On this site people usually just comment pointing out the error. Depending on if they like or dislike me the etiquette may change a bit ;)

July 25, 2007 - 2:22am

Hey Aaron,

Thanks for this great reminder! After reading this blog it made me think of a few sites that I should go back and reveiw and maybe test and play around with. Though, very great information!

Thanks again so much!

Matt Mcfalling

July 25, 2007 - 12:59pm

While Google may continue to dominate the market, I don't think that it will end up with a market share much larger than the one it has for a number of reasons:

- Monopolies make for bad business.
- People will become afraid to trust their information with a non-competitive business.
- As the internet becomes more global, the chances of Google finding stronger competition increase.

Rob A
July 25, 2007 - 3:35pm

Wow Amazon is finally making a decent profit margin.
Nice to see the walmart of the web taking off.

Yahoo is going nowhere because portals in general have gone nowhere in a long time. Google is a better tool. Not saying portals are a dead concept. They are best suited to niche market segments that a broad search can't reach. Why navigate AOL/Yahoo when you can have google find it for you?

July 25, 2007 - 6:41pm

I am not surprised to hear about Amazon. I work with retailers who used to be 100% eBay.

A year ago, when someone sold on eBay and Amazon, they did about 70% eBay vs. Amazon in volume. About 6 months ago, it was 50/50. Today, they are selling more on Amazon - at much higher prices and margins.

eBay's bad reputation is turning it into a lemon market, if you remember from an economics class.

Jim Spencer
August 5, 2007 - 12:19am


So, should it be subside or subsidize in this post's title? I guess I thought that subsidize was consistent with the text. Hope I'm not wrong here. ;O

July 26, 2007 - 12:21pm

thanks,Amazon is making a decent profit margin.

August 5, 2007 - 3:30am

Thanks Jim
I fixed it.

July 26, 2007 - 5:54pm

I do a little PPC advertising for affiliate I work with, and sometimes I only break even. That being said, I view this as a win for me, because I'm branding my site and I'm getting potential return visitors.

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