Today, I want to explore a topic that is far more conceptual than usual, yet equally critical: the relationship between SEO and SEA at the search engine level and the strategic choices it entails within a SEM (Search Engine Marketing) strategy.
It’s no revelation to say that search engine traffic can originate from multiple verticals. However, every web visibility professional, deeply immersed in their specific area, often falls into the trap of believing that their vertical is the most significant (when you’re a hammer, everything looks like a nail). More importantly, there’s a tendency to overlook the impact that one vertical can have on another. This article aims to shed light on this complex relationship and provide some avenues for reflection.
The subject is potentially vast yet paradoxically underexplored. A small body of scientific literature touches on it, situated at the intersection of game theory, web algorithms, and marketing. By no means do I intend to offer an exhaustive analysis here. For the technical aspects, you’ll either have to take my word for it or delve into the references yourself.
The search engine as a mechanism
If you’ve attended one of my talks or recent training sessions (sorry, only in France), you’ve already had a brief introduction to the notion of mechanism—a concept particularly dear to me. This idea doesn’t emerge out of thin air; it stems from what is known as mechanism design. Mechanism design sits at the crossroads of game theory, economics, and, more recently, algorithmics—for obvious reasons. In fact, most “ALGORITHMS” that are talked about on social media are essentially mechanisms built through mechanism design.
We speak of a mechanism when dealing with a game of private information between what we call agents. A principal agent operates a mechanism that can provide varying rewards to secondary agents. Each secondary agent can cheat or lie to make it seem as though they deserve a better reward (or to suggest that their competitors deserve less). The principal agent’s goal is to uncover the private information held by the secondary agents in order to achieve their own objectives more effectively.
Are you starting to see where I’m going with this? Replace “principal agent” with “search engine,” “secondary agent” with “website,” “secondary agent who cheats” with “SEO-optimised website,” and “rewards” with “€€€,” and you’re suddenly in very familiar territory. 😉
The goal for each player is to maximise their outcomes, which are typically profit-driven. The key concept here, as is often the case in game theory, is equilibrium. The aim is to reach a state where no player has an incentive to cheat, because altering their behaviour would necessarily result in a loss. The principal agent (the search engine) spends its time trying to nudge (or incentivise) secondary agents (websites) to behave in ways that align with its interests.
In practice, achieving such a stable state is complex. This is clearly evident in the real-world attempts to implement these mechanisms—where achieving equilibrium remains a challenging, ongoing process.
The SEO and SEA ecosystem
In the search engine ecosystem, there are three agents or players:
- The search engine itself. It highlights both organic results and sponsored results. For the former, it relies on algorithms primarily based on technical signals (but not exclusively) calculated at the site level. For the latter, an auction system is used. But beware: the search engine’s ability to set a minimum bid gives it ample power to manipulate the ad pricing mechanism.
- The websites. They can either be advertisers or focus solely on organic traffic. These websites engage in SEO and compete with each other to maximise their reach to users.
- The users. Their goal is to find the best websites—those that meet their informational needs.
For now, I’m defining an ecosystem with a single search engine. We’ll discuss the case of a multi-engine environment later in this article. Let’s now look at some conclusions drawn from the articles referenced here, along with my explanations. I’ll avoid technical details, as the mathematical proofs rooted in game theory go far beyond the scope of this piece.
SEO in a world without SEA
When SEA is absent—meaning no ads are displayed on the search engine—what matters most to both the search engine and users is delivering the best possible organic results. For websites, the priority is to capture the greatest value by providing maximum user satisfaction.
In a world without SEA, everything is relatively straightforward (see reference [1]): users want quality organic results, the search engine aims to provide those quality organic results, and websites will strive to deliver the best possible content. “Parasitic” SEO (I hesitate to say spammers) would be actively penalised by the search engine and quickly removed by the ecosystem for failing to add value. In contrast, “positive” SEO would become essential and thrive.
But this ad-free world doesn’t exist. It serves only as a baseline for comparison to the chaotic jungle of the real search engine ecosystem.
The jungle? More like the wild west of SEO and SEA
Surprisingly, the presence of sponsored links (ads) accentuates one of the primary characteristics of the “SEO-only” model: SEO tends to benefit high-quality websites more than low-quality ones because it amplifies the sites’ intrinsic value.
What is the reasoning behind this conclusion? It’s straightforward: if a website is high-quality and supported by effective SEO efforts, it captures users who are satisfied and will continue to engage with the site. Conversely, if a spammy site ranks well thanks to SEO, users will only be partially fooled and will shift toward SEA, which is more balanced in terms of ROI and thus inherently higher in quality. As a result, the “organic” value is better captured by high-quality sites engaging in SEO rather than by low-quality ones. In this context, SEA acts as a balancing factor that ultimately benefits search engine users.
First takeaway: SEA adds value to search engine users at the level of organic results.
However, the search engine and its users do not necessarily have fully aligned interests: if organic results are too good, click-through rates on ads will drop, reducing the engine’s revenue. Game theory demonstrates quite clearly that the search engine’s optimal strategy is to provide just enough quality to satisfy users—but no more.
Even more intriguing, article [4] concludes that if website quality within a query is highly heterogeneous, the search engine’s best strategy is to rank results in descending order of quality. However, if all websites are of similar quality, the optimal approach is to randomise the order of the top results.
Second takeaway: To maximise its profits, the search engine benefits from delivering organic results of intermediate quality.
Perhaps the most critical and underappreciated result, even among SEOs and possibly SEAs, concerns how ad auctions actually work. Google explains the second-price auction, quality score, etc., quite clearly. Yet there is a very tangible adjustment variable: the minimum bid. If organic traffic and SEO start to dominate SEA, the search engine can lower the minimum bid. This shift transfers budgets back to SEA, reduces the quality of organic results by allowing more room for spammy sites, and, as a result, mechanically increases click-through rates on ads (see the previous point).
Third takeaway: The real boss is the search engine—it ultimately controls the pricing range of ad auctions.
What if there were multiple search engines?
Article [3] is particularly fascinating as it explores several aspects of this issue. Firstly, it demonstrates that as soon as one search engine delivers significantly better organic results than another, it will immediately attract users because the switching cost between engines is negligible. This means that, unless there’s (illegal) collusion between search engines to deliver identical result quality, the outcome will always trend toward a winner-takes-all scenario—essentially a near-monopoly.
Moreover, since SEA revenue is maximised when organic results are of average quality, search engines are strongly incentivised to avoid pushing quality too high. However, because collusion is illegal, this situation naturally leads to market consolidation, eventually resulting in very few search engines—one of which will dominate the market.
The result is a quasi-monopoly held by the best-performing engine, alongside a small number of secondary players who no longer have an incentive to focus on quality. These smaller engines will instead maintain average quality to maximise SEA revenue from the limited user base they manage to retain. All of this implies that an ecosystem of search engines monetised through sponsored results will inherently produce one highly effective engine holding the majority of the market, and smaller engines with notably weaker (or at least significantly less competitive) results. Does this remind you of an existing situation?
What SEM strategy should you adopt?
As you’ve likely gathered from these findings (and there are many more, but my goal isn’t to write a book on the subject), a multitude of strategies are available. If you’re a major brand with a high-performing site on Google, your best move is to combine SEA and SEO to saturate the market. If you’re a smaller player, or SEA isn’t an option due to high minimum CPCs, an aggressive, SEO-only strategy will allow you to capture more value than you technically deserve (but you already know that).
More importantly, there’s a viable strategy on “secondary” search engines. Since their quality is lower, their market share is smaller, and their ad auction prices are lower as well, even though their users purchase the same products. As a result, the ROI can potentially be better—once you absorb the fixed costs of managing ads. (Hello to the Bing Ads network, which covers more than just Bing.) On these secondary engines, SEO barely exists, but there is still traffic. If a search engine holds 4-5% of market share on a query, it might be worth the effort—or not. That’s for you to decide.
Finally, there’s an argument often heard everywhere: “I’m already ranked #1 on Google Search, so there’s no need for me to invest in SEA.” Perhaps you’ve even said this yourself? Well, article [2] proves you wrong. Businesses with strong SEO performance and top rankings that also invest in SEA see their revenues increase by 4 to 6% compared to not doing SEA at all. (Granted, this study dates back to 2010, but its implications remain relevant.)
References
[1] Berman, R., & Katona, Z. (2013). The role of search engine optimization in search marketing. Marketing Science, 32(4), 644-651.
[2] Yang, S., & Ghose, A. (2010). Analyzing the relationship between organic and sponsored search advertising: Positive, negative, or zero interdependence? Marketing Science, 29(4), 602-623.
[3] Taylor, G. (2013). Search quality and revenue cannibalization by competing search engines. Journal of Economics & Management Strategy, 22(3), 445-467.
[4] Chen, Y., & He, C. (2011). Paid placement: Advertising and search on the internet. The Economic Journal, 121(556), F309-F328.
