Is Google SEO sleeping with Google SEM?

If you run a small business, there is a strong likelihood you may be running a Google Adwords campaign to stimulate lead conversion — in addition to your SEO strategy!
And, if you are heavily reliant on paid Search Engine Marketing (SEM) leads from Google Adwords, the odds are high you?re reluctant to reduce your ad spend or shut it down entirely.
That’s why a recent Small Business Experiment by Paul Downs in the New York Times may be very interesting to you.? Mr. Downs is small business owner who contributes regularly for the NYT You?re the Boss series.
He bravely decided to test the impact on current lead generation (and sales) by shutting down his $500 per day Ad campaign for a period of 11 days, which on average, had generated about 3 leads per day (and arguably contributed to $1.8 million in sales over several years.)
While his broad analysis and findings are interesting, including the fact that visitor rates dropped 97% and leads fell off dramatically, there is one particular outcome that is even more illuminating and one he does not appear to fully understand.
“What is surprising to me is the steep drop in organic visits, the clicks from free links. They have fallen 47 percent, from 328 to 173. Stopping the AdWords payments seems to have affected unpaid traffic as well,” said Mr. Downs.
Quite understandably he suspects an algorithmic connection between SEO and SEM, which is something Google has always categorically and unequivocally denied.
He thus concludes: Why shouldn?t Google boost the free listings of its paying customersand degrade the results when they stop paying?
However, despite his astute research and conclusions, he is largely wrong on this point and may not understand a key metric with regards to how people scan and act upon a search result, paid or organic.
The answer to this vexing question, can be found in the 2010 book, Marketing in the Age of Google, by Vanessa Fox, a former employee at Google renowned for her work in developing Google Webmaster Tools.
“Numerous studies have found that when a site is visible in both paid and organic search results, both results receive more clicks than if either appeared alone,” said Vanessa Fox. “Studies have found that click-through rates, conversion rates, and revenue are all higher when both organic and paid listings appear in the results.”
Therein lies the missing piece of the puzzle for Mr. Sands who did such a sterling job sharing his quantitative findings with us!