Why do Business Owners tend to spend more on PPC rather than SEO?

There’s a big disconnect when it comes to allocating marketing dollars for search engine marketing campaigns.  To highlight:

“Not surprisingly, search advertising should continue to be the largest category, growing from $9.1 billion in 2007 to $20.9 billion in 2013.”
- Source: C|Net News, June 30, 2008

So in 2007 around ten billion was spent on search paid ads, and most likely a lot more in 2010.  What about SEO?

“SEO: $1.3 billion (11%)”
- Source: SEMPO data via Massimo Burgio, SMX Madrid 2008

To Summarize: it’s 11% for SEO & 87% for PPC, leaving 2% for other methods.

Our question is, “WHY?” after looking at this image and studying these statistics:

- For complete look at study: http://eyetools.com/research_google_eyetracking_heatmap.html

Organic Ranking Visibility – SEO

(Shown in a percentage of participants looking at a listing in this location)

Rank 1 – 100%
Rank 2 – 100%
Rank 3 – 100%
Rank 4 – 85%
Rank 5 – 60%
Rank 6 – 50%
Rank 7 – 50%
Rank 8 – 30%
Rank 9 – 30%
Rank 10 – 20%

Side sponsored ad visibility – PPC

(Shown in percentage of participants looking at an ad in this location)

1 – 50%
2 – 40%
3 – 30%
4 – 20%
5 – 10%
6 – 10%
7 – 10%
8 – 10%

Looks like most eyeballs are on the organic listings which can only be influenced by SEO. However, SEO drives 75%+ of all search traffic, yet garners less than 15% of marketing budgets for SEM campaigns. PPC receives less than 25% of all search traffic, yet earns 80%+ of SEM campaign budgets.

WHY?