Referral vs Search Engine Traffic, Which is Better?

I have been asked many times in the past from website owners about the different types of traffic their website's receive. Most want to know, when attempting to drive traffic to their website, which method of traffic is more valuable, referral or search engine traffic and what method should they spend their time on building.

Most website owners I talk to assume that all traffic is equal, most can tell you the number of hits per day they are receiving, but few know the percentages of the different types of traffic methods, the conversion rate of their vistors and how the visitors are getting to their site's in the first place.

Here are the 3 types of traffic most stats packages display.
1. Bookmark or Direct Traffic
2. Referral
3. Search Engine

Bookmark:
When a user adds your website to their favorites and then clicks to your site from their bookmarks. Having a large % of bookmarks is good for the website owner. It usually means that visitors find the website's content valuable and want to save the website address to go back in the future.

Direct traffic:
When a visitor types in the the URL of a website in their browser's address bar and then goes to the site. Another area where you would want a high % of visitors from. This means that a visitor already knows your website and wants to go there. Google has a very high % of direct traffic, do to the fact that most people just type google.com to do their searches

Referral traffic:
Is considered to be any type of link that a user would click from one site to get to another that was not from a search engine. Referral traffic usually comes from link exchanges or one way links, you want a good % of traffic to come from referrals because of the steady flow of traffic you will receive.

Search Engine traffic:
Generally when a user puts in a set of keywords into a search engine type site like Google, Yahoo or MSN and a list of possible site's are displayed. Search Engine traffic is the most volitale and usually where most website owners spend their time in building.