Top positions on both organic and sponsored links re-enforce each other, and if possible, you should try to do well in both locations. Why? Because the visitor perceives the “ubiquitous” presence of your listing as a good indication of relevance and reputation.
As you can see, in the ideal scenario, you are able to scale back your PPC outlay as Organic SEO begins to take effect. But it has been proven that you should not drop it completely. There is benefit from having “broad” keyword presence (even if it’s position 5-10) than not being there at all, and it’s pretty cheap to keep that up. That can help with brand awareness, and it also keeps your skills sharp to see new opportunities.
In addition, the paid search world lets you take a long tail approach to SEM. You can put together a list of long tail keywords on Google Adwords or Yahoo! Search Marketing with exact or phrase match to make sure you don’t miss those obscure searches. Usually, it’s hard to optimize any web page for more than a single phrase or two – but PPC gives you some flexibility. Learn more about paid search campaign optimization.
If your are attaining positive cash flow from your PPC campaigns, there is absolutely no reason to stop them after your organic listings pick up. While PPC campaigns do not have any direct connection to organic listings, the human perception of your brand/site definitely gets a lift. You must know the numbers however – don’t fly in the dark.