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Pay Per Click Advertising - Recession Proof?
For all intents and purposes the Us economy is headed for it's 12th recession since World War II. The last followed the events of 9/11 and roughly speaking a year and a half after the dot com boom and bust. Now we look into the obvious beginnings of another economic downturn caused by disruption in the housing and mortgage marketplaces. Of significant note this is the FIRST recession since Google's rise to domination of the search engine marketplace. Back in 2001 Google's Market share was a mere 12% while today it's well into 70%.
So it begs the question: Is Google and Search Engine Marketing as a whole a recession proof business?
Last week, JP Morgan Internet analyst Imran Khan held a conference call with Kevin Lee, Executive Chairman of Didit, to discuss the Q4 2007 findings in the search marketing space. During the call, Lee noted that search volume declined earlier than expected in December (Dec. 17 vs. Dec. 20). He countered by stating that many Didit clients are self funding because they regularly hit ROI targets. Noted blogger Henry Blodget pointed out that this is often the argument against search being recession-proof: ROI targets are met, therefore, advertisers will naturally keep spending. He also cited that if the first point -- slowing query volume impacts the ability to hit ROI -- is true, then search won't be recession-proof after all. Because even if your ROI is good, if the search volume dries up, then advertising dollars will follow, leading to a dramatic impact on the bottom lines of Google, Yahoo and the rest of the pack.
So, let's play out that argument. What can be done to make your search program recession-proof?
Mitigating Supply & Demand Challenges with Search Engine Optimization
Investment advisers speak of the virtues of diversification to ensure that when one market sector falls, your eggs are not all in the proverbial basket. There is no greater tool for search marketers in efforts of diversity than Search Engine Optimization (SEO). When query volume declines in paid search, the general reaction is to bid more for the remaining volume. When supply of searchers is short, it becomes more imperative to rank well, and often demand forces companies to pay for those rankings against other competitors. A properly developed organic search strategy can alleviate this dependency. When a company launches a proper SEO program, it should include optimization of all digital assets to ensure that regardless of the type of query, a media option can be returned -- be it in text, video or image format. The trick is quickly identifying areas where the paid price point is leading to lower return and developing a plan to enhance your organic placement, while being able to reinvest in cheaper paid areas of your program.
In a Recession the experts agree that Cost Per Click as well as Cost per Acquisition will rise, Search Engine Optimization will return value in a subdued market better than it ever has. Is your company ready?
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