<< by on January 8th, 2009
The barrage of media about advertisers slashing their traditional media advertising (TV, Radio, Print) budgets for 2009 and re-allocating it to online advertising have been coming at a clip of almost a story per day on the subject of late.
As an online marketing agency, we obviously welcome the change and appreciate that our efforts are being recognized by our clients as being more efficient than other forms of advertising. We welcome the idea of finally having enough budget to get a fully budgeted impression share for our PPC Campaigns and trying to find out if the sky really is the limit to online marketing success.
But like everything else in life, there are “two sides of the coin”. Throwing more money at online advertising will also have its repercussions. Problems that I can for see with the shift in dollars to digital include:
- Treating PPC like a traditional “media buy”. Online banner advertising and PPC are not the same and need to be treated differently. PPC performance can be optimized down to the keyword level and should be. We work in the automotive sector and there are some advertisers that are obviously bidding on keywords without caring what results they get. They are optimizing to the media spend and not to the performance goals of the PPC Campaigns. These so called “Branding Clicks” aren’t achieving anything but improving Google, Yahoo and MSN’s revenues. The effect is that costs per click for everyone tend to go up when PPC advertisers aren’t spending with any eye towards common sense.
- Expecting more out of PPC than it can deliver. PPC advertising is about targeting and relevance. The beauty of it is that searchers are actually looking for what you are advertising. You can take steps to improve click through rates on keywords to get a greater share of available clicks. But available clicks are really determined by how many people are searching for a keyword. PPC is for the most part “Pull” marketing. It pulls in those who are searching for what you are selling. It isn’t going to do much in the way of “Pushing” people online to actually search for those keywords. With the shift of advertising dollars to online, it’s likely that many PPC advertisers will finally figure out how much they really can spend on their Campaigns, having extra money to spend beyond the limits of actual demand won’t matter
- TV, radio and print advertising “Push” searchers online. Online marketing may “seal the deal” and deliver the sale, lead or conversion action, but if TV, radio and print advertising budgets aren’t pushing those searchers to the web, what will? TV, radio and print advertising may have inferior return on investment compared to online marketing, but they are absolutely necessary for driving brand awareness in their own inefficient way… Something needs to fill the void of creating search demand if traditional media budgets are cut.
- PPC is going to get more expensive. The addition of incremental online marketing dollars, combined with bidder stupidity will allow online advertisers to increase keyword bids.
- Use it or lose it. The rule applies to almost everything that gets a budget. Either spend the money you are allocated or you will get less budget the next year. There will likely be a lot of money wasted in the coming year by those in charge of advertising budgets to meet spending goals. In doing so it’s likely that they will be turning online advertising into the same inefficient marketing vehicle that TV, Radio and Print have become.
What can be done to combat these issues?
- Allocate your PPC campaign budgets toward the results they deliver, not to the dollars they spend. Bid for results, not for spend.
- If you get more budget than you can reasonably spend, then re-allocate the extra dollars to optimizing your website or landing pages to improve your conversions. If your conversion rates improve you can reasonably increase your bids and justify the extra budget
- Embrace the “Long Tail” and keep adding relevant keywords. Expand your PPC Campaigns and spend your extra dollars on the new keywords if they deliver desired results
- Restructure your Campaigns and get really granular with matching your keywords to your ad copy. Improve your click through rates on your best keywords and increase your traffic and spend on them. The answer lies in improving efficiency to get a bigger slice of the existing pie.
- Just be smart with your budget. If you are an agency and it’s someone else’s money, spend it with a conscious. Spend it in the context of establishing long term business relationships with clients, rather than meeting short term spending goals. It’s more profitable for everyone in the end.