No, it’s not. But it is far more likely to weather the current climate of economic uncertainty in terms of spend and potential growth than traditional marketing, for a number of reasons.
Americans have been concerned about a recession for months now, yet there were nearly 12 billion searches on core search engines in the US during August. (Source: comScore qSearch 2.0, “comScore Core Search Report, August 2008)
More than half (55%) of adult Americans have broadband at home and 73% are online. (Source: Pew Internet & American Life Project, “Home Broadband Adoption 2008,” July 2008) Despite the sluggish economy, predictions in April were that online retail sales would grow by 17% to $204 billion this year. (Source: Shop.org study by Forrester Research, Inc., “The State of Retailing Online 2008,” April 8, 2008) People need goods and services, and many prefer the lower transaction costs associated with e-commerce.
Pay-per-click (PPC) advertising can be geo-targeted down to city level, and careful keyword selection ensures that you present a pre-qualified audience with promotional ad copy, speaking to their search query language and intent, at the exact time and place of their query.
With effective web analytics, conversion goals, tracking, and reporting, it is far easier to account for every PPC dollar spent and to track visitor traffic due to SEO investment. The ability to prove ROI and improve efficiency and cost per conversion, while reporting clear data to clients, is a major advantage.
“Many analysts now agree that when marketing budgets come under pressure in a stressed economy, those sectors that can best document their connection to ROI, such as search-engine advertising, are far more attractive to corporate chiefs than other kinds of less-trackable traditional advertising.” (Source: AdAge.com, “Online Spending Less Vulnerable to Recession,” September 18, 2007)
SEM’s effective use of hard-won advertising dollars, ease of tactical refinement due to improved ROI, and efficiency of reporting is of increasing interest to cash-strapped marketing executives.
4. Cost Efficiency
Creating and producing TV, radio, display, or print ads is costly, often with uncertain returns. PPC’s very nature of ‘paying per click’ is not only highly cost effective for well conceived campaigns, but also very easy to manage, edit, track, and budget.
The auction aspect of PPC is an unexpected advertising advantage. If an industry is feeling the pinch, related competitors may be forced to decrease keyword bid values, and thus costs, while maintaining exposure. This may be coincidental, unintentional, or the result of a cost-strategy agreement between competing brands.
5. Comparative Online Advertising Performance
US spending on Internet advertising grew 20% in Q2 of 2008, as did the gap between spend on flashy display ads (relatively flat at 21% of the total spent) versus text-based PPC ads (increasing to 42% of the total spent). (Source: The Wall Street Journal, “Gap Widens in Online Advertising,” September 4, 2008) An article in The New York Times (May 19, 2008) stated that despite the economic downturn, “One area that remains strong is search ads. They are considered cheap and effective among marketers – even in a potential recession.”
Search is relatively recession-proof, but it is not depression-proof. As a Sanford C. Bernstein spokesperson very aptly said, “If the downturn is so severe that advertisers stop advertising altogether, or face financial difficulties, then online is affected like everybody else.” (Source: The New York Times, “Online Search Ads Faring Better Than Expensive Displays,” May 19, 2008) In the case of a severe recession or depression, all marketing budgets will undoubtedly be dramatically curtailed.
However, a recession may benefit SEM in the long-run for a number of reasons – businesses previously unfamiliar with PPC are now trying it; businesses who knew about (but didn’t use) PPC are now rethinking; businesses who already used PPC as part of their mix are diverting more funds to it. Many will be very pleased with the performance, ROI, reporting, ease of refinement, targeting, and costs of their PPC initiatives. And last – but far from least – SEM will benefit from those many cases where effective PPC will lead to significant investment in SEO.