Reduced search budgets: what now?
We will have to cut our paid search budget in half for the first 6 months of 2009. The program includes brand terms, terms that describe our product, as well as terms related to how our customers use our products. How would you suggest we reallocate the funds given the budget cut?
It is well known that online media offer superior measurability and tracking capabilities compared to traditional tactics. Because every click is tracked, it’s possible to know how your customers are finding you, what they’re doing when they arrive, and most importantly, whether they’re spending money with you.
When tracking methods are implemented correctly, display media, organic and paid search, email, social media, and all other online marketing tactics can provide a click-for-click marker that can be leveraged to provide an accurate ROI metric for any online channel.
Due to the ability to assign value to each campaign initiative, companies can test a wide range of tactics, assess which generates the best response, and then adjust the marketing program accordingly.
The old adage that “I know half of my marketing spend is wasted. I just don’t know which half,” is even more sharp and painful in a down economy when advertising spending is cut. However, the inherent cost, targeting, and follow-up advantages of online marketing make it more likely to succeed (or at least able to minimize losses from a failed campaign). And when every penny counts more than it did a few months ago, this is the kind of assurance you need from your online marketing strategy.
We expect to see several online engagement-based trends emerge due to a decline in marketing budgets:
A Dollar Shift Towards Paid Search Marketing – Due to the literal nature of the on/off switch of paid search, ads can go up and down on a daily basis. The dollars will flow when the answer is shown to be the most favorable.
More advertiser-friendly exit clauses: With a surplus of online inventory due to declining demand, publishers will be forced to offer extremely advantageous exit clauses to their advertisers, some as little as 48-72 hours.
Marketing budgets will shift toward increasing revenue from current customers: Through more frequent purchases, larger purchases, or referrals from new customers, companies will look to maximize existing customer relationships as budgets decline outgoing
Increased use of behavioral targeting: With a reduced budget, waste becomes a very significant problem. Fewer marketing dollars means less space for advertising to customers who aren’t interested in your product. Publisher networks and portals that offer behavioral targeting and retargeting placements will see increased demand as contextual relevance continues to drive more qualified traffic.
Additionally, as search marketers try to reach consumers in the middle of their purchase funnel, buying from “long tail” keywords will become extremely prevalent, as the ability to capture clicks has been shown to in longer, detailed search queries is correlated with higher purchase intent. The long-tail strategy is likely to become more widespread over time, but there is ample opportunity to take advantage of it in the retail financial services industry right now.
Paid Search: Making the Most of Your Shrinking Budget
Paid search marketing is likely to become the primary marketing channel for many businesses during the current economic slowdown. Many industry experts argue that companies that cut paid search spending risk losing market share and a potential long-term delay in resuming “normal” campaign performance levels. While we agree that market share could decline during this time, we believe the effects are likely to be temporary for major brands. As for performance level risks, we believe that just going full black for an extended period would have long-lasting effects on returning to normal performance. If done correctly, decreasing budgets should not affect performance levels.
With reduced budgets, certain aspects of the campaign require extra attention:
Strong focus on SEO strategy
* Without a doubt, search engine optimization is a high-impact, high-value tactic for reaching customers online. Through keywords and tags, search engine optimization influences many aspects of social media, including video, audio, blogs, microblogging, as well as being a very effective tactic on its own. During declining periods, SEO budgets will work harder than any other.
clear economic objectives
* Tight budgets mean campaign goals must be extremely specific and carefully measured: less budget means more pressure to put the remaining dollars to work effectively
Strong offer management (tools)
* Every effort should be made to ensure that bid management is an exact science, completely focused on rules created to achieve campaign goals at each bid update.
Updated revenue targets
* Tight budgets are often the result of changes in the economy; be sure to realistically update revenue goals accordingly
keyword strategy
* Each keyword should be examined individually to determine its overall value to the campaign: Individual CPA metrics should determine which keywords continue to be used when budgets are reduced to eliminate unnecessary ad spend.
*Keywords that can provide low-cost side-building opportunities should be found to take advantage of the long-tail strategy
Online affiliate programs
* Affiliate programs typically rely heavily on paid search, and when a business cuts budget, especially in terms of branding, they may end up paying their online affiliates a higher CPA for a referral conversion than if they had just processed the conversion.
* To counteract this, companies may consider reducing their payment to affiliates when they cut budgets. However, this move can/will cause fewer affiliates to promote your offer and therefore your conversions will decrease even more.
Paid search strategy should always revolve around keywords that drive sales-related activities or conversions, and even more so in economic downturns; it is never an effective strategy for optimizing click-through rates, click-throughs, or visits.
To develop the final keyword list, each keyword must be evaluated individually to determine its CPA, CPS, or CPL value. Only those that drive conversion activity to appropriate levels should be listed. This means blanket strategies, such as suspending certain campaigns or groups of keywords strictly due to budget cuts, are not an ideal solution. Often the keywords that drive the most conversions are spread across many different campaigns and attract many different types of users.
If done correctly, the keyword list used during budget reduction periods should be a shortened version of the regular list, with an emphasis on conversion metrics and historical performance of individual terms.
A shortened version of the regular list will lessen the effects of decreasing overall budget both in terms of click volume on the various campaign strategies, as well as soften the effects of lower voice engagement in search results. Fewer impressions will be served overall, but campaigns will still have voice share for each of the campaign strategies that were present with the normal keyword list.
Furthering the recommendation that branded keywords should not be removed from the paid search campaign during budget cuts, research has shown that conversion activity increases significantly for keywords that deliver results on both paid search and paid search. the natural, which is the case for most brand terms. .
“When appearing in both natural and paid search for the same keyword impression, clicks were up 92%, actions were up 45%, orders were up 45%, page views were up 44% , visitors increased 41% and time on site increased 40%.” – Media Publishing, 2007
This is partly due to the expanded real estate that comes from having two separate results, but more so due to the control over the purchase funnel that comes as a result of being able to take a user directly to a pre-defined purchase funnel after the a click occurs.
In general, keyword strategy during a budget reduction period should be based on analysis of historical performance metrics. The final keyword list must be derived from the original keyword list, but must be based on actual sales activity for which each keyword is individually responsible. The keyword list should look like a much better version of your usual form, with all the terms that provided impression share but no clickthrough activity, clickthrough activity but no leads, leads but no sales removed from the keyword list. temporarily list to make room to spend on the most effective keywords possible. As the campaign runs, keywords should be monitored to ensure the list continues to be the most effective combination possible, and opportunities for long-tail expansion should be taken advantage of and added to campaigns where appropriate.
