Looking Ahead by Matt Greitzer , Friday, November 28, 2008
THE LAST EIGHT WEEKS HAVE been volatile, to say the least. As I've talked to advertisers about campaign performance, outlooks for 2009, and their overall business, attitudes varied, ranging from concerned, to fearful, to uncertain, to cautiously optimistic -- the later attitude seeming to wax and wane with each passing news cycle. Though advertiser attitudes are varied, their reactions to the current consumer environment are generally consistent. Four key theses are emerging:
Search, and digital in general, is seeing a fourth quarter pullback (shocking, I know). Ironically, this has less to do with performance than with search's responsiveness. While upfront televisions buys, print and other fourth quarter marketing investments are sunk costs, search budgets can be pulled back at will. Advertisers in need of profitability over growth are pulling dollars out of search in large part because it is so easy to do so.
While the fourth quarter pullback is hitting search hard, search overall will fare better than other forms of advertising in 2009. After half a decade of advocacy, it seems advertisers are finally convinced that responding to consumer demand through search needs to remain a core component of their marketing programs. Search will see a pullback next year, but nowhere near as deep as pullback in display media, and unaddressable offline advertising.
The demand for accountability is stronger than ever. In perhaps the most dramatic shift in the search marketing landscape, advertisers are demanding profitability for every dollar spent. Marginal components of search marketing campaigns, or keyword categories that have long been said to "subsidize" other keywords, are being slashed in favor of one-to-one profitability. In other words, the portfolio approach to campaign profitability is no longer acceptable. Additionally, efforts that drive less measurable returns, like keywords with "brand value," and even SEO, are facing far greater scrutiny. Efforts in these areas in 2009 will demand quantifiable, measurable ROI justifications, or they won't be funded.
CPCs are pulling back, and some advertisers are fleeing the space. As advertisers cut budgets and pull back on unprofitable keywords, CPC prices are falling in certain categories. Additionally, some advertisers are fleeing the paid search landscape altogether. Search marketers with a keen eye on the paid search competitive landscape are moving in to grab click share at efficiency levels that were not possible four to six weeks ago (or anytime over the last 24 months, for that matter). Over the coming months, search advertisers should fortify their competitive monitoring capabilities so they can discern and act upon these pricing inefficiencies when they occur.
Marketers are focusing internally to make their investments more effective. Given the aforementioned focus on profitability over growth, advertisers are taking a more aggressive approach with tactics like landing page optimization, field analysis and conversion funnel optimization, and site-side personalization.
Without question the remainder of 2008 and the first half of 2009 will be a challenging time for search marketers. Every dollar spent will be scrutinized, and common assumptions about campaign performance will be challenged. Search marketers who make the most of this difficult period will take the time to fortify their campaigns through exacting optimization and coordination of inbound search efforts with the site-side experience. This will serve them well when the current crisis/panic/malaise subsides.
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