The Case for Spending on Search in Today’s Economy

Google Quality Score FAQs
November 3, 2008
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November 6, 2008

The Case for Spending on Search in Today’s Economy


Posted by Michael Kahn, VP of Account Management and Marketing

Your Customers are Still Searching

·         Existing online shoppers expect to keep shopping
E-commerce will likely weather the current economic storm because the core online shopper is affluent, tech-savvy and career focused, thus less affected by the downturn.  According to a recent Forrester study, 84% of Web buyers indicate that they plan to spend the same or more online in the next 12 months.

·         New online shoppers are entering the channel for price and convenience
Although most retailers will feel the effects of cutbacks in consumer spending, the online business model is well-positioned as a channel that provides value and convenience. 

·         Longer-tenured and smaller retailers saw healthy increases in sales despite the downturn
We have seen a year-over-year decrease in total retail transactions for advertisers with an average order value over $150.  By comparison, advertisers with smaller average order values saw increases of between 20% and 30% in the third quarter.  It has been suggested, however, that luxury items may be the first to bounce back.  For our longer-tenured clients, year-over-year sales and transactions have also been rising over that last few months.

Online Marketing, Specifically Search, is Strong

·         Search marketing is data-driven, targeted and measurable
Search can be validated, which is important when budgets are tight.  Detailed reporting and analysis facilitates quick, targeted decisions, particularly when it comes to bid strategy.  Thus, every dollar you put into search is used to maximize ROI.

·         Search is an efficient branding channel
On top of clicks and conversions, search gives your brand visibility when branding dollars may be tight.  When Google says that a business is more relevant than another business for a certain keyword, the searcher believes that.  Search helps an advertiser brand itself as most relevant.

 

·         Online advertising is still growing while other channels are shrinking
Online sales are becoming a larger portion of total sales, gaining share from over-the-phone and physical store sales.  Online advertising spend is still posting steady growth, just at a slower rate.

·         Search is seeing greater growth than other online channels
Search accounted for nearly half of all online revenue in the first half of 2008, and continues to post double-digit growth rates.  According to eMarketer, search advertising revenue increased 23% from the first half of 2007 to the first half of 2008.

Your Competition is Doing It

The defensive position would be to maintain spending so competitors can’t poach market share.  More aggressive advertisers may want to invest to be the one doing the poaching. 


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