Sunday, January 13, 2008

Recession and Search Marketing

There are growing signs of a recession in the US. The subprime crisis has caused banks to cut bank on lending while they revalue their assets and seek liquidity. As a result foreclosures are up and today the NY Times reports that spending has slowed significantly. The national savings rate is low to negative because people relied on increases in home equity to spend. It looks like the American spending machine is going to take a breather. High nergy prices have cascaded throughout the economy. Even food costs more as rising ethanol production is increasing the price for food throughout.

What does that mean for those in the search marketing space? Typically marketing budgets are the easy places to cut when sales drop. It tends to be a discretionary activity to slice back on to help hold the line on costs. For search marketing, this actually should not happen. Unlike other forms of marketing, it is search marketing is the most measurable method of marketing. You can study each step of the process from click to lead to close. You know the numbers at each stage of the process whether is click price, cost per lead or cost per sale.

Rather than spend on a significant TV campaign where returns are distant and difficult to measure or highway billboards, crank up your search marketing budget. Run more campaigns because you know what you are getting for your marketing dollar.

I'd love to get some feedback on this...

1 comment:

Andreas said...

I think in previous recessions, marketing was cut because it was a "soft" activity: you couldn't really measure it. But when marketing becomes quantified through PPC and analytics, then there is a clear correlation between ad spend and sales. To recession-proof our SEM, we need to make that clear: "SEM is a profit-center and it produces results".