[SMK] Social Media Knowledge

DIGITAL MARKETING NEWS

eMarketer Forecasts Steep Drop In Search Marketing Spend

[NEW STUDY] Even Performance Media Is Not COVID-19 Proof

Long considered to be “recession-proof”, it appears that search marketing may well be just as fallible as every other marketing channel, in the face of COVID-19.

Between now and end of June, eMarketer’s latest search ad forecast sees US ad spending to fall between 20.2% and 29.4% on a year-over-year basis due to the crisis.  

While eMarketer’s data draws from the US market, the pressures driving budgets south are structural, and relevant globally.

As a performance marketing channel that is relied on to drive return on investment, search is often viewed as relatively safe in a recession, when marketers are forced to justify budgets.

But there are at least two significant downward pressures on search ad spending during the current crisis: 

  1. Search is a lower-funnel ad channel that’s typically geared toward driving conversions, including in-store, and many of those conversions can’t happen right now because of quarantines, inventory shortfalls and related problems
  2. Search budgets aren’t committed in advance and can be paused or pulled at any time

Ecommerce activity typically drives a significant share of search ad spending. But for now, as an example, Amazon has reportedly pulled back significantly from spending on Google search ads, likely because it doesn’t want to drive additional demand when it’s already running close to capacity.

Lower Search Spend May Not Translate To Cheaper Ad Clicks

Generally speaking, for organisations still running campaigns, reductions in spending across the board mean cheaper ad delivery costs.

Case in point, the Wall Street Journal reported a sizeable drop in Facebook ad prices last weekend:

The cost to put an ad in front of Facebook users 1,000 times in March dropped 15% to 20% from February, according to a recent analysis by one advertising holding company’s buying group.

Such rates fell about 25% in the same time frame for the digital marketing agency Wpromote LLC, which said it manages more than $130 million in annual ad spending on Facebook.

The decline was 20% at 4C Insights Inc., a marketing technology company that helped brands manage $350 million in ad spending across major tech platforms from January to March.

While widespread reductions in ad investment offer relief for brands, small business and not-for-profits with campaigns live on social media. That same upside is unlikely to translate as well within search, according to eMarketer.

“We believe travel advertisers will decrease search spending most sharply, and media and entertainment industry search budgets will be severely trimmed as well. 

Advertisers in other industries will also pull back spending on average—but keyword bidding means there likely won’t be as large a drop in pricing for search ads as there will be for display.”

In other words, if your online yoga business is trading well and can afford to run search campaigns, the same is likely to be true of your competitors.

Therefore, adopting a more longtail search strategy or exploring keyword themes out of the usual, might be one way to access bargain search clicks.

Down For Now, But Back Soon. Ish

Obviously, for Google, this is all pretty bad news.

After all, up to 40% of its revenue comes from categories hard hit by COVID-19: in-person retail, restaurants, travel, automotive and small businesses.

However, be that as it may, following the 2009 financial crisis, Google has diversified its business beyond search ads. With YouTube & Google Cloud now serious growth drivers.

Likewise, with governments considering their respective lockdown exit strategies, search investment will surge rapidly within affected areas as restrictions loosen.

Also, given the quicker short-term wins associated with performance media, Google will likely bounce back quicker from COVID-19 setbacks than Facebook.

While social media usage is booming, the majority of social media marketing spend sits in the more longer-term (yet valuable) brand-building space.

Hence, according to the Wall Street Journal, in March Facebook proposed to ad buyers that its video ad offerings could be suitable alternatives for ad dollars reallocated from sports sponsorships and media. With the cancellation of anticipated big, live audiences.

Although, given that Facebook’s average video watch time is supposedly around six seconds, it's going to be stretch-and-a-half to convince Mastercard that its video offering is comparative to TV's UEFA Champions League…

Another slight concern for Wall Street analysts, which is expected to drag on Facebook’s COVID-19 recovery, is its heavier reliance on small businesses for ad spend.

Therefore, while search costs could drop for some through to June, they should begin to pick up from Q3, before a big ramp-up in Q4.

Facebook, social media, and online display more broadly, on the other hand, are likely to experience a much slower recovery, offering low-cost marketing opportunities well into 2021.

Every cloud, and all…

Learn with SMK through Sept 2022

Start your SMK: Digital Excellence 30-day free trial today and unlock unlimited, on-demand access to hundreds of hours of digital masterclasses, training courses and hands-on tutorials.

Your risk-free trial offers the perfect opportunity to expand and upgrade your digital intellectual property.

Each month SMK releases 30 hours of new and updated social media and digital marketing educational course content, ensuring you never get left behind – be it on digital strategy, tactics or implementation.

Alongside this, SMK offers live help and support weekly within the SMK Working Group. It might be a quick fix or the root of a bigger problem; either way, a problem shared is a problem halved. On a day-to-day basis, SMK’s team gives you hands-on support and fresh ideas.

Not to mention a shoulder to cry on, occasionally

Sept SMK Courses, Live Help & Support Options

Live Member Clinics every Monday & Tuesday from 1 pm – 2 pm AEST

  • Live help and support from SMK’s team of analysts.
  • Book in to request a personalised discussion for 15 or 30m via Zoom within the Facebook Working Group.

Weekly Techical Labs: LinkedIn Pages, Ads, Campaign Manager, Pixel Tracking, & More on Wednesdays from 1 pm – 2 pm AEST

  • Technical Labs explore the technological process and workflows related to key digital marketing activities.

YouTube Marketing: Organic & Paid Video Mastery on Thursdays from 10 am – 12 pm AEST

  • Module One: 2022 YouTube Marketing Trends, Opportunities & Challenges
  • Module Two: YouTube Channel Optimisation, Analytics & Video Engagement
  • Module Three: Understanding YouTube Video’s Algorithm & Content Marketing
  • Module Four: YouTube Video Ad Campaigns & Influencer Marketing

LinkedIn & B2B Social Media Marketing on Fridays from 11 am – 1 pm AEST

  • Module 1: 2022 LinkedIn & B2B Social Media Marketing Opportunities
  • Module 2: LinkedIn Content Marketing, Engagement & Brand Building
  • Module 3: Thought-Leadership, Employee Advocacy & Personal Branding
  • Module 4: Creating High-Performing LinkedIn Ads Campaigns

 

Leave a Comment