Over the years, I have been asked what I plan to spend on pay-per-click this quarter, this month, this year, etc. Even worse is when I am told what I am supposed to spend. Pay-per-click has always been a rogue marketing tactic. That same rogue philosophy applies to budgeting. PPC does not follow the old marketing budget rules.
Pay-per-click spend is dictated by demand, not by budgets. Yes, it can probably stay under a predetermined budget, but why? Since PPC is based on demand, if demand goes up, isn’t that a good problem to have.
Pay-per-click is an essential part of marketing. In fact, if done correctly, it’s the last piece that should be cut in tough times. As noted before, when times are tough, think twice before ending PPC advertising.
On the other hand, a company should also not set a budget to reach if the demand is not there. In hard economic times, often demand is down. Pay-per-click often generates very little demand. It only takes advantage of the demand that is available. If people are not interested, thus not searching, then it does not matter what the budget is. Spending PPC money just because the budget is set is bad marketing. Spite is a bad marketing stategy.
I understand not setting a marketing budget does not work for many CFO’s, however they do understand revenue. Like any good PPC Manager knows, statistics are essential. Proving every $1 spent generated $100, or whatever margin works for a given product, will make any Chief Financial Officer happy. Having that data and then showing demand increase, will help sell the spend increase.
Sure, there are always tactics that you can do to cut the fat in pay-per-click campaigns. Thus, it’s essential to have detailed statistics on PPC, in order to justify the increase spending. When that happens, it’s an easy sell.
Despite what “experts” say, advertising is NOT failing on the internet. In fact, any real expert will tell you that search marketing is stronger than ever.
As we know, if paid search is not working, then you are doing something wrong. Assuming that all campaigns are optimized, there are no options but to follow the demand not the budget.
Tags: budget, Pay Per Click, PPC
March 27th, 2009 at 9:07 am
Hi John, thanks for the link! Nice post!
April 4th, 2009 at 12:27 am
John, Right On! There is a lot of irrationality around PPC budgets. I find its ROI performs differently in different markets. Factoring in alternative conversions (phonecalls, emails, newsletter signups, etc) is important.
For one of our boutique hotels we saw that bookings dropped when we pulled their “brand name” keyword phrases too. Here is the URL if interested http://newsletter.blizzardinte.....009/03/02/
See you in DC?
July 22nd, 2009 at 10:25 pm
You’re right, budget should be more focused on demand, so we do need to move away from the mindset of needing to ‘get away spend’ just to meet the budget.
But as a large proportion of PPC agencies are paid commissions % of spend, unless the incentives are changed I can’t see this happening any time soon.