Oct 72008

PPC Strategy During The Current Financial Crisis

We're living through historically bad financial times. Wall Street is in crisis. Consumer confidence is plummeting. Many retailers are projecting weak Q4 sales and revising earnings estimates downward.

The chaos on Wall Street has broad implications for our economy. Considering here only the narrow perspective of paid search advertising, how should online advertisers respond?

  1. Have clear economic targets. This is not the time for hazy goals. Determine how aggressively or how conservatively you should be advertising, and stick to your numbers. If your SPCs (sales-per-click) decline, so should your bids. This is not the time to change your overall strategy each week.
  2. Use strong bid management tools. Consumer sentiment and shopping trends can shift rapidly. This is not the time for coarse bidding at the adgroup level, for inaccurate algorithms, or for infrequent manual bid adjustments.
  3. Shift ad dollars to stronger channels. This may mean moving more money into paid search. This may mean moving more money out of paid search. Now isn't the time to maintain historic channel budget allocation simple because "that's the way we've always done it."
  4. Seek capped agency or technology fees. At RKG, we cap our fees, so for our large clients our management fees become an increasingly smaller percentage of their advertising effort. Anything that scales without limit with ad spend or with sales places a heavy burden on your margins.
  5. Protect your bottom line first. Don’t let revenue targets established a year ago drive decisions you’re making now. Trying to hit growth goals will lead some retailers into ruin.
  6. Stay calm. The world hasn't ended for retail. This is not the time to over react. Strong retailers will gain market share through this period, even with top line weakness.

For all of us and our nation, may we reach some stability soon.


12 Responses to "PPC Strategy During The Current Financial Crisis"
Sage advice. Thanks for sharing!
Despite the economic crisis, how could most retailers be facing a Q4 loss? For most retail this is the best time of the year, you get Christmas shopping, and in the US you also get Black Friday or whatever it's called. I could see how things like financial services, real estate, etc would have trouble as they tend to be more successful in the summer. For if you take a toy store, for example, this is the busiest time of the year for them.
Christian -- I didn't mean to imply all retailers will face Q4 losses. But it is not improbable that many retailers will be facing weak Q4 sales. Analysts following publicly-traded retailers have revised earnings and Q4 sales downward in many cases. There are also exceptions, like discount chains and supermarkets, who are predicting increased sales as people opt for less costly goods and home cooked meals. There are several ways the wall street losses could play out on main street, with some scenarios more dire than others. For our nation, we really hope that what does come to pass falls into the not-so-bad category. We recommend protecting the bottom line by watching ad-level SPCs like a hawk and bidding accordingly. Thanks for the comment -- Alan
Thank you for the good advice Alan. It's intriguing to observe how there are some businesses, and individuals, feeling the financial crisis while others hear about it, talk about it, worry about it, but haven't actually personally felt it in their businesses. Many online businesses are run by small corporations, and people without a whole lot of money to invest elsewhere besides their businesses. For many of them, the financial crisis in Wall Street seems to be a scary ghost, just not something that has reached in their pockets yet. Regardless of the situation, anyone can appreciate a strong, confident approach outlined in this post. Thank you :) seosurvivor
Great tips during this crazy time. People are most likely going to pull much of their PPC advertising as a whole these days but the important thing is to stay calm and not be rash.
Brian says:
I hope none of your businesses make over $250,000.


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