If search traffic is anything to go by, the US recession is already here! Businesses online will need to rethink their strategy.
It’s becoming pretty clear to me that the US will go into recession this year. Mind boggling amounts of cash have been lost through the sub-prime mess and with the bad news coming out of the large American banks on an almost daily basis it’s created perfect “doom and gloom” media fodder. It naturally follows that consumer sentiment becomes much more conservative as everyone begins to batten down and ride out the storm.
One indicator is Google Trends, which measures keyword search volume. The numbers on the chart above show a huge, recent spike in traffic for the keyword “recession”. It looks to me like they’re talking themselves into it!
For us, the questions are:
Obviously I’m not an economist! But it might pay to be a little conservative in 2008 especially if you’re running a Pay Per Click campaign.
If your principal online markets are the US, Britain or Europe you’ll likely see a growth in “comparative price shopping” as online consumers begin to hunt for the best prices. Depending on your price point situation, you might consider appending words like “cheap”, “cheapest”, “discount”, “low cost”, “bargain” to your pay-per-click (PPC) key phrases.
Another possible economic impact may be a rise of the Australian dollar against many international currencies. This could make it more expensive for your international online customers to buy from you. You may need to examine your supply channels and squeeze your suppliers for even keener pricing in order for you to stay competitive.
Moreover, your traditional domestic (Australian) customers may begin to buy from offshore vendors as their products become cheaper with a stronger Australian dollar.
My advice is to closely monitor your PPC expenditure and seriously think about your SEO.
If you’re not doing this already, carefully monitor your PPC campaigns from now on. Look closely at your advertising spend key-phrase by key-phrase, in particular watching your conversion rates and especially your return on investment (ROI).
You should perhaps begin to focus your expenditure on the best converting key phrases, and think about pruning the poorly performing ones. While having Google Ads appearing for lots of keywords and phrases is great for branding (as you have the opportunity for your brand to be exposed to lots of Google users) this might become more of a luxury than a necessity.
I believe companies that have already performed SEO will benefit the most from an economic slowdown as they’ll be in a position to wind back their PPC expenditure and benefit from “free” organic traffic. I expect we could see a shift in online spend towards SEO in 2008 as it provides the longest lasting ROI over time.
The affiliate marketing model may also experience increased growth this year as merchants look for “cheaper” ways to promote their wares. Affiliate marketing is based on a pay-per-performance model, where traffic is essentially free and you only pay on a desired “action”. So we may see also a trend away from PPC as online businesses explore cheaper avenues to revenue generation.
While banner ads are brilliant for branding, if an economic downturn hits, we’ll almost certainly see margins on banner ad placement fall as advertisers wind back their budgets for online media placement spend.
Chris Thomas heads Reseo a search engine optimisation company which specialises in setting up and maintaining Google AdWords campaigns, Affiliate Programs and Search Engine Optimisation campaigns for a range of corporate clients.
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