Between further interest rate rises, inflation, empty shelves, extortionate lettuce prices, supply chain issues and the barely believable events in Eastern Europe, the past six months there’s been a cacophony of environmental factors.
The knock-on effects are everywhere. Marketers appreciate the impact being felt on consumer wallets, which helped prop up the retail industry during lockdowns. A reduction in discretionary spending will shrink most sectors’ in-market consumers. From a digital marketing perspective, we anticipate that the competition for keywords in most categories will likely rise as a result.
The increased competition will drive up the average cost per click (CPC) for advertisers. In these conditions, maintaining media performance levels we’ve experienced for the past 12 months becomes more difficult as paid media costs will increase. It’s likely we’ll see weaker return on ad spend (ROAS) with this increased competition evidenced by the fact some client sectors have seen costs for branded terms increase as much as six-fold.
Advertisers that were spending $100,000 a month, would now have to fork out well over $800,000 for the same results. In all reality, most won’t increase their budgets by that much and will have to settle for significantly reduced campaign reach. Conversations around the best approach to paid media have now become a priority.
Brand has never been more important
When it comes to digital marketing and brand you’ll always have a competitive edge when focusing on your own brand, as you should always be the most relevant (think rank one, page one).
Investing in your brand results in hopefully more of the market searching for your branded term (demand generation), instead of a broader term, giving you the competitive edge. Paid search marketing for your own brand is always going to be cheaper than competing on sector’s terms. So if a buyer searches ‘buy Nike shoes online’, rather than ‘buy shoes online’ it’s a benefit in both AdWords auction and in ranking organically and securing peak visibility for that user.
Your CPC will be lower and it will be easier to rank higher. So it’s both cheaper and easier.
Focus on taking market share
This next point is going to be more directed at challenger brands than market leaders. When the whole pie is shrinking, conditions change.
One way to maintain revenues is to focus efforts on taking market share from competitors. To increase your share, content efforts (be it across paid, owned or earned media) should focus on your unique selling points among your core group, rather than market fit – why someone should choose your brand over another when there’s intent to buy.
Decision making process in marketing theory says there are five areas: Need recognition, information search, evaluation of alternatives, purchase and post-purchase.
How you do this will vary, but for the most gain for least investment in a shrinking market, you should direct more of your marketing efforts towards meeting users in the information search and honing your value proposition during the evaluation of alternatives. Focus on delivering real value to consumers, not just through the product, but through information and building a relationship with them helps you stand out when users are evaluating alternatives.
Invest in your future
The fight for visibility will continue. And the smartest way I can think to approach it is to focus on your owned channels. Organic reach across digital works to give you an advantage, without the incremental costs (in other words free clicks). And the difference in cost between paid and owned is staggering. Within owned media, the cost to impact 100,000 people could be the same as 100 million. Focus on the content and relevance and it’s a winning formula.
Customers want to know they’re making the right choice, so clue them in on the whole topic area you operate in and you’ll be rewarded. Make all of the info easy for Google to find and you’ll have mastered technical excellence as well.
Re-evaluating your marketing mix
Many organisations still view content generation for owned media as a cost. An outlay which takes a front loading of resources. This may be true. But I can tell you from experience that it pays off quicker than expected.
In conversations with advertisers, I explain that if you’re not seeing 50 per cent of revenue come from organic then you’re leaving money on the table. There’s no incremental cost once the content has been resourced and it will continue to deliver with compound interest. Paid media isn’t going away, but it’s going to deliver less returns than we’ve been experiencing.
The search for how to deal with the known future, must start with focusing on what you can control, your owned channels.
Tags: digital marketing, data-driven marketing, marketing campaigns, performance marketing
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