How to use the downturn to your advantage

As the world teeters on the brink of financial collapse, the smartest thing you can do is increase your spending in paid search. Now.

That sounds counterintuitive, but it's all a matter of learning to see your paid search as an investment. I'll explain why.

Boom times are for revenue, bust times are for market share
On the most basic level, recessions are perfect times for marketing overall -- particularly because they're an ideal time for capturing market share. While your competition is slashing its marketing budget, you can take the opportunity to snap up the customers that your competition ignores. The strategy will be particularly rewarding once the economy bounces back, and your brand equity is suddenly head-and-shoulders above the competition's.

This point holds particular weight in the world of search as it becomes an increasingly critical shopping arena amid the worsening economy. Analyst David Hallerman from eMarketer explains it bluntly: "Customers are going to search engines because they are looking for better deals."

And if customers are flocking to search engines during a downturn, then capturing market share in a downturn means paying particularly strong attention to the search channel. If search is where the customers are, then you need to be in search to capture the customer market.

Investment in data
If you want to know how best to target your ads to your best customers, you need plenty of data to work with. And if there's ever a time when you need to create efficient campaigns by targeting your ads better, it's when times are tough.

This point resonates powerfully in search, perhaps the most data-driven marketing medium around. It's your marketing data that tells you things like what kind of keywords your ideal customers use, what types of search ads they are most likely to click, and what your customers look for in an ideal landing page.

But the amount of data you have correlates directly to the size of your search investment. If you create a large search campaign, you'll have a lot of data to work with, and you'll have the opportunity to create an extremely strong search ROI by working with that data. If you run a tiny search campaign, you'll lose the opportunity to find the data you need, and you'll end up risking the ability to target efficiently.

Of course, it's not enough to have the data from a large campaign. You need to know how to make use of that data. But without the data as a starting point, you really never know what levers to push to make your search marketing campaigns more intelligent -- something you need to know in a downturn, when efficiency matters most. At the same time, having more data now will help you know how to take advantage of improvements in the economy, whenever they come.

Since these are things you really can't do without, you really can't do without a strong investment in paid search.

Data as an investment, part two: Quality score
There's also a second, search-specific part of the data story that's valuable to explore here: the search engine's ad quality ranking systems (like Google's Quality Score).

The idea behind quality ranking is simple. Search engines only make money when searchers click on search ads. Therefore, poorly-performing search ads represent an opportunity cost for the engines, which would rather hand over an ad unit to an ad that gains more clicks. To compensate, search engines charge advertisers more per click on ads that seem unlikely to perform well.

How do the engines know if an ad will perform well? One of the most powerful indicators is the advertiser's track record. Search engines assume an advertiser with a strong history of clicks will gain a similar number of clicks going forward. And so the more search clicks you've garnered in the past, the less you'll pay per click now.

The converse is also true: The fewer clicks you've garnered in the past, the harder it is to know that your ad will be a success, and the more you'll have to pay the search engine per click. That's equally true if your ads have underperformed in the past, as it is if you simply haven't run enough ads to build up a track record. Either way, the engines can't tell if your ad will perform well, and they'll simply charge you more for each click. (This, of course, is a woefully simplified explanation of quality ranking, but it gets to the gist of things.)

Quality ranking holds tremendous ramifications for would-be search advertisers who are planning to sit out the recession. By not running search ads, those advertisers are doing nothing to develop click histories. As a result, they'll need to pay exorbitant click costs on the search ads they run, once the economy bounces back. In other words, they'll be slammed with exorbitant search fees, at precisely the time when their customers are looking to buy again.

And so while some advertisers hope to save money by pulling out of search for the duration of the recession, it may prove cheaper to stay in search, in the long run.

Recessions are temporary; investments are forever
Is holding steady in search an easy decision in a recession? Of course not. But in business, the people who come out on top are the ones who keep their heads when everyone else panics. This is why you need to think beyond short-term fears, and instead look to long-term investments. Search is just one such investment you need to consider.

After all, recessions are temporary. But the benefits of a good search campaign might just be forever.

[the article was originally published at http://www.imediaconnection.com/content/22914.asp]