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Top 10 Reasons to Double Your Search Budget for '08

  |  December 14, 2007   |  Comments

Increase your search budget before rivals collectively kick your butt, take market share, or poach your most valuable customers.

Many traditional agencies and marketers have already set their 2008 budgets in offline media but have yet to lock in their search budgets. If a skilled team has managed it using good tools and technology, search has likely delivered against the market's heightened expectations. To search's proven success add increasing skepticism about offline media getting through to its defined target audience (or making an impact when it does), and you have a situation ripe for a budget shift.

You may believe search deserves a bigger budget, but you still need ammunition to justify a major budget shift. Maybe you plan and allocate auction-based media budgets on an annual basis even though the predictability of inventory levels, engine allocations, ROI (define), or profit are unreliable at best. Each industry and business are different, but nearly every search marketer should ask for bigger budgets now instead of scrambling for budget next year when that a paltry search budget won't deliver the results you desire, as your competition leaps over you.

As you think about next year's budgets, you may want to factor in some strategic reasons and rationales covered in this column. Just one of these rationales may provide a basis for a two-fold budget increase. When combining these factors and trends, you may determine that the correct budget increase is significantly more than double.

Here, in no particular order, are my top 10 reasons to double your search budget for 2008. Most of these reasons are U.S.-centric, but many apply to international markets as well.

  • Search query volume will increase modestly overall but may have particular spikes in your category due to systemic or marketing-related events. Even if search query growth is 10 percent, those additional clicks add up.

  • Other media increasingly drives search behavior instead of store traffic or personal conversations. Your online and offline media buys, PR, and viral marketing are driving search behavior; as you spend your other media more effectively and design better viral or social media campaigns, your brand and generic searches will increase.

  • Better targeting by the search engines will increase your terms' CTR (define). By improving the selection of your ads (or your competition's) that belong in a SERP (define), the average number of outbound paid search clicks per impression will go up. When combined with more searches, there is a multiplier effect.

  • You and your competition will hopefully perform additional creative testing within the next six months. Better creative garners more clicks per impression, which means your spend will increase. Additionally, you may get a boost in position based on the better quality score on your new search ad creative.

  • New entrants into the market may escalate click prices. Believe it or not, some major marketers are just discovering search or that search campaigns are effective beyond the no-brainer keywords. Those deep-pocketed marketers can hit the ground aggressively and not even worry about ROI for the first year.

  • Click price escalation may be driven by existing marketers improving their conversion rates based on landing page testing. Just as you regularly test landing pages or other ways of raising conversion rates, so do your competitors. As they succeed in raising the conversion rate, their allowable max bid for CPC (define) goes up, and even if they manually bid, one can expect bid escalation. An automated campaign system can allow you to do elasticity tests to determine if position change is sustainable.

  • New keyword-targeted contextual inventory opportunities will arise. These include links placed in video players and across social media networks. Google, Yahoo, and Microsoft will be joined by an increasing number of players selling keyword-targeted text link ads placed by context.

  • Behavioral targeting opportunities for display inventory, pure text inventory, and creative assembly ads will increase. Yahoo already has Smart Ads, but I expect to see simpler retargeting options to become available from other engines, though perhaps not Google, based on its current stance on search retargeting.

  • More screen real estate will be dedicated to paid listings. As the relevance of paid ads improves due to engine targeting and marketers further refining campaigns, match types, and creative, the engines, in particular Google, will be more likely to allocate screen real estate to ads. In addition, there may be new tabs where advertising shows up for the first time, including news video and images.

  • More research showing the true value of the search impression and click will be released. This will drive marketers to increase budgets, often pulling spend from slush funds or canceling other media with poor or dubious performance.

It's always easier to ask for the PPC (define) search budget money now than to ask for it during a crisis when rivals are collectively kicking your butt, taking market share, or poaching your most valuable customers. A well-tuned campaign can almost always absorb more budget, so ask for double and support that request with these reasons as well as any internal data showing trends that indicate you'll need more for search.

As you think about budgets, don't forget to take the SEMPO survey and learn what others are budgeting when results are available.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.

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ABOUT THE AUTHOR

Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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