According to eMarketer, search ad spending will reach $10.4 billion this year, more than twice as much as advertisers will spend on display ads. More importantly for Google,
search ads will represent 42 percent of all advertising spending, while
display ads will account for just 21 percent of all online advertising.
Let me explain.
Joe Widgetmaker wants to use advertising & marketing to sell more widgets. As part of the strategy, he buys a bunch of search ads. In a month (or couple of months), he gets a report back from Google (or wherever) showing him that X number of ads translated into Y number of clickthru traffic resulted in Z amount of sales.
“Well, hot damn!” he thinks. It’s all there in black & white. He spent this amount of money which resulted in that amount of sales. Well, to get even more sales, he starts shifting more of his budget over into search advertising.
And runs right into the wall of diminishing returns.
Not to worry, the search ad sales guys tell him, he just needs this little thingy called “SEO” to help him out. So Joe starts writing checks to the SEO guys, along with all the checks now flowing into search sales. Which bumps up his traffic, leading to nice, neat little spreadsheets with important (-looking) numbers in all the right color-coded boxes.
For unimaginative business owners, this is the perfect solution. It’s a gimmick. They put money into the Black Box input here, and money comes out of the Black Box output there.
The point they are missing in all this:
Before anyone can type that search string into Google, THEY HAVE TO KNOW YOU EXIST.
If you’re trying to introduce a new & improved product to market (like, say Chrome), you need to make people aware of it. And that requires the use of all the tried-and-true Old Media ad channels, along with the tricky “earned media” in the digital sphere.
I think that one of the real problems that newspapers, radio & TV are facing right now is a failure in marketing their ad products. Google et al. have made it easy for any mouth-breather to look at their shiny spreadsheets and track how effective their ad & marketing campaigns are. OK, OK, I know that the big guys have always had that kind of capacity. Coca-Cola, Proctor & Gamble, Pfizer — those guys have very sophisticated thin-slicing marketing departments that can tell with pinpoint accuracy how much a campaign has “moved the needle.”
But your average small to midsize business (and maybe, in light of “rightsizing,” Big Biz as well) doesn’t have the money, time or attention to employ a staff of statisticians, social psychologists, behavior analysts and researchers to aggregate & analyze the more-squishy effects of display adverts, 30-second spots and drive-time program sponsorship.
And as Las Vegas started discovering back in the early 90s, while the profit margins on bringing in the “whales” (i.e. gamblers who lose $1 million per hand at Pai Gow Poker) are higher, there is far, far more money to be made by buildling 5,000-room hotel megaplexes to attract Fred & Wilma Sixpack to lose $1500 on a weekend getaway. More consistent, too.
Google has produced a product that the Sixpacks can understand and use. And there are a whole lot more of them out there than there are Pepsi/Yum Industries.
The challenge for Old Media as it transitions to include digital (or migrates to new, or whatever phrase you wanna use to describe the changes we are adrift in), is to produce a means by which any Econ 101 C-student can draw the thick line between “Cause” and “Effect” in his ad spending.