Are PPC Budgets Increasing Or Decreasing In These Recessionary Times?

Jan 8, 2009 at 9:40am ET by Barry Schwartz

I have been hearing from many people in the search industry that the recession won’t impact the search space as much as other industries. In fact, many people feel that search will grow, while we see other industries take huge double-digit declines. I am skeptical about the search industry not taking a hit, in fact a major hit. So when I see search companies release data, I take interest.

Alan Rimm-Kaufman, who is incredibly data driven, posted an aggregate data analysis of his client’s Q4 2008 versus 2007 search ad spend. Let me bullet point the key metrics for you:

PPC Sales: showed a growth for 35% of Kaufman’s clients but a decline for 65% of his clients in the 4th quarter of 2008 vs. 2007
PPC budgets: 25% of Kaufman’s clients increased their PPC spend 2008 Q4 vs. 2007, while 75% pulled back PPC spend

Those results don’t seem overwhelmingly positive to me.

However, a SearchIgnite release (PDF) claims retail search spend is up 33% so far in Q4 2008, compared to Q4 2007. This is specifically retail, but still, overall search spend is up 33% for this company who manages over $350 million in paid search annually.

There are many predictions and theories for 2009 and search ad spend. Personally, I am a pessimist when it comes to the economy and I am overall worried about this industry’s growth, like I am other industries.

Brad Geddes the other day wrote a piece here named Beat the Competition by Anticipating Traffic Changes that might help some search advertisers through these more difficult times.

Barry Schwartz is Search Engine Land's News Editor and owns RustyBrick, a NY based web consulting firm. He also runs Search Engine Roundtable, a popular search blog on very advanced SEM topics. Barry's personal blog is named Cartoon Barry and he can be followed on Twitter here.

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ONE COMMENT ON Are PPC Budgets Increasing Or Decreasing In These Recessionary Times?

cryptblade, January 8th, 2009 at 11:54 am ET:

I too am skeptical of the sustainability of PPC and SEO spending. Too many search professionals are arrogant and believe their industry is the best thing since sliced bread. My current boss blindly thinks every company should just focus on SEO and PPC.

The truth is, marketing is marketing and SEO is not the bumper crop magic bullet marketing that all companies need. As the economy continues in its current state and as business exchanges continue at current pace – or, as some fear, worsen, there WILL be a pull back in SEO-PPC spending.

In my opinion, most SEO-PPC firms that are not out right full-service agencies with web design, interactive creative media, etc will die.

There will be an industry brain drain as SEOs working for agencies turn to individual companies and those companies, in turn, look for SEOs/webmasters/PPC specialists or gurus who can handle it all (or most of it). There are plenty of competent SEOs/PPCs who are willing to work for individual companies, collect a steady pay check, and ride out the economy until recovery. And there are plenty of companies who need the most bang for their buck. An SEO employee, after all, can also be the webmaster, the IT guy, the email guy, and pick up slack in almost anything else.

I think 2009 will get worse as the year progresses. The initial boost with Obama in place will get things jumped up a bit – but as the economy sputters, the reality will sink in more, and there will be retraction.

Remember, at the core, this is a global economic problem. Asia, Europe, the US and other developed nations are experiencing economic hardships. This is not something where some SEOs and PPCs can “will it” to be better.

Eventually, companies will not have marketing budgets to work with – the small ones at least. Then a lot of SEOs and PPCs will be competing for a few that still have cash to spend – and those companies will be very very selective who they work with.

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