Now What? When New Competition Suddenly Makes PPC Unprofitable

When PPC Is No Longer ProfitableThere have always been companies for which paid search didn’t pan out or was cost prohibitive. But, what happens when companies that have been running successful paid search campaigns suddenly find themselves getting crushed by new competition?

After looking into cases of advertisers getting squeezed out of paid search by large parent companies, I wanted to hear what advice marketers would give to these advertisers. What channels should they turn to to make up for the lost sales or lead volume from paid search?

I first spoke with Jeremy Hull, associate director of paid search at iProspect, to hear what a paid search practitioner would recommend. Hull acknowledged that in select cases his agency recommends that clients advertise more than one brand on the same keywords, particularly when those brands attract different audiences. Hull had four main recommendations for advertisers finding it hard to compete.

First, he says, “Eighty percent of traffic is still going to natural search. Make SEO a priority.” That means investing in it as you would any other channel with a dedicated budget. “Shore up a natural search strategy and you’ll see overall benefits.” SEO is a slow boat to turn and not likely pay off quickly, however, by investing in it now, advertisers will at least start to insulate themselves from further search losses.

Second, focus on mobile — not apps, but mobile usability. Be sure your sites, landing pages and emails look good on mobile devices. This is no longer an option for any company, for example, a recent Experian study that showed 50 percent of email opens now happen on smartphones and tablets.

Third, ramp up social advertising. It can be extremely targeted and efficient to reach prospective audiences on Facebook, Twitter, LinkedIn and other social networks.

Finally, Hull cautions advertisers to not give up on PPC entirely but to get more creative with targeting:

“none of these will replace the quick, scalable, immediate volume of PPC, they’re good places to expand your efforts that will pay off in the long term. I would also urge advertisers to revisit PPC — just because you can’t afford to be in a top position for all your desired keywords for every search doesn’t mean you can’t compete. Use geo-targeting, RLSA, and other audience segmentation methods and you can focus your PPC budget extremely effectively— not trying to own everything, but being present when it’s most effective for you.”

Many marketers who responded to my inquiry echoed Hull’s recommendation to focus on SEO and also emphasized establishing active social profiles on networks where advertisers’ target audiences congregate. Still, nearly all acknowledged the challenges of ramping up these channels quickly to make up for losses in paid search.

Paid social was the leading alternative advertising recommendation. Andy Groller, director of digital advertising at Dragon Search Marketing in New York, wrote ”Social advertising, including Facebook and LinkedIn ads, is still relatively cheap in comparison to AdWords, and combined with their robust demographic targeting capabilities, may actually present better opportunities for various industries based on the niche audiences that purchase their products and/or services. For some of our client verticals, we actually see better conversion rates and cost per conversion through social advertising compared to paid search on AdWords and Bing.”

It also can pay to look beyond the big social networks. “StumbleUpon’s Paid Discovery is a great, cheap alternative. This allows you to promote your site and specific pages to users on StumbleUpon looking within certain interests as low as just $0.10 per visitor. This form of advertising works best for informational blogs and sites, though it can go far in promoting sales too,” says Chris Kujawski, connection strategist at digital agency Hanson Inc. in Ohio.

Customer referral programs are often extremely effective when the offer is right. Casey Halloran, co-founder and chief marketing officer for Vacations of Costa Rica, an online travel agency, says her company has been working to trim its seven figure annual PPC budget and testing new programs. “Our first major success was in implementing a client Refer-a-Friend program. This helped grow our referral business from 3% to 12% of all sales within one year. We offer past customers $100 on if they refer us a new client.”

Surprisingly, very few marketers who responded to my inquiry mentioned affiliate advertising. Gil Dantas, co-founder of blogging platform Notelr, was one of the few, saying, “If done right, affiliate marketing can be a great alternative for companies to generate sales and, most importantly, drive consumer behaviour. It is estimated that 23% of e-commerce is driven by affiliate marketing.”

Michelle Atkins, Digital Marketing Specialist at Trupanion, a health pet insurance provider, says her company has found success with cross-marketing partnerships online. “When smart alliances are made it often strengthens both brands while allowing you to combine efforts and therefore reduce marketing costs.” Find complementary businesses to your own and propose strategies for promoting each other in new channels or within established channels and create new offers that will appeal to your target audiences.

Finally, many marketers stressed the continued importance of email. Mike Ketcham, General Manager, Weather Radios Direct, wrote, “Quickly replacing a major digital marketing channel is a monumental task, but there are options. If an established company is not leveraging email marketing, that’s the first place to start. By mining your customer database for email addresses and using a third party email marketing platform, you can create a new revenue channel almost overnight.”

What would you recommend to companies that suddenly find themselves getting priced out of paid search? Please share in the comments below.

Related Topics: Channel: Strategy | Google | Internet Marketing | Search Marketing | Top News


About The Author: writes about paid online marketing topics including paid search, paid social, display and retargeting. Beyond Search Engine Land, Ginny provides search marketing and demand generation advice for ecommerce companies. She can be found on Twitter as @ginnymarvin.

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  • Andy Maclean

    0% ROI strategies based on break even CPA from paid search can still be effective when margins are thin as 0% never actually means 0%. Aside from the conversion measured in the CPA other direct benefits are likely to include email capture, phone calls, brand awareness etc. More paid traffic will support organic traffic increases via multi channel attribution. Break even CPA’s usually indicate you’re getting max traffic and conversions for your buck and that has benefits in terms of repeat business and capturing market share.

  • Pat Grady

    We see irrational bidders enter, sometimes staying a while, then eventually going away. So I’d add “stay on your Goal ROAS (not Share), be patient and think long term, these cycles are natural, the interlopers action (unlike yours) is most often unsustainable.” The Auction Insights report in AdWords often provides the sort of data needed to more easily think along these lines.

  • Pat Grady

    “Surprisingly, very few marketers who responded to my inquiry mentioned affiliate advertising.”

    This is strange. This year, our company was awarded Affiliate Summit Pinnacle Award for Affiliate of the Year. Everything we do (mostly PPC related, but certainly not all SEM) for our clients and partners is paid on a performance basis. The affiliate channel waters are difficult to navigate (hire an OPM!), but since the cost is performance based, any merchant is off their rocker to dismiss this channel, especially one being pinched by SEM competition. If you think Affiliate Marketing is dead (Panda, Penguin, whatever the theory du jour), go to Affiliate Summit in January in Vegas… if it is dead, well then, who are all of those attendees? Hahaha!

  • Pat Grady

    “It is estimated that 23% of e-commerce is driven by affiliate marketing.”

    Whatever the number is for you, there is a lot of value to be found in this channel! Like AdWords or SEO, there’s also a lot of ways you can go wrong. Manage this channel, like you would the others – expertise, experience, analytics, ROAS goals, brand sensitive issues – be selective, be profitable.

    Btw, OPM = Outsourced Program Manager, a hired gun who knows the ins and outs of this Affiliate Channel. If you sell B2C, imo 99% of the time, you should hire an OPM.

  • Prenatal Cradle

    We’ve never had the budget for PPC. We tried it and found that competitors would quickly drain our budget by clicking the ads, even when we set our prices well below those of our competitors.

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