Written by Gary Nissim, Founder & Managing Director, Indago Digital
In the IAB’s yearly and quarterly expenditure reports we see similar trends in Australia’s search marketing investment. It always has the highest spend of all digital channels, and when times are tough and overall ad investment drops, we rely on it more. Why is that and is that trend likely to buck in the near future?
Why Is Our Investment in Search Marketing So Consistent?
In the past seven years, search marketing has been the most consistently invested in of all digital marketing channels and that trend shows no signs of changing.
Source: IAB Australia Online Advertising Expenditure Report
In the past couple of years there has been much press and many case studies telling us to stop our reliance on this heavily focused ‘performance’ channel and how a longer-term view with a focus on brand advertising is key. This strategy certainly isn’t for everyone and when we know that 44 per cent of digital advertising investment comes from SME’s it’s no surprise that we don’t see this strategy translate into a drop in paid search investment.
So why is search marketing so consistently invested in? Because:
- Despite being a mature and saturated channel, it still drives results and ROI that other channels often can’t match
- Even if other channels can match or better its efficiencies, the scale is huge, often allowing it to drive larger volumes than other channels
- It is the only truly demand-based advertising channel available. People actively tell the advertiser that they want their services or product, providing unique targeting opportunities
- It’s relatively easy to measure using a range of metrics that suit your needs
- It has had its bad press but it’s rare we use words like fraud and there is no need for expensive third-party tools to measure its legitimacy
The Times They Are A-Changin’
I remember in the earlier days of search marketing (circa 2008) I met with a senior marketer at one of our country’s finest supermarkets. He was grossly more intelligent than I, understood the benefits of search marketing, its measurability and ability to drive an outcome. However, at the end of lunch, he said, “If our stores are performing poorly, the store managers tell me that we need to invest more in TV. If the stores are doing well, they tell me that TV is working, and we need to invest more into it. No one gets fired or questioned for investing into TV”.
Those days have gone, TV is no longer seen in that light, and no one’s job that safe.
Modern day marketers need to drive measurable outcomes and when the economy is poor those results need to come now, not three years down the line when we’ve spent a fortune building a brand that we are no longer employed to enjoy. When the chips are down, when C-Suite are demanding efficiencies, and when ad budgets are being slashed, the modern-day marketer increases their investment in the best performing channel available: search marketing.
Search Marketing’s Performance in Q1 2024
Comparing the quarter ending Dec 23 to the one ending March 24, overall digital advertising in Australia was down 4.2% from $3,912m to $3,746m (A pretty standard seasonal dip) and the latest SMI results show overall ad spend continuing to fall with a 6.6% decrease in March 2024.
However, during this time search marketing grew its market share to 46% and its overall investment by 2.2%.
Source: IAB Australia Online Advertising Expenditure Report
Other Reasons Search Marketing Investment Increases in a Downturn Market?
As well as driving volume and ROI there are other reasons why search fares so well in a poor economy.
- Low Risk – search marketing is measurable, scalable, and can prove its value nearly immediately
- Opportunity Cost – quite simply if we’re not appearing for a relevant search our competitors are likely to be, increasing their market share whilst ours declines
- Brand Budgets – most companies have an underlying spend on the search engines protecting their brand from being encroached on by competitors
- Branding – we rarely measure the positive effective having our brand feature in Google has. Other channels are measured purely on CPM but search provides us with context-relevant branding
- Diversification – with the advent of new products like Performance Max the search engines have managed to open new avenues of cheap highly converting traffic
The Future
Even with the advent of the Search Generative Experience, there is no way the search engines (especially Google) will jeopardise their cash cow, and we’re likely to see search marketing to keep its spot as the most invested in of all digital channels for the foreseeable future.
Gary Nissim is chair of the IAB Australia Search Marketing Working Group.