Pay-per-click not immune to downturn.
I’ve written it many times, but now we’re starting to see the affects: pay-per-click is hurting.
I’m not talking about just domain name parking income. We’ve known for a while that payouts to domain owners have been in the dumps. I’m talking about how pay-per-click isn’t immune to downturns.
Many people argue that advertisers will move to pay-per-click during a downturn because it is more results oriented than TV advertising. The theory makes sense, but you’re assuming advertisers are rational. When a big company slashes advertising 10%, its looks everywhere for cuts. Those TV ads it contracted for 6 months ago? It can’t cancel those without penalty.
Pay-per-click ads, on the other hand, can be stopped with the click of a button. Literally.
And if advertisers haven’t learned that PPC is more results oriented by now, don’t expect these advertisers to suddenly see the light.
We’re also seeing slackening on the demand side of pay-per-click ads. If fewer people are going to buy flat screen televisions this Christmas, then fewer people are doing research on Google and thus fewer people are clicking on these ads. (Conversely, there are a lot of people searching for “stop foreclosure” right now.)
That’s not to say pay-per-click revenue will decline. It’s just that growth rates will be slashed. Even affiliate marketing for certain categories will be hurt. If you market expensive electronics or cars as an affiliate, the demand for your services is reduced.
Don’t get me wrong — I’m bullish on the future of online advertising, in particular PPC and affiliate marketing. But let’s not be naive, either.
Good points.
Of course, the reciprocal good news is that–at least for those smart product/ service providers–they’ll be able to more affordably gain new customers due to lower PPC costs.
Yeah lets hope it shall bring the prices down from Google & Yahoo and make it more affordable for people to use ppc for there business – Some words are mega expensive and the little guy didnt have a chance. I think corporate comapnies shall cut back but they still need to advertise to get customers so who know what they shall do.
Regards,
Robbie
Founder
RegFeeNames.com
Sounds like a good time to be developing your domains into minisites or better.
The fixed ad budgets you speak of are just that “fixed”, but when those run out I wonder if there might be a shift. Especially come Jan. and Feb. when many big co’s do their budgets for the year they may bulk at that six month TV contract and instead allocate a much bigger chuck towards the Net.
It’s just a hunch…..don’t know if that will happen, but Jan. is a big ad budget month. Some companies do it in Jan. for the entire year and then just forget about it and move on to other business.
I remember calling some companies in Feb/March back when I was into development, only to be told the money has been spent for the year. Sometimes that is just a blow-off but other times it is true.
Recession will hurt everything 🙂
We are quiet lucky though to be involved with what is a pretty solid business overall and there are many opportunities this time around — be smart and look for them and you can make a lot of money… Money that you wouldn’t be able to find if all is well. Competition low= rewards high. Time to get to work!
Best,
Mike
http://www.wannadevelop.com
In an almost direct correlation, I have found that traditional PPC revenues are down on days when the markets are down, and new revenue streams are up, such as domains with economic or recession information. So in some sense PPC is down, but at the same time it is really just being redirected to more bearish names.
It seems as though many marketers who once sought after Google and Yahoo as their sole search advertising channels are trying to find more cost-effective advertising venues, such as Search123 and other similar search engines. It is very likely that many will follow suit and pursue the lower cost search advertising in the near term.