Can Your Internet Marketing Stand the Test of a Recession?

01/28/2008

If we start with the premise that a recession is characterized by a lower capacity or willingness of people to purchase products and/or services, then we can logically assume that no matter how hard you try to improve ROAI (Return on Advertisement Investment) your sales will still trend downwards because less people are shopping.

Furthermore, your overall business ROI will head south as your fixed overhead gets distributed over fewer sales.

Sound gloomy? Perhaps, but there is hope. Several factors come into play for Internet marketers as we move further into this economic downturn. In this article, we’ll discuss some key initiatives that will help you diversify your efforts heading into a recession and have you well positioned to emerge stronger.

Realigning Online Advertising Tactics

Currently, companies use many online advertising tactics such as display advertising, paid search, search engine optimization (SEO), e-mail campaigns, and video advertising A combination like this can easily add up in terms of marketing spend. For businesses that want to ensure their online advertising dollars do not become a greater percentage of total sales during a recession, they should think about placing more concentration on “direct response” tactics such as search engine marketing, while reducing the investment in activities more traditionally focused on branding. For companies who already place heavy emphasis on direct response mechanisms, consider diversifying venues and reallocating some of the budget. For example, if your company utilizes paid search but not SEO, think about shifting some of your Internet marketing budget to include SEO in your advertising mix. Diversifying with SEO can increase ROI and alleviate an over-dependency on paid search.

Reducing Fixed Expenses

One of the most critical and often uncomfortable decisions companies must make during a recession is to reduce fixed expenses. When it comes to online advertising, decision-makers should consider outsourcing to Internet marketing specialists to move fixed expenses to the variable category.

Leveraging Social Networks

If you haven’t started leveraging free social networks, now is the best time to do so. Social activities include blogging, posting video content on sites like YouTube, and creating pages within social communities like MySpace and Facebook. Many social networking activities do not require high technical expertise. It’s definitely possible to execute many of these activities by tapping into your staff’s talent to provide the right content.

Improving On-Page Conversions

The effective use of landing pages and video content has been shown to improve conversion rates on both service and product-related websites. Proven by case studies far and wide, and according to MarketingSherpa’s Search Marketing Benchmark Guide 2008, testing landing page elements improves conversion rates anywhere from 5% to 50%. In November 2007, eMarketer cited a study showing online shopping conversions increasing 35% with the aid of rich media, including video. Of course, succeeding at improving on-page conversions requires the proper analytics coupled with methodical testing.

Beefing Up your Competitive Intelligence Gathering Efforts

The basic business requirement of gathering competitive intelligence often gets pushed aside by many companies. Competitive intelligence is particularly critical in the online marketing space, since campaign management strategies constantly change and evolve due to the dynamic bidding process. Good intelligence gathering will reduce the probability of wasted advertising dollars. To establish what intelligence should be gathered, successful marketers need internal reports with specific campaign optimization recommendations, along with data on your competition, such as upstream and downstream traffic, advertising sources, and keyword volumes.

What About Market Share?

If you are a major player with substantial market share, you are more likely to be exposed to the effects an economic downturn may have on your industry. To counter that, your size and resources give you a greater ability to leverage multiple strategies, such as pricing, which go beyond the scope of this article. On the other hand, smaller businesses have the advantage of being more nimble. Their ability to continue penetrating the market using rogue/guerrilla tactics lends itself well to the Internet. A host of tactics, including geographic targeting, can allow smaller players to focus on and maximize their best opportunities. Regardless of size, it becomes important that you evaluate your options and develop a strategy that is tailored to your market position.

The Advertising Darling

Reported by eMarketer in January 2008, a survey of 3,000 marketers conducted by The Fournaise Marketing Group, and cited by the World Advertising Research Center, indicates that 65% of marketing spend had no discernible effect on consumers in 2007. During an economic slowdown, most companies don’t have 65% of their budget allotted for “chewing the fat.” Survival mode kicks in and the strongest survive. Internet marketing, particularly Search Marketing, has shown to be the most trackable and accountable of all mediums.

Recently, eMarketer cited a November 2007 study by Advertiser Perceptions in which more than 75% of responding ad execs said their ad budgets for online and mobile ads would increase. Alternately, about 20% expected to increase their TV ad spend, and only 16% their radio spend, over the next six months. These figures suggest that Internet Marketing, during a recession, shines as the advertising darling and the least likely to be removed from a business’ advertising budget due to its built-in accountability.

Nevertheless, the fact remains that a recession is likely to have some impact on all aspects of your business. Preemptive measures, such as the suggestions in this article, should be considered to help your Internet Marketing stand the test of recession.

By: Carlos Ugalde, President and CEO, WebMetro.

To further explore improving your current campaigns, you can request a FREE, no obligation consultation from WebMetro.