Advertisers will need to improve the effectiveness and measurability of their advertising spend. As digital budgets increase the competition on PPC will increase and drive CPC upwards. Keyword inflation has been on +20% for 2008 and unless more serious competition emerges, the prices will keep increasing.
Our advice: Keep your focus on ROI and conversion rates. Increased click-costs will affect cost per acquisition (CPA), and only through getting more sales pr click and lower cost/higher revenue pr conversion can you counter the keyword inflation
If you look at the current US economy and the outlooks for even more recession in their economy with less than 50% of the mortgage crisis complete, you will have to expect dire things for the global economy. As the recession bites, consumers will increasingly shop online in search of deals and bargains, especially through auction websites and ad listings. So Craigslist, Gum Tree, eBay and many more websites will, in all likelihood, see their traffic rocket.
Our advice: Keep focus on market share. Instead of viewing the global economic crisis as a threat to your business, view it as an opportunity to gain market shares for less money. Some companies will cut their marketing budgets by default, which will mean the road is paved for you to gain new shares for less.
Also online businesses will need to think about incentives, offers and deals as standard operating procedure. Incentives for customers to come back will be crucial, in order to up-sell or cross-sell. Well-positioned loss leaders are a good way to shape consumer perceptions and keep them coming back for more.
The CPA (cost-per-action/acquisition) digital advertising buying model will become more widely negotiated. It is time for measurable and accountable digital marketing. Marketers will need to document their success towards management to justify increasing budgets and to optimize their ROI. The biggest online advertisers are already spending over 50% of budget on CPA media and in difficult times, where direct response is more important than branding goals, more advertisers will be looking to this model.
Our advice: CPA is great for advertisers because ad costs are directly proportional to action/acquisition conversion rates. It is evident that companies will be able to put pressure on partners such as media agencies to provide measurability and hereby negotiate hard with publishers to achieve CPA deal terms. We do not believe that the CPM (cost-per thousand) and CPC models are about to die, as they have their place in providing brand awareness, but the CPA model will become a m
