Online marketing budgets in the new economy: SEM vs. display

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David Wright is an interactive media director for display and search engine marketing at Click Here, the interactive arm of he Richards Group advertising agency. “HOS” recently asked Wright about budgeting trends in search marketing.

HOS: Search marketing spend seems to be holding up well, right?

Wright: Yes. Given the dour economic climate, marketing budgets are under attack, and online budgets are allocating more to search engine marketing. Overall, online marketing can measure ROI with exquisite accuracy, measuring the “cost per” of almost any desired action; but SEM specifically has such an attractive ROI because it’s often the last click-through before the desired action.

HOS: What impact is that having on other types of marketing outreach?

Wright: The budget struggle between search engine marketing and display begins because the “cost per” for SEM is usually lower than display, resulting in a much better ROI for search. In an even better situation are those SEM players that combine natural and organic search with paid or PPC search. Effective natural search will have the best ROI of all media.

But search results can instill a false sense of exemplary performance because they don't account for all the media, offline and online, that led to the search. Added to this is the perception that online marketing is a completely separate channel, not comparable to other media. Those on the client or agency side involved in traditional offline channels often don’t know their online counterparts. This is especially true if clients have separate offline and online agencies.

This disconnection can even happen within an interactive marketing group, as the search marketing people and those developing really “cool” online media don’t share a common purpose.

HOS: What solutions can you suggest?

Wright: Rather than using a buzzword like “synergy” or citing studies by major display and search media Web sites about the lift in brand awareness and purchase intent for well-established brands, the cry should become “Remember the marketing funnel!”

In the case of online marketing, much of the attention flows toward search because it is an intentional activity, with words or phrases in mind, and is lower in the funnel, being closer to the desired result.

Display campaigns, on the other hand—while contributing to brand recognition, awareness, affinity and the desired click-through—are higher in the funnel and can provide memorable words or phrases, perhaps attached to images. This is especially important when related to newly introduced products or services.

HOS: If there’s this kind of strong synergy between SEM and display ads, why are non-SEM tactics falling behind?

Wright: It’s easy to attack display advertising in relation to SEM because of SEM’s strong ROI. But looking further up the funnel to compare the ROI of other media puts this in perspective. One of the major problems is that you often can’t look further up the funnel and, if you do, you find that ROI gets very vague. Even so, agencies and businesses actively sharing offline and online media disciplines can more easily look up the funnel to optimize all media channels.

HOS: How should these concepts be analyzed when setting marketing budgets?

Wright: Before the budget ax hits the marketing mix, time would be well spent in understanding the funnel, looking at both the best-performing media as well as at how the less successfully performing or measurable media drive ROI. If anything, economic pressures might drive down the cost of display advertising while raising the cost of SEM. That in turn just might drive a better understanding about marketing budgets.

We’ll be in a much better place when “multiple attribution protocol,” or MAP, matures and becomes a widely accepted and easily deployable online media metrics tool. When this happens, we’ll be able to score, much like in a game, the relative weight of what impression contributed most or least to influencing an action, as well as where and when that happened. Just imagine if that kind of accountability could be extended to pervasive interactive digital TV, mobile and newspaper platforms. The marketing funnel would still exist of course, but the accountability would be dramatically improved.

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