the PPC Book|PPC Blog | Querying for Dollars

This post is almost 2 months old, but I promised myself I would comment on it…

Oh lord how I love these articles. Steve Rubel, a popular blogger, claims to see in his crystal ball a ‘pay per click recession’.

For the last several years, search engine marketing has been on a tear. While the big advertisers sat on the sidelines in the beginning, they have lately been ramping up their spend on pay-per-click advertising, primarily on search engines but also affiliate sites like those that run Google Adsense.

However, I am calling a top to this market now. Here are five reasons why a pay-per-click advertising recession looms.

A recession? You must be kidding.

It actually only takes about 2 seconds of research to find Steve’s underlying angle.

Steve works for Edelman, a ginormous PR Firm. One of the biggest in the world.

I bet they would LOVE LOVE LOVE a recession in the pay per click industry.

Here are some of Steve’s insights:

1) Clutter
Have you shopped for a car lately? I have. And I did a lot of Google searches in the process but largely ignored the ads. The reason - clutter. Take a look at this search. Ads are stacked on top of each other. There are 10 ads in my browser. Advertising clutter is a known deterrent to advertising effectiveness. TV advertising suffers from clutter and there’s no reason why search engines are immune. The New York Times touched on this today.

Steve did “A LOT” of searches…and through this scientific method found a LOT of clutter.

Steve, advertisers are better than ever at serving relevant ads, and the quality score is keeping them in check. Google is doing a great job of balancing revenue and relevancy. Just check their revenues if you’re doubting that…

2) Declining Relevance of Traffic/Transition to Cost Per Action
OK, you have heard this from me twice in a week now so I won’t spend a lot of time here. Traffic is becoming irrelevant unless it results in action. There will be some pain as search engine marketing moves to a cost per action model, rather than one based on sometimes irrelevant clicks. This will contribute to a search engine marketing slowdown.

If you can’t find good traffic you are using a poor search marketing analyst. There is more relevant traffic now than ever before, and it will continue to grow for the foreseeable future.

3) Rising Costs
According to a five-year Forrester interactive marketing forecast published last week, costs per keyword rose an average 33% each month in Q1 2007 compared with the same period in 2006. As a result, some marketers are buying lots more Long Tail terms. Further, Forrester says that “many still spend with abandon.” The reason is that search outperforms other advertising - but for how long? And again, how do you define perform (see point #2)? The madness will end as soon as the economy tightens.

Steve said it himself, via Forrester: “search outperforms other advertising”. That may never change, ever….unless Google suddenly turns into a library. What, radio is suddenly going to overtake search? Please.

Steve also says, “The madness will end as soon as the economy tightens.”….Um Steve - the economy tightened last year. It’s in a full on recession already. Foreclosures at an all time high, oil near all time highs. Housing market on the verge of insolvency. We’ve seen not a blip in search advertising. Why? Because it is the most cost effective form of advertising and people know it.

4) Marketers Spread the Ball Around
Move over search, you’re not the only game in town. Marketers are increasingly investing in behavioral targeting, webisodes as well as more social channels like blogs and soc nets studies say. These formats are becoming more targeted and effective too.

Steve’s only lucid point in the whole article. Yes, we know how you big agencies love to spend money without measuring effectiveness. It’s less accountable that way. Webisodes convert really well. You should put all your best clients in them.

5) Search Ads Are Viewed as Untrustworthy
If there’s anything that Enron, Bill Bellichick, Marion Jones, Worldcom and Barry Bonds taught us, it’s this - trust is king. Google CEO Eric Schmidt knows this - note his comments this week to AdAge. However, according to a study published by Nielsen last week, search engine advertising suffers from low trust.

Comparing Google to Enron is an interesting delusion.

Again, see my relevancy point up top. People always say - “I never click those ads on the side”.

Sure you don’t….

I don’t either…

A nice try by Steve, some seriously good linkbait. But the argument as a whole is weak, and I’ll make sure and remind him this time next year.