The fourth quarter of 2008 was a particularly tumultuous economic time. While uncertainty was an operative word in several marketplaces, sophisticated advertisers leveraged the adaptability of search engine marketing (SEM) to successfully change their advertising strategy.
Between September and October 2008, as the economic downturn hit the global economy, advertisers within Efficient Frontier’s Customer Index started to see a lower return on investment (ROI) on their ad spend. To compensate, they reduced spend by 5% to maintain ROI. Advertisers cut spend further in November as the overall ROI climbed to the September baseline. Observing this trend, advertisers increased spending by 2% in December while ROI improved to 2% over the September baseline.
This response to the economic downturn represented a fundamental shift in SEM strategy. Previously, many advertisers chose a volume strategy, i.e. accepting a lower ROI in return for increased volume. Now, most advertisers are choosing an ROI and efficiency strategy, i.e. dynamically adjusting the advertising budget to maintain a target ROI in return for a decrease in search volume. We believe that in the coming months, efficiency will form the cornerstone of many advertisers’ gameplan. As Efficient Frontier’s bid optimization technology allows for many types of flexible marketing strategies, we look forward to the opportunities and challenges in the months ahead.
