E-commerce sales can make marketers look good by raising top and bottom lines alike. We’re understandably pleased with ourselves. Yet we’re not satiated—we want more sales and speedier growth.
But you’re mistaken to assume that today’s party-like conditions will last forever. In general, marketers are becoming entirely too dependent on today’s online media for low-cost, high-volume traffic to maintain growth. Meanwhile, they continually miss opportunities to convert more of the traffic they already have by not optimizing their content.
For decades, the marketing battle has been fought over traffic and impressions. For brand marketers, the more people exposed to your marketing, the better. For direct marketers, more and better-targeted traffic was the mantra. So to improve marketing results, marketers buy more traffic.
No wonder marketers investing in search engine marketing (SEM) are adopting the same old-school strategy in the online channel. It’s like a party that nobody wants to end. But do the marketing math, and you’ll see that it’s only a matter of time until the taps run dry, the strobe lights dim and the DJ packs up his gear.
Many marketers simply are not future-minded in their strategic outlook. So take a final sip of that champagne, because online traffic cost inflation is coming to an SEM budget near you.
While Conversion Rates Drop
According to Internet Advertising Trends, a presentation by Mary Meeker and Brian Pitz at Morgan Stanley Research, fewer ad dollars were spent on Internet advertising than any other medium in 2004.
Undoubtedly, today’s costs of Internet traffic and online advertising still are a great value compared to the alternatives. Consider newspapers, a medium that reaches slightly more households (and is declining in reach) than online: Ad spend on newspapers was more than four times that of online in 2004. How much longer will it take for online ad costs and spending to catch up with newspapers? Could your SEM budget absorb a fourfold increase in its advertising budget for the same amount of traffic?