The 90:20 Budget Conundrum: Are Marketers Unknowingly Reinforcing 'Social' As A PPC/Advertising Channel?

Since the 2011 SEMPO State of the Market Survey was released back in March, I keep revisiting this one nagging data point, one that may be a sign for the reality of future marketing endeavors across social networks, and yes, social channels ("Social PPC is Giving Google Adwords A Run For Its Money").  The survey found that social PPC has emerged as a sort of third search channel for paid media buyers, meaning that they go to Adwords, Binghoo, and also a multitude of PPC channels like Facebook, LinkedIn and Twitter to round out their media spend. This data point leaves out all debate on the efficacy of these channels, but rather underscores the point that marketers and advertisers are in fact buying media with a PPC mindset towards these channels. 

The problem is that we, as marketers, may be unknowingly reinforcing social as a PPC channel, while the greater opportunity lies in participation and content publishing strategies.  But as search marketers, we've seen this movie before, and we know how it ends.  So today I want to go over a loose history of the "ppc-ification" of the search channel as a much larger strategy, and how the same path may be happening to the balance of social participation vs. advertising marketing activities.

But first let's go back to the basis of the 90-20 conundrum in search marketing, to better understand if we in fact may be headed down a similar path for "social" as a marketing "channel." 

The problem is this:90% of spend goes toward paid search media channels, yet it only provides 20% of the return from the search channel as a whole.



For at least 10 years now, I have at various times dragged out my own slides and data points in making the case for proper budget alignment in the search marketing channel.  Over and over again, using a client's actual spend and conversion data from both channels, I revealed an unbalanced approach to budget allocation versus actual opportunity in the search channel.  In almost every single historical case for my own clients, the spend is lopsided in terms of investment versus the potential for short- and long-term benefits from the channel. 

I've since taken the liberty and rounded it off to the 90:20, meaning that for most marketers, 90% of their search marketing spend goes towards paid search, yet it may only represent 20% of the opportunity and return they are currently getting from the channel.  Paid search may only represent 20% of the clicks.  It may only represent 20% of the conversions, and 20% contribution to the bottom line.  Conversely, only 10% of search budget may be going towards natural, yet it is generating 80% of the revenue or desired actions.  This is true for marketers who may be getting anywhere from thousands to billions of dollars in return out of the search channel as a whole.  Sure there are exceptions, but this remains the case for most enterprise and SMB marketers.

The purpose of my argument here is not to debate what the actual %ages are - it  varies too much from marketer to marketer, anyway - but to shed further light on a fact that many of us know all too well, that paid search media is already maxed out for many marketers, while natural allocation has achieved only the tip of its true potential.  Again, 90:20 is not a set ratio for every situation, but I rounded it off for this article to illustrate a greater point.

So why does this problem exist?  If most searchers are clicking on the natural results, why don't marketers shift more spend into natural search, or earned marketing approaches?  The answer is simple: 

Paid search makes it too easy for lopsided budget allocation.  (Stay with me here -- I'm getting to the point about social budget allocation).

Paid search is quick, and relatively easy to get started with.  Most marketers don't understand natural search and earned media, and they have organizational challenges with implementation.  They do not measure the benefits of an earned media program in months or years, but rather as "what have you done for me lately," meaning today, this week, and this month for paid search.  Marketers have numbers to report, and they want to see the results right now to justify the channel upstream. 

So for all of the evangelization and education, for all of the search conferences, for all of the columns and blogs read, all of the forums frequented, marketers still find themselves in this short history of the search marketing channel in an upside-down, disproportionate position of throwing 90% of search budgets at paid media.  Make no mistake about it - I am not an SEO apologist, but rather an advocate for balanced allocation in the search channel as a whole, especially when the benefits are to the client, and also the consumer and searcher. 

Which brings us back to the 90:20 "social" allocation conundrum. 

My question for marketers is this: Has frustration with the difficulty of "social media optimization" as an earned effort (and its parallel to SEO) driven them to social PPC and advertising as a quick way to get involved in the channel and be "social," even if it is paid media?

Again, my concern here is that the greater opportunity of social is participatory and earned, but with the rise of Social PPC and advertising, the trend seems to be that marketers are focusing on it as yet another paid channel.  Are marketers somewhat unknowingly reinforcing this view, simply because social engagement is harder?   Is it the "advertising" mindset that somewhat disintegrates all media efforts away from "earned," and into "bought"? 

I don't have the answer right now, but I would say that this is one to watch.  Based on my long experience in search marketing, I would say that a 90:20 ratio for paid versus participatory/earned spend appears to be where social media marketing is indeed headed. 

5 comments about "The 90:20 Budget Conundrum: Are Marketers Unknowingly Reinforcing 'Social' As A PPC/Advertising Channel?".
Check to receive email when comments are posted.
  1. Bruce May from Bizperity, June 22, 2011 at 10:51 a.m.

    You rightly point out that earned, participatory media should be measured over months or years but when you consider ROI you must also count the time expense for participating. My clients’ number one complaint is that they don’t have time to devote to the effort. If you have dedicated content producers participating and creating content then their salaries is the expense. If you have many employees contributing to the effort in their “spare time” then the issue is more confusing and difficult to track. Smaller companies may be reconciled to run these campaigns with rough estimates of ROI based on lead generation. Smaller companies also have an advantage with local search as they are naturally more connected to local communities and the social networks based in those communities. There are big lessons here for all of us but I’m afraid that most marketers are not digging down into the details to really understand how to effectively leverage social media. I have clients that are creating big wins with ROI’s that are literally off the chart. It requires a commitment to make that “time spend”. For larger companies, that means that you may have to develop a strategy that includes many employees outside the marketing department.

  2. Eric Wittlake from Babcock & Jenkins, June 22, 2011 at 10:54 a.m.

    Rob, I hope the parallel doesn't extend to social media as you outline it, and I'm actually encouraged by the fact that PPC offerings from LinkedIn and Facebook have been combined with search, and not with social engagement and community management. Hopefully social won't become a CPC and engagement discussion, both under a social umbrella. The difference is far greater the parallel from search.

    Here is what I mean:

    Search is about being being found as the answer to a query. Organic and paid results both accomplish this, albeit with vastly different cost structures. But the other differences in organic and paid search, while important, are nuances from the audience perspective.

    "Social PPC" is about traffic. Saying you have a social media program because you are buying CPC ads on LinkedIn is like buying banners on NYTimes and WSJ and saying you have a publishing program. In both cases, you have an advertising program. Full stop.

    Social media is about connecting with an audience, sharing and creating dialogue (or fueling a community that does so on your behalf). An outcome of that is the ability to drive traffic and conversion, expand your list, do audience research, etc. Those are outcomes. If you skip the social elements, its not a social media program, it's just a media program.

    -- @wittlake

  3. Marc Engelsman from Digital Brand Expressions, June 22, 2011 at 5:02 p.m.

    Hey Rob, glad to see that you are still thinking about the implications of the SEMPO survey as we discussed when it was first released. I agree with you that there is an advertising mindset taking over re social media that is following a similar pattern to SEO/SEA. (For that matter, same thing occurred in tv and radio when advertisers realized it was cheaper just to buy the ad time vs. producing whole programs.) But I can't just blame the marketers for taking the easy route and buying their way in - I think these networks have latched onto ppc for monetization (following the Google model) of their otherwise mostly free content and are doing everything they can to get marketers to show them the money and not just the engagement love.

  4. Howie Goldfarb from Blue Star Strategic Marketing, June 25, 2011 at 5:03 p.m.

    I have no problem with this mindset Rob. Since Facebook is PPC and even with the low click rate you aren't paying for impressions. The fact that for the most part social technology so far has been a bigger bust than digital marketing which is pretty hard to achieve. The fact is the platforms are meant for only 2 types of communication. people to people and people to brands, not brands to people. In fact I laugh hysterically at the failure Facebook has had for their brand pages. When major brands with tens and hundreds of millions of customers, and millions to tens of millions of fans can't get anyone to engage with them after why look at social as anything but a small sliver of your marketing efforts.

    The fact is every brand in your life has a facebook page and twitter account. How many will you seriously want to engage with unless for customer service? 0.1% of them is my guess. So for 99.9% of brands they will never reach you.

    What are you left with? PPC. End of story. In fact I see this getting worse because as new networks appear and Facebook dies (which it is currently dying and that is a fact) we have no idea if brands will even be allowed in. Does ATT/Apple interrupt your calls with Ads? No they don't do they? and is Social Communication Platforms different from that? Not really except the fact in their primitive early states they were allowed in by bad business models. in 2009 if Facebook just got 200mil people to pay $3 a month they could of locked out all brands and marketing and had a $7b business ranked 314 in the US Fortune 500 Hundred. Noticed they blew and now have a polluted network.

    The only scale for social is PPC. Smart marketers if you ask me!

  5. Rob Garner from Author of "Search and Social: The Definitive Guide to Real-Time Content Marketing Wiley/Sybex 2013, June 27, 2011 at 12:04 p.m.

    Thanks for all of your comments. Great points here, and maybe it might not be such a bad thing if Facebook nets out as a predominantly paid channel. Really, what "business" does a business have in a "social" network anyway?

Next story loading loading..