There Is No Floor On Search Spending

I was asked an interesting question by a client the other day:  “What is the minimum spending threshold for paid search? Below what level does it not make sense to invest anything?”

A little context is in order here. This same client had been through a vigorous round of budget discussions, where the digital and branding teams were fighting for the same bucket of dollars. They were trying, with almost no success, to compare effectiveness of digital and branding on a dollar-for-dollar basis. The brand team’s tactic was that they couldn’t give up any budget because they were already at minimum spending levels. Even a dollar less would drop them below the level required to hit the reach/frequency minimums dictated by the agency handling the media buys.

The answer, of course, is that there is no minimum when it comes to paid search. Each click you buy generates a potential lead. But the reasoning behind that answer speaks to the unique nature of search, when compared to traditional brand-building channels.



Online Branding is a Different Beast

Search vendors have been trying to prove the brand-building effects of search for years now. I’ve been personally involved in some of the earliest of these studies. And I’m here to tell you, branding is much different in an online environment than it is in the traditional worlds of print and electronic media.

When you use research to create a direct comparison between two different alternatives, you have to control for variables. If you don’t, the results are meaningless. If you’re trying to measure the brand lift of search, you have to use traditional brand awareness metrics -- which, as I said, have significant methodological challenges.

The biggest challenge, identified by more sophisticated research approaches such as neuroscanning, is that most market research doesn’t really take into account how the brain works. And it’s here where the brand impact of search really can leave its more traditional counterparts in the dust.

The brain can interact with potential marketing messages in two different modes – a “bottom up” mode or a “top down” mode. The “bottom up” mode is how most traditional advertising works. It interrupts the brain, whatever it’s engaged with, and temporarily sidetracks the brain long enough to hopefully leave a “brand imprint” that will stick in long-term memory. Often, this is done at a subconscious level.

And therein lies the problem with most brand-awareness metrics. By their very nature, they have to engage the conscious brain and suddenly you’ve muddied the mental waters to such an extent that it’s almost impossible to get a true picture of the impression the brand left. Traditional brand impact research is a crapshoot, at best.

It’s this subconscious impact that has created the “minimum buy” hypothesis. If you don’t hit a potential target with enough impressions to make even a slight ding in their mental armor, you have wasted your entire budget. It’s the “Chinese water torture” approach to advertising.

But search engages the brain in a “top down” mode. We’re actively engaged with the task at hand, which means that no interruption is required to implant the brand impression. It’s immediately loaded into working memory, and we’re ready to act on it. That’s why there is no such thing as a minimum search spend. Each click bought has the potential to work, because there are no mental barriers to break down or attention to grab.

Sometimes the Truth Hurts

Ironically, in this particular budget discussion, the effectiveness of search turned out to be its downfall. We didn’t have the same “minimum spend” argument as the branding agency when it came to moving ad dollars from one budget to the other. But, when the dust settled, I took some solace in knowing that while we may have lost the battle, the effectiveness of search will eventually prove triumphant in the war. 

2 comments about "There Is No Floor On Search Spending".
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  1. Rob Schmults from Intent Media, March 29, 2012 at 11:01 a.m.

    I totally understand why it would make sense to convert brand marketers to the virtue of search/performance marketing. But I think part of the problem in attempting to do so is that branding is all too often an end in and of itself rather than a means. SEM is clearly a means -- it's a step to driving a conversion event (typically a sale). Branding too should ultimately lead to a sale, but of course difficulties often lie in making a clear connection between branding and a given sale. It's this separation that doesn't merely allow the notions of minimum (and of course maximum) spend but in fact makes them a necessity. SEM properly has neither a ceiling or a floor: you spend as much or little as your cost of acquisition and margin structure will permit. Where it lacks that ability to convert itself into a cost of sales, branding has to remain a budget based program. Branding has value, so the war Gordon describes doesn't have to end with total victory and branding's extinction. But logically as advertisers continue their quest to be both more efficient and effective with their marketing spend, branding will have to continue its movement toward a more performance based model. So keep up the good fight!

  2. Gordon Hotchkiss from Out of My Gord Consulting, March 29, 2012 at 12:11 p.m.


    Thanks for you comments. You're bang on. I'm going to pick up this thread in next weeks comments. In fact, I have a great example from some of the budgeting discussions from the very same client.

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