The third quarter of 2022 could become a rocky road for many brands, as consumers tighten budgets from July through September in preparation to spend during the holiday season.
Visa suggests more people put purchases on credit cards, specifically in Q2 2022. Net revenues rose 19% in the quarter, compared with the prior year, indicating modest growth. Total payment volume for the quarter reached 136% versus three years ago -- up 1 point from the prior year.
The financial company also said during the earnings call on Wednesday that there is no “indication of any slowdown” in spending, at least when it comes to consumers putting purchases on their cards. That does not mean people spend what they have or can afford. It just means higher borrowing rates.
“A few observations, though, on inflation,” Al Kelly, chairman and CEO of Visa, said on the earnings call. “One, keep in mind that the headline CPI inflation number does not necessarily apply to Visa as our basket of goods isn't the same. Consumers just don't buy homes or use cards with their Visa cards, for example, so we see a several point gap between headline inflation and inflation in card-related spend categories.”
How does search engine optimization (SEO) fit in with current spending trends? Inside Performance talked with BrightEdge CEO Jim Yu to gain insights. The following are excerpts from correspondence via email.
IP: How are marketers reacting to the current economic environment based on consumer pullback or spending?
Yu: We see marketers focus a lot more on being competitive in the content they create -- especially where they see drops in demand or pressure from competitors.
At the same time, recent Google updates make marketers focus on product reviews that reward creators who provide users with authentic and detail review content. Then there are product algorithm updates based on improving the user experience and surfacing results that help make purchasing easier.
This means marketers focus on showcase their expertise and ensuring content is authentic and educational. They are explaining more about why they recommend products with evidence to support it.
This is a trend we are seeing over time as SEOs start walking and talking more like product marketing groups.
IM: What do you think marketers will see this holiday season from consumers, beginning with back-to-school?
Yu: We will see a shift in key back to supplies such stationary. Maybe some exponential spending on IT equipment, but a lot of that happened during the lockdowns.
Back-to-school will be competitive. According to Google, 71% of U.S. shoppers are willing to wait over two weeks to buy something if they want to take advantage of a sale, deal, or promotion.
IP: How are organizations preparing for changes in the current economic climate?
Yu: I see many organizations -- just like during any economic fluctuation -- adjust operations and rapidly scale up or down operations as conditions change. Many organizations and their digital marketing departments are getting in a position to pivot and re-prioritize.
You may have seen that many analysts have drawn parallels to past economic downturns and talk of an upcoming recession. I cannot say if that will happen, but I do see that uncertainty means marketers are searching for the most affordable and cost-effective ways to understand macro shifts in market consumer behavior and changes in demand volatility -- like in retail, where there are multiple categories.
One big challenge they face is trying to rationalize expensive traditional media budgets, evolving digital strategies, disseminating helpful content, and most importantly, defending lasting brand equity.
While some companies are guided by recession plans built on durable business operations, many are not. Business leaders will be challenged to ensure that their organizations are agile, responsive, and nimble.
If the economy slows in some areas, it means marketers need to prioritize how they protect their brand, find marketing cost efficiencies, and build on quick wins or viable opportunities.
IP: Why does SEO become crucial to digital marketers during these times?
Yu: I started in search 15 years ago, and I have seen time and again that marketing has proven exactly the wrong place to trim back in times of crisis, and this is never more true than in search. Google and the discipline of SEO grew dramatically post-2008.
People search no matter what. Search will always play a role in our lives, regardless of economic conditions. How people's use of search has grown consistently over the past two decades.
Despite market fluctuations, search continues to be a channel that has grown over 20 years.
Unlike other media, search doesn't fluctuate with consumer behavior. And as search proliferates, it provides essential consumer insights. Inflation is causing a rise in traditional and paid media costs.
In the past two decades, that gives us plenty of macro- and digital conditions, such as market fluctuations, the Dow, and inflation.
I also see shifts in consumers' attention. For example, social channels have launched, and while those have had similar growth trajectories, we are not seeing search impacted by their launches.
You may have heard how things like TikTok or social platforms draw peoples' attention from channels like TV or video. We just are not seeing those effects with search, yet.
Today in 2022, more than double the searches are happening on Google than there were ten years ago. If we think of keywords as data inputs, we're working with a much richer data set now than ever. And it'll just keep growing. As search use grows, so do our insights on what those search audiences are interested in.
IP: Why do people turn to SEO – in particular- during turbulent economic times?
Yu: SEO is durable. Whether markets are up or down, consumers make purchases, or there are other channels to divert their attention online, search continues to maintain a steady growth trajectory. As a result, marketers need to be top of mind in search, regardless of what's happening worldwide.
SEO is an essential source of business intelligence. During the past 15 years, SEO has changed to become a companywide initiative.
Think of search like a focus group. The consistent proliferation of search is great for demand, but it's also great for insights. It's a channel that's getting richer and richer with insights.
SEO is cost-effective in multiple ways. Beyond being the number one source of traffic and most cost-effective acquisition channel, SEO also reaches the consumers when they are in a state of need.
When there is scarcity, people turn to search. Optimized content helps protect, build and grow brand equity. Search helps future-proof the business and provides immediate, midterm, and long-term wins. SEO data feeds content and digital strategies
IP: How can marketers who have not invested well in SEO catch up and be prepared?
Yu: As economic conditions tighten, brands may need to make big decisions about scarce resources. SEO can help expand your options.
I would advise three things — focus on long-tail SEO to support paid efforts on high-return keywords, optimize brand presence to re-invest when necessary, and create a cost avoidance by leveraging good technical SEO.