Last Updated on October 15, 2007
Steve Rubel writes on his MicroPersuasion blog that there is a looming recession in the pay per click advertising business and gives 5 reasons why he thinks this is so:
For the last several years, search engine marketing has been on a tear. While the big advertisers sat on the sidelines in the beginning, they have lately been ramping up their spend on pay-per-click advertising, primarily on search engines but also affiliate sites like those that run Google Adsense.However, I am calling a top to this market now. Here are five reasons why a pay-per-click advertising recession looms. (If you depend on Adsense for the bulk of your revenue, this applies to you as well.)
Steve is an always thoughtful writer and one of my favorite bloggers, so you should definitely head over and read his 5 reasons.Nonetheless, I have to disagree a bit (not just because I work for a paid search agency). I’ll keep it short and sweet and say that Steve is correct in his 5 reasons as to why pure search marketing on a PPC metric will hit a glass ceiling (if it hasn’t already). However, smart marketers and advertisers have already noticed this trend and have positioned themselves to evolve with the marketplace. This is especially true with his #2 (“Transition to CPA”) and #3 (“Rising Costs”) reasons. However, there is still a promising market for the search companies and agencies wise enough to blend PPC into a CPA or affiliate model and insure performance metrics that work out on the back end. Rising costs are definitely an issue for the PPC world to tackle with, especially in the realm of ad networks like Commission Junction with their respective commission structures. The trick there, as many search agencies have already figured out, is to go direct. So, I agree with Steve that the PPC model in its pure state will see a cap or even downturn. However, smart marketers and advertisers have already seen the writing on the walls (or search results) and have moved to make their businesses flexible and wide enough to deal with these market changes. Look for those agencies to rise to the top.