The Elasticity of Client Search Budgets


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The endemic shrinking budgets of 2009 have had an ugly effect on many marketers, who have been forced to sacrifice efficiency and volume for smaller budgets. We see a decrease of 5% in elastic budgets from 2008 to 2009 and an increase of 4% among agencies reporting that their clients have fixed budgets that are too small.

In a world where accountants understand PPC advertising, the levels of efficiency (or minimum ROI) would increase on elastic budgets in tight times, thus shrinking budgets without sacrificing sales. However, the nuance of this point is easy to lose in the panic of the moment.

Among marketers spending more than $10,000 a month on search, almost half have elastic budgets designed to meet as much search demand as possible in an efficient manner. Well over half of those with budgets under $10,000, however, find that they run out of cash when they need it most and are unable to meet consumer demand for their keywords.

For a minority of PPC marketers, it appears there is too much of a good thing, as some have more budgets to spend, than demand to meet. Those in this enviable position may want to consider expanding into contextual PPC networks and secondary search engines.