Paid-Search ROI Continues To Fall
A report released Tuesday implies that during the past six years, the effectiveness of paid-search and online video marketing fell at a slightly faster rate compared with other online advertising or marketing.
Findings in the report suggest that paid-search return on investment (ROI) fell 27% while online video fell at 32%. Digital display has seen a 14% decrease during the same time period. The drop in ROI ranges from 2010 to 2016.
“Online ROIs will continue to fall until they are on parity with offline, largely made up of TV spend,” said Joe LaSala, VP of marketing at Analytic Partners, although he did not provide specifics.
The ROI numbers from the Analytic Partners’ 2017 Marketing Intelligence Report aim to help marketers understand and quantify how factors such as brand health, marketplace, country dynamics, and the competitive landscape impact marketing media performance.
ROI falls as spend increases, per the report. Although costs continue to rise, supply has not increased as much as demand. Marketers are spending more on search, but not getting as much in return as they once did.
On average, digital still offers a higher ROI than offline, but they are converging.
The report also points to payment and cost structures and the availability of these channels stemming from the rise of programmatic and the unavoidable bidding wars for limited inventory.
The report analyzes about $430 billion in marketing spend in a cross-section of industries and marketing tactics. Using benchmark data from the company’s Genome database, the study found the average return on investment for online advertising remains higher than the offline effort, but the two are rapidly approaching parity.
Of the brands included in this analysis, 61% increased the amount of online marketing dollars spent from 2015 to 2016. The average contribution of online spending more than doubled, increasing from 6% of total marketing spending to 15%.
The report also notes that television dominates offline advertising, largely because the the ROI tends to be more predictable.
One insight revealed in the report suggests that TV often serves as a trigger that sparks consumers to search, discuss, and share. This ensures that the interaction of TV with other channels such as word-of-mouth (WOM) and other paid, earned and owned online channels remains strong.
Indirect effects can increase the impact of TV by more than two times when considering its impact on WOM, search, websites and social.
TV advertising has a longer-lasting impact on sales when compared with digital advertising. Over half of TV’s incremental sales occur five weeks or more. Display ads see 91% of incremental sales occurring within four weeks. Both combined provide a higher ROI, according to the report.