How to manage Google ads campaigns in an economic crisis

During the pandemic, ecommerce businesses running successful Google ads campaigns reaped the rewards but the current economic crisis is the biggest challenge they now face.

Cost of living crisis

The UK inflation rate hit a 40-year high of 9.4% this week and economists warned of a potential increase to 12% by October 2022. With the average UK food bill rising by £454 a year, the cost of living crisis has led to many people finding ways to cut back on expenses. With average pay not able to keep up with the rate inflation is increasing this inevitably means, consumers have less to spend. With further increases to come, this will only get harder.

• Petrol and diesel sales fell by 4.3% in June as prices at the pumps hit new records, monthly retail data shows.
• The average family car costs more than £100 to fill up, according to the RAC.
• Clothing sales dropped by 4.7%, as UK inflation reached new highs.
• The ONS found around nine-in-10 adults continued to report a rise in their living costs over the past month.

Russian invasion of Ukraine

Global food prices have risen to their highest levels since the Russian invasion, as the UN has acknowledged. Before the war, Ukraine was the fifth largest wheat producer and largest sunflower oil producer in the world. World wheat prices soared by 19.7 per cent during March, according to the Food and Agriculture Organisation’s monthly food price index.

The second major area where the conflict in Ukraine is propelling the cost of living crisis is energy. Russia is one of the world's top three producers of crude oil and home to approximately a quarter of the planet's known natural gas reserves.

The IMF cut its global growth projections for 2022 and 2023, saying the economic impact from Russia’s invasion of Ukraine will “propagate far and wide, adding to price pressures and exacerbating significant policy challenges.”

Drop in demand

Consumer confidence has reached its lowest in almost five decades, surpassing anything seen during the financial crisis, the pandemic or even the 1970s. Facing these challenges we are now seeing a drop in demand especially as consumers start to spend less ahead of uncertain times.

How is the cost of living crisis impacting PPC marketing?

With people being more careful with their finances the current crisis is having a significant impact on search impression and click volumes and negatively affecting conversion rates and average order value metrics across Google Ads accounts. Return On Ad Spend (ROAS) has dropped to levels not seen since before the pandemic and the cost of living crisis isn’t the only challenge businesses running Google ad campaigns are facing.

What are the challenges of PPC marketing in 2022?

Hypercompetition

Since the pandemic, the number of online retailers has increased. Whilst some traditional businesses were forced online to continue trading, new ecommerce businesses entered the market to take advantage of the increased online sales demand, creating a hypercompetitive marketplace.

Increased cost per click

There have been some staggering increases in the cost of clicks year on year which has placed significant pressure on advertisers. Cost per clicks in 2022 are at some of their highest levels seen.

Automation

Google is moving increasingly towards full automation with campaigns like Smart Shopping and Performance Max which reduce a skilled marketers ability to beat the competition with savvy PPC tactics and level the playing field, budget excepted.

The rise of privacy

Cookie and privacy policy updates such as last year’s iOS15 release mean we’re potentially losing visibility on many customers' user and conversion journeys. In 2020, only 10% of the population were covered by privacy regulations and by 2023, 65% of the population will live in countries with privacy protecting regulations that limit how much of their internet activity can be tracked.

Google notes that third party cookies will eventually be phased out but that this will not affect the ability to accurately measure and optimise Internet marketing campaigns. Google acknowledges that the loss of third-party data will result in “measurement gaps” and states that this is inevitable. However they suggest that privacy-safe machine learning models can step in to help provide accurate reporting on the customer journey.

What tactics can you employ to face PPC challenges in 2022?

Reset targets

Don’t look back to 2020/21 to set your 2022/23 KPI’s. They were unprecedented times. If your business has historically seen YoY growth, be prepared for like for like or a decline in revenue and an increase in costs.

Make sure you understand the value of your PPC campaigns. Define and set your conversions understanding how much a conversion costs and how much revenue it generates. Make sure you're tracking these properly in Google Ads and GA4.

Be agile

The marketing strategy you spent months creating in 2021 may no longer be fit for purpose so update it. Don’t stubbornly stick to the plan. Test, learn and adapt and make sure you consider your PPC campaigns in the context of your other marketing channels. Look at activating those opportunities you’ve only just considered in the past.

Value brand

Don’t ignore the value of your brand campaigns. Are your brand assets compelling and representative of your brand values? Make sure you’re marketing to the entire sales funnel targeting customers at the awareness stage rather than just those that are primed to buy. Utilise video and display ads if your budget allows.

Optimise your campaigns

Keep a close eye on costs. Track your campaigns performance metrics and consider pushing budget towards the high performance campaigns. Make sure you’re keeping on top of and considering the account recommendations. Ensure your quality score remains strong.

How Applied Digital can help your business with PPC advertising.

With our finger on the PPC pulse our pay per click strategy and account management has delivered success for our clients for over 20 years.

If you’d like more information, or to talk through ways we can help you with your email marketing campaigns, please contact Applied Marketing Strategist - Richard Hatfield.