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Impending threats to the ever-changing digital landscape: Part 1 – The Economy

None of us can predict the future with any degree of certainty, but all of us can plan for it.

By learning from the past, analysing current trends, planning for different possible scenarios and being agile enough to change course when events dictate, businesses can not only insulate themselves from future shocks but can also generate huge levels of growth whilst others around them fall by the wayside.

In 2016, we saw spectacular growth for some of our clients. Consumer spending, despite some of the post-Brexit predictions, remains strong. Opportunities from search, both paid and organic, remain very healthy as search volumes hold up in most markets that we are operating in.

Social advertising has finally come into its own as a direct response channel; the revenue being generated from these channels for our clients has represented the biggest success story for us over the last year.

But we’ve also observed some key behavioural shifts and the digital landscape, in fact, the everything landscape, looks very different to the one we faced this time last year. In an environment where the only real certainty is change, complacency is the enemy of success.

To stay ahead of the game in times of uncertainty and rapid change, you need to look at what’s happening now and anticipate the effect that it’s going to have on the future behaviours of the people that really matter; your customers.

In part 1 of this 3-part series, I’ll discuss how changes to the economy and search landscape may affect your digital marketing in 2017.

The Economy

Whilst we don’t claim to be economic experts, we always need to factor possible changes to the economy into our planning for clients. Given the current political uncertainty, nobody, not even the experts it seems, knows for sure what’s going to happen to the UK economy in the medium to long term.

Therefore, the trick is to focus on what we do know and assess the likely impact on your customers, how their behaviour may be affected, and what that means you need to do.

For example, we know that following the referendum in June, the pound took a big hit from which it doesn’t look like it will recover.

pound-decrease

Since the UK is a net importer of goods and raw materials, we also know that at some point in the near future many goods are going to become more expensive for UK consumers.

How this could play out

As higher prices eat into consumer pockets, we’d expect to see some belt-tightening and search volumes declining for certain types of goods.

Search volumes declining which, in the absence of any gains in visibility, spells bad news for organic search traffic.

To cover organic search traffic losses, there will be new entrants to paid search and more aggressive bidding will occur as brands try to win a bigger piece of a smaller pie. This will subsequently push click costs up and CPAs down.

Without measures built into your strategy to deal with this eventuality, digital return on investment may suffer.

Changes In The Search Landscape

Google updates have always been a threat looming on the horizon. However, in 2016 the update which had the biggest impact wasn’t algorithmic.

Over the course of the year, Google made changes to its search results layout.

The major changes included the removal of right-hand side ads on desktop and the introduction of an extra result at the top of the SERPS; on both desktop and mobile, we also saw increased prominence for Google Shopping ads.

For many search terms with commercial intent, i.e. where Google Shopping results are triggered, we are now seeing no organic search results above the fold.

door-canopies-mobile

saint-laurent-desktop

The impact of this on organic search traffic has been fairly predictable. See below for the impact on organic search click-through rates for a typical ecommerce client:

oragnic-ctr-2016

It has not been unusual for us to see decreases in organic click-through rates of up to 20% for ecommerce websites.

This effect has been particularly damaging for clients who receive a high percentage of their traffic from mobile devices (where Shopping ads take up a higher percentage of search real estate).

How this could play out

These changes to SERP layout are here to stay, in fact, it would be wise to factor even more of these changes into your scenario analysis.

We would anticipate further decreases in organic search click-through rates and, similar to our analysis of the potential impact of economic change above, more players entering paid search space to mitigate against lost organic search revenue. Upward pressure will be put on click costs, and less agile brands will experience higher CPAs and lower return on investment.

In part 2 of this 3-part series, I will be discussing social media’s increasing influence on purchasing decisions.

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