Advertising Dependency: How To Create Marketing Resilience via @sejournal, @Kevin_Indig

Reduce risk and increase marketing resilience. Find out how channel diversification can help your business maintain growth even during challenging times. The post Advertising Dependency: How To Create Marketing Resilience appeared first on Search Engine Journal.

Jan 28, 2025 - 21:03

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Advertising Dependency: How To Create Marketing Resilience via @sejournal, @Kevin_Indig

Advertising can pull your company forward like an 18 wheeler, but it can also create a risky dependency that backfires when you need to reduce budgets or reduce advertising spend.

Think about it like over-watering a plant. Too much of a good thing can be a bad thing.

Lately, I’ve encountered a lot more companies that need to pull paid budgets back and struggle to hit the growth targets as a result.

The solution to this problem is simple: a safety net of organic channels that catches you when you need it. But making it happen is hard.

Tough Waters

Screenshot from layoffs.fyi, January 2025

Channel diversification is the thing you didn’t know you needed until you realize you need to cut budget and you’re too dependent on a single channel. I could be SEO, too.

Lately, budget and people cuts have become the norm:

Big tech companies have conducted mass layoffs to navigate tougher market waters. Over 150,000 tech workers were laid off in 2024 alone.1 Marketing budgets dropped by an average of 15% in 2024 compared to 2023, and minus 26% compared to 2019.2 Higher interest rates make it harder to raise money, unless you’re an AI startup right now, which means that it’s harder to grow as aggressively with advertising.

The frivolous spending times are over. And as a company, you need to build resilience, like an investor who diversifies their portfolio – even though some of their assets have grown really well.

Reducing Your Ad-diction

The common approach to ad spend is to either ramp it up as long as your lifetime value is higher than your customer acquisition cost and net retention is positive, or you simply exhaust your available budget. Often, it’s both.

But the position you actually want to be in is one where you could quickly cut 20-30% of the advertising budget and still grow. That is true resilience.

And resilient companies deliver 150% higher growth, according to a McKinsey analysis.

Screenshot from mckinsey.com, January 2025

McKinsey found that:

During times of economic uncertainty, marketing is more important than ever. Instead of trimming, companies can empower their CMOs to adopt an investor mindset.

By eliminating inefficient spend and reinvesting it in high growth areas, resilient marketers will weather pending storms while also creating opportunities to rebound stronger.3

Channel Diversification

Image Credit: Kevin Indig

When I looked at the channel mix of sites in the biggest industries, I found that B2B enterprise and SaaS companies get much more direct and referral traffic, but less from social marketplaces have the highest percentage of organic traffic, while D2C companies lean mostly on paid.

Remedy

To diversify from advertising, you need to inevst in organic channels like SEO, content marketing, organic social, organic YouTube, etc. Organic channels require only fixed instead of marginal costs like advertising budget.

So, your investment becomes more efficient because returns can scale even without investing more money.

On top of that, organic channels can make paid channels more efficient (e.g., Search), even when you don’t need to reduce budgets.

The challenge is that organic channels take a while to build and don’t have as crisp attribution as paid channels.

The best framework for balancing paid vs. organic channels is earned, owned, and paid.

Image Credit: Kevin Indig

Earned channels are the ones where you need to put in the work for additional visibility. Owned channels are the ones that are already yours; they just need to be optimized. Side notes: Your product is the most forgotten-owned channel. You can drive new customers with user referral loops and retention tactics, which, in return, also makes you less dependent on advertising to bring in new customers.

Image Credit: Kevin Indig

To prioritize the right organic channels, measure where your audience is against audience size.

First, find out where your audience is by looking at high-affinity websites in SparkToro, survey your existing customers, or analyze which channels/platforms send you referral traffic in your web analytics tool of choice.

Then, find out the audience size per channel. For example, if you have a highly engaged audience on Reddit but the most relevant subreddit has only 1,000 members, it might be smarter to go after SEO if your relevant keywords have a promising search volume.

A very common sequence of channels that I found to be successful is to prioritize product referrals, then invest in SEO plus email, then in organic YouTube, and then look at alternative channels.

What’s important is to define very clear criteria for when a channel is established based on its impact on the bottom line so you can explore the next one.

Trimming

The most efficient approach to cutting advertising budgets I found is to start with branded terms and paid search.

Many companies spend millions of dollars to bid on their own brand, but it’s not always necessary.

Incrementality testing can reveal that organic search can catch the majority of brand traffic just as well when the product is known enough.

We did large incrementality tests across our product portfolio back at Atlassian and noticed that known products like Jira don’t need paid spend on branded terms. Organic does the job just as well.

Efficient cutting also factors in where your audience is. In SaaS, you commonly cut paid search last and social first. But in commerce, it might be the other way around.

However, the biggest mistake that I see companies make is to cut off brand advertising entirely. You still need brand awareness to feed performance channels and SEO.

Higher paid spend doesn’t always translate into more or better traffic. Two examples I found are Salesforce and Shopify.

Salesforce ramped up paid spend significantly in Q4 but didn’t see a proportionate traffic increase.

Shopify shows a similar pattern, just that its paid spend has grown over the last two years.

These trends don’t have to be bad, and both companies have a diversified channel mix.

They just show that advertising returns can fluctuate, and having optionality is critical to survive the winters so you can enjoy the summers.

Image Credit: Kevin Indig