What you need to know:

• Indie agency Speed's Duncan Parfitt is urging clients to pause paid search.
• He believes clients are stuck over investing in the channel, hooked on "lazy" metrics.
• Speed isn't the only one turning off the tap – last year Airbnb pulled hundreds of millions of dollars in search and performance marketing and said it will never go back to old ways.

Call off the search

"Don't be afraid to turn off the tap". Speed MD Duncan Parfitt is telling clients paid search is often a waste of money and those willing to "be bold" are seeing "negligible impact" on sales conversions. 

The former Spark Foundry COO told Mi3 marketers have stopped questioning digital metrics and have become "lazy" in their measure of success.

"If a search campaign is run well, you should be testing for incrementality – and I don’t mean little tests. Switch it all off and see what happens," said Parfitt. 

"If you are running a rubbish campaign and you're measuring incorrectly then it is going to look like search is your golden child. It's not."

The agency's own tests found paid search reached a point of diminishing return much faster than expected with numerous clients. Parfitt won't say who, but Speed's client list includes brands such as Taco Bell, Dulux Group, Japan Airlines, B&D Group, Palmer’s Australia and V Energy.

In a recent test, Speed compared the rate of diminishing return of paid search against localised radio advertising, with radio proving to be the more successful direct response channel over a short-term campaign window.

The dumb money

Parfitt describes the approach to paid search as a "money spinner" for large agency holding groups and its always-on strategy has hooked marketers on media results rather than business success.

"All the brands I've spoken to, from the biggest to the smallest, always have the same thought, 'we're probably over-investing performance media'. However, they have been fed a false metric for success," said Parfitt.

"The problem that I have is that so many parties just treat a client's campaigns the same and roll out a generic infrastructure.

"Agencies don't look at the business results, they look at their media results because they just don't have the sophistication to understand the difference between brand and generic value to a business."

A recent conversation with a potential client highlighted the issue for Parfitt.

After examining how paid search and performance factored into a predominantly bricks and mortar retailer, Speed found over 70 per cent of all its revenue was being attributed to digital, despite a large majority of purchases occurring in-store.

"Because they got the numeric 'evidence' of these individual purchases through user tracking and had it stitched together with a flawed attribution measurement, the results for their spend looked fantastic but it couldn't possibly be," Parfitt said.

"There is no way it could add up, especially given the large scale physical presence they have. But because they've never had the confidence to turn off the tap and stick their neck out, it's hard to fault them for accepting search as the key to results."

Back brand instead

While Apple's shifts and other platform reactions to Google's big changes could begin to edge out some of the "murky" metrics paid search relies upon, Parfitt urges marketers to get on the front foot and question their investment.

He said several of his clients have already seen the value in incremental testing, with some saving hundreds of thousands of dollars, moving the budget into above the line media as a result.

"That's when you see it pay off – when a client says to you 'this can help as balance the scales' when it comes to brand and performance," Parfitt said.

"Not every client can do this, but those with nimble marketing teams, big or small, who are often over-investing in paid search should really look at taking a bold approach - the results could surprise you." 

Full funnel shift

While Speed's approach may ruffle some digital marketer feathers, it's not entirely an outlier.

Last year Airbnb turned off $800m worth of advertising, including hundreds of millions of dollars worth of performance marketing, much of which was search and social, as Covid collapsed the travel industry. In a Q4 2020 earnings call in February this year, Airbnb CEO Brian Chesky said "something remarkable happened" as a result – i.e. nothing.

"Even before we started resuming our marketing spend, our traffic levels came back to 95 per cent of the traffic levels of 2019 without any marketing spend. And what this revealed is that our brand is inherently strong. It's a noun and a verb in pop culture," said Chesky.

"And so we don't intend to ever again spend the amount of money as a percentage of revenue on marketing in the future as we did in 2019. In Q4, more than 90 per cent of our traffic was direct or unpaid, and we think that will continue in the future. 

"Our marketing plan, therefore, our strategy is the following: a full-funnel marketing approach. The top of the funnel is actually PR ... Second is brand marketing. We think of brand marketing as education and an investment."