As of November 2020, Google will be passing their Digital Service Tax (DST) directly onto you. If you are advertising in the UK that is 2% on top of your digital spend. Every acquired customer is going to cost you 2% more, and that’s before we consider the additional VAT. So, if your current Google search budget is £24,000 including VAT you will now be paying £24,480 per month…and an additional £5,760 per year.
There isn’t too much we can do about the tax, and we are under no illusions that simply removing Google search from the equation is a viable option, but we have been thinking about ways we can shift more clicks to organic or direct so that the 2% goes back into acquiring customers rather than a tax black hole.
When we talk about ‘harvesting’ TV responses, we are looking at the ways we deliver TV viewers from seeing the advert to the site. This is typically done through organic clicks, paid clicks, and direct traffic, but can we shift those paid clicks into free ones? We looked at the split across numerous sectors, and although not always the case, in general we see an increase in either the direct traffic or organic search when TV or increased TV is running.
Based on the splits that we see across our clients, we have looked at the potential impact of shifting the harvesting splits.
Below is an example of the total cost of a TV campaign of 10m impacts vs. 15m impacts (using some assumed generic costs and KPIs). We can see that increasing TV spend by 50% decreases the overall cost per website visit (CPV) including the TV spend and PPC harvesting costs by 1%.
If we can increase the percentage of harvesting traffic coming from organic and direct, then we could potentially be saving 5% on the CPV, which would equate to an additional 2,351 visits per year based on a budget of £540k.
All Response Media viewpoint.
The shift we can achieve by making small changes isn’t seismic, however over the years it can contribute to improving efficiency without having to change too much, and now is the time to talk to your planning team about how we can impact the harvesting split for your campaigns.
For example, ensuring that you have an SEO strategy and road map in place is essential, as this will allow for less reliance on paid and drive more organic traffic. Studies have indicated that with a good SEO programme, 71% of traffic was coming through page one organic, which left just 15% coming through paid clicks.
There are also potential changes to creativity that can encourage more direct traffic. For example, testing an earlier or more prominent URL on screen. Whilst there isn’t anything we can do to avoid the Google tax altogether, we can certainly try to tip the scales in favour of free harvesting channels and make your campaigns more efficient.
For more information on the TV services we offer, click here.