Google Ads to Sustain Business in Challenging Economic Times
As we enter 2025, a recession has been avoided, inflation in the US is nearing the Federal Reserve's target level, wages have grown above pre-COVID levels, consumer spending exceeds economists' predictions, and business investment is at record levels.
As the second Trump administration has begun to reshape the government, although uncertainty exists, initial response from the markets has been favorable, on expectations that the new administration will be able to unlock further economic growth. Although some new tariffs will probably be put into place, at least temporarily, the across-the-board measures proposed in campaign rhetoric likely will not. And some undocumented immigrants will probably be deported, but legal immigration levels are unlikely to be significantly affected. Significant government spending cuts may be enacted, but likely not in amounts large enough to change the course of the economy in 2025.
What's going on with the economy?
- Investors believe the Trump administration will be able to unlock new economic growth through tax cuts - including extension of the Tax Cuts and Jobs Act (TCJA) - and deregulation.
- Proposed cuts in government spending - on things like the Affordable Care Act and the US Department of Education - will likely soon be offset by spending elsewhere.
- Because of the threat of further inflation resulting from any new tariffs actually put into place, the Federal Reserve will defer any further rate cuts until at least the second quarter of 2025. A strong job market and robust consumer spending should make deferring rate cuts less of a problem. But government layoffs could change that.
- If, as is likely, imports of food and energy will be exempted from any new tariffs, any adverse impact on consumer spending should not harm the overall economy significantly.
- Although many households burned through their COVID-era savings in 2024, growing incomes and wider access to credit make increased consumer spending likely in 2025.
- Consumers and businesses will likely drive up US foreign trade activity by 3%-4% early in 2025 to avoid price increases due to new tariffs.
- US business investment has been at a record high since the passage of the Inflation Reduction and CHIPS and Science Acts which have stimulated US production of strategic technologies like EVs, batteries and semiconductors. But because many of the imported goods to which new tariffs may apply are used as inputs by US manufacturers and other industries, those firms' cost of doing business will increase. Those unable to find a cost-effective local replacement source could fail.
How can you continue to get customers and sales in today's economy?
As soon as inflation rose to a 40-year high in 2022 and the Fed began raising interest rates - making monthly mortgage and credit-card payments higher for consumers carrying balances - people began to spend more judiciously on discretionary goods and services. But they haven't, and won't, STOP spending.
However, at the first sign of a pullback in consumer spending, many business owners panic. Their first thought is to bring marketing in-house, stop advertising and hunker down until the economy recovers.
First marketing efforts to go are typically those that don't produce a measurable return on investment: content marketing, image advertising, social media, branding.
Smaller advertising platforms like X, Snap and TikTok will be hit harder than Google because they have a smaller ad sales volume, and big advertisers consider their efficacy, safety and scalability to be largely unproven. Advertisers go where their audiences are, and more are at Google than anywhere else.
Google alone has demonstrated over a significant period of years the consistent ability of its advertising programs to get buyers to the bottom of the funnel, and for that reason, savvy advertisers won't be switching horses in the economic climate of 2025. Advertising money will continue to rush to Google.
However: in 2024, many American consumers lost faith in the Biden administration's ability to manage the economy effectively. Interest rates rose, people cut back on spending, and advertisers found themselves chasing fewer buyers. Accordingly, average Google Ads costs across all industry sectors increased by 10.4% vs. 2023. When Google click prices became insanely overinflated so that very high ad spends are required to get conversions, some businesses stopped advertising altogether or tried to maintain sales by switching their ad spend to lower-priced media.
When that happens, if you've hung in there with Google Ads, you'll be able to get lower-priced leads and more conversions as a result of decreased competition.
If you're tempted to stop advertising in 2025 - or not ever to start it - consider the conclusions reached by Henry Ford after his company lost $88 million - nearly $20 billion in 2025 dollars - in the Great Depression of 1932-33:
“The way out of the depression is to start spending and doing things.”
“A man who stops advertising to save money is like a man who stops a clock to save time.”
The key thing is: to do whatever it takes to keep your Google Ads running through the bad times so you can stay in business, continue to get new customers into your pipeline, and get ahead of competitors in the upturn.
Ready to start making more money now? Most Google Ads campaigns need an investment of just a few hundred to a few thousand dollars a month. In 2024 with inflation at a 40-year high, Google Ads produced a mean ROI of 200% across all industry sectors. Follow this link to tell me a bit about your business and your strategic objectives and