Traditional Marketing Budgets Lose to Interactive

by Jack Loechner, Jul 14, 2009, 8:15 AM

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According to Forrester Research, reported by Richard H. Levey at Directmag.com, 60% of marketers surveyed will increase their interactive marketing budgets by shifting funds from traditional media. Direct mail was cited by 40% of marketers as being one being cut, outranking newspapers (35%), magazines (28%) and television (12%).

Among the interactive channels, the study finds social media and mobile marketing spending expanding between 2009 and 2014, with social media jumping by 34% on a compounded annual basis and mobile marketing increasing by 27%. Social media starts at $716 million in 2009, increasing to $3.11 billion by 2014. Mobile marketing expenditures stand at 319 million this year, and goes to $1.27 billion by 2014.

Online display advertising, which currently stands at $7.83 billion, will rise by 17% annually, ending up at $16.9 billion in 2014. Search marketing, which currently accounts for $15.39 billion in spending, will jump by 15%, to $31.59 billion, and e-mail, now at $1.25 billion, will increase 11%, to 2.08 billion.

Shar VanBoskirk, Forrester analyst, says "Email marketing is having a banner year as marketers:

• Grow their lists with the promise of ‘green marketing'
• Turn on more and smarter programs to boost sluggish sales
• Shift money to email from direct mail
• Improve email effectiveness by linking it to other channels like search or user-generated ratings and reviews."

And, while social and mobile media expand, a corollary report from Forrester shows marketing officers reporting that budgets for traditional media, such as television, print, radio or magazines, along with staff and training spending and branding and advertising expenditures had been cut by two-thirds from last year's levels, and more than half of their direct mail budget was gone.

Budget reductions from the 2008 level include:

• 29% reduction in marketing technology
• 27% in online advertising
• 22% in Web site development budgets were reduced
• 21% reduction in loyalty program spending
• 11% reduction in E-mail marketing  
• 7% in social media spending from the 2008 level

Among CMOs facing lower budgets:

• 19% said they cut branding and advertising because "I can't track its results"
• 26% said the same about their TV, print, radio or magazine expenditures
• 19% reduced their direct mail spending because it delivers the lowest ROI

On the other hand, 47% of CMOs whose budgets have been cut are increasing their spending on social media, while another 44% are increasing spending on Web site development. 40% will spend more on online advertising, and nearly that amount will increase financial resources in e-mail, considering these functions critical to their businesses, or needed to maintain competitive advantages.

In a glimpse into how marketing is viewed throughout a number of organizations, just over half of the CMOs see it as a revenue enhancer that needs to be supported. But 41% indicated marketing efforts are under increasing scrutiny from all levels of the company, and 18% are working in firms where marketing is seen as a cost center that needs to be cut.

To read more about the interactive budgets, visit Direct here, and for more on the continuing Forrester report on marketing budget reductions, please go here.

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0 comments on "Traditional Marketing Budgets Lose to Interactive".

1. Russell Cross from Prentke Romich
   

   commented on: July 14, 2009 at 10:01 a.m.

   One of the challenges of moving to e-mail, social media, and mobile marketing is to develop strategies that are focused and unobtrusive. And by "unobtrusive" I mean advertising that doesn't irritate or annoy. Many of us routinely use a spam filter because of the information overload of email and although this cuts down on the number of actual messages that arrive on the virtual desk, the size of the spam seems to get no smaller. Similarly the number of my Twitter followers who turn out to be "follower spam" accounts for almost 80% of my follower requests.

   The point is that with more ways to promote products virtually, the greater the potential for customers beginning to ignore information offerings.

2. MediaMark Walker
   

   commented on: July 14, 2009 at 10:55 a.m.

   This sounds like what I've been telling all the reps that call me everyweek- if I can't track it I can't justify it right now. However, I am puzzled by the notion that print, magazine and direct mail ar ebeing vut. Those are exactly the things I CAN track. Coupons are hot rightnow- use them, track them and see the ROI grow to triple digits...

3. Kristen Sullivan from Dukky
   

   commented on: July 14, 2009 at 12:07 p.m.

   MediaMark Walker - we totally agree with you. Coupons, deals etc. from direct mail are trackable. Dukky's combining them with social media and online technologies...and seeing big ROIs.

   Russell Cross: Here's our answer to this tough challenge: We let consumers pass their favorite deals, coupons, products on to their friends via their social networks. A personal recommendation is a lot more effective than a message from an unknown marketer.

   kristen
   @dukky.com

4. Lauren Mccadney from CDW
   

   commented on: July 14, 2009 at 12:45 p.m.

   In my gut I smell fear and the herd mentality. I'm all for incorporating new means of influence into the marketing mix. But my analysis is showing that much of the wholesale abandonment of some "old school" tactics is hysteria driven coupled with CMO insecurity and the desire to chase the new-new thing. I LOVE social media as much as the next person but come on folks...in today's world I can still get broader more targeted reach and a higher ROI on a catalog vs. a tweet. I'm not ready to throw the baby out with the bath water just yet. I'm still working toward a balanced integrated plan.

5. Andrew Eklund from Ciceron
   

   commented on: July 14, 2009 at 1:36 p.m.

   The fundamental question is "Who's leading this charge?" Is it the CMO? And, if so, where were you two, five and ten years ago? There's a lot of jumping on bandwagons with regard to social media. Hell, it's practically all I do (enterprise social media strategies - not simply tactical implementation). But if a CMO thinks that social media is a good advertising environment, forget it. If a CMO thinks social media is a good broad-reach model, double forget it. Social media is about allowing brands and customers to vet each other out, get authentic and semantic information, and, ultimately, allow your brand fans to share their positive -- and, yes, negative -- experiences.

   Social media is a culture and leadership challenge, not a media or technology one. The CMOs who treat it as either of the latter will find themselves once again on the top of the C-Level heap pile.

   BTW, social media IS trackable all the way through the sales or lead gen funnel. Social media IS as trackable as direct mail. It's just that many organizations either don't have the internal resources, interactive agency relationships, or IT buy-in to connect the dots. It's all there.

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