• by Mark Walsh  @markfwal, February 7, 2008

Faced with a looming recession, marketers should spend more on online social media as a cheap, efficient way to advertise during tougher economic times.

So advises Forrester Research in a research note issued to clients Tuesday outlining strategies for interactive marketing in a recession. The firm argues that advertisers can get more bang for their buck by running campaigns on social-networking sites and online communities as consumers become less receptive to traditional brand advertising.

"Advertising (or as we often call it, "shouting") is mostly about generating awareness and reinforcing brands," wrote Forrester analyst Josh Bernoff in a blog post accompanying the report. "In a recession, ordinary consumers like you and me aren't as willing to spend. Sure, we'll be aware of the product, but that doesn't make so much difference when you're worried about your future."

Instead, marketers should embrace social sites and word-of-mouth marketing as a more effective means of reaching spending-conscious consumers in a downturn. The potential viral effect of social-marketing efforts can have a bigger impact than any other medium, according to Forrester. They also offer accountability via metrics such as leads generated, or softer measures of engagement like increased buzz or word of mouth.

And, instead of spending millions of dollars, campaigns can be started on major social sites like Facebook for almost nothing by starting company pages or blogs. "Even more sophisticated programs, like a full-blown customer community, typically don't cost more than $50,000 to $300,000 to get going," states the report.

Reaping results from social advertising isn't necessarily so simple. "Social networking [campaigns] can get people the biggest bang for the buck, but there are no guarantees," said Sarah Fay, president of Isobar U.S. "It entirely depends on hitting the right consumer, having a message people care enough about, and a willingness to attach their own identities to it."

That's tougher with some brands or product categories, like packaged goods, that don't necessarily have brand evangelists ready to spread the message. (Even Crest White Strips has put up a Facebook page.) But less sexy brands must calibrate the creative just right to gain traction among young social networking users.

Social networking takes so much finesse that companies need to get their feet wet and understand how to use it," said Fay, whose firm, along with MySpace, commissioned the influential 2007 study "Never-Ending Friending," about marketing campaigns on social sites. "It's still an experimental category for most companies, so I'm not sure what will happen there."

Even so, Fay agreed that digital advertising wouldn't suffer during a recession this year even as marketers tighten up overall ad budgets. "I do think people gravitate to what that they think are the most targeted, contextually relevant channels," she said, referring to more established formats such as search and e-mail.

For its part, Forrester expects that dollars cut from mass brand ad budgets could be diverted to search marketing, potentially driving up prices on keywords. E-mail marketing should also get a boost as companies launch e-mail campaigns to target existing customers who are less likely to ignore their pitches.

Even online display advertising won't be hard hit as brand advertisers shift some portion of spend to online video and flash ads as well as performance-based display ads. As a result, spending will move away from CPM-based buys to cost-per-action ads, "but total spending on display ads won't suffer," according to Forrester.