Flying Towards Quality When the Economy Is Grounded
But the decision to cut marketing spends isn't -- or at least shouldn't be -- a simple one. In a report entitled "Learning to Love Recessions," global consulting firm McKinsey & Co. studied 1000 business from 1982 to 1999 with the goal of understanding the tactics employed by those that grew stronger during an economic downturn.
While much of their report focused on M&A activity, there was one key finding that should give pause to corporate budget-cutters. McKinsey found that successful companies actually increased their advertising during slow times. No doubt these businesses recognized that stepping up their marketing while their competitors may be retreating provided tremendous opportunities to gain share.
The reality is that some companies will heed this advice -- and probably reap considerable benefits in the years ahead -- but many more will be forced to make tough advertising decisions. Christopher Vollmer, the head of Booz & Company's North American media practice, recently said these businesses should focus their marketing online. "Marketers are looking for advertising environments that are targeted, accountable and interactive -- all of those dimensions continue to benefit online," he commented. And he added that the current environment will lead marketers away from advertising networks, because "they offer little additional value in the form of campaign optimization or targeting."
Indeed, there is good reason to believe that the economic downturn will cause marketers to seek a flight to accountability and quality. Trusted, professionally developed online media sites, offering premium audiences, quality content and a history of delivering results, have the potential to become even more valuable as marketing budgets come under pressure.
Consumers have been embarking on a flight to quality for years, and even more so recently. When the news and information matters -- from plotting a travel destination, to staying on top of local and national breaking news, to understanding the world's financial condition -- it is the well-known, high quality content sites that are most trusted. In a recent study by TNS, 38% of consumers say they trust online news sites, while only 9% express trust in blogs. Jupiter found a similar result in its latest research on the environments consumers trust online. Well-known online media sites lead all others when consumers are researching products.
Given this consumer trust in well-known news and information sites, it's not surprising that, in a year in which dramatic political and economic news has dominated our lives, these sites have seen remarkable growth.
Nielsen Online recently reported that newspaper sites, such as NYTimes.com and washingtonpost.com, received a record 68.3 million unique visitors in the third quarter, an increase of 15.8% over the third quarter of 2007. Average monthly page views were up 25.2% over the year-ago quarter to 10.5 billion. The actual day of the election was a record breaker for professional news sites: MSNBC.com, CNN.com, ABCNews.com and the LATimes.com reported their highest single traffic day ever on Nov. 4.
If Vollmer is correct and the economic downturn is driving demand for accountability and premium, targeted audiences, then advertisers will follow consumers into high quality content sites. And there is growing evidence that, in doing so, they will see even stronger return on their investment.
In July, the Online Publishing Association analyzed independent Dynamic Logic MarketNorms data and found that advertising effectiveness scores on quality, original content sites (as represented by the OPA membership) were numerically higher than on the Web in general, on portals or on ad networks. The strong showing for these sites swept across nearly all measurements -- high quality, original content sites outscored industry norms for the Internet in 41 out of 43 advertising metrics.
A similar analysis was conducted more recently, crossing several months of severe economic turmoil, and it found that OPA members have actually seen higher average advertising performance since July, while performance scores for the Internet overall, portals and ad networks have declined. The OPA will soon be releasing full details of this report.
It is becoming clear that businesses that are being forced to make difficult ad budget decisions have an opportunity to recession-proof their marketing. Moving towards quality ensures their brands will be found in the places that consumers are clearly relying upon, and that are clearly delivering consistent, strong and accountable results. At the same time, these sites are the definition of trusted, well-lit environments.
In the good times, with flush ad budgets, marketers are often willing to place bets on the broad reach delivered by less trusted and less reliable environments. With challenging times looming, and marketing budgets constricting, marketers need to ask whether investing in ad networks remains a worthwhile gamble. The importance of environment hasn't changed in the current economic situation, but its relative value to marketers has never been higher.