Report: Interactive Budgets Favor Familiar Formats

When it comes to interactive marketing budgets, companies are sticking with proven direct-response formats like email and search while shying away from emerging media categories such as mobile and Web video, according to a new report.

The study by Forrester Research, which surveyed 204 marketers from companies with 200 or more employees, found that half expect to increase interactive spending this year if the recession continues. But not all online ad categories will get a bigger slice of the pie.

The percentage of marketers that use online video and mobile advertising remains unchanged from a year ago, at two-thirds and 30%, respectively. And only 21% of marketers expect to adopt mobile in 2009 compared to 36% a year ago, according to the "Interactive Marketing Channels to Watch In 2009" report.

Social media applications fared better, with an additional 20% of marketers this year building their own social platforms including podcasts, widgets, user-generated content and blogs. Overall, 64% of companies surveyed develop social media applications today, with another 22% expecting to do so next year. A smaller share -- 41%--advertise through paid placements on social networks and blogs.

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Given the shift toward performance-based advertising this year as a result of the recession, it's not surprising that more than 90% of marketers will continue to rely on email and search. But within the latter category, search engine optimization will outpace paid search (93% versus 86%) because of its perceived cost-effectiveness.

Conversely, the percentage of marketers using display advertising --viewed as a less efficient buy than search -- will shrink from 94% to 88%. That decrease is partly a result of the 38% planning to cut display ad budgets this year. Forrester, however, advises companies to continue spending on brand advertising online. "Cheap, plentiful display media makes it easy to brand with a limited investment," reads the report.

While companies overall are less likely to experiment with new marketing tools in a tough economy, certain sectors are more aggressive in embracing emerging media. Financial services firms, for instance, are more likely to use online video and mobile. Twenty-four of 30 financial firms found in-stream video ads an easy way to repurpose commercials. And compared with 31% of marketers on average, 13 of 29 use mobile marketing.

Small businesses and media companies, meanwhile, tend to be more active in social media. The study found that 90% of companies with less than 1,000 employees will create social platforms like blogs and widgets, compared to 85% of corporations. But small and medium-size business skew low in paid advertising in social media and in mobile marketing.

The report did not include any dollar figures, but Forrester has previously projected interactive marketing to increase 11% this year to $25.6 billion. Starting from small bases, the mobile and social media segments are expected to grow most rapidly -- increasing nearly 70% to $391 million and almost 60% to $716 million, respectively, in 2009.

For the first quarter, however, the IAB reported Friday that online ad spending dropped 5% to $5.5 billion, the first yearly drop since 2002. 

Forrester chart

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