ADOTAS EXCLUSIVE — Despite the election and the Olympics, 2008 has been a bad year for the traditional media companies. According to an article in the Financial Times published earlier this week, the economic slowdown has forced large companies like Coca Cola and General Motors to cut their marketing budgets.
But all is not gloom and doom. Many Fortune 500 and SMB marketers are maintaining, even increasing their advertising budgets by implementing new economic measures for new economic times.
What’s at the heart of the new strategy for these brand marketers?
In one word, “Engagement.”
No longer do brand marketers have the luxury of deploying “big bang” campaigns with heavy TV and print schedules to boost awareness, favorability and other branding metrics.
For one, by themselves, these methods are not cost-effective. In addition, they are not in tune with the times.
It might be sound clichéd, but the Internet has democratized our society. Every industry segment has been profoundly affected by the ability for people to express their personalities through their likes, dislikes and preferences.
You can’t escape it. I saw an excellent documentary Helvetica, in which an eminent design critic Rick Poyner points to the proliferation of social-networking websites as examples of where people “are using graphic design to express their individuality,” and how this will drive changes in the way new fonts will come into being.
If obscure industries like typesetting can see and react to the winds of change, then surely online marketers driving this change can reinvent ourselves in keeping with the times. We need to move from an “announcement” focused strategy to one that enables us to talk to our consumers at multiple touchpoints in a way that is relevant and meaningful to them.
This shift is already taking place. A large number of companies like Nike are moving dollars away from traditional media. Instead, they are building vehicles like community sites and newsletters (such as nikeplus.com) that allow them to engage their consumers in a genuine two way conversation. The Starbucks Idea site and the Mercedes community forums are just a few more examples of marketers gaining real-time feedback from their consumers to drive meaningful change to their brands.
In an article in the New York Times, called “The New Advertising Outlet: Your Life”, Trevor Edwards, Nike’s corporate vice president for global brand and category management says of the Nike Plus Community Site “It’s a very different way to connect with consumers,” says. “People are coming into it on average three times a week. So we’re not having to go to them.”
Nike is not alone.
According to Advertising Age and TNS Media Intelligence, the top 25 companies with the largest advertising spend over the last five years cut their spending last year in traditional media by about $767 million.
Given that newsletters, community sites and the like offer brand marketers the opportunity to engage consumers in a meaningful way, the challenge is to build a pipeline of qualified members for these vehicles cost-effectively.
Many of our clients are using transparent CPL advertising for this purpose. With falling click-through rates and increasing keyword costs, CPM and CPC pricing models are not cost-effective for building a large pipeline of qualified leads. Transparent CPL advertising enables brand marketers to map leads to their sources and build and segment a pipeline of qualified consumers quickly.
There is yet another advantage to be gained by moving away from traditional media.
To gauge the success of their programs, brand marketers can now measure the effectiveness of their engagement vehicles in terms of metrics like newsletter open rates, bounce rates, click-through rates and sales. They can tie in their marketing metrics to business results more directly, i.e. they can operate more like direct marketers. Which is a good thing. A result focused mindset helps them drive and prove ROI in tough economic times.
Sure, the tough economic times have taken a bite out of traditional media budgets. But it was about time. As an industry, we can utilize these tough economic times to set practices in place that truly harness the power of the Internet to engage consumers in a relevant way and deliver real value to our clients.