Financial experts are predicting that this economic downturn will last longer than most recent economic slumps. With thousands losing their jobs and more job cuts expected in the near future, consumers are being much more selective about what they buy and in many cases they are buying less.
The economy’s impact on consumer purchasing decisions has been both drastic and dramatic. In fact, it has reshaped the way that many marketers operate. Marketers spending smarter with fewer dollars. The tightening economy means that advertisers now compete for fewer consumer dollars. Data indicates they may also be competing for those consumer dollars with fewer marketing dollars.
According to a recent study of 2,000 senior marketing professionals conducted by the Marketing Executives Networking Group (MENG) (referenced in Marketing Daily) over half of the marketers surveyed indicated that they will have a smaller marketing budget this year.
Other studies agree with the MENG find that marketing budgets are being decreased. Adweek references an Interpublic Magna finding that media spending in the United States fell from $279.6 billion in 2007 to $270.8 billion in 2008. And, 2009 media spending figures are expected to be even lower.
The tightening economy and tightening advertising budgets mean that today’s media purchasing decision makers want to see results with the limited dollars that they have to spend. They are no longer willing to buy media time or placement on the prospect of nebulous future benefits. They want to see a return on investment and they want to see it quickly.
For the best results, smart marketers are turning to online media. Where are the marketing budgets going to be spent? They will be spent on those media channels that marketers believe to be the most effective.
Another study, conducted by Dartran Media, a leading digital marketing technology company, may have some of the answers. Perhaps not surprisingly, the Dartran media study shows that marketers believe online media is now the most effective media in terms of performance. Over 80 percent of those surveyed indicated that email advertising performed best. Search marketing was not too far behind with over 56 percent of the marketers indicating that it was a top performer.
The Dartran Media study confirms other findings that online media channels are more effective than traditional media. In fact, a 2008 study from Interpublic Magna (referenced in MediaPost News) shows that social media is the fastest growing online media channel.
Traditional media channels are hurting. It is no secret that traditional media is hurting. The news is filled with stories of the struggles of local and national newspapers. A number of local television and radio stations are also in trouble. A 2008 New York Times story called 2008 the worst year for ad revenue for newspapers.
If the statistics from the Dartan Media study are any indication, 2009 will not be much better. Over half of the respondents in that study said that their spending on offline media would either decrease or remain stagnant. In fact, during these rough economic times traditional media may not deliver the needed “bang for the buck.”
What happens when traditional advertisers pull their television ads? A sudden empty slot in the television station’s lineup is created. If that empty slot is not filled immediately, it could mean dead air. Rather than have dead air, many stations are turning to ready-made direct response infomercials, even during prime time.
Infomercials are a bargain for the savvy marketer because an infomercial can be run for a fraction of the cost of a regular advertisement. A recent New York Times article quoted one marketer as saying that “she often paid as little as 5 percent of what a general advertiser would” to air a short-form infomercial, which is typically :60 or :120 in length. That is a cost savings of 95%!
Smart marketers will react to changes and adjust. It is possible for a smart marketer to succeed in today’s changed economy. The successful marketer will look for the media channel that is the most effective in reaching and persuading customers. Right now, traditional media channels are failing to deliver while online media channels are expected to increase in effectiveness.
The smart marketer will also look for advertising bargains in traditional media channels, such as infomercials. Infomercials offer the smart marketer an unprecedented access to the prime time audience at a bargain rate.
The successful marketers of 2009 will also devise and implement accurate measurements of return on investment. They will design their marketing strategy accordingly, revising and changing their approach whenever the data indicates that a particular strategy is no longer effective. Smarter marketing is definitely the wave of the future – and many of us, with the right preparation and foresight, are poised to benefit – even in these tough economic times.