Advertising's Changing Landscape

  |  July 28, 2009   |  Comments

Technology allows marketers to become smarter about where to allocate marketing budgets. But they must first define success metrics.

Forrester Research recently released its "U.S. Interactive Marketing Forecast 2009 to 2014" lead by Shar VanBoskirk. A key highlight: "Interactive marketing will near $55 billion and represent 21% of all marketing spend in 2014 as marketers shift dollars away from traditional media and toward search marketing, display advertising, email marketing, social media, and mobile marketing."

A few key shifts caught my eye:

  • Social media will quadruple to $3 billion in the next five years. This is defined as social network campaigns and agency fees and excludes display advertising on social media sites.

  • As pointed out in the main takeaway, 2014 interactive marketing is forecasted to be 21 percent of all marketing spend, growing from 12 percent in 2009. That's a huge shift in five years, while overall advertising/marketing budgets won't be growing.

In a blog post about the research, VanBoskirk writes:

    But to me, the most interesting take away from the research is that overall advertising budgets will decline. Yep. With dollars moving out of traditional media toward less expensive and more efficient interactive tools, marketers will actually need less money to accomplish their current advertising goals. But reasonable marketers won't relinquish budget because their programs are running too efficiently. Instead, marketers will allocate unused advertising dollars into investments like innovation, research, customer service, customer experiences, and marketing-specific technology and IT staff, in order to further marketing's strategic influence within their companies.

This is great news for most of us in the digital industry. But there are a few scary trends in here as well. The dot-com days were a lot of fun, offering a lot of excitement and changes, but those days weren't based on true business performance. People were caught up in the excitement of something new and the promise of the future. Too many people flocked to these avenues without clear success metrics and eventually failed. I'm not forecasting a repeat of the dot-bomb era in any way, but it stands as an example of companies needing to be smart about what they are doing rather than throwing money at potentially promising things without specific goals.

Read that last line again. The key words are "without specific goals." A lot of people are sprinting toward social media. That makes sense for many companies, but often they get caught up in the hype and being part of the new way of doing things. They're less focused on what they and their customers can get out of it.

As money continues to pour into social media and other digital marketing initiatives, companies must get smarter about defining success and measuring results. If this money continues to be spent on these areas without a focus on measureable performance, at some point something else will come along and people will put budgets to the newest thing.

That's one reason people are moving away from traditional media. The famous saying "I know half my marketing works, I just don't know which half" rings especially true during these times. It becomes difficult to justify that additional newspaper or TV spot. In this day and age, marketers are learning that they can determine which percentage of their marketing is working. They care becoming accustomed to knowing the conversion rate of an online campaign, of their Web sites, and of specific banner ads on specific sites. They can see what's working and what's not and quickly make changes to things that aren't working to improve them or reallocate that money to areas where they know it is working.

Marketers have concrete ways to determine how well something is working. So instead of having buckets of working marketing and not working marketing, marketers can dissect the working group and shift money from campaigns that are returning a positive ROI (define) toward better-performing areas.

Technology is allowing marketers to become smarter about determining where to spend their money. But it all starts with defining success. Don't allow yourself or your company to get drawn into the newest hottest things without defining what success means and how it impacts your customers, prospects, and your bottom line. By setting goals and understanding the impact, you can ensure that you spend money in the right areas and won't lose money to the next big measureable thing down the road. If you don't define those goals and measure the impact, your days of increasing budgets are most likely numbered.

Join us for Search Engine Strategies San Jose, August 10-14, 2009, at the McEnery Convention Center. Spend Day 1 learning about social media and video strategies with ClickZ.

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Jason Burby

As President of the Americas at POSSIBLE, Jason is responsible for leading the long-term stability and growth of the region. With more than 20 years experience in digital strategy, he is a long-time advocate of using data to inform digital strategies to help clients attract, convert, and retain customers. Jason supports POSSIBLE's clients and employees in driving new engagements and delivering great work that works. He is the co-author of Actionable Web Analytics: Using Data to Make Smart Business Decisions.

Follow him on Twitter @JasonBurby.

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