Interactive Marketing Nears $55 Billion; Advertising Overall Declines

[Posted by Shar VanBoskirk]

I'm pleased to announce that Forrester's five year forecast is now complete and live on Forrester's site.  It feels like this has been a long time in coming from my side too! Please see the full report for detailed explanations of the trends affecting overall marketing budgets and the growth of the channel in the forecast.

You may remember we previewed our forecast at Forrester's Marketing Forum at the end of April.  If you cross reference this post to the one we posted as follow up to the forum, you will notice that the "% of all advertising spend" has changed.  The absolute forecast is still the same, we just changed this calculation to make sure it was done in the same way as in years past. See below for the most recent release:

  

This research will certainly help marketers plan their channel strategies.

• Search continues to lead interactive spend followed by display. 

• And owned social media assets (like internal blogs, community sites) are really the only emerging media getting traction in today's economic climate.

But to me, the most interesting takeaway 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. 

Confirmed: The Recession Limits Interactive Experimentation

[Posted by Shar VanBoskirk]

Forrester's "Interactive Marketing Channels To Watch, 2009" -- our annual look at actual interactive channel adoption compared to hype -- went live on Friday.  A few of the study's key takeaways:

*Few marketers experiment with emerging media with the exception of social media applications.  They stick with email and search and are waiting for a better economy to embrace online video and mobile marketing.

      

*Marketers embrace social media applications. 64% of our sample are already building social media applications, despite a general hesitancy to experiement with emerging media

*Display media penetration has declined due to marketers prioritizing direct response investments over branding ones this year

How does this adoption of interactive tools match with your own?

Microsoft's Bing Will Change The Face of Search

[Posted by Shar VanBoskirk]

Microsoft announced today its Bing search engine, a "decision engine" that will replace live.com worldwide as of June 3.  A distant third place in the search engine game, Microsoft hopes that this engine will help it gain more searcher share by delivering results and content more relevant to how users actually search.  What makes Bing different from existing search engines?

• Bing focuses on delivering answers, not Web pages.  Microsoft research shows (and Forrester's research affirms) that users rely more and more on search engines to deliver solutions...hotel reservations, movie listings, gift ideas, newsclip replays...not just a directory of Web sites.  Bing was developed to help consumers make decisions, not just to catalog content.

• Bing organizes content/results by searcher (not algorithm) relevance.  Using research of what types of results have proven relevant to former searchers, Microsoft has organized its Bing interface to deliver the content users are most likely to value, rather than just content that matches an algorithmic formula.

• Bing filters out results that aren't relevant.  Instead of giving users an overwhelming volume of results, Bing acts as a concierge to help point users to the results most likely to meet their need.

What does Bing mean for interactive marketers?

• More, quality search inventory.  Today most advertisers buy search ads just with Google and Yahoo because Microsoft has a measly 8% share of searches -- not enough reach to make buying search ads with MS worth the trouble.  Forrester expects Bing to change that.  We expect Bing to appeal to the savvy searcher seeking more relevant search results.
• A new approach to SEO.
  Instead of Bing showing all sites that match the search engine's algorithm, it will show just three results for a given "subcategory" related to a search.  For example, a search for "Britney Spears" may organize by the subcategories "biography," "videos," "music" and "concert information."  This means SEO strategies will adjust in order to optimize Web content for select sub categories, rather than select keywords only.
• Search engines will become information portals.  Search engines have long been used as gateways to Web content.  But as a decisioning engine, Bing introduces a search engine that actually delivers Web content without sending users away to other destination sites.  A search for "airfare to Denver" shows avaiiable fares, pricing trends, a buy or wait recommendation, and a link to purchase.  Since we expect other search engines to follow Bing's lead, this means marketers should expect increased costs for search and display ads.  We also expect online media planners to adjust the sites where they buy.  We expect consumers to frequent Bing (and other similar search engines in its wake) instead of other portals (Yahoo) and preferred destination sites.

Search Marketing Automation Will Compete With Agencies

[Posted by Shar VanBoskirk]

In Q1 I met with an SEO automation vendor called Altruik.  Under development since 2006, Altruik launched in January and provides a technology solution to help dynamic (and static) sites get top search engine rankings.

Before Altruik, I'd had a spate of updates from search marketing automation tools (Marin Software, Kenshoo, Omniture Search Center, Coremetrics), but all focused on the paid search side.  Altruik was the first enterprise-level technology I had met dedicated to SEO.

I think we are at the beginning of a major trend here.  I think we can expect to see the development of more technologies that turn search marketing project work into tech-enabled processes.  And why not?  Altruik charges a $7500 installation fee and then $500-2000/month (depending on site complexity) to guarantee rankings.  Pretty nice price compared to $150-200,000/site pricetag standard for most agencies.

Interactive Budgets Are Growing At The Expense Of Offline

[Posted by Shar VanBoskirk]

During my presentation at Forrester's Marketing Forum on April 23,  I previewed Forrester's latest forecast of interactive marketing spend.  We expect marketer spend on display media, search, email, mobile and social media to reach nearly $55 billion by 2014.

  

This growth is due to marketers seeking lower cost, more accountable channels which are also widely used by their customers.  This year, we are also finding that marketers are migrating dollars away from traditional channels and into interactive ones.

  

Direct mail and print are suffering the most loss to interactive tools.  According to our survey, 40% expect to cut direct mail budgets, while 35% will decrease newspaper spend and 28% will slash magazine money in order to spend more in interactive media.

 

I'm actually currently at work on Forrester's full forecast report detailing the growth trends around each of the channels itemized in this forecast.  Look for that report -- which will include additional data and explanation -- on our site around the first part of June.

Online Media Insights from Sportgenic

[Posted by Shar VanBoskirk]

I had breakfast last Friday with Robert Tas, CEO of Sportgenic an ad network and advertising management platform focused on targeting advertising to sports enthusiasts.  He was in Boston meeting some agency partners (although he did manage to catch game 7 of the Celtics/Bulls series while in town!)

He shared a few observations based on ad sales at his business so far this year:

*Like most publishers, he is finding that advertisers are shifting dollars away from branding and toward direct response vehicles because of the recession.  He and I both agreed that this is a very short-sighted strategy.  Not only does it set your firm up for a poor recovery after the recession ends, but it also means you are likely paying more per conversion than if you invested in some upstream activity focused on warming up an audience to convert easier when they reach the direct response of point of sale touchpoint.

*He's seeing limited experiments with mobile.  Despite the advances in mobile devides and the promise the mobile medium holds for marketers (and of course to the chagrin of my Forrester colleagues here dedicated to mobile marketing), I maintain my cynicism about mobile as well.  With limited marketing budgets available today.  I would definitely invest in trusted channels first and wiat for mobile to work out some more of its kinks. 

*Recent new investment is coming from auto and financial services companies.  After being dark for several months, these industries are back buying online doing reach campaigns (cheaper than TV) and targeting specific users in market for new cars or investments.

*The recession is breeding bad habits.  I have a theory that because business is slower during the recssion, vendors and marketers actually have time to think and develop, which will lead to a burst of innovation after purse strings open back up at the end of the downturn.  Tas, decidedly disagreed with me.  He is finding that marketers are so focused on getting results that they are going after any and all low hanging fruit.  This means they aren't necessarily doing the right thing, but rather doing the thing that gets them to their needed result.  And of course, it will be hard to break bad habits that have been practiced throughout an 18-24 month recession.

A Bad Economy Is The Right Time To Catalyze Marketing Change

[Posted by Shar VanBoskirk]

The theme for my speech at Forrester’s marketing forum on April 23-24 in Orlando this year is that the down economy is actually the *right* time to catalyze marketing change.  Instead of hunkering down and trying just to maintain marketing status quo, my assertion is that marketers should actually take risks during the recession.

 

I tested the idea and some of my research to date with a few bloggers well known for their own thinking on marketing innovation:  David Berkowitz and BL Ochman. 

 

Overall, they agreed with the notion and made a few very interesting points that I am going to try to flesh out into the speech.

 

1)       First, leveraging interactive tools can actually make marketing innovation *less* risky.  Berkowitz mentioned – and I agree – that doing things like monitoring Twitter for what is being said about your brand or campaigns is actually an extremely *safe* thing to do.  Although Twitter sounds all newfangled for a traditional brand, it provides a way to listen to how your audience is talking about your brand.  Heeding this input can help marketers actually be better/more secure in crafting customer-centric marketing programs. 

2)       Leveraging social media gives brands enough of a personal face, that consumers are willing to forgive their peccadilloes.  I hadn’t thought of this benefit of social media.  It has its value in allowing marketers to listen and speak with consumers.  But it also has an opportunistic value.  The theory is that consumers will be more tolerant of customer service gaffes from marketers who talk to them like a fellow human (eg, via Twitter, blogs).

 

The conversation around marketing innovation definitely hinged around social media.  We talked about Disney, Zappos, Dell, H&R Block as firms innovating well with social media.  Are there other innovations you have seen that are outside of social media?  Perhaps firms applying other interactive tools in a new or better way?  How about using interactive tools for better measurement?  I’d love to hear your thoughts on my forum theme as well and also learn about the examples you have seen that seem particularly compelling to you.  And then of course, let’s continue the conversation at the forum.  I’m on stage from 8:40-9:20 on Thursday April 23.  I hope you’ll be in the audience and then able to chat afterwards during one-on-ones or in some of the networking events.

P&G Social Media Night: The Results

[Posted by Shar VanBoskirk]

The results are in.  And the collective effort of the four teams partipating in P&G's digital night sold 3,000 Loads of Hope t-shirts and raised $50,000 for charity.  Tide actually matched the money raised, putting the total disaster relief donation to $100,000 for four hours of effort. Thank you to all who bought t-shirts!

If you are just tuning in, Forrester analysts Lisa Bradner, Sucharita Mulpuru and I participated in a P&G-organized event with about 150 digital media experts this past Wednesday focused on understanding how digital media, social networking and word of mouth could drive site traffic and sell product (in this case, vintage Tide t-shirts which raise money for disaster victims.)

While the activity driven by this event was intense, I return to some of my former cynacism about social media (sorry, Jeremiah).  Here are the marketing lessons I learned from this experiment:

*WOM still doesn't have the reach of more mainstream (and dare I say, traditional) channels.  Don't get me wrong here.  I was jazzed about how quickly we created buzz (and sales) on Wednesday night.  But then I got to thinking.  We had some of the biggest social media powerhouses out there (David Armano, Pete Kim, Deb Schultz, Pete Blackshaw) pushing this initiative hard to their network and we only sold 3000 shirts.  When I started translating this into pallets of product I suddently realized that the total audience we had reached was quite small.

*WOM drives site traffic, but the on-site experience closes the deal.  Conversion rates across the four teams hovered right around 7% -- which according to Sucharita is really good for retail sites.  But I couldn't help feeling that conversion should be much higher.  All of the traffic coming online to buy was coming in response to a direct personal reference.  So presumably, they were an audience more qualified than your typical site visitor.  If we had been able to prevent site errors, limit the amount of information required from users at purchase, even merchandised the t-shirts on the site a bit we would have made more good out of our site traffic. 

*The big deals were relationship sales.  My team sold a lot of onesies and twosies, but what really moved our dashboard were a few 50 and 100 t-shirt sales.  And these deals were made personally through phone calls to contacts who might need matching shirts in volume for teams, schools, work groups -- not through digital/online outreach.

Overall, the experiment was definitely a succesful way to feel the power of social media.  My conclusion?  Social media is still young and best used only in tandem with other interactive and traditional tools to drive engagement around brands or issues.

P&G Tests the Power of Social Media

[Posted by Shar VanBoskirk]

So I got a golden ticket to P&G's digital hack night -- a P&G party to bring together social media experts, P&G digital minds, and experienced interactive marketers to share ideas.  The event is to test the strength of digital media to try to generate $100,000 for charity.

Here's how it works:

*P&G has split us into four teams -- each team has about 40 people: P&G folks, social media gurus (Pete Blackshaw is my team captain and Pandora's Tim Westergren is sitting next to me) as well as online ad folks like me and Aaron Finn from AdReady.

*Each team has four hours to sell as many Tide Loads of Hope t-shirts as possible.  (If you don't know, Loads of Hope is a Tide-sponsored social initiative which raises money for disaster victims.  View a spot about it here).

*We can use any digital tools available to promote our unique url to sell t-shirts www.tide1.com

I'm admittedly the most cynical analyst about social media and its measurable value to marketers.  BUT, participating in this event is making me a believer.  In 60 minutes through networking, well targeted ads, SMS messaging, and viral videos we have generated 1200 hits for a site that didn't even exist before 5pm tonight.  We are tracking at about a 5-7% conversion rate...not bad.  The other thing that is happening here is that we are adapting our marketing strategy based on feedback from people who are responding to our viral outreach.  How often does that happen in a traditional marketing environment?

The point is, marketers should advertise on multiple search engines

[Posted by Shar VanBoskirk]

My recently released piece "Search Loyalty Is Still Hard To Find" has gotten a lot of press.  Some of it for a faulty conclusion.  I've corrected the notion that I was trying to introduce a "Google Killer" with this research on a few blogs.  Glad to see the right interpretation of our our data popping up as well!  I thought it might be worth setting the record straight from our own blog.

My primary assertion in this research is, that although Google's lead in the share of online searchers continues to grow, users find that other search engines are actually more effective for certain things — like looking up stock quotes or finding news stories. Smart marketers should most certainly advertise on Google and Yahoo! but should also target niche audiences via less expensive and more flexible media on AOL, MSN, Ask.com, and Internet service providers.

In no way would I argue with Google's dominance in this market (it leads significantly in terms of both consumer searches and marketer spend managed).  Nor am I expecting that Google's lead is one that will be caught up to by Yahoo!, MSN or any new entrant.  What I am arguing with this research is that alternative search engines can offer more flexible ways to reach some types of audiences.  Advertisers looking to expand their programs and increase the sophication of their paid search buys should definitely experiment on engines beyond Google.