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Should Marketers Shift Offline Budgets to Digital Marketing?

Posted on Jan 7th, 2009
Written by Lee Odden
In this article

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    shift marketing digitalYou don’t have to look much further than recent headlines and research studies below to see that many companies are losing confidence in traditional marketing and advertising.  

    The changing trends in information production, distribution and consumption coupled with the uncertain times we live in create an unprecedented challenge for companies to better reach and engage with customers.

    Whether changes in marketing direction are motivated in response to market and industry conditions, changing consumer behaviors or the need to stay competitive and cost effective, one thing is certain: companies that don’t nail down marketing efficiencies and customer retention are in for a long, cold winter.

    Here are a few recent headlines and studies of interest:

    Integrated Marketing Media Mix’ Study: More Digital with Mainstay Traditional: “As marketers integrate their media campaigns, they are adding email and other digital media in ever-increasing numbers – though offline media remain vital to integrated campaigns, according to “the Integrated Marketing Media Mix”” 
    DMA Study via Marketing Charts

    NCDM Database marketers need to innovate, explore multichannel options: “Tim Suther, senior VP at marketing services company Acxiom, agreed, stressing the need for database marketers to extend their skills into digital marketing.” 

    Direct Marketing to Account for 53% of U.S. Ad Spend in 2009 Growth for Interactive Marketing:  “Expenditures in the newer online media will maintain significant growth in the coming year. Commercial email will continue to claim the top growth ranking for 2009, while internet advertising will claim more than 15% of all direct marketing advertising dollars in 2009.” 
    DMA Power of Direct Marketing’ Report

    Survey Finds Pharma Marketers Poised to Embrace Digital: “The pharmaceutical industry is behind the curve in many areas of digital marketing, but it is likely to make a significant leap ahead in the coming year. That is the conclusion of “Digital Marketing in Pharma”, a new survey from MarketBridge, in conjunction with Pharmaceutical Executive magazine.”

    Economy Shrinking 65% of CMO Ad Budgets, Money Shifts toward Digital: “Nearly two-thirds (65%) of CMOs and marketing execs say their ad budgets will decrease because of the troubled economy, but more of their money will go toward digital/interactive marketing than before
    epsilon CMO Study via Marketing Charts

    Digital and Direct Orange boss urges total budget switch to online:  “Speaking at the annual IAB Engage conference, held last week, Billingsley made the case for advertisers to transfer all their budgets to digital. He also accused ‘archaic executives’ of wanting to see their creative work on TV, thus holding back the inevitable shift toward online marketing.”
    Brand Republic Marketing

    Research and opinions in favor of digital marketing are pretty clear: Invest marketing and advertising budgets in internet and mobile or face the consequences of failure. That’s a bold statement, but is it really true?

    While presenting at last month’s Social Media Smarts Workshop in New York, I offered the question, “Should marketers shift budgets from offline to digital?” and then posted the question to LinkedIn as both a demonstration of how the “Answers” feature worked and to get the pulse of the LinkedIn community on the topic. Replies were compelling and here are a few I’d like to highlight:

    Lynne Mysliwiec – VP, Analytics at Epsilon Data Management:

    My opinion is that media budget allocation should be commensurate with ROI in the short term (immediate sales driven) and long term (quality/value of customers transacting in a channel after some time frame). Budget allocation should also be consider immediate marketing needs. For example, if you’re planning a new product introduction, cutting mass back to nothing will probably jeopardize or delay the ultimate success of this new product. It would make sense to drive brand-based and/or product-introduction investments toward mass media to give your new product a fighting chance or you will have to adjust your expectations for penetrating the new markets the product was designed for. 

    Since the impact of mass media on sales tends to be less measurable than direct-response media, in a downturn one expects that many mass-media budgets are slashed in favor of measurable media, although often those budgets are cut as well. 

    ARE people pulling out of advertising and print-based DM and allocating dollars toward digital for 2009? Yes they are, although many are using cost cutting as the primary thought process behind that migration rather than data-driven thought-processes and will re-think those decisions as their businesses exit the recession.

     Jim Gilbert – Direct Marketing Professional, Author and Professor:

    The answer is in understanding your metrics. If you have traditional programs that are working, keep them. Test, if you can, integrating off/online with personalization techniques like PURLS. 

    Furthermore, the more the online shift, the better for direct marketers using traditional vehicles like mail and catalogs. Less mailbox clutter, more visibility for messages that are relevant to the consumer.

    Dan Gershenson – Creative Director at The Creative Underground: 

    To me the question has to start first with how your target audience is behaving based on the latest research you have about them. Which makes the answer a case-by-case situation rather than a blanket statement of “go more digital”. Now, if it appears for example that your target is comprised of heavy web users that only marginally read magazines or newspapers, then the shift to more digital is warranted. But just because the world has more Blackberrys and iPhones in it these days doesn’t mean that there aren’t audiences that have special relationships with print or direct mail.

    What you have to discover is if your target is one of them based on how the demographic and psychographic information is trending for that specific group. In all likelihood, I wouldn’t doubt it if in most cases you’re talking about a suitable mix of the two because it’s not often realistic to say certain groups use all of one form of media anyway. Sure, the media attention is going to continue to show its love for digital. But show some love for your audience first before you get swayed too much by the press.

    Lynne, Jim and Dan make a pretty good argument for making sure companies rely more on data than the headlines to make decisions about moving marketing budgets.  Company marketers will never get the data from digital marketing without testing, so I would encourage those who have not historically leveraged search, social media, mobile and other interactive advertising channels to do their homework (or have an agency help them) to establish a digital marketing roadmap and start testing and capturing data.

    You can read a good post about direct marketing compared to social media marketing here as a tactical primer.

    What do you think? Is your company moving more budget to digital marketing efforts ? (Internet, mobile, display). If you work within an agency, are you seeing more clients move towards or away from digital marketing programs? What tactics are you emphasizing for 2009?