Is your digital marketing recession proof?

by Peter Young on January 5, 2009 · 1 comment

Much like 2008, 2009 is forecast to be another difficult year for businesses. In the UK, we have seen the demise of many established bricks and mortar retailers, household names such as MFI and Woolworths. It is no surprise therefore that advertisers are demanding that their advertising and marketing activities are as effective as possible, and this can only mean that agencies will have to ensure their campaigns are water tight.

It is also a time when advertisers will be looking at trimming wastage from their marketing budgets. We have already seen a number of traditional channels seeing significant falls in spend, areas such as radio in particular. Online is not immune from this, and there is evidence of significant reductions of paid search campaigns and display, affiliate and SEO budgets.

However despite these reductions we are still seeing increasing numbers of advertisers shifting budget allocation from traditional channels to online marketing. These are new and interesting waters for everyone. The last time, many people experienced a recession was in the last century, and many organisations such as Google, Yahoo et all were either in their infancy, or not even thought of. For this reason it is difficult for marketeers to draw directly on any previous experience, however that is not to say, previous experiences should not be discounted.

In particular, during previous recessions – there were examples of many organisations that decided the ‘bunker’ approach. That is – they decided to wait it out, until the recession ends cutting back on assets and investment – including marketing. This often results in an inability to react when market conditions improve – and thus a loss to faster, more nimble competitors. Recessions often see periods of real innovation, and we only have to look at the boom of e-commerce & as a result of search following the dot-com bubble bursting to see how a potential negative can become a positive very, very quickly.

With many downturns, two things often go hand in hand. Accountability on the one , and innovation on the other.  For this reason, I would suggest the winners from this recession are going to be those that innovate during this period – offering clients extra value for their money, and those that invest and provide quality service to their clients.

Accountability is not a difficult thing to cover. In times such as this clients want their money to work even harder. Channels which do not perform will either see reductions in budget, or alternatively the chop altogether. Display for example is seeing falls in budget as marketeers struggle to determine effectiveness.It is therefore imperative, the tools in place to measure effectively – thereby allowing you as the marketeer to make educated decisions based on fact rather than guesswork.  Simple Clickthroughs and traffic are not enough. Conversions and ROI are going to play (and are already playing) a more and more important part – and branding exercises are likely to become more and more scarce.

Spending through a recession may seem like a daft idea, however Dave Morgan of AOL makes an interesting point

“The financial pressure will be severe,” …”When you take out big chunks of money, it’s not just the spend that disappears but also the competition.”

This is likely to mean that two potential scenarios could develop. Areas where ROI cannot be easily determined are likely to see slowdowns in spend (if not reductions) – with channels which deliver on spend seeing increased spend – albeit this comparitively. Expert analysis would suggest channels such as Search (SEO and PPC) are likely to see stability in spend, with other areas such as social media still remaining high on many peoples agendas. Whilst social media has been a bit of a hit and miss channel for many marketeers, there are becoming an ever increasing number of success stories such as Comcast – who have seen successful campaigns on social media platforms such as Twitter, and I would expect the number of success stories to continue to increase in 2009.

Reductions in spend however are reflected in industry figures – E-Marketer have forecast an increase of 8.9% in 2009, from $23.6 billion to $25.7 billion – down from an initial forecast of 14% back in August 2008.  As an agency, we are going to have to work harder to make campaigns work – advertisers are going to be scrutinising all aspects of campaigns, and as a result, I would suggest we are going to see greater movement between agencies over the coming months. It is therefore essential that you get your house in order now – before it is too late.

This is the first post in the Digital Marketing and the Recession series.

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steve January 6, 2009 at 10:11 am

Didier Grossemy says that Digital is no longer the “under dog” of the marketing world, campaigns and strategies are now built around digital media with digital media becoming the centre piece of any activity, so a digital agency really needs to work at that strategic level with their clients.
Didier Grossemy Blog |Didier Grossemy On Linkedin | Didier Grossemy Profile

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