Traditional Marketing Budgets Lose to Interactive

Source: Center for Media Research

According to Forrester Research, reported by Richard H. Levey at Directmag.com, 60% of marketers surveyed will increase their interactive marketing budgets by shifting funds from traditional media. Direct mail was cited by 40% of marketers as being one being cut, outranking newspapers (35%), magazines (28%) and television (12%).Among the interactive channels, the study finds social media and mobile marketing spending expanding between 2009 and 2014, with social media jumping by 34% on a compounded annual basis and mobile marketing increasing by 27%. Social media starts at $716 million in 2009, increasing to $3.11 billion by 2014. Mobile marketing expenditures stand at 319 million this year, and goes to $1.27 billion by 2014.

Online display advertising, which currently stands at $7.83 billion, will rise by 17% annually, ending up at $16.9 billion in 2014. Search marketing, which currently accounts for $15.39 billion in spending, will jump by 15%, to $31.59 billion, and e-mail, now at $1.25 billion, will increase 11%, to 2.08 billion.

Shar VanBoskirk, Forrester analyst, says “Email marketing is having a banner year as marketers:

  • Grow their lists with the promise of ‘green marketing’
  • Turn on more and smarter programs to boost sluggish sales
  • Shift money to email from direct mail
  • Improve email effectiveness by linking it to other channels like search or user-generated ratings and reviews.”

And, while social and mobile media expand, a corollary report from Forrester shows marketing officers reporting that budgets for traditional media, such as television, print, radio or magazines, along with staff and training spending and branding and advertising expenditures had been cut by two-thirds from last year’s levels, and more than half of their direct mail budget was gone.

Budget reductions from the 2008 level include:

  • 29% reduction in marketing technology
  • 27% in online advertising
  • 22% in Web site development budgets were reduced
  • 21% reduction in loyalty program spending
  • 11% reduction in E-mail marketing  
  • 7% in social media spending from the 2008 level

Among CMOs facing lower budgets:

  • 19% said they cut branding and advertising because “I can’t track its results”
  • 26% said the same about their TV, print, radio or magazine expenditures
  • 19% reduced their direct mail spending because it delivers the lowest ROI

On the other hand, 47% of CMOs whose budgets have been cut are increasing their spending on social media, while another 44% are increasing spending on Web site development. 40% will spend more on online advertising, and nearly that amount will increase financial resources in e-mail, considering these functions critical to their businesses, or needed to maintain competitive advantages.

In a glimpse into how marketing is viewed throughout a number of organizations, just over half of the CMOs see it as a revenue enhancer that needs to be supported. But 41% indicated marketing efforts are under increasing scrutiny from all levels of the company, and 18% are working in firms where marketing is seen as a cost center that needs to be cut.

To read more about the interactive budgets, visit Direct here, and for more on the continuing Forrester report on marketing budget reductions, please go here.

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