US Interactive Marketing Forecast, 2009 To 2014

Interactive Will CanniBalize Traditional media

This year, more marketers are shifting budget from traditional to interactive media rather than supporting interactive efforts with new monies as they have in years past (see Figure 1).1 To explore the circumstances behind this trend, we surveyed 204 marketing executives from firms with more than 200 employees across multiple industries. We dug into their current and planned interactive marketing budgets and found that the following factors influence interactive planning:

• Poor economic conditions. The majority of marketers find that interactive tools are more effective than traditional ones, especially in a recession (see Figure 2). When faced with
• budget cuts or the need for immediate sales, these marketers find that interactive tools are less expensive, more measurable, and better for direct response than traditional media. For example, Busch Entertainment — the theme parks arm of Anheuser-Busch Companies — is using Facebook and iPhone applications to try to regenerate slumping theme park attendance.
• Increasingly interactive customer relationships. Empowered consumers today expect a customized, interactive brand experience that goes way beyond a 30-second television spot or two-dimensional print ad. Forty-two percent of online adults and 55% of online youth want to engage with their favorite brands through social applications.3 HRB Digital’s H&R Block took this to heart. It used Facebook, MySpace.com, Twitter, and YouTube to make tax preparation accessible, even social, and to engage consumers with the brand throughout the year — not just at tax time.
• More strategic marketing organizations. Although not yet universally involved in setting business direction, marketing is gradually assuming more organizational leadership in part because of its close connection to customers. More than 40% of marketers say that “marketing is the strategic leader in their organization.”4 As part of this shift, CMOs will begin to buy their own technology, prioritizing interactive solutions like campaign management, Web analytics, and email marketing.5
• Moribund print inventory. Consumer readership of newspapers and magazines has dropped 17% and 6%, respectively, since 2004 while offline publishers have struggled to translate their
• impression-based ad sales model into viable online business.6 The result? Publishing giants Hearst Communications and Condé Nast are closing magazines like CosmoGirl and Men’s Vogue while Gannett and The New York Times Company are restructuring and selling off physical assets. This leaves more advertisers disdaining print for interactive options: The Publishers Information Bureau reports that advertising revenue is down 20% for Q1 2009 compared with the same time period in 2008.7
• Proof that interactive marketing works. At last, even laggard industries feel that they have enough experience and data to prove interactive marketing’s worth. Online display spending by telecom companies in Q1 2009 grew 50% over Q1 2008.8 Pleased with double-digit growth in applications, Cornell University’s business school, The Johnson School, is increasing its investment in interactive to between 60% and 70% of its overall marketing budget. Randy Allen, the associate dean for corporate relations explains why: “If we do [new media] strategically, we can target more effectively and do it more cost-effectively as well.”

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