Friday, July 17, 2009

Marketers who want to Improve ROI Need to Better Align Ad Budgets with Consumer Media Habits

There’s no doubt that traditional advertising tactics will continue to be a critical part of the mix for many marketers for years to come. That said, whether this practice is based on the efficacy of these tactics (and by that I mean old standbys such as TV, radio, direct mail, etc, but also some of the more aggressive forms of banner ads such as pop-ups and page takeovers), or the fact that the interruptive based advertising model has become so habitual among marketers that it is self perpetuating, is subject to debate.

But what I find ironic is that despite the incredible growth of the Social Web and the dramatic increases in the amount of time consumers spend with digital media, a significant share of ad dollars are still being devoted to traditional formats. Of course, there is plenty proof that these traditional formats are effective at getting messages out. What we don’t know is how effective they are (if at all) at influencing people - but that’s a topic for another post.

The problem is that people do not appreciate the intrusive nature of these traditional tactics and will do anything they can to avoid them. Whether it be putting their name on a do not call registry, adding ad filtering technology to their browser or using a DVR to record TV programming as a way to avoid ads during playback.

People, instead, want control over the content and information they consume. And they want it from sources they can trust; hence the growth of the Social Web.

The good news is that marketers finally appear to be catching on. Earlier this month Forrester published their 2009 – 2014 US Interactive Marketing Forecast. The report predicts that interactive marketing will represent 21% of all marketing spend in 2014 (up from 12% in 2009), which nets out to a CAGR of 17%.

Why? Because they have learned that interactive marketing tactics are incredibly efficient and effective. For example, when Forrester asked over 200 marketers to rank the effectiveness of various marketing tactics over the next three years interactive tactics such as social media and online video topped the list.

What is shocking, though, is that despite this gradual shift of budgets to the digital channel there will still be a significant disparity between the percentage of ad budgets directed to digital (7% in 2009), and the percentage of media time people spend with digital media (34% in 2009). Apparently old habits, even those with significant financial implications, die hard. With that said, I’m going to go watch last night’s Daily Show on my DVR - sans commercials.