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.

Are Fees for Online News Content in the Offing?

A couple of weeks back I posted about the challenges facing the newspaper industry as they deal with declining ad revenues and the migration of readers to free online sources.

http://marketingmemes.blogspot.com/2009/03/time-is-running-out-for-newspapers.html

Now, the New York Times is reporting that the industry is reconsidering its free content for all business model.

http://www.nytimes.com/2009/04/08/business/media/08pay.html?_r=1&ref=business

At an industry conference last week, newspaper execs explored various options to monetize their content on the Web. Some of the payment models under consideration include:

• Subscription model (e.g., WSJ.com)
  
• Micro-payments (e.g., iTunes)
  
• Content licensing to third-party sites

Of course, in order for this to work, newspapers will to address a major, maybe even insurmountable, challenge: how to get readers to start paying for something that has been free for so long?

Time is Running Out for Newspapers

The next year or two (if it takes that long) will most likely be the beginning of the end for many newspapers if they don’t figure out a way to make money on the Internet.

For instance, last week after 146 years in publication, the Seattle Post-Intelligencer ceased operations as a print newspaper, reduced its staff by over 80% and converted to a slimmed down, online only publication.

And the P-I is not the only one. Last month Denver’s Rocky Mountain News shut down completely. And there are a host of other newspapers on the ropes, including the Chicago Sun Times, the Boston Globe and the San Francisco Chronicle to name a few.

Even the mighty New York Times recently had to sell part of its company and seek a $250 million loan from a private investor to help address its financial problems.

Of course, all of these newspapers are grabbling with the same challenge: how do they monetize their content online as more readers move to the Web and information becomes more of a commodity.

There are many ideas floating around about how newspapers can become viable businesses again. Here are a few:

• Make newspaper sites a channel for social media – for example, many papers are using Twitter headline feeds on their sites that are grouped by the sections of their paper to keep readers up to date and engaged with their content
• Publish APIs for independent software developers – the New York Times and a few other papers have taken the lead in publishing application programming interfaces (APIs) that allow software developers to create social media apps using New York Time’s content – for example, here’s a Gmail gadget built using one of the NYT’s APIs:

• Jump on the electronic newsreader wagon by bundling content with the purchase of a reader device – for example, Newsweek Magazine might try to get new Kindle owners hooked on Newsweek's electronic version by giving them a free yearly subscription
• Become more deeply integrated into the communities they serve – for example, the Austin Chronicle has thrived despite being a free weekly by becoming active participants in the Austin music and art scene. For instance, the paper started the South by Southwest Conference in 1987, which has grown into one of the world’s premier music and film festivals

Whatever the strategy, I hope newspapers figure this out; and soon. In my opinion, the role of newspapers in investigative reporting , local news coverage and editorial journalism is too important to leave to the anything goes ethos of the Internet. Sadly, they have had 15 years to figure this out so the prognosis is not too good.