• July 11, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

Amid Budgetary Bloodshed, Social Media Marketing Is Spared

Forrester Research recently released the results from its first quarter CMO Recession Online Survey, indicating at least one palpable effect of the down economy: More than half of the marketers surveyed reported their budgets had been cut at least 20 percent, primarily in traditional media. Social media marketing, on the other hand, seems to have fared better than most: Among those reporting overall budget reductions, social media was the channel targeted for cuts by the smallest share of marketers (only 7 percent of respondents) and represented the most popular channel of marketing to see any budgetary increase (47 percent of respondents).

Lisa Bradner, principal analyst at Forrester and author of the report, recalls marketers singing a different tune a year ago. When asked at the time to predict the degree to which their budgets would get cut, she says, most brushed off the matter, reporting a modest 3 percent cut. "There was definitely a feeling that 'We're going to be fine,' " she notes, dryly.

But the surprises run deeper than that, she says. Here we are, a year later, and these unexpected budget cuts -- and other reactions to the current financial situation -- are actually forcing marketing departments to move away from the "safe and secure" and into new channels of communication. Even as marketers inch toward new media, she says, the role of marketing hasn't changed no matter how much the tactics may have.

Seventy-one percent of respondents reported overall marketing-budget cuts, and 51 percent said those cuts were of at least 20 percent. Drilling down into the 71 percent cutting their marketing budgets, Forrester asked respondents to identify the areas affected:

Marketing Area% of
% of
TV, print, radio, or magazines674
Staff and training665
Branding and advertising6411
Direct mail527
Marketing technology2927
Online advertising2740
Web-site development2244
Loyalty programs2114
Email marketing1138
Social media747

It's worth noting that marketing organizations are pinpointing their strongest channels and making the necessary investments -- the most obvious shift being toward digital media such as Web-site development, online advertising, and social media. For instance, 40 percent of respondents reported that Web-site development was "critical to my business," followed by 20 percent who said investment in the Web site was necessary "to maintain a competitive advantage."

"People continue to find that social [media] and the new channels are stuff [they] have to do," Bradner says. "Whether [they] like spending that money or not, they have to be there."

While Forrester does not claim that the sample size of this study -- only a few dozen marketers -- is representative of the entire population, the makeup of survey respondents points to the actions of industry leaders. Sixty-seven percent of respondents are from organizations that earned more than $1 billion in revenue in 2008. Bradner also points out that more than one-fifth of the chief marketing officers surveyed -- 22 percent -- were in the financial services field. "They believe they're going to make it," Bradner says of the financial service industry.

And "making it" may be more than just a desperate hope for some marketers. In previous recessions, Bradner says, survival meant "hunkering down and doing the same thing we've always done." This time, though, marketers are adjusting, moving, and reacting. Bradner doesn't suggest that the results of this survey are radically new, but she says that the results reaffirm the world's continuing realignment.

The change, however, isn't necessarily altering the nature of marketing itself. The real impact is being felt in the manner in which marketers are conducting the task at hand. Yes, Bradner says, the consumer is now in control, but smart marketers understand that the company still needs to be at the root of the brand. Marketers still need to own their brand and engage consumers with a brand message. "Marketing still has a really important role and that role hasn't shifted," Bradner says.

In fact, Bradner stresses, while digital media such as email and search advertising may be more cost-effective, unwary brands risk hurting their images in the long term. "The damage comes if you metric everything in the short term and lose sight of the brand," she says. "It's a balancing act." Long-term brand activity can't be replaced by social media channels, where the audience comprises customers who are already interested or involved with the brand. Any marketer that attempts to enter a social network with a mass-marketing mentality will likely be ignored, she says -- a marketer's worst nightmare. Particularly in this economy, if people don't value the brand, they're more than happy to trade down for a better price.

"You still need ways to tell your story," Bradner says. With more channels available, marketers can now focus on listening more acutely to demand and augmenting their messages accordingly to foster intimacy. "What we are seeing is a focus on loyalty," she says. "and long-term customer relationships."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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