• October, 28 2008
  • By Jessica Tsai, Assistant Editor, CRM magazine

Budgets Hold Steady (So Far), But Online Marketing Actually Expands

While many of us are better off not looking at our dwindling 401(k)s, one area that seems to be resisting the economic decline is the average marketing budget. According to a recent survey, "Tough Times Call for Tough Measures," conducted by the eMetrics Marketing Optimization Summit (eMOS), 65 percent of marketers report that the current economic situation has had no negative impact on their overall marketing budgets. Nevertheless, every dollar is expected to earn its keep as senior management pushes more for quantifiable results.

Released as part of eMOS's sixth annual international conference last week, the survey focuses on how to deliver a return on investment for online marketing initiatives. Conducted over a period three weeks, the survey queried approximately 60 marketers and industry analysts. Though not a representative sample of what the "average" marketer might be doing -- all 60 participants are recipients of eMOS founder Jim Sterne's newsletter and are active members of the Yahoo! Web Analytics Forum -- the underlying message of this study is that those who are investing in Web analytics are seeing results, and are therefore holding onto their budgets.

In fact, respondents report an overwhelming initiative to increase spending on online advertising mediums for the upcoming year:

  • Email (84 percent plan to increase or maintain);
  • Online Advertising (77 percent);
  • Keyword Search Campaigns (76 percent);
  • Social Media (62 percent); and
  • Video Advertising (38 percent).

Sterne says that, of those channels, the increase in email spend was perhaps the most noteworthy. "We've finally gotten over the spam issue of people not wanting to send out emails because they were afraid of offending," he says. Improvements around email, paired with increased consumer trust, have enabled marketers to use it not only for traditional promotions, but for nurturing existing relationships.

The shift from offline to online has been an ongoing trend since the tools were first introduced in 1995 -- well before the latest financial crisis, and the shift will undoubtedly continue long after. Those who are effectively measuring this change, he says, are the ones increasing their budgets. "The running joke is, ‘Can I please have a rounding error of television?' " Sterne says. "You spend $10 million on a television ad, [but] if I could just have $100,000, I could build you a really killer Web site."

Measuring change doesn't necessarily mean making change, though. Two-thirds of the survey pool report no plans to alter their Web analytics budgets in either direction, despite a 69 percent share that agrees with the statement, "My organization's Web analytics department is understaffed." Those that are shifting money, however, tend to favor an increase: 21 percent report plans to expand their Web analytics budgets, while only 13 percent plan to make cuts there.

When deciding whether to educate the entire corporation on Web analytics or to have a centralized team, Sterne says that, like most corporate decisions, it depends on your company culture -- whether you prefer to have a single arbiter of truth or have everyone operate autonomously. "What we've learned is that it's better if everybody has the skill and can do their own work," he says. "But it's hard to acquire that skill, so in the meantime let's get the core team delivering insight and actionable data...until everybody in the organization gets it."

Luckily, respondents are not alone in this endeavor. Eighty percent of them report that they've seen an increase in interest in analytics from senior management. The support helps, especially when it comes to making a case for a bigger budget. As it stands today, the majority of advertising dollars are still directed toward more-expensive, general-advertising methods such as television, radio, and print, but experts have no doubt that the efficiency-driven demands of the economy will provide, as Sterne puts it, exactly the "kick in the pants" that marketers need to make a bigger move toward online marketing.

"When times are really good, everyone's wandering around looking for a bigger wheelbarrow to carry their money around," Sterne says. "When times are bad, everyone's looking for ways of making more money and saving."

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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