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

Experience the Benefits of Experiential Marketing

In light of a highly fragmented consumer market -- and customers whose expectations are increasing by the minute -- marketers are finding that traditional methods aren't enough to make a lasting impression. It's little surprise, then, that nearly 75 percent of marketers worldwide plan to increase their spending on experiential marketing this year, according to the results of a study released today. Still an emerging concept, experiential marketing "involves a target audience member in an experience related to a brand or product," explains Liz Bigham, director of marketing at New York-based experiential marketing agency Jack Morton, which conducted the research. The company typically focuses on live events, targeting both group and personal interactions, as well as online experiences. For instance, to raise awareness about the the National September 11th Memorial Museum Foundation, Jack Morton launched a campaign where an interactive exhibit housed in a truck traveled to 25 different cities across the United States. By recognizing most Americans can't travel to New York to feel connected to the events of 9/11, the memorial foundation instead aimed to touch people where they are. The research -- in which Jack Morton surveyed 277 marketers in the United States, the United Kingdom, Europe, China, and Australia -- reveals that, while the majority of respondents expect to spend more on the technique, the level of increase varies widely:
  • half of all respondents plan to spend 5 percent to 10 percent more than in previous years;
  • 12 percent plan to spend 11 percent to 25 percent more, and
  • almost 10 percent plan to increase their experiential marketing budgets by at least 25 percent.
Jack Morton didn't inquire as to whether the increases will come at the expense of traditional marketing campaigns, but 70 percent of marketers surveyed believed experiential marketing was either extremely important or very important to their organizations. And in another sign that the segment is on the rise, while 75 percent of respondents expected to increase spending on experiential marketing in 2008, only 58 percent claimed to have already done so in 2007. The most obvious challenge of executing experiential marketing comes down to the cost, but Bigham suggests that, while it does require a higher investment up front, the returns from experiential marketing are significantly higher. "Basically what you're paying for is the cost per acquisition -- getting someone involved in the experience," she says. Whereas a typical marketing campaign may reach audiences in the millions, experiential marketing may reach only thousands. However, she says, the effect is more likely to be long-lasting. Moreover, by connecting with one person at a time, experiential marketing also leverages the power of peer-to-peer recommendations. "The thing that generates word of mouth is some sort of personal, actual experience," Bigham says. "It's stuff that happens in the real world that gets people to talk," she adds. The study's results support her contention:
  • 93 percent of respondents agreed that experiential marketing generates advocacy and word-of-mouth recommendations;
  • 92 percent agreed that experiential marketing builds brand awareness and brand relationships; and
  • 77 percent stated that it generates sales and leads.
Measuring the return on experiential marketing faces the same obstacle that any other campaign does: getting the hard numbers. Jack Morton uses an online tool called nGauge that queries consumers before and after being exposed to a given campaign. Often, it's about measuring the relationship between the consumer and the brand -- not just the awareness. Unfortunately, Bigham says, "there is no silver-bullet solution." The survey respondents seemed to agree:
  • 79 percent said that a key obstacle was "measuring/demonstrating experiential marketing ROI"; and
  • 87 percent said they were interested in learning about "measuring engagement."
Whether or not 2008 will be the year for experiential marketing still seems to be up for debate. Bigham says she believes marketers are definitely realizing that "you [can't] rely on the same old, same old," adding that no single medium can be sufficient. Success requires touching customers at all touch points, through any means within the capacity of the company. Her advice to marketers? "Keep your mind open." Customers are increasingly favoring the freedom to empower and educate themselves, a shift that makes the sentiment that "brands need to do more and talk less" all the more critical. "There's always the risk that marketers focus so much onto their advertising, that they neglect the experience of it," Bigham says. "If brands can improve the 'do,' they'll generate the talk that really matters, which is actual personal recommendation."

Related articles: The Personal Touch Your customers connect to your brand through their experience -- it's an emotional bond. Thinking Outside the (Mail)box Creativity and quirkiness are influencing alternative marketing strategies. Marketing Needs Compassionate Marauders Consumers are growing more frustrated with and resistant to companies. Affluent Consumers Long for the Experience Spending on things to do, such as travel and dining, is a trend for this segment and a driver of real growth. Viewpoint: Customer Loyalty: The Real Payoff A number of leading brands are embracing experiential rewards as an opportunity to broaden loyalty programs. How Can Customer-Facing Employees Help Build Brand Equity? The most powerful differentiators available are not related to the features and benefits of the product, but rather the emotional, experiential, and self-expressive benefits of the product or service.
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