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Online marketing grows as business cuts advert costs
By Manuel Alonso Coto |
March 20, 2009, Friday
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PUBLICITY and marketing is going through its worst crisis since the Great Depression.
But not every aspect is suffering, given that online publicity is seeing enormous growth, driven in part by needs emerging from the economic crisis.
If we analyze the figures used by specialist agencies, the crisis that is heavily affecting almost every business sector could become an opportunity for digital advertising.
In fact, it is already happening; it is the only sector that has grown (almost 20 percent so far this year) as everything else is shrinking.
The cuts in marketing budgets mean that agencies are seeking channels with lower investment requirements.
Thus, many firms that had not previously tried the digital medium as an advertising channel are taking their first steps and, in most cases, with good results. Hence digital advertising is growing.
However, investments in the traditional advertising market in Spain could be reduced by 9.2 percent this year, the biggest fall of the last 30 years.
Certain things occur with the arrival of a bearish economic cycle: individuals start saving by not (?by buying long-lasting products, not NOT buying) buying long-lasting products, while businesses cut back on training and advertising.
This reduction in investment in advertising brings the challenge of obtaining the same leads (or, if possible more leads, since the crisis will lower the sales-conversion ratio) with less impact; so they have to be of higher quality, more in line with the target.
And that is where the great capacity for segmentation of digital advertising can be very helpful. Online segmentation techniques, such as behavioral targeting, should be given more consideration than ever.
In the US, the media are facing the greatest advertising crisis since the Great Depression. This is one of the conclusions drawn from the report prepared by Zenithmedia on the forecasts for the advertising market.
It predicts the greatest fall ever, bigger than the North American Great Depression, and, consequently, the greatest since the Spanish market reached maturity in the 1980s.
Have advertising companies lost their confidence in traditional advertising investments?
I disagree with the idea that businesses have lost their confidence in either online or traditional advertising investments.
The fall of almost 9 percent in advertising investments so far this year is the result only of cutbacks in marketing budgets caused by falling sales as a result of the crisis. As soon as the situation lets up, we shall see investments increase again; you cannot sell unless people know you exist.
What is true is that the Internet is one of the channels that is most successfully dodging the crisis and there are three key factors to the situation: higher profitability of the campaigns, more refined segmentation and, above all, greater simplicity for gauging results.
But the key to good advertising strategies is not setting digital and traditional advertising against each other, but rather the opposite: it lies in attaining the appropriate blend of on+off media.
Every good campaign of a certain size must be integrated: in the same way that today no traditional campaign can be considered complete if it does not have a digital component, there is also little sense (except for very young segments) in developing campaigns that are 100 percent online.
(The author is a professor at IE Business School, Spain. The views expressed are his own. Shanghai Daily condensed his article.)
But not every aspect is suffering, given that online publicity is seeing enormous growth, driven in part by needs emerging from the economic crisis.
If we analyze the figures used by specialist agencies, the crisis that is heavily affecting almost every business sector could become an opportunity for digital advertising.
In fact, it is already happening; it is the only sector that has grown (almost 20 percent so far this year) as everything else is shrinking.
The cuts in marketing budgets mean that agencies are seeking channels with lower investment requirements.
Thus, many firms that had not previously tried the digital medium as an advertising channel are taking their first steps and, in most cases, with good results. Hence digital advertising is growing.
However, investments in the traditional advertising market in Spain could be reduced by 9.2 percent this year, the biggest fall of the last 30 years.
Certain things occur with the arrival of a bearish economic cycle: individuals start saving by not (?by buying long-lasting products, not NOT buying) buying long-lasting products, while businesses cut back on training and advertising.
This reduction in investment in advertising brings the challenge of obtaining the same leads (or, if possible more leads, since the crisis will lower the sales-conversion ratio) with less impact; so they have to be of higher quality, more in line with the target.
And that is where the great capacity for segmentation of digital advertising can be very helpful. Online segmentation techniques, such as behavioral targeting, should be given more consideration than ever.
In the US, the media are facing the greatest advertising crisis since the Great Depression. This is one of the conclusions drawn from the report prepared by Zenithmedia on the forecasts for the advertising market.
It predicts the greatest fall ever, bigger than the North American Great Depression, and, consequently, the greatest since the Spanish market reached maturity in the 1980s.
Have advertising companies lost their confidence in traditional advertising investments?
I disagree with the idea that businesses have lost their confidence in either online or traditional advertising investments.
The fall of almost 9 percent in advertising investments so far this year is the result only of cutbacks in marketing budgets caused by falling sales as a result of the crisis. As soon as the situation lets up, we shall see investments increase again; you cannot sell unless people know you exist.
What is true is that the Internet is one of the channels that is most successfully dodging the crisis and there are three key factors to the situation: higher profitability of the campaigns, more refined segmentation and, above all, greater simplicity for gauging results.
But the key to good advertising strategies is not setting digital and traditional advertising against each other, but rather the opposite: it lies in attaining the appropriate blend of on+off media.
Every good campaign of a certain size must be integrated: in the same way that today no traditional campaign can be considered complete if it does not have a digital component, there is also little sense (except for very young segments) in developing campaigns that are 100 percent online.
(The author is a professor at IE Business School, Spain. The views expressed are his own. Shanghai Daily condensed his article.)
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