Cover Story : Media Usage Forecast 2010

No matter how you slice it, traditional media are getting the squeeze

If flat is the new up, then those economists and industry analysts predicting that we're seeing the first indicators of a slow recovery are right on the money.

Comparing responses from Target Marketing's Media Usage Forecast 2010—now in its fourth year—to data from last year's survey, we find fewer marketers reporting a decrease in direct response media budgets (29 percent in 2010 vs. 35 percent in 2009). But considering that 43.5 percent of respondents this year expect budgets to stay level with last year's and 40 percent of respondents to the 2009 forecast expected a flat budget compared to their 2008 funding, marketers still are going to be hard-pressed to turn straw into gold for another year.

To make things a little more interesting for 2010's Forecast, we tracked responses across three verticals: B-to-B, B-to-C and marketers with hybrid business models to serve both businesses and consumers (see chart 1 in the media player to the right). Of the trio, B-to-B is faring the best at the beginning of the turnaround, with a strong majority (78 percent) anticipating at least the same direct response media spend as in 2009, if not a little more. But marketing departments on the B-to-C and hybrid sides will continue to struggle with budget decreases, as close to a third of respondents in each vertical predict less money in their futures.

The continuing need to do more with less likely plays a role in which media are go-to vehicles at the present. Looking at which media provide the strongest ROI for acquisition across all respondents, e-mail claims the top spot for the second year in a row (24 percent), followed by direct mail (20 percent) and telemarketing (11 percent). But because the majority of respondents engage in B-to-B marketing, telemarketing skews a little higher in the combined results. When broken down by vertical, B-to-C firms rate e-mail and direct mail closely for prospecting ROI but turn to advertising on outside Web sites as their third pick. For both B-to-B and B-to-C marketers, search engine optimization holds down the fourth spot, while the hybrid group blends in a little direct response space advertising. In general, these numbers compared to last year's choices for top ROI producers on the acquisition front are a smidge lower for both e-mail and direct mail, providing room for other media to take on more prominent roles in the hunt for new customers.

From a customer-retention perspective, it's no contest: E-mail blows away all other media options in the survey when it comes to generating the strongest ROI. Across all sectors, 43 percent selected e-mail as their front-runner with direct mail trailing a distant second at 25 percent and telemarketing owning just 11 percent of the vote. In contrast to last year's tallies, these numbers aren't far off, save for e-mail and direct mail stealing a little more share of the responses from the other media options. Looking at the three verticals tracked, the holy trinity of e-mail/direct mail/telemarketing holds fast; it's with the fourth-place runners-up that things get interesting. For B-to-B marketers, the remaining media options all pan out pretty evenly, but for the B-to-C and hybrid firms, social media claims a bigger role in their customer retention efforts than some of the remaining choices combined.

It should be noted that three media options offered to respondents in the last three years of the Forecast have been removed and replaced with two new categories for this 2010 effort. Leaving the survey are catalogs (now accounted for by the direct mail category), fax and podcasts; new this year are affiliate marketing and social media, to reflect the changes taking place on the media front.

The Rise of Digital Media Diverts Investment Away From Offline Channels
Even though there is one fewer category in this year's survey, seven media still boast anticipated increases in spending that are larger than both the percentages pledged to keeping funding similar to last year's budgets and to any predicted decreases (see chart 2 in the media player to the right). The media marketers are investing in more heavily for 2010 include e-mail, mobile, search engine marketing (paid search), SEO and webcasts—all online media, which matches a good deal of the predictions that traditional media are losing more ground to digital marketing avenues.

But that's far from suggesting that print is dead. Rather, the survey results show that marketers simply are putting their eggs into more baskets to keep pace with the various media with which their audiences engage and interact. Compared to last year's numbers, the percent of marketers expecting to decrease their budgets for direct mail has dropped a few percentage points, while the amount stating they don't use direct mail held steady; the result should be a flat year in terms of investment. The picture is a little less positive for direct response space advertising and insert media; while marketers predicted larger spending decreases for both last year, the percentages of respondents expected not to use these media in the coming year both rose slightly.

Telemarketing also witnessed a bump in the number of marketers predicting no investment in this tool for 2010, as did direct response radio and direct response television. Still, all three are in play; especially telemarketing, with more than 42 percent of respondents claiming they will keep budgets the same or higher for this channel.

After balancing anticipated budget increases, decreases, holds and nonuse, the media coming out on top for 2010, in order, are e-mail, SEO, social media and SEM.

Acquisition Still Relies on E-mail and Direct Mail; Social Media Joins the Party
If we slice the direct response media usage pie a different way, looking just at how many respondents will use each medium for prospecting efforts in the year ahead (see chart 3 in the media player to the right), we still see e-mail way out in front (84.6 percent), direct mail second (70.4 percent) and social media stealing third place from SEM (66.4 percent vs. 60.3 percent). As was the case last year, direct mail again is the only offline channel to make the top five list for planned acquisition activities this year. Not surprisingly, direct response television and direct response radio were at the bottom of the pile. Still, they drew decent percentages, at 11.9 and 17.1, respectively.

One interesting comparison to make—even though the Forecast respondents from one year to the next are not the exact same group, there still is overlap—is noting which media marketers predicted in 2008 they would use in 2009 compared to what they reported in 2010 as actually having put into action last year. With respect to e-mail and direct mail, the numbers are pretty close to accurate, but from there use changes dramatically—likely due to the introduction of the two new media options, mobile and social media.

Where more marketers thought they would be active in the SEM and SEO fronts, it was advertising on outside Web sites that pulled a little ahead. Social media came in sixth and telemarketing was seventh, both probably snagging a few percentage points from space advertising, which dropped from a projected sixth place to an actual eighth.

Overall, marketers' projections for which media they will employ to attract more customers reflect a far more diverse media plan than in past years, with their budgets being spread out more—especially as digital media offer them greater reach for less money. The question is: Will this more complex blend of media result in the ROI they seek from what appears to be another challenging marketing year?

Even for Retention, Marketers Like E-mail, Direct Mail and Social Media
As is typically the case, the addressable media of e-mail (88.6 percent) and direct mail (65.6 percent) lead the way in media most marketers anticipate using in 2010 for customer retention efforts. Coming in as the spoiler again, however, is social media in the third spot (56.1 percent). But where SEM ran a close race with social media on the acquisition side of marketers' future plans, this media option missed the target by nearly 50 percent. From there, the percentages of marketers predicting usage of telemarketing, SEO and advertising on outside Web sites were fairly neck-in-neck.

The only direct response medium for which fewer respondents anticipate usage in 2010 compared to 2009 is direct response television. Conversely, double the percentage of marketers claimed to be planning for mobile marketing efforts, and both social media and SEO are expected to pick up more adopters.

Or will they? If past performance is any indicator of future outcomes, then SEO just might not get there. In 2008, fewer marketers predicted they would turn to e-mail in 2009 than finally did, according to the actuals reported in this year's survey. And more marketers thought they would be turning out direct mail, SEO and telemarketing campaigns than actually did. In the end, e-mail and social media sound like they just became easier to execute when the budgets dwindled and both consumers and businesses continued to watch their wallets.

Methodology
Target Marketing conducted this survey in January 2010 by e-mailing a questionnaire to 17,260 of the magazine's print subscribers who have opted in to receive e-mails from Target Marketing. This audience was further refined by suppressing list services firms and creative services/advertising agencies to produce a list that was composed only of marketers.

A total of three e-mail drops were made between Jan. 18 and Jan. 27. Survey results are based on the participation of 396 respondents (for a response rate of 2.3 percent, which represents a 35 percent increase compared to last year's respondents). Of the respondents to this year's survey, 42 percent described their companies' activities as B-to-B, 24 percent as B-to-C and 34 percent as both (also referred to as hybrid throughout this analysis of the results). Respondents' job functions include: corporate and general management (25.3 percent); marketing and sales management (54.3 percent); list/database/circulation management (5 percent); e-commerce management (2.8 percent); operations/fulfillment management (2 percent); and other (10.6 percent).

In addition, respondents reported their firms' annual direct marketing expenditures as follows: less than $100, 000 (44.4 percent); $100,000 to $499,999 (19.9 percent); $500,000 to $999,999 (8.2 percent); $1 million to $5 million (10.8 percent); more than $5 million (9.9 percent); and don't know (6.8 percent).

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