Media Usage Forecast 2008

Target Marketing’s second annual survey on direct response media spending

March 2008 By Hallie Mummert

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Costs Erode Use of Offline Channels
In comparing this year’s projected media spending to reports on last year’s actual spending, we find evidence that companies are further adjusting their media mixes to keep pace with their audiences’ changing media-consumption habits (see chart #5 below).

Online media made serious inroads, with e-mail, SEM and SEO seizing larger percentages of respondents planning to increase spending on these categories. Even webcasts, mobile marketing, podcasts and advertising on external Web sites posted decent gains.

Direct mail essentially remained flat, with the number of respondents indicating budget increases about equal to those planning to decrease or maintain spend levels compared to last year. Still, it’s one of only two media to elicit predictions of a double-digit decrease in spending—the other being direct response space advertising, another print-based medium.

By balancing spending increases with decreases and holds, we get the overall media winners for this year:
e-mail (87 percent), SEO (72 percent), SEM (68 percent), direct mail (63 percent) and advertising on outside Web sites (62 percent).

One last statistic that helps solidify e-mail’s place in marketers’ media mix for 2008: The percentage of respondents indicating they don’t use a particular medium grew about 22 percent for direct mail, whereas that number declined about 67 percent for e-mail.

Direct Mail Still King for Acquisition; New Media Heating Up
Having reviewed spending plans for 2008, let’s now slice and dice media usage for acquisition efforts by usage and adoption rates to see what’s happening on that front (see chart #6 below).

When it comes to use, direct mail proves it’s still the workhorse, at 81 percent, followed by: e-mail (71 percent), SEM (60 percent), SEO (59 percent) and advertising on outside Web sites (57 percent). The only changeup from last year is between the third, fourth and fifth slot positions: SEM beat out both Web ads and SEO, which then gave a little shove to Web ads to grab fourth place.

Similar to last year’s findings, direct marketers continue to explore new media options. What’s different is which of the new media find themselves leading the pack for adoption growth in 2008. According to respondents, podcasts, webcasts and mobile marketing are the hot vehicles right now, posting adoption gains of 325 percent, 262 percent and 85 percent compared to last year’s usage.

For 2007, respondents gave the nod to SEO and SEM as the most attractive new channels; the former continues to do well this year, with an impressive 44 percent gain, while the latter slows to an acceptable 28 percent improvement.

Of course, more mature channels will see far fewer new users, which puts e-mail, direct mail and catalogs in the bottom three for adoption. The only medium that remained stagnant between 2007 and 2008 is fax, a natural outcome of the legislation that heavily restricts communication via this channel.

Retention Equals E-mail; Webcasts Still Pulling New Users
Although retention is not the paramount focus of respondents’ plans for this year, it will make a significant contribution to revenue and thus help fund those acquisition activities. So, more marketers will turn to the cheapest channel of the bunch, e-mail, to get the biggest bang for their retention bucks. Even with rising postal and paper costs, marketers have decided direct mail’s performance garners second place. Coming in a distant third is SEM, with SEO and outbound telemarketing tied for fourth (see chart #7 below).

The influence of B-to-B marketers (58 percent of respondents) in these survey results becomes more apparent when assessing adoption-rate gains between 2007 and 2008. Webcasts posted a 237 percent increase in users; unless consumer marketers classified their use of online video (product demonstrations, customer reviews, etc.) as webcasts, this growth reflects B-to-B firms’ favor for this online educational tool.

A wild card in this year’s results for retention media is direct response radio, which garnered an adoption-rate increase of 80 percent. Still, just 9 percent of respondents indicated they use this medium—the second lowest usage rate behind direct response television (6 percent). The same is true of podcasts with a 580 percent growth rate but only 11 percent of respondents actually using the vehicle.

More solid players are SEO, SEM and advertising on outside Web sites; all posted strong results in adoption rates and usage.

Behind the Numbers
The overall message gleaned from Target Marketing’s second Media Usage Forecast is that media fragmentation is becoming more pronounced. As media analysts and direct marketing experts have been predicting for several years, direct mail could become a casualty of costs that rise too greatly compared to its performance. While a few respondents indicated greater reliance on direct mail due to technological advancements—such as variable data personalization and personalized URLs—and targeting abilities, the majority of mail-related comments cited rising postal and paper costs as the reasons behind their media reallocations for 2008.

Of course, online media are moving in on direct mail and direct response space advertising—particularly e-mail and search tactics. Respondents indicated that speed-to-market, interactivity, cost and customer media consumption led them to shift more dollars to online media for 2008.

As the 1992 Clinton-Gore campaign claimed, “It’s the economy, stupid.” Not a single respondent mentioned the economy as a factor last year, but it was a popular theme in this year’s results, driven by the real estate downturn and subprime mortgage fiasco.

The upside from marketers is that they are interested in multichannel, integrated marketing and ROI more than ever, so they’re getting smarter about effective testing and measurement with each campaign. And that’s a boon for direct marketing as a whole.

Methodology
Target Marketing conducted this survey in January 2008 by e-mailing a questionnaire to 21,768 of the magazine’s print subscribers who have opted in to receive e-mail from Target Marketing. This audience was further refined by suppressing lists 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. 28. Survey results are based on the participation of 340 respondents (for a response rate of 1.6 percent, which represents a 20 percent increase compared to last year’s respondents). Of the respondents to this year’s survey, 42 percent describe their company’s activities as B-to-C and 58 percent as B-to-B. Respondents’ job responsibilities include: corporate and general management (30 percent); sales and marketing management (47 percent); list/database/circulation management (4 percent); e-commerce management (3 percent); operations/fulfillment management (2 percent); and other (14 percent).

In addition, respondents reported their firms’ annual direct marketing expenditures as follows: less than $100,000 (39 percent); $100,000 to $499,999 (24 percent); $500,000 to $999,999 (6 percent); $1 million to $5 million (16 percent); more than $5 million (8 percent); and don’t know (7 percent).

For chart No. 2, “% of media budget, customer acquisition vs. retention,” answers of “don’t know,” “not sure” or blanks were eliminated from the tabulations.

• MORE ON
• DIRECT MAIL & POSTAL
• LISTS & INSERT MEDIA
• ONLINE MARKETING