Cover Story : Media Usage Forecast 2011
Have marketers finally found the new normal?March 2011 By Thorin McGee
"At least it doesn't look like things got any worse."
That was my initial reaction to Target Marketing's 2011 Annual Media Usage Forecast survey results. But looking more closely at the numbers, budgets appear to have stabilized and are even beginning to turn upward. It's a slow turn, but unlike last year—when only B-to-B saw a significant rebound—it appears to be across the board.
Half of all respondents, exactly 50.1 percent, expect their 2011 direct response media budgets to remain the same as in 2010. Comparing that to last year (when 43.5 percent of respondents reported flat budgets) and 2009 (40 percent), we can see that media budgets have finally escaped their multiyear decline. This is the highest percent of flat budgets Target Marketing has ever seen in the survey.
Are budgets just stagnant? No. In fact, 28 percent of all respondents are increasing media budgets in 2011, and only 16 percent report decreases. In 2010, 29 percent of reported budgets decreased, and 35 percent decreased in 2009. We're not looking at the "boom times" of 2008, when 38 percent of respondents increased budgets and only 16 percent decreased, but we're not seeing the standstill of '09 either.
Similar signs of stability with some specks of encouraging increases pervade this year's survey results. There are some new trends—social media may be this year's email, SEO has only gotten hotter—but the overall balance of direct print to digital seems to be stabilizing.
Along with the multiple choice polls, we asked one open-answer question in the survey: "What factors have influenced changes in your direct marketing media allocations from 2010 to 2011?" For every respondent who cited the terrible economy, there were two who explained their budget shifts in terms of shifting media consumption among their target markets.
The eclectic mix of multichannel direct marketing reported here appears to be more than a response to the recession. It looks like marketing's new normal.
There is not a single media category in the 2011 survey that has more companies decreasing spend on it than increasing. And while that may seem like a trivial detail, it's the first time we've been able to say that since 2007—yet another sign of stability in direct marketing media usage.
Multichannel is hardly worth mentioning as a separate marketing strategy anymore—it's just marketing now. Flipping through the individual responses to this survey (which do not contain any personally identifiable information) it's obvious that no one is putting the entire marketing budget into one channel. And as you can see from the chart on page 24, only three of the 14 mediums we list are ignored by a majority of marketers: DRTV, DR radio and insert media.
Direct mail and DR space ads see the highest percentage of companies reducing spend (12.7 percent and 10.7 percent, respectively), but more companies plan to increase spending on those channels than decrease. So while print has been squeezed, as we reported in the 2010 Media Usage Forecast, it still appears to be a top-performer for companies using it. Open responses indicated that companies decreasing direct mail spend were doing so due to costs, not results. And direct mail ranks very highly as the medium with the highest ROI in the charts on page 28.
"The personal touch of direct mail and social media" was a main reason for this year's budget adjustment for one B-to-C marketer—and you just can't get more multichannel than that. The marketer continued, "metrics we pull have our messages being received and read, even responded to, on the prospect/customers' time frame. Not [an intrusive time frame as with] TV commercials, email, some search engine marketing, online advertising, etc. Direct mail especially allows our customers a non-invasive first touch or introduction to products, services, etc. They opt to continue communicating that way, or they allow us to offer the communication method most preferred."
B-to-B vs. B-to-C
For the second year, we tracked responses by three verticals: B-to-B, B-to-C and hybrid companies (who market to both consumers and businesses). You can see in the chart on page 23 how firms of each type expect their budgets to compare to 2010.
In last year's forecast, we noted that B-to-B marketers were faring best at the beginning of the turnaround. The 2011 B-to-B overall budget chart is almost identical to 2010. B-to-C budgets appear to be more volatile, with fewer staying flat and a much higher percentage in decline. But B-to-C budgets compare favorably to last year, when 31 percent decreased, 42 percent stayed the same and only 22 percent pushed upward.
Hybrid companies are far more optimistic about 2011 than 2010. Last year, 30 percent of those firms were decreasing budgets, 40 percent stayed flat and 23 percent were increasing—numbers just as depressed as B-to-C's. This year, 36 percent of those firms are increasing direct marketing budgets, and only 14 percent plan to decrease.
Webcasts garnered interesting results. Only about half of all companies are using them, but that breaks down as 66 percent of B-to-B marketers, 25 percent of B-to-C and 57 percent of hybrid companies. However, only 3 percent of companies are decreasing their webcast budgets. More companies are increasing webcast spend than holding it steady in both B-to-B (36 percent increasing, 27 percent staying the same) and hybrid marketers (33 percent increasing, 20 percent staying the same).
Social Media: The New Email?
Email has seen steady growth as a direct marketing medium every year we've conducted this survey, and 2011 is no different. Nearly 70 percent of companies are still increasing their spend on email marketing, 85 percent use it for acquisition and 90 percent use it for retention. For all the strikes against email—that it can be intrusive, spammy, etc. when done wrong—the chart on page 28 proves its worth. More respondents ranked email as the top ROI channel in every case except B-to-C acquisition and hybrid retention, where it was second only to direct mail. No other media approach that level of across-the-charts investment and satisfaction ... except social media.
We only began including social media on the survey last year, and its adoption by responding marketers has been striking: 75 percent of companies use it for acquisition, 65 percent use it for retention and 64 percent plan to spend more on social media this year—only email is attracting more new spend. The ROI isn't there yet, but how much of that is due to the challenge of quantifying social media? Clearly, many marketers think it's worthwhile, even if few see it as a top channel for ROI.
While one marketer said, "social media requires more planning [than other advertising methods], if not more than any other advertising method," others cited the maturation of social media as the pivot point of their changing marketing plans. One marketer claimed that the biggest factor in the new budget was, "probably the emergence of social media marketing. We are doing a lot of Facebook marketing to members and non members alike."
However, the success of social media still seems very dependent on the marketer and the target audience. Some responses said the hype or fad of social media was the factor really influencing their budgets—and not its results. However, others felt customers were driving the shift. "The New Social Media," is changing the plans of one marketer because of "how potential customers view this phenomena and how we have made it the rule and not the exception."
After email and social media, search engine optimization (SEO) and search engine marketing (SEM) came in as the fastest growing avenues of "media" investment in 2011, with 52.3 percent of companies increasing the budget allocation for SEO and 48.9 percent increasing SEM.
Most of those companies are employing SEO and SEM for acquisition. B-to-B marketers lead the way, with 70 percent planning to employ SEM in 2011 and 71 percent SEO, compared to 54 percent and 55 percent last year. For B-to-C, 53 percent will use SEM for acquisition and 52 percent for retention, over 38 percent for each in 2010. And 65 percent of hybrid marketers are using SEM for acquisition (51 percent last year) and 60 percent SEO (49 percent last year). All of those present significant increases over 2010 responses.
The search channels are used less for retention, but among hybrid marketers, 42 percent still engage in SEM for retention and 43 percent use SEO the same way. B-to-C firms have the next highest rate of search for retention (SEM 33 percent and SEO 35 percent, over 15 percent and 21 percent last year) and B-to-B firms use search for retention at a similar rate (34 and 36 percent respectively, compared with 23 and 27 percent in 2010). But, again, each vertical reports more companies increasing search budgets in 2011 than in 2010.
The success of search is also driven, at least in part, by its synergy with branding. As one hybrid marketer explained, a lack of search-engine ranking can be seen as a lack of visibility: "We are not high on search engine results. We have a new corporate structure and logo and want companies to know who we are."
Are We Mobile Yet?
For the 11th time this century, analysts are saying this will be the year mobile marketing takes off. Our survey indicates that marketers still are not on board.
Only half of respondents are marketing through mobile this year, which is up from 34 percent in 2011, but still isn't defining the marketing landscape. Overall, 21.7 percent of respondents are using mobile for retention and 33 percent are using it for acquisition. That seems backward for a notoriously permission-based channel, but getting the prospect's mobile number has become just as much of a priority to many companies as getting the email address.
B-to-C companies lead the use of mobile for acquisition, with 38 percent prospecting through mobile compared to 22 percent of B-to-B and only 11 percent of hybrid firms.
On the other side, however, 31 percent of the hybrid firms plan to use mobile as a retention channel, compared to 23 percent in B-to-C and only 1 percent for B-to-B—one of the widest percentage spreads between the verticals in the whole survey.
Out of the nearly 500 open answers we received for the question, "What factors have influenced changes in your direct marketing media allocations?" only 12 mentioned mobile—that's 2 percent. While some of those cited reasons like this one from a hybrid marketer, "Growth and acceptance of mobile marketing and social media by more demographic groups that we target," many of the other respondents just intend to try mobile out or "get more into it" in 2011. When you contrast those sentiments with the more definitive, detailed answers we saw explaining the impact social media had on direct marketing budgets, it suggests either marketers have not yet mastered the mobile channel, or the opportunities still are not mature.
Target Marketing conducted this survey in January 2011 by emailing a questionnaire to approximately 19,000 of the magazine's print subscribers who have opted in to receive emails 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 email drops were made between Jan. 17 and Jan. 31. Survey results are based on the participation of 497 respondents (for a response rate of 2.6 percent, and the second straight 25 percent increase over the previous year). Of the respondents to this year's survey, 40 percent described their companies' activities as B-to-B, 24 percent as B-to-C and 36 percent as both, with 2 percent of the results moving from B-to-B to "both" compared to 2010. Respondents' job functions include: corporate and general management (22 percent); marketing and sales management (57 percent); list/database/circulation management (3 percent); e-commerce management (2 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 (49.5 percent); $100,000 to $499,999 (16.9 percent); $500,000 to $999,999 (7.6 percent); $1 million to $5 million (10.5 percent); more than $5 million (8.2 percent); and don't know (6.6 percent).