Media Usage Forecast 2008

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

March 2008 By Hallie Mummert

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With the specter of a recession looming, results from Target Marketing’s second annual Media Usage Forecast reflect the caution that marks the start of 2008. The majority of direct marketers plan to hold the line on or even increase their budgets, which is good news. Still, the group of respondents tightening the purse strings on their media budgets rose 23 percent compared to last year, and the group planning a budget increase dipped about 10 percent. An intriguing development is that a smaller percentage (5 percent) of respondents are indicating uncertainty about their budget plans for this year contrasted with the response to this question last year (8 percent). Perhaps a few less media sales representatives will waste time this year chasing prospects who, in the end, won’t buy anyway.

Going into 2008, direct marketers expect to devote more money to acquisition, after a mostly equal focus on prospecting and retention in 2007. Looking back to last year’s survey results, this represents a more dramatic shift to new customer growth; respondents indicated a heavier dedication to retention activities in 2006 (53 percent).

Factors behind this acquisition trend include the usual suspects of customer attrition, new market and start-up ventures, and new product launches. But it’s also being driven by the rise of cheaper media options, such as search engine marketing (paid search) and search engine optimization—both of which posted large gains in predicted use for 2008.

If history tells us anything about media spending in the direct marketing sector, however, it’s that a slow economy compels firms to cut costs and extract more value from their customer bases. And with respondents selecting e-mail as the channel that delivers the best ROI for retention efforts (37 percent), marketers should expect significant clutter in their audiences’ inboxes this year.

Delving deeper into media preferences for producing ROI, direct mail continues to hold the crown for acquisition activity (34 percent), with e-mail (24 percent), SEM (8 percent), outbound telemarketing (7 percent) and catalogs (6 percent) trailing far behind.

Further analysis also shows that while direct mail, e-mail and SEM posted increases against last year’s reported ROI favorites for acquisition, outbound telemarketing and catalogs got hit hard this time around; in fact, catalogs pulled a 65 percent drop against 2007’s scoring.

On the retention front, e-mail and direct mail jockey for first place in the ROI race, with the online medium edging out its offline competitor by four percentage points (37 percent vs. 34 percent). Again, both media were predicted to increase their footholds in 2008, while catalogs and outbound telemarketing took another tumble. Two media worthy of mention are advertisements on external Web sites and insert media, which posted small gains in becoming marketers’ go-to ROI methods.

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