Cover Story: Media Usage Forecast 2013
Are doubts creeping into the marketing recovery—and the budgets of our readers?
Marketers never did stop expressing doubts about the economy after our last recession. Yet, compared to the responses to our annual Media Usage surveys in 2012 and 2011, this year's survey of our subscribers' marketing media spending plans reveals more guarded budgets than the year before.
Take the overall percentages of companies increasing and decreasing marketing budgets in Chart 1 (see the media player to the right). Compared to 2012, fewer B-to-B companies are increasing budgets, and more companies are decreasing or budgeting flat.
On the B-to-C side, there is more uncertainty. Fewer respondents are increasing or decreasing budgets than last year, but many more answer "Don't know/not sure."
Companies that market to both businesses and consumers (the "Both" graphic in Chart 1) have the lowest rate of increasing budgets this year and the highest rate of staying the same, which is similar to 2012's results.
The open response answers to the question "What factors have influenced changes in your direct marketing media allocations from 2012 to 2013?" also show unease with the economy, budgets and sales revenue.
Out of the 169 respondents who wrote answers to that question, 31 include the word "budget." That's a full 18 percent. They often use it as a one-word justification for their responses to the entire survey, simply saying, "Budget."
"Sales," "revenue," "growth," "funding" and "economy" are all offered in those open answers, as well; many times in the same manner as "budget." In total, a solid quarter of our respondents blame business income for negative responses in the survey.
On the other hand, there are a few who say budgets, sales, etc., are having a positive impact; including one B-to-C marketer who says of his biggest influence, "If any, it would be the economy improving."
More budgets are increasing than decreasing, so the total outlay still appears to be creeping up; just more slowly than in 2012.
That's the big picture of how marketing budgets are shifting in 2013, but our survey reveals much more about how marketers are allocating their dollars. Here are six things you need to know about what they say.
1. The 4 Top Marketing Channels
Sometimes, the increase and decrease columns in Chart 2 get all the attention. But it's the last column, "do not use," that reveals the silhouette of this industry: The smaller that number is, the more prominent the media in the big direct marketing picture.
By that measure, email, search, social media and direct mail are the top media for direct marketing in 2013.
Only 5.6 percent of marketers reported that they do not plan to use email in 2013, which means a full 94 percent do, and 63 percent of those plan to increase its budget.
By the same calculation, search engine optimization (SEO) is used by nearly 90 percent of respondents, and 84 percent pay for PPC search engine marketing. About half of respondents are increasing search budgets, as well.
Eighty nine percent are using social media for engagement—what you might call "natural social": creating a fan page, interacting with followers, etc. Unlike search, less than half of respondents are investing in paid social network ads.
And finally, 80 percent plan to invest in direct mail, about 1.5 percent fewer than in 2012. Fewer respondents report increasing direct mail budgets—28 percent compared with 31 percent in 2012—but there are also fewer decreasing budgets.
2. What's Leveling Off?
Over the 2011 and 2012 surveys, we saw marketing budgets stabilize, turn upward and start spending more on acquisition. There was also a significant shift toward some of the key digital channels—in both years, email and social media were the only channels with more than 60 percent of respondents increasing spending.
As you can see in Chart 2, these channels will increase the most in 2013, but fewer marketers are increasing them than in 2011 and 2012.
The only other channel to rise more than 50 percent through 2011 and 2012 was SEO, and that is not slipping—51 percent of marketers are increasing spending this year, the same as last year. And that's only 1 percent below 2011 levels.
The number of companies increasing spending on a medium may not be the complete picture—in fact, the "stay the same" response is up for both email and social media—but it shows that the rush to catch up is perhaps slowing down, and at least some companies must feel they're reaching diminishing returns.
3. Direct Mail's Standing vs. Email
In 2007, the first year we conducted this survey, 91 percent of responding marketers used direct mail. It was the most universally used direct marketing channel. Only 85 percent were using email, 63 percent used search and social wasn't even on our radar.
This year, direct mail is still being used by 80 percent of respondents, but with so many other channels competing for attention, it's clear its role has changed.
And yet, direct mail is still one of the top media for ROI. In Chart 4, you can see that direct mail spars with email to offer the highest ROI for acquisition and retention in each segment. The only use for which it's not in the top two for ROI is B-to-B retention, where telemarketing edges it out by 1 percent. ("Other" in that chart is a collection of smaller ROI channels, not a single channel itself.)
Where does that put direct mail in the minds of marketers?
One B-to-B respondent cites "better ROI on direct mail in retention and acquisition of customers" as the primary factor in determining marketing budget for 2013.
However, a different B-to-B marketer responds, "Increasing reliance on technology, budget and inability to convince leadership of return on direct mail" are prime factors in determining the budget. Another respondent comparing email and direct mail says the primary factor is the "price of sending direct mail. Email is far less expensive."
Email is also benefitting from some of the technologies available today. For example, Chart 3 shows nearly a third of our respondents will increase marketing automation spending, less than 1 percent are decreasing and 45 percent don't use it. That's a recipe for growth of a technology that emphasizes email.
Personalization also seems to be shifting to enhance email. Only 27 percent of respondents are using variable data printing to personalize print, but two thirds are using personalization, overall. Much of that is being done in email.
Our responding marketers clearly still consider direct mail a top marketing channel. We also know from other data, such as that released in DMA's annual "Statistical Fact Book," that direct mail has very high response rates. However, as long as email continues to rate with it in terms of overall ROI, the slow trend away from mailing will likely continue.
4. Acquisition or Retention?
Within the overall environment of cautious growth, are marketers playing offense or defense? Are they spending money on retention or acquisition?
Here's how the different segments are adjusting budgets for customer acquisition:
- Increase: 49 percent
- Decrease: 5 percent
- Stay the same: 36 percent
- Don't know: 10 percent
- Increase: 36 percent
- Decrease: 6 percent
- Stay the same: 41 percent
- Don't know: 17 percent
- Increase: 37 percent
- Decrease: 10 percent
- Stay the same: 43 percent
- Don't know: 10 percent
And here's how it breaks down for retention marketing spend:
- Increase: 32 percent
- Decrease: 5 percent
- Stay the same: 52 percent
- Don't know: 11 percent
- Increase: 31 percent
- Decrease: 6 percent
- Stay the same: 36 percent
- Don't know: 26 percent
- Increase: 32 percent
- Decrease: 7 percent
- Stay the same: 50 percent
- Don't know: 12 percent
While roughly equal portions of the B-to-C and "Both" segments are increasing spending on acquisition and retention, half of the B-to-B marketers surveyed are putting their money on acquisition. Why is that? Here's what some B-to-B open responses said:
"Customers are all cutting back, so we need to become better at driving customers to our website and then converting."
"In-house list stagnation has driven the need to bring in fresh names."
"New product requiring a new media for marketing."
Several other B-to-B marketers also say they've released new products or acquired a company and, therefore, are selling new products, both of which demand new customers.
On the consumer side, many B-to-C marketers talk about repositioning their products rather than launching or acquiring new ones:
"Changing marketplace and the need to change pricing."
"Market downturn combined with reduction in customer spending forecast for our products in the U.S.A. Increase in forecast for international customer spending."
5. Content Is Still King
Last year, we called content marketing "The Next Big Thing," saying its increase/decrease rate was "comparable to email as a marketing channel—they're market-defining."
When we look at the technologies our respondents are using this year in Chart 3—a question we only asked for the first time last year—it's clear that content marketing is still the No. 1 area of investment, along with blogging, video and webinars, which are all forms of content themselves.
Yet, content marketing's growth is slowing down. Last year, 62 percent of respondents planned to increase spending on it, 20 percent were holding steady and only 17 percent were not using it. This year, 54 percent are increasing spending on content and 22 percent are holding steady. All in all, nearly 77 percent of respondents are using some kind of content marketing.
In terms of which content companies are investing in, nearly 70 percent of respondents are using blogs, 59 percent are creating videos, 51 percent are using webinars and 25 percent are podcasting.
6. Gimme SoMo
Social-mobile marketing, often called "SoMo" (or "SoLoMo" when it's local, as well) isn't mentioned by name by any of our respondents. Taken together, though, SoMo is a good description of what many described.
Although social media spending is leveling off some, Chart 2 shows that more than 50 percent of social budgets are still increasing. Marketers mention it specifically in nine of the open response comments, ranging from "The expectation of social media marketing" to "EXPLOSIVE INCREASE FROM SOCIAL MEDIA."
Similarly, several respondents say they need to provide more mobile experiences to their customers. One simply explains "a need for more mobile content."
After the content marketing investments already discussed, mobile-optimized websites are the biggest area of increased technology spending in Chart 3, with 42 percent of respondents allocating more of their budget for them. However, 43 percent are not allocating budget for the technology and only 15 percent are holding spending steady. No respondents report decreasing spending on mobile sites.
Marketers are more cautious about mobile app investments, but 29 percent report increasing budget for those, as well. A mobile app is a very specific investment—you're creating and committing to a certain type of interaction and support with your app subscribers. So even though Chart 3 shows that 59 percent are not using them for marketing, we are surprised by just how many are creating them.
"The need for mobile apps by our customers and prospects has influenced us to become more knowledgeable in that area and to partner with a company that is an expert in this area so we can offer this service to our clients/prospects," says one B-to-B marketer who is increasing spending on mobile apps this year.
Target Marketing conducted this survey in January 2013 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.
Three email drops were made between Jan. 16 and Jan. 25. Survey results are based on the participation of 244 respondents (for a response rate of 1.3 percent). Of the respondents to this year's survey, 50 percent described their companies' activities as B-to-B, 23 percent as B-to-C and 27 percent as both. Respondents' job functions include: corporate and general management (27 percent); marketing and sales management (54 percent); operations/fulfillment management (4 percent); e-commerce management (4 percent) and other (11 percent).
In addition, respondents reported their firms' annual direct marketing expenditures as follows: less than $100,000 (53 percent); $100,000 to $499,999 (14 percent); $500,000 to $999,999 (8 percent); $1 million to $5 million (9 percent); more than $5 million (6 percent); and don't know (10 percent).