Cover Story: Media Usage Forecast 2012
Marketers are climbing out of the foxholes and charging back to the fight for new customers in 2012. At least, that's what we see in the results of Target Marketing's 2012 Annual Media Usage Survey. Overall marketing budgets in 2012 aren't too different from what they were in 2011, but their investments are more aggressive and customer acquisition-oriented.
The Budget Picture
"The main influence was an increase in budget to explore new marketing outlets," one B-to-C marketer explains in the answer to the survey's open response question: "What factors have influenced changes in your direct marketing media allocations from 2011 to 2012?"
Overall, 49 percent of marketers report no change in their 2012 budgets compared to 2011, 29 percent report increases, and 16 percent have seen their budgets fall. Those are all very similar to what we heard from the 2011 survey, and no news is good news in a lot of ways. Marketers started to get rolling again last year, and continuing that is a positive sign. Moreover it means for two years running, nearly twice as many companies have expanded budgets than have shrunk them.
When you look at where those budgets are allocated, marketers are making a big push to acquire new customers in 2012. "We are in a 'Strategic Growth Initiative,'" says one B-to-B marketer, "and the money has been budgeted to be more aggressive in our marketing efforts."
More marketers are planning to use every method of customer acquisition in 2012.
That was the most striking result from the survey. As you can see in Chart 4, we asked whether or not respondents had used 16 different media channels for customer acquisition in 2011, and whether or not they plan to use those channels in 2012. For every channel, more respondents plan to use it in 2012 than used it in 2011.
That "change in business model to increase focus on bringing in new customers as opposed to client retention," as one B-to-B and B-to-C marketer describes it, shows up in budget allocations, as well. Fewer than 10 percent of respondents reported a decrease in their customer acquisition budgets, and a full 38 percent are rising. Last year, this report said budgets had stabilized and companies were playing defense, focusing on retention. This year, marketers are more focused on investing to expand their customer bases.
Email continues to be the lead customer acquisition channel according to the survey, with 86 percent of respondents planning to use it for that purpose. Direct mail is second, with 69 percent using it for acquisition in 2012.
Search marketing (PPC, 59 percent) and search engine optimization (SEO, 67 percent) are the leading methods of online direct marketing. The social media channel shows no signs of slowing down or succumbing to its alleged fad status either, with 67 percent of marketers planning to use it for engagement in 2012 (an 11 point increase over 56 percent in 2011) and 35 percent planning to buy paid social media ads (almost doubling last year's 19 percent). Webcasts also see a big jump in 2012, with 34 percent of marketers planning to use the channel compared with 21 percent in 2011.
The increase includes older, even declining media channels, as well. Advertising on outside websites (56 percent in 2012 compared to 47 percent in 2011) and telemarketing (36 percent from 31 percent) are both up, as are affiliate marketing (41 percent from 33 percent), direct response radio (15 percent from 11 percent) and even direct response TV (14 percent from 9 percent).
The fastest growing acquisition channels are on mobile devices. Marketing via the mobile Web and apps (32 percent from 13 percent), and lower bandwidth methods like text, SMS and telemarketing (25 percent from 11 percent), will all more than double in 2012, according to the survey.
and New Blood
The return to acquisition isn't proof that consumers and businesses are spending at pre-recession levels. In fact, many answers to the open-response question cited continuing recession-level spending as the main consideration in their plans.
For example, one B-to-B marketer says, "The worsening economy and customer indications that their available budgets have decreased," were key factors in their media budgeting. A marketer identifying as both B-to-B and B-to-C reported "economic conditions in the markets served have improved only slightly. Will take a wait and see approach." Another says, "The ongoing recession is the main factor influencing all marketing decisions."
Then there's this heartbreaking response from a company caught between the low economy and high gas prices: "The continued depressed economy. The escalating price of gasoline. We notice a direct correlation between the cost of fuel and the rate of orders. As gasoline closes in on $4.00 per gallon, we see a 50 percent drop off in sales."
It's fair to say none of our respondents reported customers dumping their wallets into response envelopes.
However, other respondents are looking for answers in new channels and considering that their customers aren't where they used to be. One B-to-B and B-to-C marketer says, "The dynamics of the market are completely different due to consumers changing behavior to new technologies and phenomena." A B-to-C marketer responds, "Our strategy has been to rely entirely on direct mail and email. We are finally beginning to adapt to the visual and electronic requirements of modern times." And another described its whole strategy as a testament to, "The growth of the mobile, social and especially tablet platforms. The efficiency of our email programs and outbound telemarketing. And the ongoing success of direct mail, print and online media."
Not all of these changes were bloodless. Some responses indicate there have been changes at the top, saying that budgets were driven by a "more digital focus by new CMO" or "newly hired marketing staff with expanded skill set." One B-to-B marketer cited "A change in overall marketing messaging, strategy and leadership resulting from seeing preliminary results of 2011's testing of new ideas."
Direct Mail and Email
Direct mail and email continue to be the most-used marketing channels. We're not going to go into them at length this year, because not much has changed from years past. Both are used by large percentages of responding firms, they are used extensively for both customer acquisition and contact/retention, and they rate as the highest ROI media.
However, both also have known obstacles, and that's part of the reason marketers are exploring new channels. For example, a B-to-C mailer cited "mail costs, response rate," as the reasons it's "moving dollars to online channels." A B-to-B emailer explains that it has become "harder to get email delivered and opened, so we're looking for other means to reach our target audiences."
Direct mail and email are still the most widely used media, but they don't seem to be where the noteworthy changes are occurring this year.
Social and Mobile
Many responses mentioned social media, and you can see that in Chart 2 (Page 23) showing where marketing allocations are increasing, decreasing or staying the same: Sixty-three percent report they're increasing spending on social media engagement (fan pages, interaction, etc.) and 31 percent are spending more on paid social network advertising. Only 15 percent of respondents don't plan to use social media for engagement.
To put that 63 percent in perspective, only email will see more companies increase spending (65 percent) than social media. In last year's Media Usage Forecast, we asked if social media was becoming the new email—a top digital marketing channel. In terms of this data, it looks like it is. However, it still doesn't appear in Chart 5 as one of top-ROI channels with email and direct mail.
Not as many respondents are increasing their mobile marketing budgets as email and social media. Only 35 percent will spend more on mobile Web and apps than in 2011, and 25 percent are investing more in mobile text/SMS/phone. However, neither of those categories report even 1 percent of companies decreasing those budgets. At the same time, the percentage of respondents who don't budget for mobile marketing is around 50 percent.
Some respondents were far warmer to the mobile channel. "The explosive growth of mobile can't be ignored anymore," says one B-to-C marketer. "Mobile visitors will account for 10 percent to 12 percent of our Web traffic, and up to 30 percent of our email is read on a mobile device."
As noted above, mobile saw the largest percentage growth as an acquisition channel. As a retention vehicle, mobile Web/apps and text/SMS/phone were each used by only 9 percent of firms in 2011. In 2012, those numbers jump to 20 percent and 16 percent, respectively. One B-to-B marketer explained, "We are increasing our direct mail and incorporating mobile messaging into our mix to provide timely updates since mobile SMS gets opened at a high rate."
The Next Big Thing
The next big thing is content marketing, but let me explain that by talking about QR Codes.
QR Codes have been a very controversial marketing technology. In concept, the ability to put a link on paper that launches a Web page on smartphones sounds brilliant. In practice, marketers have had mixed results. One B-to-B respondent said, "In the B-to-B marketing space, it seems some of the blogging and video done five years ago are resurfacing as viable options. Other things like QR Codes appear to have been a flash in the pan."
There was a time when Web video was considered the flash in the pan, but that ignores the larger question: Who's using these new technologies, these "next big things," and are they putting more money into them?
This year we added a question to try to get to the bottom of that: "Compared to 2011, are you planning to increase, decrease or stay the same in using these marketing technologies?" You can see the results in Chart 3.
The results are that 48 percent of marketers are not using 2D codes (which includes QR Codes), 15 percent are using them and maintaining the investment level, and 35 percent are increasing investment. Only 1 percent of marketers have tried 2D codes and are decreasing investment in 2012.
By contrast, 62 percent of firms are spending more on content marketing, 20 percent are holding steady and only 17 percent are staying out of the game. Those numbers are comparable to email as a marketing channel—they're market defining.
In the survey we described content marketing as "creating editorial content to use online and/or in lead generation." That utility is what makes content marketing this year's "next big thing," and other tactics related to it show similar lift. For example, 52 percent of responding marketers are increasing their video budgets. That's also true of blogging (which a combined 64 percent of marketers are increasing or maintaining budget for) and webinars (53 percent, combined).
Content isn't the only tactic worth mentioning. A full 45 percent of respondents are increasing personalization, and only 31 percent are not using personalization at all. A combined 60 percent of marketers are investing in triggered marketing, as well; which goes hand-in-hand with personalization in many campaigns (birthday emails, for example).
Target Marketing conducted this survey in January 2012 by emailing a questionnaire to approximately 19,600 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. 9 and Jan. 20. Survey results are based on the participation of 365 respondents (for a response rate of 1.9 percent). Of the respondents to this year's survey, 42 percent described their companies' activities as B-to-B, 23 percent as B-to-C and 35 percent as both. Respondents' job functions include: corporate and general management (25 percent); marketing and sales management (57 percent); list/database/circulation management (5 percent); e-commerce management (3 percent); operations/fulfillment management (1 percent); and other (9 percent).
In addition, respondents reported their firms' annual direct marketing expenditures as follows: less than $100, 000 (51 percent); $100,000 to $499,999 (18 percent); $500,000 to $999,999 (7 percent); $1 million to $5 million (11 percent); more than $5 million (7 percent); and don't know (6 percent).