Get ready for the recovery: Part 3 – Media.
Media was going through major changes before the recession began. The downturn has accelerated some, slowed others. Pundits are predicting that the end of the recession is in sight, so here are some thoughts on what media will be like after the worst is over:
1. Newspapers may actually bounce back a bit. A funny thing happened on the way to newspapers disappearing: they didn't.
True, a lot of newspapers didn't survive the recession. But predictions of the complete extinction of metro dailies appear to have been overstated. At least in the short term.
Yes, publishers are hemorrhaging money. The massive debt many of them took on to finance acquisitions before the economic collapse, the accelerated departure of display advertisers during the downturn and the migration of classifieds to the internet have combined to give a grim new meaning to "black and white and red all over."
But despite newspapers' financial problems, readers are still there. Fewer of them than previously, and the number is going nowhere but farther down. But they're there, and they're good prospects. Although there are fewer of them, newspaper readers continue to be a mass, relatively affluent, audience. And newspapers are effective at turning readers into customers for advertisers.
According to a study by MORI Research, 59% of adults say newspapers are the medium they use to plan their shopping and to make purchase decisions.
That's a metric no retailer can afford to ignore. Because at the bottom of the funnel, newspapers work. Being supplanted by the internet, you think? The same study found that the primary medium for checking out ads was almost twice as likely to be newspaper than online sources. And checking out ads is what folks do when they're ready to buy.
2. Online display may have peaked. Agencies and marketers fell all over themselves getting into internet advertising. No one seemed to worry about the fact that there was no evidence that banners or skyscrapers or buttons had any impact on target audiences. It was a learning experience, and they didn't want to be left behind.
One beneficial side effect of the recession was the introduction of a stiff dose of reality into marketing. And the metrics showed pretty clearly that display internet advertising isn't cost effective. A lot of those early adopters have adopted exit strategies. Despite predictions that internet display ads would somehow not participate in the advertising decline of the recession, they're down 12% in the last quarter according to IDC's "Worldwide and U.S. Internet Ad Spending Report." They're predicting continued declines at least through the end of the year.
Obviously online display ads will be around at the end of the recession. But they're not likely to regain their momentum.
3. Sponsorships will decline. A lot of research has shown that only serious fans and/or participants of an event give a flip about who sponsors it. That's not to say sponsorships don't work. They do, but the effect is limited. (See our article "Sponsorship Works" to see how to use sponsorships effectively for tightly-targeted audiences.)
Last week we pointed out that Buick dropped Tiger Woods as a spokesperson after an eight-year run which saw their sales fall 66%. They also walked away from their long-standing sponsorship of golf tournaments.
Now Lowe's is pulling out of its naming rights sponsorship of Charlotte Motor Speedway (Oops. We mean Lowe's Motor Speedway) after eleven years. Even NASCAR fans, arguably the most avid in U.S. sports, weren't buying hammers, chainsaws and siding because Lowe's hung their name on a track.
We suspect that being the Official Antiperspirant of the Olympics doesn't get the brand into many armpits, and we have no idea who the Official Whatever of the NFL is, even though we seldom miss a Monday night game.
Actually, the metrics support sponsorships to reach very precisely targeted audiences. But hanging a brand name on an event or venue is a completely ineffective mass-appeal vehicle.
Of course, one of the main reasons companies sponsored the Olympics, the America's Cup or the Masters was so the chairman and ad manager could hobnob with the glitterati at the event. Corporate accountability will make that about as popular as Gulfstream jets and mega-million bank bonuses at Congressional hearings, at least for the time being.
Look for sponsorships to slip significantly. And evaluate your own carefully. If your target audience is participants or on-site spectators (the runners in a marathon or the fans actually in the stands at a NASCAR race, for example), a sponsorship might be an effective marketing tool. If you're after a broader audience, having your brand anointed as The Official Socket Wrench of Major League Baseball might not work too well.
4. TV: not dead, just different. This year's upfront was a telling picture of the state of broadcast television. The broadcast networks usually sell three-quarters of their inventory for the next year in the three or four weeks following the mid May extravaganza. This year they finally declared the upfront over in August, and half the inventory was still unsold. (See our recent article, "What if They Gave an Upfront and Nobody Came?")
As we noted in that post, TV is still the 500-pound gorilla of American media. Well, maybe the 400-pound gorilla these days. Adults 18+ watch an average of 309 minutes of non-time-shifted TV a day. Internet inroads? Last year TV viewing increased 1.2%. Trouble is, TV is no longer a mass-reach medium. Viewers are scattered among the more than 118 channels the average household receives.
So what's TV's great strength? Actually, there are four of them:
• TV is still the most-viewed/used medium of all.
• TV has become an effective targeting tool. There's probably not a lot of overlap between the audiences of The Food Network, Versus and VH-1.
• TV is the top of the funnel. The Pew Internet and American Life Project notes that while the bottom of the funnel is increasingly online, "Typically, traditional advertising triggers online search."
• TV is still the most effective brand-building medium. Online video may soon catch up, but for now no other medium can do as good a job at beginning a relational sales cycle.
5. Search is strong and getting stronger. Internet display advertising is down 12%. But paid search is down just 2%, a stronger performance than any other medium.
There's no reason to think the trend is going to change any time soon. Optimized and paid search are vitally important at the middle of the sales funnel, when prospects are gathering information, and at the business end of the funnel, when prospects select a source from which to buy.
Search itself is not an effective branding tool, but the web site to which it takes surfers should be. So search can, to some extent, help build brand equity.
The shift toward search is going to continue after the recession is over. The renewed focus on metrics will assure that. Search is likely to be the best marketing communications investment in the post-recession era.
6. Social media advertising is an idea whose time may never come. Not social media, social media advertising. Every company should have an effective social media presence. But an effective presence means participation in, not advertising on, social media. Social media offer a wonderful opportunity to interact with customers and prospects, a great – and inexpensive – attitudinal tracking tool and a chance to participate in real-people conservations about your brand.
Those ads at the right side of the Facebook page have never demonstrated the ability to move the needle for a brand. In fact, a lot of people never noticed that the ads are there. The results-oriented number crunching that went on during the recession may have put a permanent crimp in social media's previously upward trajectory as an ad vehicle.
So that leaves a social media presence. Many brands just don't generate enough emotional involvement to get a lot of followers. (See our earlier guest posting by new media guru David Harris, "They're Just Not That Into You.") David was posting about user-generated content, but what he says is equally applicable to social media. People just don't care enough about ketchup, chocolate milk powder, delivery services or diapers to follow them on Facebook or Twitter. If you're selling Tide, it might not be worth a lot of effort to get 2,632 laundry fanatics to follow your tweets.
However, if you market Harley Davidson, The Colbert Report, Modest Mouse or any other product, show, band or whatever that's really important to its customer base, social media is a great vehicle to leverage that audience involvement.
The mystique of social media is fading, and smart marketers will capitalize on the potential benefits of having a presence there and stop chasing the will-of-the-wisp of social media advertising effectiveness.
7. Mobile works, but only for place-based offers. A mobile user who gets a text message about a special offer at a Starbucks or Dunkin Donuts a block away may be persuaded to consider an unplanned cup of Joe. 26% of people who text have responded to an offer in the last month. The keys:
• An offer, not a branding message.
• Proximity. The retailer is close and convenient.
• Timeliness. The offer is good right now.
So far, mobile is primarily a retail communications tool. We're not aware of any branding campaigns which generated actual profits, not just attention.
Mobile will continue to grow, especially as more people watch video on their phones and PDAs. But it may be a while before it's useful outside a mile or so radius of the advertiser's business. Except during election years. We expect that the built-in geotargeting capabilities of mobile will be very popular with candidates in small election districts.
8. Get in the game. At least if you're a national advertiser. In-game advertising is likely to get a lot bigger fast. First, it's grown way beyond adolescent geeks. The Entertainment Software Association says 68% of American households play games. The fastest-growing demographic is female 55+. Video games may be the most effective reach vehicle for males 18-34.
True, a lot of newspapers didn't survive the recession. But predictions of the complete extinction of metro dailies appear to have been overstated. At least in the short term.
Yes, publishers are hemorrhaging money. The massive debt many of them took on to finance acquisitions before the economic collapse, the accelerated departure of display advertisers during the downturn and the migration of classifieds to the internet have combined to give a grim new meaning to "black and white and red all over."
But despite newspapers' financial problems, readers are still there. Fewer of them than previously, and the number is going nowhere but farther down. But they're there, and they're good prospects. Although there are fewer of them, newspaper readers continue to be a mass, relatively affluent, audience. And newspapers are effective at turning readers into customers for advertisers.
According to a study by MORI Research, 59% of adults say newspapers are the medium they use to plan their shopping and to make purchase decisions.
That's a metric no retailer can afford to ignore. Because at the bottom of the funnel, newspapers work. Being supplanted by the internet, you think? The same study found that the primary medium for checking out ads was almost twice as likely to be newspaper than online sources. And checking out ads is what folks do when they're ready to buy.
2. Online display may have peaked. Agencies and marketers fell all over themselves getting into internet advertising. No one seemed to worry about the fact that there was no evidence that banners or skyscrapers or buttons had any impact on target audiences. It was a learning experience, and they didn't want to be left behind.
One beneficial side effect of the recession was the introduction of a stiff dose of reality into marketing. And the metrics showed pretty clearly that display internet advertising isn't cost effective. A lot of those early adopters have adopted exit strategies. Despite predictions that internet display ads would somehow not participate in the advertising decline of the recession, they're down 12% in the last quarter according to IDC's "Worldwide and U.S. Internet Ad Spending Report." They're predicting continued declines at least through the end of the year.
Obviously online display ads will be around at the end of the recession. But they're not likely to regain their momentum.
3. Sponsorships will decline. A lot of research has shown that only serious fans and/or participants of an event give a flip about who sponsors it. That's not to say sponsorships don't work. They do, but the effect is limited. (See our article "Sponsorship Works" to see how to use sponsorships effectively for tightly-targeted audiences.)
Last week we pointed out that Buick dropped Tiger Woods as a spokesperson after an eight-year run which saw their sales fall 66%. They also walked away from their long-standing sponsorship of golf tournaments.
Now Lowe's is pulling out of its naming rights sponsorship of Charlotte Motor Speedway (Oops. We mean Lowe's Motor Speedway) after eleven years. Even NASCAR fans, arguably the most avid in U.S. sports, weren't buying hammers, chainsaws and siding because Lowe's hung their name on a track.
We suspect that being the Official Antiperspirant of the Olympics doesn't get the brand into many armpits, and we have no idea who the Official Whatever of the NFL is, even though we seldom miss a Monday night game.
Actually, the metrics support sponsorships to reach very precisely targeted audiences. But hanging a brand name on an event or venue is a completely ineffective mass-appeal vehicle.
Of course, one of the main reasons companies sponsored the Olympics, the America's Cup or the Masters was so the chairman and ad manager could hobnob with the glitterati at the event. Corporate accountability will make that about as popular as Gulfstream jets and mega-million bank bonuses at Congressional hearings, at least for the time being.
Look for sponsorships to slip significantly. And evaluate your own carefully. If your target audience is participants or on-site spectators (the runners in a marathon or the fans actually in the stands at a NASCAR race, for example), a sponsorship might be an effective marketing tool. If you're after a broader audience, having your brand anointed as The Official Socket Wrench of Major League Baseball might not work too well.
4. TV: not dead, just different. This year's upfront was a telling picture of the state of broadcast television. The broadcast networks usually sell three-quarters of their inventory for the next year in the three or four weeks following the mid May extravaganza. This year they finally declared the upfront over in August, and half the inventory was still unsold. (See our recent article, "What if They Gave an Upfront and Nobody Came?")
As we noted in that post, TV is still the 500-pound gorilla of American media. Well, maybe the 400-pound gorilla these days. Adults 18+ watch an average of 309 minutes of non-time-shifted TV a day. Internet inroads? Last year TV viewing increased 1.2%. Trouble is, TV is no longer a mass-reach medium. Viewers are scattered among the more than 118 channels the average household receives.
So what's TV's great strength? Actually, there are four of them:
• TV is still the most-viewed/used medium of all.
• TV has become an effective targeting tool. There's probably not a lot of overlap between the audiences of The Food Network, Versus and VH-1.
• TV is the top of the funnel. The Pew Internet and American Life Project notes that while the bottom of the funnel is increasingly online, "Typically, traditional advertising triggers online search."
• TV is still the most effective brand-building medium. Online video may soon catch up, but for now no other medium can do as good a job at beginning a relational sales cycle.
5. Search is strong and getting stronger. Internet display advertising is down 12%. But paid search is down just 2%, a stronger performance than any other medium.
There's no reason to think the trend is going to change any time soon. Optimized and paid search are vitally important at the middle of the sales funnel, when prospects are gathering information, and at the business end of the funnel, when prospects select a source from which to buy.
Search itself is not an effective branding tool, but the web site to which it takes surfers should be. So search can, to some extent, help build brand equity.
The shift toward search is going to continue after the recession is over. The renewed focus on metrics will assure that. Search is likely to be the best marketing communications investment in the post-recession era.
6. Social media advertising is an idea whose time may never come. Not social media, social media advertising. Every company should have an effective social media presence. But an effective presence means participation in, not advertising on, social media. Social media offer a wonderful opportunity to interact with customers and prospects, a great – and inexpensive – attitudinal tracking tool and a chance to participate in real-people conservations about your brand.
Those ads at the right side of the Facebook page have never demonstrated the ability to move the needle for a brand. In fact, a lot of people never noticed that the ads are there. The results-oriented number crunching that went on during the recession may have put a permanent crimp in social media's previously upward trajectory as an ad vehicle.
So that leaves a social media presence. Many brands just don't generate enough emotional involvement to get a lot of followers. (See our earlier guest posting by new media guru David Harris, "They're Just Not That Into You.") David was posting about user-generated content, but what he says is equally applicable to social media. People just don't care enough about ketchup, chocolate milk powder, delivery services or diapers to follow them on Facebook or Twitter. If you're selling Tide, it might not be worth a lot of effort to get 2,632 laundry fanatics to follow your tweets.
However, if you market Harley Davidson, The Colbert Report, Modest Mouse or any other product, show, band or whatever that's really important to its customer base, social media is a great vehicle to leverage that audience involvement.
The mystique of social media is fading, and smart marketers will capitalize on the potential benefits of having a presence there and stop chasing the will-of-the-wisp of social media advertising effectiveness.
7. Mobile works, but only for place-based offers. A mobile user who gets a text message about a special offer at a Starbucks or Dunkin Donuts a block away may be persuaded to consider an unplanned cup of Joe. 26% of people who text have responded to an offer in the last month. The keys:
• An offer, not a branding message.
• Proximity. The retailer is close and convenient.
• Timeliness. The offer is good right now.
So far, mobile is primarily a retail communications tool. We're not aware of any branding campaigns which generated actual profits, not just attention.
Mobile will continue to grow, especially as more people watch video on their phones and PDAs. But it may be a while before it's useful outside a mile or so radius of the advertiser's business. Except during election years. We expect that the built-in geotargeting capabilities of mobile will be very popular with candidates in small election districts.
8. Get in the game. At least if you're a national advertiser. In-game advertising is likely to get a lot bigger fast. First, it's grown way beyond adolescent geeks. The Entertainment Software Association says 68% of American households play games. The fastest-growing demographic is female 55+. Video games may be the most effective reach vehicle for males 18-34.
So far, in-game advertising is not an option for local or regional marketers, but hopefully addressability will come to gaming just as it's coming to TV commercials, and smaller brands will be able to participate on a geotargeted basis.
9. Take advantage of the decline of direct mail. The number of pieces mailed last year dropped by 12.1%, according to Mintel Comperemedia, and the Direct Marketing Association is projecting another 10% drop this year.
In some industries the decline was massive. There were 3.8 billion fewer mailers for credit cards and 3.6 billion fewer for loans and mortgages. Those steep drops reflect more than the turmoil in the banking sector. They were caused, at least in part, by the slipping effectiveness of direct mail offers for financial services. Credit card offers typically pull 0.2%. That decimal point is not misplaced. That's two responses per thousand mailings.
Overall, the Direct Marketing Association reports a 2.61% average response rate in more than one thousand direct mail campaigns they studied across a broad spectrum of industries.
The beginning of the recovery might be a good time to use direct mail. There are billions fewer pieces going out, so there's less clutter in prospects' mailboxes. With list rental, creative, production and postage, it's possible to put a mailer into a prospect's hand for around $1 (depending on the size of the mailing). At a 2.61% average response rate, that works out to a cost of $38.31 per sale. Not so good if you're selling laundry detergent. Great for any big ticket B2B or B2C product or service.
The upside opportunity? Two of our mailers have delivered 54% response rates. These were expensive dimensional mailers sent to small, very precisely targeted lists. Creative costs, production and postage were more than $100 per recipient for one. But it generated more than $10 million in profit.
Have other thoughts about media in the post-recession era? Please share them in our comments section. We welcome disagreement, amplification and corrections.
To find out more about marketing in the present economic environment – or in the very different environment that's about to begin – call BrainPosse at 865-330-0055 or click here.
Next week:
9. Take advantage of the decline of direct mail. The number of pieces mailed last year dropped by 12.1%, according to Mintel Comperemedia, and the Direct Marketing Association is projecting another 10% drop this year.
In some industries the decline was massive. There were 3.8 billion fewer mailers for credit cards and 3.6 billion fewer for loans and mortgages. Those steep drops reflect more than the turmoil in the banking sector. They were caused, at least in part, by the slipping effectiveness of direct mail offers for financial services. Credit card offers typically pull 0.2%. That decimal point is not misplaced. That's two responses per thousand mailings.
Overall, the Direct Marketing Association reports a 2.61% average response rate in more than one thousand direct mail campaigns they studied across a broad spectrum of industries.
The beginning of the recovery might be a good time to use direct mail. There are billions fewer pieces going out, so there's less clutter in prospects' mailboxes. With list rental, creative, production and postage, it's possible to put a mailer into a prospect's hand for around $1 (depending on the size of the mailing). At a 2.61% average response rate, that works out to a cost of $38.31 per sale. Not so good if you're selling laundry detergent. Great for any big ticket B2B or B2C product or service.
The upside opportunity? Two of our mailers have delivered 54% response rates. These were expensive dimensional mailers sent to small, very precisely targeted lists. Creative costs, production and postage were more than $100 per recipient for one. But it generated more than $10 million in profit.
Have other thoughts about media in the post-recession era? Please share them in our comments section. We welcome disagreement, amplification and corrections.
To find out more about marketing in the present economic environment – or in the very different environment that's about to begin – call BrainPosse at 865-330-0055 or click here.
Next week:
Part 4 – Motivation
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