Tuesday, February 1, 2011

Estimates on Changes in Promotion Spending for 2011

I just finished reading Richard Levey's January 26, 2011 post on Chief Marketer entitled "Acquisition Spending, Direct Mail on the Rise: Winterberry Report."

He reports that Bruce Biegel writes "...that mail as an ad medium has seen a resurgence of late, and will continue to do so." A very different story than was written in 2009 by this same group.

Of greater interest to me as an association marketer is that  in 2010 marketers spent $154.4 billion for direct and digital advertising. In 2011, direct and digital expenditures will rise to $163.9 billion, taking money from "traditional channels" like TV, radio and space ad. Interesting to note that the within the 2010 rise digital spending realized the biggest jump—8.5%—winding up at $27.7 billion.

Biegel sees direct and digital channels as making gains, with overall spending on these channels expected to rise by 6.2%, racking up $163.9 billion in expenditures. Direct mail will grow by a healthy 5.8%, to $47.8 billion.

Among other channels, direct response broadcast is anticipated as jumping by 7.6%, to $25.4 billion, and digital spending will show the largest growth – 14%, to $31.6 billion.

When marketing budgets expand, however, digital mediums are claiming most of the increases. Email, search and mobile marketing led the pack when Winterberry asked marketers which channels were capturing new spending.

But WHY is this of interest to us?

Several reasons:
1) Those marketers with the biggest budgets are moving their spending from horizontal channels to vertical channels. Not "new news," but something to remember when we as association marketers. We must invest in the tools that will help us identify the horizontal markets within our horizontal market. That means invest in your CRM. It is that tool that will help you the most in being able to identify AND capitalize on the nuances within your markets.

2) Buying is a learned behavior. As more and more dollars are spent on selling products and educating markets through the mail and the Internet, more and more of our prospects, members and customers will come to DEPEND on these mediums to help them make their purchases. We know, when selecting lists, that a direct mail response list outperforms a compiled list...for the same reason.

Levey reports that Begel estimates that in "....2011, spending on (e-mail) will jump 18.1% to $1.6 billion. As a retention vehicle, e-mail remains marketers’ most cost effective medium. Search spending is also expected to increase by 13%, to $17.6 billion. And finally, spending on social media is projected to jump 35.4% to $1.6 billion. The year will also see leaps in analytic capabilities, mobile advertising (estimated at $1.2 billion which is a 30.8% rise from 2010’s level) driven by coupon use and improvements location-based targeting.

As a consumer, 10 years ago I would see an ad about a product, maybe ask one or two friends about it, call the company, maybe then place an order or send in the solo direct mail piece or the catalog I received.

Now, I receive the email/solo dm/catalog, look it up on line, ask my 500+ friends on FB, Twitter about it, STILL call the company, and then I'll buy perhaps using the catalog, phone, email/website or the solo dm piece.

In 2 years, I may do this all by my 'smart' phone.

HERE IT IS! I'm learning a new buying behavior. And if an association wants me to join or buy a product, since they don't know what my PREFERED BUYING BEHAVIOR IS, you better be equally good on all fronts.

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