Media Usage Forecast 2014

More marketers are spending more money (and time) with email, social media and paid/organic search marketing than ever before, according to the responses to our "2014 Media Usage Survey." As one B-to-C respondent sees it, there is "potential for more cost-effective growth online than in the mail." On the other hand, there's a countermove of companies who see a rising tide of what one B-to-B respondent calls "too much noise in the digital world," and they're pushing back with more direct mail and telemarketing spending. Which channels are they using? Which do they say have the best ROI? What factors have influenced changes in their direct marketing programs from 2013 to 2014? Read on to find out. Who Has Money to Market? Turns out, many marketers do. As you can see in Chart 1, just about a third of respondents are increasing budgets in 2014, and large pluralities in each segment are holding budgets steady. That's more increasing budgets and fewer flat ones than were reported in 2013. For the most part, fewer respondents in B-to-B and "Both" reported decreasing budgets. ("Both" companies market to B-to-B and B-to-C customers.) The outlook isn't as rosy in B-to-C, where 20 percent project decreases in 2014—that's significantly higher than the 14 percent last year. One interesting trend not shown in these charts is more marketers report they are increasing acquisition budgets than retention budgets. In the survey, we ask the question in Chart 1 two more times, specifically for retention and acquisition budgets. B-to-B marketers foresee a 45 percent rise in acquisition budgets, but only 30 percent are increasing retention. It's similar for B-to-C (42 percent vs. 34 percent) and Both (40 percent vs. 33 percent). A couple years ago, marketers were playing defense and increasing retention spending. This year, they appear to be back on the hunt to increase market share. While most responders appear back to non-recession spending, tight budgets still hamper some. For example, one B-to-C respondent says a "reduced integrated advertising budget pushes our shift from print to online advertising. This also increases the advertising ROI." As mentioned earlier, there is a continuing rise in email, social and search marketing. And one thing all of these media have in common is they don't have obvious hard costs. They all certainly have a price, and most of them cost a good deal more than they appear to—especially if you're looking to create a bunch of high-quality content to make your site "go viral" on social media and show up high on search engine results. But in all of those channels, the emphasis of the strategy is on enthusiasm, interaction and effort, not budget spent. This nuance shows up in the open responses about what factors influenced 2014 budget changes. Where these responses mentioned decreased ROI/sales/conversions/budgets, they often spoke of switching to more digital advertising as a result. For example, one B-to-C marketer says, "We have consistently experienced low return on direct mail, our budget has decreased and our focus is shifting." Another says, "Reduced integrated advertising budget pushes [us to] shift from print to online advertising. This also increases the advertising ROI." That's not to say online marketing is cheaper or more successful for all marketers. Clearly, many respondents find direct mail to be very profitable. But where marketers are still feeling a squeeze, they seem more likely to A) try the new technology, and B) try tactics that don't seem to require as much investment in obvious costs, like printing and postage. That leads directly into one of the shifts evident in this year's survey. Digital Is Still Rising There seems to be a continuing shift to digital by many of our responding marketers, and a counter shift of a smaller number of marketers who say they're moving more money from digital to direct mail and other traditional channels to take advantage of the lower volume and higher engagement they report there. That dichotomy can be seen in Chart 2, where we can calculate from the "do not use" answers just how many marketers are using each channel. By those numbers, here are the top five channels by percentage of respondents using them (either increasing, decreasing or maintaining current budget): 96 percent use email 90 percent use social media ("organic social," not paid ads) 88 percent use SEO (organic search) 82 percent use SEM (paid search) 80 percent use direct mail Comparing that to recent years' surveys, email continues to be used by just about every marketer who responded, and Chart 3 shows how satisfied most continue to be with the channel. Social media has risen to No. 2—despite continued naysayers in many quarters—and both arms of search marketing come in right behind it. In each of those channels, 49 percent or more report increasing budgets. That's four major digital marketing channels now being used by more responding marketers than direct mail, and many respondents cite customer preference as the reason why. One B-to-C marketer says its 2014 budget shift is driven by "the evolution of Web technology and customer expectations. The modern consumer expects a lot more for their money." A B-to-C marketer moving money out of traditional and into digital says it's "how people wish to be communicated with." Another who works with Both says (caps are the respondent's): "WHEN CALLING CUSTOMERS, THEY WOULD RATHER YOU EMAIL OR TEXT INFORMATION THAN TALKING ON THE PHONE. THEY [WOULD] RATHER SEE THAN SPEAK." Perhaps that is part of the reason direct mail is being used by 80 percent of our respondents, and nearly 70 percent say they are increasing the investment or keeping it the same. That comes in just below the top digital channels, and just a smidgen below where it was last year and the year before. According to one B-to-B marketer, "Way too much noise in the digital world is driving us to use strategic direct mail much more in order to get our message through." What's more, in Chart 3, direct mail comes in as the second most popular answer for "Which channel has the highest ROI?" for every marketer type and activity. So, while digital is rising, mail is not fading, according to the numbers. Content Carries On There is a unifying theme to No. 2 through No. 4 of the most-used media in the list above: Social and search both benefit greatly from content marketing, which was the big new trend in the "2013 Media Usage Survey." Well, content marketing hasn't cooled off over the past 12 months. Last year, we included a chart much like Chart 2, but asking which "technologies and tactics" marketers were investing in. This year, there wasn't room for that chart in print, but we still asked the question. Once again, content marketing leaped out of the data: 89 percent of respondents are engaging in content marketing in 2014, and 65 percent will increase the investment over last year. That's the stuff that makes search and social marketing run, so it's no surprise to see those channels creep up the list when content marketing has become such an essential tactic. In fact, with the changes to Google's algorithms throughout 2013, content marketing could be considered as much an SEO investment as it is an investment in social, lead generation or any other typically content-related marketing tactic. "We are just beginning to implement an inbound marketing strategy, which has lead [sic] us to focus more time and budget on content, social media and blogging," says one B-to-B marketer. Another cites "Demand generation strategy with content marketing" as the sole reason for this year's budget changes. A couple Both marketers say their budgets are being driven by "the effectiveness of valuable content" and "the need for more content marketing." More and more, it seems direct marketing has become a game where you have to give to receive. Which Channels Look Most Effective in 2014? We've discussed where the money is moving, but Chart 4 and Chart 3 paint a somewhat different picture of what media is being used for which activities, and which channels marketers think provide the highest ROI. In both of those charts, email is still the top marketing channel, but old-school marketing fares better than the other digital channels. Looking beyond this survey, we still regularly hear "email is dying" from marketing thought leaders on the Web and at conventions. But evidence like the survey responses in Chart 3 suggests otherwise—perhaps that worrying is even a little crying wolf, or wishful thinking. Marketers who responded to this survey clearly considered email essential to their strategies. Not only did 97 percent say they use email, but Chart 4 shows most use it for both retention and acquisition. And in Chart 3, we can see that a plurality—in some cases even a majority—of respondents in every line of business say email provides the highest ROI for both acquisition and retention marketing. Some marketers talked about a decline in email performance, including one who notes "email opens have dramatically reduced." But many more credited improved email technology, know-how and capabilities (such as video in email) with lifting response in that channel. Direct mail fares almost as well as email in these charts, coming in second across the board for ROI. And it's the only channel besides email that more than half of marketers intend to use for both acquisition and retention in 2014. When you consider the difference in up-front expense between mailing and emailing, that performance is still very impressive. Direct mail can be called the leading obvious-cost marketing media. One other channel we haven't talked much about that also shines in Chart 3 is telemarketing. What kind of company lists the phone as its top-ROI channel? Mostly B-to-B companies with personal service and high lifetime values. As one B-to-B marketer put it, "We have a tight relationship with each client, so mass marketing has limited appeal for anything we do. Ninety-eight percent of our clients come from outbound telemarketing, 2 percent from referrals, none from our website or direct mail." That appeal made telemarketing the third most-cited channel for top B-to-B ROI. The fact that so many marketers call telemarketing their highest ROI channel, not to mention the ones who cited Web advertising or affiliate marketing, proves that marketing media selection is not a one-size-fits-most proposition. For any individual marketer, the unique features of their markets and business models determine the best media mixes to use. But hopefully with this information, you can build a clearer picture of what other marketers are doing, and what your target customers are seeing across their multichannel media world. Methodology Target Marketing conducted this survey in January 2014 by emailing a questionnaire to approximately 46,000 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 emails were sent between Jan. 8 and Jan. 23. Survey results are based on the participation of 349 respondents (for a response rate of 0.75 percent). Of the respondents to this year's survey, 43 percent described their companies' activities as B-to-B, 25 percent as B-to-C and 32 percent as Both. Respondents' job functions include: corporate and general management (22 percent); marketing and sales management (57 percent); operations/fulfillment management (4 percent); e-commerce management (3 percent), lists/database/circulation management (2 percent) and other (12 percent). Respondents reported annual direct marketing expenditures as follows: less than $100,000 (43 percent); $100,000 to $499,999 (17 percent); $500,000 to $999,999 (9 percent); $1 million to $5 million (10 percent); more than $5 million (8 percent); and don't know (13 percent). Chart totals may not equal 100 percent due to rounding.

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Media Usage Forecast 2014

Thorin McGee

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Thorin McGee