AD Spending Falls Again. Is that a Good Thing?

It’s all relative.

One of the reasons may be a recent internet posting I read that stated that niches are irrelevant. It made me laugh. By not understanding that understanding your segments (niches) is vital, you make your advertising irrelevant and thus it becomes less effective and people don’t buy what you are selling.

Thus, a lesson in knowing that relevancy today is THE key metric that makes people want to buy what you have to sell.

Stated concisely: talk to me like you understand me and I am much more likely to respond to your advertising and buy your products/services.

Some advertising “professionals” simply don’t get it. Advertising and marketing today is a bottom-line, P&L function with C-level attention, not an “expense” that must be incurred.

United States advertising spending has fallen for the second quarter in a row, which hasn’t happened since 2001. And that has some people acting as if the sky is falling.

But it’s actually a good thing.

Advertising spending in the US measures the dollars spent in traditional paid media … newspapers, magazines, television and radio. And while it is true that advertising has fallen in these areas, smart American companies are devoting more and more of their efforts to the “new” media … word of mouth, conversational marketing, and such new and exciting outlets as YouTube.

The Mobile Marketing Association says that by 2008 nearly 89% of brands will use text and multimedia messaging to reach their audiences. Nearly one-third are planning to spend more than 10% of their marketing budgets on advertising in the medium. Again, that’s just by 2008.

The baby boomer generation will grow by 25% in the next decade. As our population ages, it will become more multicultural and increasingly cynical toward traditional sales messages. Much like GEN Y.

If you don’t understand “social” media, now’s the time to start learning. Because consumers want product information, but not necessarily advertising. Perhaps the most important role any company can play now is to get out of the way and let that happen. Consider using word of mouth as media. It’s all about creating generations of conversation. Remember this thought … awareness + worth of mouth = results.

The natural order of things is changing in marketing and advertising. While it isn’t surprising that “traditional” media spending is down, online ad spending is up nearly 33%, according to 24/7 Real Media, Inc. That means that marketers need to understand digital media options and how to design for the “new” media.

Since we’re in a period of transition, it might be wise to consider integrating the “old” with the “new.” I’ve often recommended doing “split” direct mail, in which one audience receives one message about a product or service, and another receives a different one. Then we measure which message works best. Sometimes there’s no clear-cut winner.

In some cases, using both old and new media may be the best tack. Combining direct mail with a dedicated microsite, for instance, is a very workable and sensible way to integrate both offline and online media. Again, though, the message, however it’s communicated, must be relevant to the audience.

Automobile makers market to people of nearly all ages. Clearly, though, the top of the line, $50,000 luxury sedan is not intended for the recent college graduate. The same automaker, however, probably manufactures another vehicle that is desirable to the younger audience. You’re not often going to find both audiences reading the same magazines or watching the same television shows, so you might want to target the young audience through a viral marketing campaign and the more mature audience through magazines such as AARP. The intent is the same … to sell cars. The message will differ. Automakers are among those leading the way in moving dollars to customer relationship marketing and word of mouth.

Must every single potential page in the vast universe of the web try to sell you something? No, but if you’re not investing in the web as a direct response marketing tool, you’re missing the boat. Don’t think your kids are just communicating with each other when they’re online … they’re seeing and responding to the “new” advertising.

The winds of change aren’t just blowing. It’s getting downright gusty in here!

Grant Johnson

Johnson Direct LLC

800-710-2750

5 Comments

  1. Somewhat audacious but counter-intuitive to claim there are no niches. After all, AARP aren’t selling to Gen Y, although they’ve made inroads with Gen X.

    As for the baby boom, their numbers are not increasing by any percentage. The percentage change in their numbers will be increasingly negative as time passes. And it’s not an aging population that grows more multicultural and cynical towards traditional sales messages, it’s the younger cohorts who constitute the new center of gravity for spending. But this is a truth for all time: you can’t step in the same river twice.

    Your points about new media are well-taken, although I don’t know how much has yet been tested empirically. It’s still theology.

  2. Robert: You are correct. It is a “nichetorious” world; how I sell and what I say to families would be different than single folks. As for new media and testing, we must continue to test and see what the best mix — old and new — is to optimize ROI.

    Thanks for the response.

    Grant

  3. Speaking of Gen Y and younger, what’s your take on the mass exodus from MySpace to facebook? Or would you bypass both and attempt something viral in YouTube? Then there’s Google’s ultra fine-tuned ad placement service. To what extent would you use that?

  4. Well, MySpace is becoming more of a general media outlet, and Facebook still focuses more on Gen Y. YouTube will continue to see growth, in my opinion, because it is so interactive and individual-specific. Google continues to get better because they think like direct marketers.

    As for the right way to go, it’s simple: test, test, test to determine what works best in each specific situation.

    Thanks for stopping by again.

    Grant

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