Three key themes playing out in the news right now raise critical questions about how the media landscape is going to shift because of the economic downturn.
Masked within the traditional “old media transitions to new media” debate are more nuanced questions about the relationship between investment in brand development and investment in response-based media, such as search.
Item 1 is a ominous forecast from Jack Myer’s Media Business Report calling for three years of decline in advertising spending. According to Myer’s forecast, media company advertising will have declined from $234.7 billion in 2007 to $187.7 billion in 2010, a 20% total decline.
The decline represents uncharted waters for everyone involved in marketing and media. Over the past 10 years, we’ve experienced a explosion of media and an unprecedented period of innovation in alternative channels. With such a substantial contraction in media spending, the primary emphasis will be on driving awareness that translates into action that translates into sales: the traditional marketing supply chain that has been efficiently serviced by mass media, local media and multiple distribution channels for the past 50 years.
So much has changed in composition of the media landscape that it’s fair to wonder who will the new winners be in this contraction.
Item 2 is several recent reports about the performance of the search marketplace, which is reportedly experiencing weakness driven by reduced consumer activity.
The Wall Street Journal reported today that Google’s outlook for the first quarter appears to be challenged, and may result in the first sequential quarterly revenue decline in the company’s history. The Journal story connects comments by Google’s CEO Eric Schmidt last week that suggested the business climate was challenging to a conversation the Journal had with the president of search marketer Didit.com:
Kevin Lee, president of search engine marketer Didit.com, said U.S consumers are “searching less” for various types of products. Lee, who runs one of the largest search engine marketing groups, said search advertising spending by his U.S. clients so far this quarter was flat or down year-over-year, with some clients showing marked drops due to “click supply issues.”
“Ad spending is notably lower than we expected during planning last fall. Overall, we would imagine that Google’s revenue growth is slowing markedly and if economic contraction continues there might actually be a year-over-year decline,” said Lee.
Niki Scevak of Bronte Media does an excellent job of analyzing the shift in the search market in two recent posts, here and here. In a discussion of search marketing trends at search agency Rimm-Kauffman, he shares an intriguing chart that looks at the decline of brand-specific search terms over a several month period.
The trend shows performance of the brand-specific terms declining 70% from their peak 8 months before. While the analysis is influenced by many different factors beyond consumer demand, it does provide a directional indicator that helps to support what common sense says is happening: consumers are buying less, so they are inquiring less about products.
Item 3 is the release of Razorfish’s Digital Outlook, an overview of their take on the development of digital marketing. Razorfish points to three major trends over the past year: an increasing reliance on search and on vertical sites to accomplish marketing goals; a decreasing reliance on portals and a flattening of social media advertising; and a significant increase in what they call Social Influence Marketing.
In discussing Social Influence Marketing, Razorfish uses language and describes an approach that has been at the core of specialty and enthusiast products for a long time: engage in an authentic and interactive dialogue with your market, and focus on the influencers, because they’ll drive the most impact for your brand.
What is different today, and what Razorfish is clearly focusing its development on, is the ability to truly measure the networked impact on the influencers, and to create massive networks around products and brands. These are exciting tools, and, when they are used the wrong way, can have a big impact (witness the Skittles/Twitter one-day experiment.)
The reality of search marketing is that is a distribution channel for satisfying demand.
In a robust market, as we’ve experienced for the past five years, demand is so ubiquitous and built-in, that many product and services beneftted by creating a strong search presence. In some cases, they’ve shirked on developing the kind of powerful marketing that drives DEMAND for brands: display advertising, network influence and clear pricing strategies.
One by-product of these difficult economic times is that companies are going to have to go back and rewrite their marketing playbook, starting with the question of how do we tell our product story to create incremental demand. Then they will ask how to capture that demand within their distribution channels. Search is powerful in that instance. But it’s not the demand creator that brands are going to need in this marketplace.
A little more context on the fallibility of experts, in a review by Louis Menand of Tetlock’s book “Expert Political Judgement: How Good Is It? How Can We Know?” in The New Yorker.
