2009
Digital Marketing Outlook Presented by: The Society of Digital Agencies
Fizz or Foam? :: The outlook for digital marketing in 2009 Executive Summary As the dark clouds of the economy envelope the marketing world, many wonder if digital marketing may be a ray of sunshine in the gloom. To find out, the Society of Digital Agencies conducted a broad survey of traditional and digital agencies as well as brands, digital vendors and even freelance digital experts. The news clearly shows that the digital marketing industry is strong and growing with over 81% of survey respondents planning to invest the same or more into digital marketing this year despite the economic downturn. Agencies and brands alike see an increase in the overall dollars spent on digital in 2009, although at a slower growth rate than before. With investments in other media decreasing across the board, this means that digital marketing is gaining a significant share of the pie at the expense of traditional media. Both traditional and digital agencies believe that there will be the same or more digital marketing work in 2009 than in years past. Most brands see the same or greater digital spending, and follow up interviews reveal that while digital marketing budgets are by and large intact so far, brand decision makers are very cautious. Society of Digital Agencies - 2009 Digital Marketing Outlook
Fizz or Foam? :: The outlook for digital marketing in 2009 Executive Summary (continued) Brands are not only being cautious about spending, many are also reducing their digital work forces. However traditional and digital agencies are at the same time hiring digital staffers, potentially indicating a move by brands to outsource more digital work. When asked what the focus for their digital spending would be in 2009 both brands and agencies cited digital infrastructure, such as websites, as one of their top digital priorities. This indicates the recognition of the influence that a brandʼs digital ecosystem will increasingly have on their customers and prospects. On balance the evidence suggests that despite the drastic effects of the crisis on marketing in general, the digital arena is suffering less. At SoDA we believe this is because of the growing importance, accountability, and effectiveness of digital marketing, and this survey reflects the digital industryʼs confidence in its ability to weather the storm.
Society of Digital Agencies - 2009 Digital Marketing Outlook
Compared to last year, are you projecting an increase or decrease in the amount of digital projects/work in the current economy? % of Survey Respondents
70% 60% 50%
Digital Advertising/Marketing Agency Traditional Advertising Agency Vendor/Service Provider in the Digital Industry Corporate brand Freelance/Independent
40% 30% 20% 10% 0% Significantly less
Less
Roughly the same
More
Significantly more
“So don't expect as many flashy advertising campaigns on TV in 2009, as the ROI from such campaigns is
pure guesswork. The smart companies will be using highly measurable low-cost digital marketing techniques to drive profitable real-time ‘recessionary marketing tactics' focused on tightly-defined market segments.” - BI & CRM, Bloor Research,December 22, 2008, www.it-director.com/business/content.php?cid=10970
Society of Digital Agencies - 2009 Digital Marketing Outlook
MORE Taste LESS Filling As you can see in the previous slide, both traditional and digital agencies believe that there will be more digital marketing work than in years past. However, brands are fairly evenly split between less, the same, and more. Our follow up interviews reveal that while digital marketing budgets are staying intact by and large, decision makers are cautious to pull the trigger on new projects just yet. Most are waiting to make sure additional budget cuts are not required, but expect projects to kick off later in the first quarter. In the interviews, marketers also revealed that while new long term projects are being cautiously delayed, immediate result spending such as paid search placement is seeing only modest reduction. Most reduction is based upon short feedback loops that show lead conversion rates changing in certain industries. Society of Digital Agencies - 2009 Digital Marketing Outlook
Multiple Sources Confirm SoDA’s Data Further research for the 2009 Digital Marketing Outlook has returned consistent results from multiple sources. All projecting the trend in allocation of budgets for Digital Marketing.
% of Digital Marketing Budget Increase
10%
9%
10% 8%
7%
5% 3% 0%
Forrester Research
PFJ
Winterbury Group
Sources: Forrester Research; Business Strata, a Division of THOMSON Local, February 9, 2009; www.zimbio.com PFJ: Phee Farrer Jones; January 30, 2009; www.pfj.co.uk/news/media-agency/1492-itv-shelves-tv-production-asmarketing-expenditure-continues-to-dwindle Winterburry Group: Outlook 2009: What to Expect in Direct & Digital Marketing; DMCNY 2009 January Luncheon Summary
Society of Digital Agencies - 2009 Digital Marketing Outlook
Advertiser Optimism Next Six Months Majority of Advertisers Plan to Increase Digital Marketing Spend AGENCY INCREASE
MAINTAIN
MARKETER DECREASE
INCREASE
MAINTAIN
DECREASE
Broadcast TV
14%
51%
35%
19%
26%
55%
Cable TV
27%
55%
18%
24%
42%
33%
Local Newspapers
5%
38%
57%
4%
32%
64%
Magazines
16%
34%
49%
11%
30%
59%
Mobile
52%
35%
13%
58%
16%
26%
National Newspapers
4%
42%
54%
7%
21%
71%
Online Display
51%
33%
17%
52%
30%
17%
Online Research
56%
34%
10%
47%
42%
11%
Outdoor
21%
57%
22%
8%
48%
44%
Radio
16%
47%
38%
27%
31%
42%
Society of Digital Agencies - 2009 Digital Marketing Outlook
Red: More will Decrease than Increase Ad Spending Next Six Months Green: More will Increase than Decrease Ad Spending Next Six Months
*2009 Advertiser Optimism Report, February 2009
Change in Online Marketing Spending in 2009 According to Senior Marketing Executives Worldwide (% of respondents) INCREASE
FLAT
DECREASE
Word-of-Mouth/ Social Media
77%
12%
11%
Search Marketing
76%
18%
7%
Mobile Marketing
75%
14%
11%
Behavioral/Contextual Marketing
70%
22%
7%
Lead Generation
63%
29%
9%
CRM/Analytics
60%
31%
9%
Video Advertising
60%
24%
16%
Email Marketing
58%
31%
11%
Online Gaming
51%
30%
18%
Online Media Buying/Planning
47%
40%
13%
Affiliate Marketing
46%
35%
19%
Web Development
39%
38%
23%
Market Research
27%
50%
23%
Display Advertising
26%
29%
45%
Society of Digital Agencies - 2009 Digital Marketing Outlook
Note: Numbers may not add up to %100 due to rounding. - Ad Media Partners, January 28, 2009; Posted on www.emarketer.com
Has your company increased or decreased personnel in the areas that support digital marketing initiatives? 80%
% of Survey Respondents
69% 57% 46% 34% 23% 11% 0% Decreased and may decrease further
Decreased but currently hiring
Stayed the same
Stayed the same but currently hiring
Digital Advertising/Marketing Agency Vendor/Service Provider in the Digital Industry Freelance/Independent Society of Digital Agencies - 2009 Digital Marketing Outlook
Increased
Increased and currently hiring
Traditional Advertising Agency Corporate brand
WHERE is the TALENT going?
Brands 40%
28%
Here is another way of looking at the data from the previous slide. As you can see, by and large corporate brands are reducing their talent pools while both traditional and digital agencies are hiring new digital talent.
32%
With brands holding the largest portion of the talent pool however, expect the supply of talent to be considerably better than in recent years and compensation for positions falling slightly.
Agencies 12% 59% 29%
Decrease
Same
Society of Digital Agencies - 2009 Digital Marketing Outlook
Increase
Compared to last year, are you (or your clients) shifting funds from traditional to digital media?
Digital Advertising/Marketing Agency
Traditional Advertising Agncy
Vendor/Service Provider in the Digital Industry
Corporate brand
No shift in % of budget for digital Digital increasing by 1% to 29% Digital increasing by 30% or more
Freelancer/Independent
20%
40%
60%
80%
% of Respondents
Society of Digital Agencies - 2009 Digital Marketing Outlook
STILL GROWING but SLOWER 60% 45% 30% 15%
With digital budgets on average holding even or growing over previous years, it appears that agency confidence to hire talent is warranted. While the increase in overall dollars spent on digital marketing will be less than in previous years, this should still be a growth year for digital marketing.
No shift in % of budget for digital Digital increasing by 1% to 29% Digital increasing by 30% or more
“As a CMO from a leading world-wide analytics company stated "When we did the numbers, overnight we increased our digital marketing spend from 12% to 30% of our marketing budget. The results were too compelling."
-- BI & CRM, Bloor Research,December 22, 2008, www.it-director.com/business/content.php?cid=10970
Society of Digital Agencies - 2009 Digital Marketing Outlook
A BIGGER Piece of A SMALLER Pie The contrasting forces of marketing budgets contracting worldwide while digital marketing initiatives gain a growing share of overall budget means that we will most likely see only modest growth of digital marketing overall (less than 10%). Digital marketing spend for many industries will remain flat or be reduced based on the economic trends of the industry in question
Digital
Other
Digital
Other
Marketing Expenditure Trends Society of Digital Agencies - 2009 Digital Marketing Outlook
How do you believe the current economic challenges will affect the digital marketing industry in the long run? 70% 60% 50% 40% 30% 20% 10% 0% Slow Growth
Little Effect
Digital Advertising/Marketing Agency Vendor/Service Provider in the Digital Industry Freelance/Independent
Society of Digital Agencies - 2009 Digital Marketing Outlook
Increase of Digital Marketing Use Traditional Advertising Agency Corporate brand
UNANIMOUS DECISION One thing everyone agreed upon was that the economic crisis will accelerate the shift of focus and importance from traditional media to digital media. The combination of accountability, convergence and the infusion of digital media into every facet of life make the future look very bright for digital marketers of every kind. Additional feedback on the reasons for this included: • Better Accountability/Tracking • Improved Customer Relations • Two-way Communication • Lower Costs • More Scalable Budgets • Able to Target More Accurately • Required to Reach Younger Demo • Easier to Integrate into CRM Society of Digital Agencies - 2009 Digital Marketing Outlook
Which of the following are top priority in 2009? 50% of survey respondents consider Digital Infrastructure, which includes websites and online tools, to be their top priority. TOP PRIORITY
IMPORTANT
LOW PRIORITY
Digital Infrastructure
51.5%
42.8%
5.7%
Digital Advertising
32.8%
48.3%
18.9%
Search Optimization
32.5%
45.9%
21.6%
Social Networks/Applications
26.9%
50.1%
23%
Mobile
20.4%
42.9%
36.7%
Blogging Integration
17.4%
45.3%
37.3%
Viral Campaigns
18.1%
43%
38.9%
Blogger Outreach
15.8%
44.8%
39.4%
Email Marketing
16.5%
38.9%
44.6%
Widgets
7.7%
37.2%
55.1%
Society of Digital Agencies - 2009 Digital Marketing Outlook
A just-released survey from eMetrics Marketing Optimization Summit reported that businesses plan to increase or maintain their budgets for: Email, Online Advertising, Keyword Search Campaigns, Social Media, and Video Advertising. - Economic Outlook for 2009 and Its Impact on Marketing Budgets, www.scribd.com/doc/9620761/2009Marketing-Budgets
TOP SPENDING PRIORITIES The top initiatives for most respondents in 2009 were:
•
Digital Infrastructure (websites, tools, etc)
• • • •
Digital Advertising Search Optimization Social Media & Blogs Mobile
The first three initiatives represented the bulk of where budgets will be invested, while social media and mobile are still in the investigation and evaluation phase for many organizations. As these platforms become more proven with clear ROI, they will continue to increase their share of future digital marketing budgets.
Society of Digital Agencies - 2009 Digital Marketing Outlook
Which tools / products will you or your organization use in 2009 Aptana Blogger Coda Dreamweaver Eclipse Expression Blend Expression Web Fireworks Flash Flex GoogleType iWeb Movable Type Text Editor Typepad Visual Studio WordPress Zend Studio
IMPORTANT TOOL FOR US
LIGHT USE
DO NOT USE
NOT SURE WE USE
NEVER HEARD OF
1.4% 6.8% 7.1% 44.8% 13.6% 1.9% 1.9% 18.4% 87.5% 32.3% 3.0% 0.9% 4.0% 32.4% 9.1% 19.2% 37.0% 6.8%
6.2% 29.5% 12.4% 31.1% 12.7% 7.5% 8.6% 33.6% 9.9% 30.9% 12.3% 6.3% 15.0% 35.0% 23.8% 17.6% 33.6% 7.8%
24.6% 50.9% 37.8% 19.8% 36.0% 46.2% 48.6% 39.1% 1.7% 27.0% 54.1% 64.7% 56.9% 21.3% 47.9% 49.6% 21.1% 41.9%
9.9% 9.6% 12.9% 2.4% 9.5% 9.8% 8.6% 5.0% 0.9% 5.5% 13.5% 9.8% 10.5% 6.5% 11.0% 9.1% 5.7% 11.1%
57.9% 3.2% 29.7% 0.9% 28.2% 34.7% 32.2% 3.9% 0% 4.3% 17.2% 18.2% 13.6% 4.9% 8.2% 4.4% 2.5% 32.5%
Society of Digital Agencies - 2009 Digital Marketing Outlook
Silverlight
Which technologies / languages are most important to your company in 2009?
Ruby on Rails Python PHP Microformats JavaScript Java HTML Drupal CSS ASP.NET
Never heard of Do not use Important tool
AJAX/AJAFramework ActionScript 23
45
% Use Society of Digital Agencies - 2009 Digital Marketing Outlook
68
90
What technical skill sets, if any, will you look to hire or contract for in 2009? Technical Skill Sets Silverlight Ruby on Rails PHP iPhone SDK Mobile Java/JavaScript Expression Eclipse Fireworks Flash Dreamweaver CSS Blogging Platforms ASP.NET ActionScript AJAX
0
20
40
% Seeking Skill Sets Society of Digital Agencies - 2009 Digital Marketing Outlook
60
80
TOOLS & TECH As shown in the previous three slides, Adobe products continue to be the dominate solutions sets for the digital marketing industry. Dreamweaver, Flash and Flex were the preferred tools of choice, and Flash and ActionScript skills were the most in demand for hiring new workers. Other popular skill sets included iPhone SDK and PHP. PHP is considered a useful tool to almost 60% of survey respondents and is another area where companies are looking to hire. Blogging Platforms such as Wordpress seem to be top of mind in the industry as social networking and blogs become more necessary to stay connected. Web programming languages and application frameworks popular with digital marketers include Java, JavaScript, AJAX and PHP.
Society of Digital Agencies - 2009 Digital Marketing Outlook
ABOUT SoDA The Society of Digital Agencies (SoDA) is the worldwide voice of digital marketing professionals with a mission to advance the industry through best practices, education, and advocacy. For more information or to get in touch with us, please visit our website or add your input to the survey by visiting www.SoDAspeaks.com/survey
About this document The information presented in this document comes primarily from our online survey as well as select interviews, other research sources and industry expert opinions. All data was gathered in the first quarter of 2009 from 559 survey respondents.
Society of Digital Agencies - 2009 Digital Marketing Outlook