Marketers hunt digital sweet spot

On paper, the past 12 months, while turbulent, were not as bad as many expected. According to Media’s marketers’ poll, now in its eighth year, 91 per cent of businesses were able to maintain their minimum required level of performance, while 43 per cent posted stronger results than expected for the year.

Majority of marketers remain pessimistic.

However, the recession has left its impression. An attitude of caution prevails in terms of general economic outlook for the region, with the majority of marketers (56 per cent) describing themselves as “pessimistic” and just seven per cent expressing optimism. Yet while almost a quarter plan to decrease marketing spend, over 42 per cent indicate they will increase their overall budget. Compare this with last year, when, unsurprisingly, just 25 per cent pledged to spend more. In terms of media spend and brand investment, a respective 40 and 47 per cent plan to increase investment.

Paul Hu, director and head of marketing for Volkswagen Group China, describes his outlook for the coming year as “cautiously optimistic”, while Procter & Gamble’s regional marketing GM, Maile Carnegie, expects the year to be “stronger and less volatile” but challenging nonetheless.

Fewer marketers plan reviews in 2010.

And in the wake of recent serial pitching, a smaller percentage of marketers plan to conduct reviews in 2010 - 45 per cent as opposed to last year’s 52 per cent. Of those, most (67 per cent) plan to review their creative agencies, while media agencies rank much lower at 45 per cent.

This is clearly good news for agencies and media owners. But while keeping costs under control is less pressing a concern than last year (49 per cent list it as a key challenge as opposed to 67 per cent in 2009), in terms of desired attributes by marketers, little seems to have changed: the biggest challenge remains improving overall marketing effectiveness, and the majority of respondents (54 per cent) state that they are still seeking greater value for money from their agency partners.

Although the figure is marginally lower than last year, it is nonetheless the biggest priority for improvement outlined, and tops the list of requirements in a media agency. This suggests further rate reductions are likely, with lasting consequences.

The sentiment is perhaps to be expected given that little has changed in the way of satisfaction with effectiveness measurement. This remains an area of concern for half the respondents. And while most are happier with their agencies’ general versatility in handling different media, over half (more than last year) list stronger understanding of digital media as a key requirement. The level of satisfaction in this area remained unchanged at 23 per cent.

Online looks set for further growth.

However, having led the way into the worst of the downturn (48 per cent increased spend on digital last year), online looks set for further growth. Over 80 per cent intend to raise their use of the channel over the next 12 months. But despite raised interest levels, digital still accounts for a relatively low proportion of marketing spend. Sixty per cent of those polled do not intend to allocate more than 10 per cent of their budgets to online, and a third of those plan to spend under five per cent.

While the figures are disappointing for digital practitioners, Chris Jaques, regional CEO of M&C Saatchi, points out that outside of Japan and Korea, they reflect the fact that the medium is still “largely experimental”. “Most people are investing in digital to investigate how it works. It is not a fundamental part of their business. As a result, it’s been ‘nice to have’ for many, and Asia has a long way to go before digital is truly embraced as a cornerstone of marketing communications,” he says.

“There is a less knowledgeable and less confident client population in digital,” admits Jason Kuperman, regional vice president for digital development at Omnicom. “Because of all the hype around digital, especially social media, I think some may have jumped into digital efforts that were not entirely thought through. Some agencies are still not providing ideal guidance on how to best use digital.”

But Jaques adds that while some clients may not be convinced by the potential of digital advertising as such (10 per cent have no intention of running online ads over the coming year), most are “very interested” in digital as a direct solution.

Jeremy Woolf, SVP and global social media practice lead of Text 100, is optimistic that the increased online focus will see “companies looking at digital and social media not as projects or isolated campaigns, but as part of a holistic and measurable approach to communications”.

Within the digital sphere itself, the study shows little change on last year: pollsters are still focused on dedicated websites, online ads and search, and these three areas can expect to see more activity than last year. A third intend to pay increased attention to their websites, and a quarter plan to do more around online ads and search.

Respondents are also more aware of the potential of social networking sites, but mobile marketing, interactive TV and gaming are low on the priority list, something Kuperman believes should change, particularly with regard to interactive TV.

“Interactive TV should be at the top of everyone’s experimentation list within the next two to three years,” he says. “Not just because of the impact of the interactive experience; the biggest impact will come from the IP-based plumbing and addressable technology that the PC internet uses, changing the way TV ads are planned, bought and tracked.”

Hu notes that for VW, online will serve as an important platform for branded entertainment content.

“The digital space is where we see significant opportunities to drive revenue,” adds Bob van den Oord, VP of sales and marketing at Langham Hotels. “With a 30 per cent increase in bookings via our brand portals in 2009, it makes sense to invest in maintaining our edge in this arena.”

Other growth areas include CRM and PR.

Seventy-five per cent of respondents intend to use these channels more in 2010, a pronounced increase on last year and further evidence of emphasis on measurable ROI.

“We are contuning to shift marketing investment towards higher return programmes,” says Carnegie. “We are seeing strong returns from our digital programmes and plan to continue to invest aggressively in these. We are urging our agency partners to work closely with us to improve ROI, control overhead costs and ensure their capabilities can support stronger investment in digital.”

According to Mohammed Sirajuddeen, CEO of Rapp Asia, “clients are looking at channels that show value”. But he adds that the trend does not cover the entire region. “Markets like Indonesia, the Philippines, Vietnam and even China are still focused on straightforward advertising. They pay lip service to data, digital and CRM, but are not really aware what [those channels] can do.”

Sponsorship also attracts increased attention.

While initially surprising given the apparent thirst for measurement, observers see value in the channel as a CRM extension. “We believe sponsorship is one of the best ways to connect with our passengers,” says Edwin Lau, Emirates’ VP for Greater China . “It allows us to share and support their interests and to build a closer relationship with them.”

 

Methodology

Media’s marketers poll had three research objectives: to evaluate current trends in marketing actions and strategies; to gauge business performance for 2009; and to understand the outlook for 2010 in terms of business performance and marketing investment.

On behalf of Media, research company Harris Interactive, working in conjunction with online partner Pulse Media Tech, sent out online self-completion surveys to marketers on an extensive database of industry professionals. Fieldwork was carried out between 2 and 12 February.

Just over 41 per cent of respondents said their role had local responsibilities, 55 per cent said their role had regional responsibilities, and 17.5 per cent said their role included global responsibilities. Ninety per cent had over two years’ experience in marketing, while 45 per cent have been in the industry for more than 11 years.

Over 12 per cent described their company’s main business as consumer products. The next most popular sectors were travel and leisure and finance.

Eighty per cent worked for companies employing over 150 people. However, only 11 per cent worked in a marketing department of more than 30 people.

Some 11 per cent said their marketing budget for 2010 would be US$10 million or more, while around half said it would be less than $1 million.

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This article was originally published in the 8 April 2010 issue of Media.