Traditional Ad Budgets Predicted to Decline Steadily

In yesterday’s blog, I discussed MarketingSherpa’s study on the maturation of social media. Along with social media, the entire online marketing industry continues to grow and is predicted to reach $55 billion or 21% of all ad spending by 2014.  And, as I mentioned yesterday, funding the new initiatives comes at the expense of budgets previously allocated for traditional media. How bad is the damage to traditional media? Forrester Research has assembled some specific numbers in its Interactive Marketing Projections study released last year.

About 60% of companies responding to a Forrester Research survey on interactive marketing indicate they will decrease allocations to traditional media outlets by the following percentages in order to fund their online activity:

  • Direct mail: 40%
  • Newspapers: 35%
  • Magazines: 28%
  • Television: 12%
  • Yellow pages: 11%
  • Outdoor: 9%
  • Radio: 8%

Here are the reasons managers give for planning to increase their interactive marketing budgets:

Poor economic conditions – They plan to use more of the less expensive interactive tools available.

Consumers expect interactive relationships – The younger demographics are especially receptive to social interaction with brands.

Increasing power of marketing departments in corporate structure – Because interactive marketing affords a closer customer relationship, marketing departments are gaining power and access to technology when enables them to fine tune their analytics.

Interactive marketing works – Companies can increasingly point to the effectiveness of the medium.

After seeing a huge increase in applications, the associate dean for corporate relations at Cornell University’s The Johnson School plans to fund interactive marketing at between 60–70% of total marketing and sums up what many decision makers believe, “If we do [new media] strategically, we can target more effectively and do it more cost-​effectively as well.”

[Source: Interactive Marketing Projections, Forrester, 2009] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.