What Downturn?

An economist looking only at direct marketers' online spending patterns might think the country is in pretty good shape. Direct's annual survey of e-commerce practices shows continued investment in digital strategies, with additional spending anticipated for 2009.

This is especially true among consumer-focused firms, with more expecting to dig deeper this year than last. Business-to-business companies are more cautious. Fewer anticipate significant spending hikes, but more of them plan smaller increases.

According to Direct's research, 29% of all marketers have shifted marketing dollars from traditional channels to online media, a figure comparable to last year's study. Similarly, 56% report no changes in allocations — again consistent with last year.

Another study confirms this trend. The most recent Communications Industry Forecast from Veronis Suhler Stevenson indicates e-marketing channels are getting higher allotments.

Veronis Suhler's executive summary states, “During the 2001 recession…brand marketers [that] cut budgets significantly lost market share, a trend they do not want to repeat in 2008. …The overall market will exhibit only minor declines as brand marketers shift budgets to alternative media that are targeted at hard-to-reach demographics, like the youth…and business markets.”

However, other conclusions from Direct's poll reveal a picture that isn't all rosy. For all the boosts in spending, this year fewer respondents say their e-marketing is more profitable than past offline campaigns. The number of B-to-B companies indicating their digital efforts are more profitable than those offline has dropped by half, from 35% a year ago to 17%.

Among consumer firms the slide is somewhat less dramatic. In 2007, 47% said online campaigns were more profitable. Now only 41% feel this way. So why keep doing them? Because they still pull in responses.

“The weakening economy prompted brand marketers to shift ad budgets to alternative media and marketing services due to stronger return-on-investment metrics, and high usage among target audiences,” Veronis Suhler analysts note about the current year's trends. These media include online and mobile channels.

But don't count offline out. Direct's research shows marketers are using both online and traditional channels for prospecting, with media mixes determined by a firm's target audience.

Consumer firms indicate direct mail is their key Web site traffic driver, with e-mail a close second. Natural search (as a result of search optimization), paid search listings and word-of-mouth referrals follow.

B-to-B firms rely more on word of mouth — so much so that it's the top-cited channel for generating Web traffic. E-mail and direct mail campaigns are gaining fast, though, while search engine optimization trails, a distant fourth.

A handful of those surveyed say their Web sites are so antiquated they don't promote them at all. One respondent boasts of a truly alternative medium: His firm's URL is written on signs plastered all over his car.

E-mail's prominence among prospecting methods is good news for list managers and brokers, as it goes hand in hand with greater use of outside e-mail lists. Nearly a quarter of all respondents say they rent these files, up from 19% last year. The growth is seen among both consumer and B-to-B marketers: Twenty-three percent of the former rent e-mail lists, up from 16% a year ago, while nearly a third of the latter do, up from 28% in 2007.

Where else do marketers get e-mail addresses? Across all categories the three most-mentioned sources, respectively, are “directly from customers,” “through the company Web site” and “gathered at trade shows.” B-to-B DMers are likely to favor personal networking and outside lists, while consumer respondents depend more on affiliate programs.

Once source they're probably not using is other marketers. Only 8% make their own e-mail lists available for rental, a figure essentially unchanged from last year.

There's been a shift in how marketers are viewing permission once they've harvested those e-mail names. While single-opt-in is still the most commonly used permission level (especially among consumer firms), use of this method dropped from 2007. Instead, significantly more are trusting solely in opt-outs. Use of double-opt-in — the most rigorous standard — fell across all respondent groups.

Among the study's other findings:

• Some 71% of DMers post a privacy statement on their Web site, much the same as last year. Nearly 85% of consumer firms' sites have one.

• Just over half of B-to-B respondents optimize their Web sites in order to boost rankings in search engine queries, compared with more than two-thirds of consumer companies.

• Consumer marketers are more diligent about collecting and analyzing clickthrough data than B-to-B firms. Better than three out of four consumer respondents do this, vs. 57% of B-to-B DMers.

• Marketers are broadcasting their e-mail messages in a variety of ways. More are using outside e-mail specialists, affiliate partners or traditional list vendors than last year. Slightly fewer are maintaining in-house operations.

• Just over one out of five respondents say staffing in their online marketing departments was up during the last 12 months, while nearly two-thirds note that it stayed the same. As in 2007, only 4% lost employees.

METHODOLOGY

This survey was conducted for Direct by Penton Research, an in-house firm. It was e-mailed to 18,476 Direct magazine and Newsline subscribers who indicated they held a position in corporate or general management.

An initial copy of the survey, offering a chance to win one of four $50 Amazon.com gift certificates, was sent June 13. Two follow-up e-mails, along with the sweepstakes offer, went to non-respondents.

Results are based on 316 questionnaires returned by qualified participants.

In some cases, subscribers who responded “don't know” or “unsure” to certain questions were eliminated from vote totals. The minimum number of responses to such questions was maintained to ensure stable data.