Winterberry Group, an advertising and marketing consultancy, released a report on January 13 revealing US direct and digital ad spending had increased 2.7% to $154 billion in 2010. The report also predicts US direct and digital ad spending will increase by 6.2% in 2011 to $163.9 billion. Winterberry Group managing director Bruce Biegel discusses the report’s findings and why mobile marketing why not take off as quickly as expected.
Direct Marketing News (DMN): The Winterberry Group report found that direct and digital advertising spend is up. What has attributed to the increase?
Bruce Biegel (Winterberry Group): There are a couple of points to this: 1) The improving health of the economy. As the GDP goes so goes ad spending. Along with an improved GDP, you get a return to the need for top-line revenue growth at corporations driven by new customer acquisition. 2) Money is shifting into acquisition, but because of the increase in the focus on analytics, targeting and ROI over the last several years that money is flowing into the more measurable and targetable channels. Direct and digital is capturing not only the increase in spend but also taking share from traditional measured media channels.
DMN: Many of our readers might be surprised to learn that direct mail spending has increased and Winterberry Group predicts it will continue to increase in 2011 as well. Why does this continue to be a viable outlet for direct marketers?
Biegel: Direct mail is seeing an increase because while acquisition in the online market is improving, it is not yet as effective for local marketing, trade area marketing, or targeting at scale. Therefore, because it still works for many verticals, money is flowing back, because it’s controllable and measurable.
DMN: Which types of digital marketing spend should we expect huge increases for in the next year?
Biegel: Site optimization, display media and social will continue to rise in terms of active marketing channels. E-mail for retention will see a significant increase in volume, but, as a result of price compression, we won’t see the spend increase at the same rate. E-mail is the number one retention method of choice and it’s extremely cost effective.
We’ll also see mobile marketing spend increase, but like e-mail, it will be a very controlled increase because you need to get people to opt in before you can market to them. We’ve got three or four years before mobile is as popular as e-mail. Though everyone has a mobile device, everyone is aware of privacy issues surrounding their mobile device, and people are a lot more protective of mobile than e-mail. E-mail still has the ability to be somewhat anonymous. Mobile does not. People are sensitive about what they receive on their phone, and as a result it’ll take longer to build those mobile databases. Marketers will try, but it will take a long time.
DMN: Do you think any legislation will be handed down in terms of behavioral tracking and advertising?
Biegel: Congress is preoccupied with a number of large issues, including the economy and healthcare. Those two issues will take up a lot of their focus. Also, a number of guidelines came out over the last 12 months on privacy, and during this comment period, both Congress and the market are looking to see how well marketers self-regulate before deciding what type of regulation we will have. For example: If you put do-not-track into the browser will you need regulation? If everybody adds privacy icons to their site, will you need regulation?