Online Marketing in an Unstable Economy

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Experts and checkbooks around the world agree, the global economy is entering recession conditions accompanied by stock market behavior unseen since the 1930’s. Businesses across industries are being forced to tighten spending for fear that sudden movements in this thin ice environment will create the crack that sends their company into icy and unforgiving waters.

Out of the ashes, however, rise well-placed industries able to weather the economic storm, and perhaps even benefit. Online marketing is one such industry. Remaining strong as companies slash traditional marketing and advertising budgets, the strength of this niche industry highlights the benefits offered by online marketing that have set it apart, and at an advantage.

Economic Woes

Recessionary trends across world markets have spiraled in recent months and show no signs of stopping soon. The International Monetary Fund (IMF) has reported that global economic growth is due to slow to 3.9% this year and be stunted an additional 3% in 2009, bringing economic activity to the lowest levels experienced since 2002.

Despite the intervention of governments around the world to rescue economies in peril, numbers continue to dip in sales, equity value, and consumer confidence. US Treasury Secretary Henry Paulson has stated that despite an injection of $700-billion into the economy, an increasing number of firms that were previously stable are likely to fail in the months ahead.

Traditional Marketing and Advertising: Downward Trends

Unfortunately, the traditional marketing and advertising sectors are bearing the brunt of the current economic conditions budget cuts. Emarketer reports that 59% of marketing executives initiated a decrease in spending on traditional marketing in 2008 and 65% decreased budgets for traditional advertising. Additionally, the Newspaper Advertising Association of America reports that total newspaper advertising revenues fell by $3-billion in the first six months of 2008, marking the lowest level in 12 years.

The Strength of Online Marketing

In stark comparison to the struggling traditional marketing sectors, online marketing firms have been steadily building market share for several years and are surprisingly unaffected by the current failing markets. Displaying a clear strength in a clearly chaotic business environment, both paid search and online advertising revenue have grown by 28% since 2007. Marketing Sherpa reports that 29% of medium to large businesses in Canada plan to increase their Search Engine Optimization (SEO) spending in the upcoming year.

Explaining it All

During a recession, the initial instinct for most managers is to cut back on marketing expenditure – leaving them vulnerable to strategically minded competitors. But why shouldn’t they be strengthening marketing efforts to ensure market visibility when competition is tightest?

-Businesses aren’t forgetting marketing completely, but simply being strategic about how and where they spend their money. Evidence reveals that the only areas in marketing avoiding the current budget cuts are online. The uncomplicated reason behind this is that marketers are not likely to cut budgets that drive sales efficiently with an attractive ROI.

Vancouver, BC-based 6S Marketing is one of the largest online marketing firms in North America. They provide search engine marketing services aimed at driving profits with targeted and effective online presence. Co-founder and President, Chris Breikss, reports that the company has seen relatively unchanged client volume and levels of spending during these past few months of economic turmoil. The simple reason is that “Clients are more willing to spend money if they can see that they are gaining results.” explains Breikss.

Breikss makes this critical point explaining the edge of online marketing over traditional methods that has been further revealed as a result of recent economic decline. Online marketing differentiates itself from traditional marketing methods in several ways:

Traditional Marketing vs Online

1. Quantifiable Results

Traditional marketing and advertising often involve multiple media campaigns and a process of testing strategies and techniques. Measuring results is a very difficult and subjective task that is at times impossible. Despite the esteem of traditional marketing and advertising, it is difficult to prove who actually saw your ad or received your message, or when and how they responded to it.

Online marketing is quite the opposite. Businesses who advertise online or use SEO can track and measure precisely how their company was discovered, the keywords used in a Google search, click through rates on advertisements, and direct sales results based on internet ads or searches. With this specific knowledge, tailoring campaigns to a particular market becomes easier and ROI can be easily monitored.

2. Flexible Messaging

With traditional marketing and advertising methods, there are no second chances at making an impression or communicating a message effectively. Once an ad is placed and printed it is essentially permanent.

Online marketing is a much more forgiving and flexible option. If it is shown that internet ads are not getting enough attention, companies can quickly and easily make strategic adjustments and reap the rewards. Changes to direction, strategy, and style can all be made with the click of a mouse. Using internet marketing, managers are able to ensure that their marketing strategy is in line emerging trends quickly and efficiently.

3. A Focused Approach

Using traditional marketing, a business can purchase a magazine ad or bill board in hopes that in the right place and at the right time their message will convince a potential buyer to purchase or become interested in their product or service. This approach does produce some results, but suffers from inaccuracy and high inherent costs. Additionally, many consumers are used to traditional approaches, and tend to ignore them. Modern consumers change the channel during commercials, skip over ad space, and have essentially tuned out such passive advertising methods.

Using internet marketing, a company can hone in on specific customers that are searching for a particular product or service. Rather than convincing a customer to try their product, internet marketing works to position a company as a resource for those consumers actually seeking their specific business offerings.

4. Cost Effectiveness

SEO and internet advertising is quite cost effective in comparison with traditional marketing and advertising, especially taking into account the factors explained thus far. A comparison of costs shows that the creation and distribution of an offline leaflet/magazine typically takes between 16 – 23 days to develop and deploy, compared to 4 days for an electronic version. Pair this with the fact that response rates from electronic publications are typically higher (20%) in online promotion versus offline (5% – 7%) and we have a clear winner for the savvy marketing dollar.

In the current economic conditions, more than ever, it is important to think strategically about where and how a marketing budget is spent. Those who understand this will be able to reap the rewards of greater market share when the economy eventually rebounds. With online marketing options showing marketers greater value, flexibility, and insight into the changing trends of the market, we can expect to see more companies advertizing online to help their firm weather the storm and succeed in the future.