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The Results Are In: Where Marketers are Spending $$ in a Down Economy

MarketingSherpa's Marketing and the Economy Survey shows an overall picture that offline marketing is definitely on the decline and online marketing is on the rise. I want to delve a little deeper into the online marketing trend.

MarketingSherpaChart.jpgWhy are businesses adding more online marketing and reducing offline? Well, I'm a web analyst so my view of this answer may be a little biased. However, when marketing dollars are being cut, it makes the most sense to spend your money where you can definitively measure what you are getting in return. All online marketing can be measured using web analytics tools, whether it's email marketing, banner ads, pay-per-click or anything else. If properly implemented, all of these campaigns can be measured. How, exactly, do you measure the impact a billboard ad has had on your revenue for the year?

Let's look at the top three increasing online marketing items:

Web 2.0

The survey shows that 48% of marketers are adding dollars to their Web 2.0 (social network marketing) budgets. How is that measurable, and what do you get from it? There are many levels of social networking, and each will have its own goal. Check out The 6 Spheres of Social Media Marketing. Here's an example of what happened when our SEO team created a StumbleUpon post for one of our golf clients. On the day of the post, traffic increased 48% above the average daily visits. These visitors had a 45% lower bounce rate than the site as a whole. So not only does the post help our SEO efforts, the post boosted the site activity, and started building relationships with these new visitors.

Paid Search

Paid search has proven to have one of the highest return on ad spend (ROAS) - IF it is done right. We have seen great success stories from our clients with 500%-3500% ROAS. We are also now seeing some interesting trends on how paid search campaigns can help with natural search conversions due to the synergistic effect paid and natural search have together. As my colleague, Brian Carter, mentions in a recent blog post, "When you show both, you make a bigger impact on the buyer, which increases attention and trust, thereby increasing traffic, conversions, conversion rate, decreasing cost per conversion, increasing ROI."

Emailing to House Lists

This option has just as high a percentage increase as did Web 2.0. From my perspective, this is hands down, one of the best returns on spend out there. Judging from the 48% of marketing putting more money into this venue, clearly I'm not alone in this opinion. We have seen time and time again clients getting 1000% or more return on spend. If you train your subscribers well, don't abuse your list, and send quality messages, you won't be disappointed with this decision.

That being said, not all online marketing is increasing.

Emailing to Rented Lists

NOT ALL EMAIL IS CREATED EQUAL! This is why I am not surprised to see 43% of marketers reducing spend here. With more and more companies implementing web analytics, I believe it has shown that many rented lists do not perform as well as we would like. Why spend the money here, when you know your existing list gets a much better response?

Online Display Advertising

43% of survey respondents are reducing spend here as well.  Why?  In general, display ads are more costly than other makreting media, and that drives up the cost per acquisition, and brings down the return on spend.

Every company has a different marketing budget and different goals.  Maybe you are still adamant about sending email through rented lists.  I'm not going to stop you, but I am going to insist that you measure your results.  Look at your conversion rates, cost per lead, return on spend.  The numbers will speak for themselves.  You be the judge of your marketing effors to see which onces give you the best bang for your buck, and then spend more on those efforts.

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