As the news continues to pour in and the news media works hard to sell their wares (meaning the more terrible the news the more people pay attention) there are more victims to be counted in the carnage. This time the targets are the ‘darlings’ of the new world advertising and marketing including web video, mobile phones, gaming and virtual worlds. The Wall Street Journal takes a look at how some companies who once were putting as much as 10% of their ad budgets there (Chrysler) and their new tolerance of 5% for this kind of marketing.
I know I will probably ruffle a few feathers here but I don’t see this as such a big deal because I believe that most of the ‘success’ of these mediums has been more hype than reality. The article points out that the main reasons that what is really happening is the fact that advertisers are less likely to throw money at something that there is little proof of real returns, “Areas like mobile, virtual worlds and widgets are expected to be hit particularly hard, as it remains unclear what kind of impact ads in these media have.”
Since we internet marketers love to talk about what is cool and happening and what the next big thing is the industry tends toward hyperbole far too often. Hype exceeds reality in this space by a few years at a minimum. When people are forced to look at things with more discerning eyes the shine comes off of these new areas pretty quickly. Who can argue with Peter Kim, Senior Partner at Dachis which advises the likes of Johnson & Johnson on marketing strategies when he says:
“When we get into the need to drive results, you can’t spend money on the experiments and hope to keep your job and get your sales goals.”
That’s just reality talking and I believe that oftentimes the internet marketing world checks reality at the door and thinks cool outranks smart. It doesn’t matter what market you are in, when you throw away money on unproven (and sometimes just plain speculative) marketing options you are being irresponsible. Accountability in the financial markets is an important subject these days. How about accountability in marketing?
Aside from the effect of less spending there may be another consequence of this slowdown which will be consolidation in the already ‘boutiquey’ world of these experimental advertising vehicles. Investment in these kinds of companies will slow. This all comes together as a ‘perfect storm’ of difficult factors for this industry that is trying to tap into the tremendous ‘potential’ that may need to be redefined anyway. Realistic projections would be interesting to see versus the hype we see all the time.
To wrap up, Larry Bettino, a general partner at StarVest Partners, a New York based investment fund says, “The assumption that eyeballs would generate ad revenue is no longer valid. Many firms won’t be able to survive what is going to be a much more difficult environment.” What I take away from that is that is that we should be concentrating on the elements of online marketing that work. While it sounds very plain vanilla and not so exciting, search marketing is hard to argue with even the dollars are getting tighter. There is nothing wrong with getting back to basics even in the ‘new world economy’.