It has become a commonplace that digital marketing will suffer less in a downturn than other, more conventional, forms.
There are many reasons given for this. They include the fact that there is still a massive gap between the amount of time people spend online and the amount of marketing budget brands commit to interactive media; that marketers traditionally move spend into more accountable channels when budgets are tight, and interactive channels are the most accountable of all; and that interactive media have now become crucial to many businesses’ success, such that any cuts to digital budgets would have a detrimental effect out of proportion to their size.
Speaking at a seminar recently, I characterised this last assumption as being the end of the era of experimentation. What I was suggesting was that companies had previously only been committing small amounts of money, often left over from TV campaigns, to see what might be achieved through interactive channels.
As these experiments succeeded, budgets were increased to the point where the results achieved by those channels became hugely important, if not critical to the business’s fortunes.
Evidence for this can be seen in the increasing involvement of procurement departments in the appointment of digital agencies, for example, or the fact that more and more of those agencies are expected to deliver strategic thinking about digital at the highest level of their clients’ organisations. At the same time, people within digital media regularly suggest that while the core of the interactive marketing business is secure, what’s likely to suffer is the experimentation around the edges. Mobile advertising, for example, or in-game advertising are suggested as potentially risky places to be in the coming year.
It’s a nice theory, but it is fundamentally flawed. Because while the era of having to work with experimental budgets may be over, the commitment to experimentation as a key attitude has never been more important than now.
This is down to what Emma Jenkins, head of interactive marketing at Procter & Gamble UK, calls the “mayfly life cycle of interactive marketing formats”. Driven by a media-savvy public’s incessant demand for novelty, constant technological innovation, and the saturation-level copycatting of any successful marketing initiative, the position and perception of any interactive marketing vehicle is changing constantly. As a result, so is its potential value to marketers.
The evidence for this is everywhere. It was apparent in the plummeting click-through rates for banners in the early part of this decade, and could still be seen in the dissatisfaction among Facebook users with the proliferation of applications last year.
Now, you could argue that there are two types of experimentation going on here. There’s experimentation within established channels, and there’s experimenting with new ones. The former is a kind of optimisation, and therefore is entirely appropriate in difficult times. The latter involves trying new and untested approaches, involving high risk and uncertain rewards. This is the sort of thing that can safely be ignored at a time when budgets are being cut, to be revisited when conditions improve.
I’m not convinced, however. There’s a long-standing argument that the companies that do best during economic downturns are those that continue to market themselves aggressively, but that always sounds suspect, as if the marketing industry were trying to persuade companies not to cut their marketing budgets. The difference with interactive media is two-fold.
First there is no way to predict what is going to work. Text messaging is the example everyone gives of a technology that simply took off without any marketing push, but no one saw YouTube coming either. So if you’re not out there experimenting with new platforms and approaches, you may find you have a lot of ground to make up if one of those platforms goes global. And you may not have the time to make up that ground before your audience moves on to the next thing and leaves you behind.
Second, the pace of development is showing no signs of slackening. Indeed, if futurologist Ray Kurtzweil is to be believed, it’s actually speeding up. Kurtzweil’s argument is that every new development makes more innovations possible, and he predicts that the rate of technological progress will double every decade, so that we’ll see a century of progress achieved in only the next 25 years.
This means we need to change the way we think about experimentation. It’s no longer something you can turn on and off, since not trying out new approaches carries such high potential penalties. And waiting until things settle down is no longer an option, because they won’t. Instead marketing departments need to recognise that experimentation is just as important to them as it is to new product development. The research and development line in the marketing budget is now as important as the media line, if not more so.