Summit attendees encouraged by results of Marketing & Media Snapshot 2004 study.

Interactive marketers at last week's iMedia Brand Summit in Deer Valley got encouraging news about increasing ad budgets, thanks to the first-of-its-kind Marketing & Media Snapshot 2004 study.

Mary Ann Packo, chief client and marketing officer of research firm Millward Brown, unveiled results of the study, which was sponsored by Advertising.com in conjunction with iMedia. This study analyzed decision-making trends in marketing and media, perceptions about how different marketing media perform, spending patterns, as well as how online media are being -- or not being -- integrated into the marketing mix.

Overall, the news was good for online marketers and marketers in general. Budgets are up in 2004 and expected to increase yet again in 2005. A cross-section of marketers at all budgetary levels tag online marketing as the fastest growing portion of their budgets, and they expect this trend to increase.

The respective channels of online marketing (Web advertising, search, email and promotions) will all increase. More qualitatively, the objectives for which marketers successfully use online are coming into focus. However, while 89 percent of marketers state that they pursue an integrated marketing strategy, how those marketers define integrated marketing varies widely.

Data were collected in three parts: first, Neil Perry of Neil Perry Associates, Inc. conducted an extensive secondary review of industry reports, forecasts and news coverage information from companies and associations. Following this review, Millward Brown conducted in-depth interviews with high-level marketers from Gatorade, Mitsubishi Motors, Vonage, Delta, ING, Nextel and Johnson & Johnson. Finally, Millward Brown conducted a quantitative study of 292 marketing budgetary decision makers across the industry.

In a high-speed, information-filled presentation, Packo reviewed:

• Current media and marketing budgets
• Perceived media effectiveness
• How marketers are using online
• What marketers say about TV and online
• Different definitions of integrated marketing
• Conclusions

Current media and marketing budgets

Fifty-six percent of marketers state that their budgets increased in 2004 and 60 percent expect that they will increase yet again in 2005. Interestingly, it is the marketers with the largest budgets that are most confident about budget upticks: Of those marketers with budgets north of $400 million in 2004, 81 percent predicted an increase in 2005, compared with 59 percent for those marketers with budgets between $100 million and $400 million.

Marketers predict that online marketing will have a greater budgetary increase than any other medium. Relatedly, marketers expect online marketing to have the greatest increase in total budgetary share (25.7 percent), with the combination of network and cable TV a close second (19.9 percent).

Within online marketing channels, marketers report that Web advertising increased the most in 2004, will increase the most in 2005, and is expected to increase the most over the next five years. If a marketer uses a specialized online agency, that use correlates with the increased reliance on Web advertising.

Perceived media effectiveness

Millward Brown asked marketers to share their opinions about the relative effectiveness of a range of different media: network and cable TV, radio, outdoor, online, magazines, newspapers, direct mail and promotions.

The firm evaluated each medium for six attributes: building brand equity, new customer acquisition, providing measurable ROI, ability to retain customers, ability to reach target audience, and offered cost efficiency.

Across these attributes, marketers unsurprisingly rated TV and magazines most effective for building brand equity. Direct mail was rated highest for effectiveness in reaching a target audience and providing measurable ROI.

Marketers saw online marketing as the most effective medium for acquiring and retaining customers and in offering cost efficiency.

How marketers are using online

While marketers use TV to raise brand awareness and brand consideration, they find online marketing most effective for what Millward Brown categorizes as "trial and repeat" objectives: for example, new client acquisition and extending customer loyalty.

Within the online arena, marketers use Web advertising somewhat equally to communicate the brand's position and expand consideration, raise awareness for new products and maintain top-of-mind awareness for established products, and also to encourage trial, acquire new customers as well as retain established customers and increase loyalty.

Marketers use online promotions most frequently to achieve brand trial and repeat purchase. Search marketing is used to achieve brand trial and awareness, rather than consideration or word-of-mouth. Marketers use email to achieve trial and repeat purchase.

What marketers are saying about TV and online

As an established medium and known quantity, marketers still find TV emotionally engaging and able to build brand awareness. Representative quotations from marketers include: "TV is still the only medium that can make you cry," "TV is proven. We know it works to build brand equity," and that TV "legitimizes us to the market."

On the negative side, marketers see TV as expensive and not adequately proving its value; many are concerned about the growth of DVRs. One marketer said, "TV is like a teenager -- mature on the outside but trying to figure out what it wants to be when it grows up."

In contrast, online marketing is viewed as a better value, yielding the best ability to reach a target audience and generating better ROI and easily measurable results. On the other hand, within companies, convincing middle management of online marketing's effectiveness can be a challenge.

"We have had to 'sell' interactive internally since the crash in 2000 -- at that point the medium became unloved,” one marketer said. "Generally, online marketing is seen to be in a state of flux and requiring a too-large time expenditure. The same marketer who compared TV to a teenager said: "Online is in ‘the terrible twos’ -- it can walk, talk, and feed itself but is uncertain and has fits and bursts. The industry needs to better organize and educate."

Different definitions of integrated marketing

Although 89 percent of marketers report that they pursue and execute integrated marketing campaigns, the definition of integration is difficult to pinpoint. For some marketers, integration means simply "Multiple products marketed in multiple mediums." At the other end of the spectrum the prospect is more complex: "Ideally, it means all elements of the marketing mix (pricing, on-premise promotions, off-premise promotions, channel promotions, direct mail, advertising and Web marketing) are integrated."

Even if marketers could agree on a definition for integrated marketing, generally there are no set practices. Attempts to integrate marketing campaigns can run against a wall of unintegrated organizational structure within companies and agencies: "Integration is an ad hoc process," one marketer stated. Another said, "We have financial constraints making it difficult to integrate our marketing efforts. People are fighting for budgets … separate P & Ls drive separate goals."

As the 2004 iMedia Brand Summit also demonstrated, the differing definitions of integration are sure to be a significant topic within marketing throughout 2005 and beyond.

Conclusions

Online marketing is taking an increasingly integrated role within organizations, with 73 percent of the companies surveyed reporting that they have centralized online marketing groups.

For all of online's measurability, marketers tend to use online artfully rather than scientifically. In the words of the Millward Brown study, "Marketers are like sailors of racing yachts: They make decisions from some navigational data but generally much more through past experience, instinct and input from others within the company. They're not supertanker captains where all decisions are made based on metrics and manuals. "

While online marketing has proven its value to marketers and will continue to increase its presence in the marketing mix, the general absence of integrated campaigns has left the marketers far behind consumers who already use multiple media in multiple ways.

Additional resources

Download the Millward Brown Powerpoint presentation.

Learn more about iMedia summits.