Why is UK internet marketing spend continuing to grow despite all other marketing budgets being cut?

The decline of traditional media

The latest quarterly survey of UK marketing spend by the IPA reveals that marketing 'budgets have been revised down for the third successive quarter.

As confidence reduces, some companies view their marketing budget as a 'discretionary' spend and make cuts. Many bigger brands are cutting budgets for TV, press, outdoor, radio & cinema advertising as well as PR, events and research.

Direct marketing and sales promotion have traditionally been more resilient to downturns because they are seen as providing a 'stronger relationship' between spend and return. 

However, even these 2 sectors are seeing budget cuts.

The continued growth of the internet

Internet marketing is the one sector that continues to grow. The Guardian reports that 30% of advertisers said that they were increasing their marketing budgets. Over 17% of companies said that they now allocate more than 10% of their budget to internet marketing. As few as 11% of companies have zero internet marketing budgets.

Why is the internet the exception?

The IPA represents advertising, media & marketing communications agencies who tend to be the bigger agencies with the bigger clients. Many of these companies have a long heritage of spending large budgets on big brand campaigns using traditional media like TV. Many have been slow to switch money to the internet. However, as budgets become under pressure there is a pressing need to make the marketing budget work harder and become more accountable. Internet marketing can provide many advantages:-

• improved targeting - with SEO & Pay Per Click (PPC) advertising you can reach people actively searching for your product or service

• lower costs - email marketing, blogs & PPC are much lower cost than traditional media

• improved cost efficiency - with traditional advertising you often pay to reach an audience (e.g. readers of a magazine) whether or not they have read or can recall your ad. With PPC you only pay when prospects react i.e. they click to visit your website

• greater control - it is much easier and faster to increase or decrease spend with PPC and email marketing

• improved measurement - advanced email systems, PPC and web analytics make it possible to speedily identify what's working and what isn't and make appropriate changes faster and more often

• more tests - advanced email systems, PPC &  web optimisers enable multiple tests to be implemented with instant results e.g. testing multiple propositions, headlines, copy, images, calls to action etc

• greater accountability - when budgets are under pressure it is even more critical that the marketing budget is being spent as effectively as possible. The above advantages all help provide greater accountability.

What does this mean for smaller companies?

As most smaller businesses do not have a legacy of spending large budgets on TV, press etc I would expect them to spend a significantly larger share on internet marketing than bigger brands. 

Often smaller companies will not have any in-house expert marketing support. They naturally will want to get the best results from their budget with minimum resource, waste and risk. 

The internet has huge potential to help businesses (big and small) to improve their business by attracting new prospects; converting them to valuable customers: and growing customer lifetime value. However to fully realise this potential (and avoid having one of the many websites that fails to perform) make sure sure you either have the right web expertise in-house or find a web marketing expert.

Remember...web marketing is about solving customers' problems profitably.

Peter Hawtin is an internet marketing specialist with Brand New Way, a UK web marketing agency which helps companies to attract and retain valuable customers online.