Shift to Online, Mobile, Social Marketing Will Slam Traditional Media

Forrester Research predicts that interactive marketing in the United States will near $55 billion and represent 21 percent of all marketing spend by 2014 (click on image for larger view).

Search marketing, display advertising, email marketing, social media, and mobile marketing are the categories that will benefit.

More significantly however, overall advertising in traditional media will continue to decline in favor of less expensive, more effective interactive tools and services. With dollars moving out of traditional media toward less expensive and more efficient interactive tools, marketers will actually need less money to accomplish their current advertising goals.

The majority of current online budgets appear to be earmarked for search marketing, even though the search landscape is rapidly evolving to include real-time updates and also social, community and micro networks.

Mobile marketing spending will grow at a 27 percent rate over the next five years, reaching $1,274 million in 2014.

Social media marketing will increase to $3,113 million in 2014 from $716 million in 2009, with a 34 percent growth rate.

Owned social media assets (like internal blogs, community sites) are really the only emerging media getting traction in today's economic climate, Forrester says.

If You Had to Cut a Communications or Entertianment Service, Which Would it Be?

It appears most users would reduce spending elsewhere to hang on to their broadband connection, while most would consider cutting back on a mobile broadband connection, if forced to make a cut in the monthly service budget, a recent survey by Strategy Analytics suggests.

TV service seems the next most resilient service.

Some of us might be surprised that propensity to keep either a fixed or mobile voice service is similar.

71% of Marketing Budgets Have Been Cut

About 71 percent of chief marketing officers say they have seen marketing budgets reduced,

and 51 percent have seen cuts of at least 20 percent, say respondents to a recent Forrester

Research survey.

TV, print, radio and magazine spending has taken the biggest hit, with budget decreases of 67

percent. Branding and advertising budgets have been cut 64 percent, respondents say.

About 52 percent have reduced spending on direct mail. In fact, virtually every category studied by Forrester Research has declined this year.

But a significant percentage of respondents also report they plan to increase nspending in a few

categories. About 47 percent of marketers say they will increase spending on social media,

Web site development, online advertising, and email marketing.

That marketing budgets have been cut should come as no surprise. That happens whenever there is an economic or industry downturn. Nor should the shift of spending towards online, mobile or social media provide much of a surprise. That simply is where users are spending more of their time.

Over the long term, marketing effort always follows audiences.

Sprint Sells 99-Cent Netbook

Sprint is offering new customers Compaq’s 1040DX netbook for 99 cents when bought at Best Buy with a two-year mobile broadband contract costing $60 a month.

The same netbook with service bought from Verizon Wireless or AT&T is $199.99, while a non-contract price is $389.99.

In principle, the tactic is the same used by mobile providers to bundle handsets with service. .

Sprint is fully subsidizing the hardware price in order to gain a two-year service agreement. At $60 a month, the 3G service costs the consumer $1,440, for a gross revenue for Sprint of around $1,050 over two years. So the netbook represents marketing cost.

But some consumer advocates want an end to such bundling practices, arguing that the practice ties customers to a carrier. Up to this point, most consumers might conclude that the significant discounts on handsets are worth the trade off.

In fact, some economists argue that subsidized handsets actually lead to more innovation, as users have incentives to upgrade to new devices frequently. If the general rule is that consumers buy less of products that are more expensive, severing the tie between service and subsidized handsets should reduce the frequency with which most consumers buy new devices.

To the extent that new devices drive new applications, application-based innovation could suffer.

That said, sales of unlocked devices would allow some greater degree of switching behavior. Users of CDMA handsets would have a choice of Verizon and Sprint, while GSM users would have a choice between AT&T and T-Mobile USA.

A new regime of unlocked phones should in principle also spur development of phones operating on both GSM and CDMA, though at the price of higher handset cost. To the extent that rapid mobile handset innovation and adoption lead to higher consumer welfare, regulators might want to weigh the costs and benefits of handset subsidies very carefully.

Children Do Not Like Being on the Same Social Networks as Their Parents

Apparently, children do not especially like belonging to the same social networks as their parents. Or so it would seem, based on 2009 Facebook demographics.

Though Facebook users grew 513 percent in the 55 and older demographic, usage by college and high school age users dropped 20 percent, says iStrategyLabs.

If you have, or have had, teenagers, you are not surprised by this finding.

Click the image for a larger view.

Execs Don't See Network Driving Value

If a recent survey of European telecom ecosystem executives proves accurate, business model changes in the mobile broadband space increasingly will find content providers paying money to access providers for a variety of services, while infrastructure itself becomes a less-crucial driver of network value.

About 81 percent of respondents indicated that traffic shaping and deep packet inspection can help network operators boost their revenues.

Also, some 91 percent said network infrastructure sharing will become the norm as mobile data costs climb.

Both of those findings confirm a belief that at least in the mobile space, revenue and cost sharing mechanisms are likely to change, and relatively soon.

What is a telecom operator’s unique selling point? Overwhelmingly, European telecom executives identified a telco’s service management platform as its core USP with 37 percent of the vote, the Yankee Group says.

Poll respondents also were evenly split on which ecosystem participants would have most profit potential over the next three to five years. Some 32.1 percent thought service providers would, while an identical 32.1 percent thought content owners would have the brightest prospects.

Brand came second with a quarter of the vote. Ownership of network assets—both access and core network—came in lower with 13.2 percent and 11.3 percent of the vote, respectively.

The survey was conducted in April 2009. Some 60 percent of survey respondents work for telecom operators, and the remainder for software and IT services, application providers and media-related firms working with telecom operators.

Prepaid Wireless Site Visits: Who is Up? Who is Down?

If changes in traffic to mobile prepaid sites are a reflection of the amount of consumer interest, MetroPCS, Boost Mobile and Leap Wireless are getting more interest, while Virgin Mobile and Tracfone, historically the leaders, are getting slightly less interest, according to a traffic analysis by Compete.com.