Saving is cool again. Is that bad news for marketers?

If you’re smart, agile, integrated and niche-focused, we like your chances. Thought leader predictions for 2010.

No doubt about it. Americans are starting to save more. In October, they saved a whopping 4.4 percent of their disposable income, according to the U.S. Commerce Department. To put that into perspective, that’s almost double the average annual savings rate of 2.7 percent for the past 10 years. The rate dipped to near zero at several points in recent years, according to a story last week in the Wall Street Journal and many economists expect the savings rate to increase further from here.
Whether you call it pragmatism, fear, or the reverse consumer confidence index, U.S. consumers and businesses are hording more of their cash than they have in a long time and that has profound implications for marketers.

Experts say the economy is on the mend from the worst recession in half a century. But many say businesses of all kinds are skeptical that American consumers will return to their spendthrift ways anytime soon. They see consumers emerging from the brutal economic climate with a new mind-set: careful, practical, more socially conscious and less prone to ostentatiousness.

“Much as the 1930s shaped the spending habits of an entire generation, many companies now anticipate a shift in consumer behavior that persists even after jobs and growth get back closer to normal,” the Journal said. John Quelch, a Harvard marketing professor, thinks Americans will discover more cost-effective ways to live, and those coping mechanisms become engrained.

We don’t agree.

While consumers and business purchasing managers are scrutinizing every expense they possibly can, we think the “new normal” will return to the “historical normal.” That means American consumers – the world’s savviest shoppers and best-trained bargain hunters – will unleash a torrent of pent up demand as they start to see fewer foreclosure signs in their neighborhoods, more folks back to work and their 401k’s start to show signs of sanity. And that will trickle down to business in every sector.


Why smart marketers will win

This is where smart marketing comes in, especially if you have a medium to long-range sales cycle. You can forget about sitting back and taking orders when the “all clear” signal emerges from the U.S. economy. By then it will be too late. Competitors who get the business are the ones who have been steadfastly marketing and adapting throughout the downturn, keeping both the brand awareness and demand generation spigots reasonably on stay top of mind with their customers and prospects.

Marketing predictions for 2010

We’ll share ours with you next week. In the mean time, George Simpson of Online Media Daily had these pearls from his panel of experts. Click for full article

• “2010 will be the year of data-driven TV -- which will come of age in 2010 -- will only extend that dominance."
• “Brand dollars will accelerate their shift to online, driven by the scale of professional online video content and the rise of technologies that enable real-time demographic targeting."
• “Agencies will become more active and skilled in acquiring audiences through data partners -- separate from their purchase of media."
• "In 2010, advertisers will figure out that they can significantly boost campaigns by augmenting with innovative mobile phone and social networking solutions that more fully engage consumers."
• "The shift of ad dollars from standard display ads to social marketing programs that deliver engagement will be most notable as marketers shift focus from clicks to engagement and from CPM and CPC to cost per engagement metrics."
• "The marketplace will realize that the market for conversions relies on retargeting, which everyone does, leaving lots of people scratching their heads with 'OK, now what do we do to move real dollars online from brand marketers?'"
• "The subscription model for content will re-emerge as a viable business, because content publishers are having trouble standing on paid ads alone."
• "It will be the year of the niche. Mass is dead. A focus on being nimble and resourceful are the keys to winning in 2010."

Stay true to your brand and stay smart, focused, agile, integrated and niche-focused. More easily said than done in 2010. But if your continued to market throught the downturn and who got your new media experimentation out of the way when your rivals went into budgetary hibernation mode are going to win. And your're going to win big.

Key to the Future? Managing the Unknowable

Turkey day food for thought. Microsoft search deal with Newscorp could backfire. TV still relevant. 2010 marketing budgets show signs of life.

It’s no secret the Web’s explosive growth has been driven by the principle of the open playing field. Using collaboration and open source tools, the small guys can take on the behomoths by using their smarts, speed and savvy. But Microsoft, arguable lacking several of the aforementioned S’s, wants to use its muscle to tilt the playing field in its favor if a proposed deal with News Corporation comes to pass.

In case you missed it, Microsoft is in discussions with News Corp to remove links to its news content from Google’s search engine and display links exclusively on Microsoft’s ambitious new Bing search engine. Web pundits think this kind of a deal could induce major media and tech companies to start choosing one over the other which is about as good for consumers as the cable tv model is. Even worse, this scenario creates a whole new set of hoops for Web users to navigate.

According to Comscore, Bing has gained about 10 percent of the search market in its first year – an impressive showing, but still miles behind Google which handles about two thirds (65%) of the total U.S. search queries performed. Yahoo, ranked second (`19%), has lost about 10 percent of its market share since Bing entered the scene.

While we salute Microsoft’s aggressiveness and its aspirations to break up the Google-opoly on the Web, we side with the experts who say the Internet historically favors players who share tools and information, rather than building barriers to it. If there’s any positive outcome to the latest Miscrosoft initiative it will be that all the major search players will have to continue to improve their offerings in order to hold on to their market share.

Marketing budgets claw back to life

Despite the budgetary carnage inflicted upon marketers in 2009, nearly 40 percent of the 376 marketers surveyed by BtoB magazine plan to increase spending next year. Almost half plan to keep budgets steady and only one in eight (13%) plan to cut them next year. Of course, what marketers report in surveys differs greatly from how they actually open their wallets it’s an optimistic sign nonetheless. It’s no surprise that online marketing will continue to siphon off dollars from traditional media with e-mail marketing, search, social media, video and Webcasts garnering the largest increases. Researchers say customer acquisition (and marketing on the cheap) will continue to be dominant drivers of the B2B marketing landscape as measuring ROI will get a lot more attention than branding for at least another year. We’re betting that when the economy finally rebounds in late 2010 or early 2011, marketers will continue to give online the seat it deserves at the table – because they see its wholistic merits, not because it’s cheap.
Click here for more stats and analysis from BtoB.

Thriving in era of uncertainty

If you get a chance over this long Holiday weekend, check out Howard Sherman’s piece in BtoB: “When Uncertainty Is Normal”. Howard’s take is that business has never been more complicated, demanding or high stakes. To succeed in marketing and in business operations, companies will need skills their top dogs aren’t always comfortable with: “collaborative thinking by smart people.”

You need to help clients/customers accept ambiguity. You need to adhere to a nimble framework. You need to restore internal relationships, especially if your organization has dramatically downsized or restructured and rebuild trust with all of your stakeholders including customers, investors and prospects. Right on, Howard.

Research confirms: TV still draws audience

A new survey by Nielsen Company says that despite the Internet, iPhones, twitter and facebook, we’re actually watching more television not less – an average of 4 hrs and 49 minute/day for average American, up 20% from a decade ago (4:06). Nielsen says U.S. TV viewers broke another record -- increasing their consumption last year. The media research company said U.S. viewers watched 4 hours and 49 minutes of TV per day for the 2008-2009 season -- when looking at live viewing plus seven days of DVR playback.

That's up four minutes -- or 1.4 percent -- from the previous season. Why the rise? Nielsen says the gain came from more television sets in homes and more channels available for U.S. viewers. In addition, DVRs have increased the overall TV usage total: live and playback. It also appears that viewership improvements came in non-prime-time dayparts.

So if you're still agonizing about how to budget for 2010, just expect the unexpected and Strategically Stumble(tm) through it faster than your rivals.

Summer of Discontent to Continue?

All signs point to ‘not sure,’ but innovation thriving. Smart ad dollars will find the right home.

Economists and investors were buoyant Friday when the Labor Department announced we lost only a quarter of a million U.S. jobs. Despite the fact that nearly one in 10 (9.7%) able bodied Americans are now officially out of work – the highest jobless rate since 1983 – and millions more have essentially given up trying, Federal Reserve policy makers said they were increasingly confident the downturn had ended and the economy would start growing again in the second half of the year. What’s a quarter million lost jobs when we saw 700,000+ jobs evaporating monthly during the winter?

A “’jobless recovery” may be underway, but experts say we’re still vulnerable to “adverse shocks” and we’re in for a slow, halting rebound. Not exactly the powerful, “makeup-sex” kind of recovery we’ve been accustomed to when rocketing out of previous recessions. Economists say businesses will remain skittish about hiring. Income growth is sluggish. And credit is still tight for millions of households. A further drag on the employment scene is that older workers, who would normally be retiring at their current ages, are fearful of leaving the workforce as the value of pensions, 401ks and uncertainty about social security keeps them feeling anything but secure. Pretty scary, and there’s no little blue pill to fix all that.
A jobless recovery doesn’t conjure warm, fuzzy feelings for marketers, media professionals and other WANT-creators. We’re the folks who depend on businesses and households NOT being able to do more with less. They need to buy, invest, get bigger, better and of course v2.0 and new and improved.

But this trend toward austerity goes against our consumer DNA. It’s not likely to sustain itself as workers burn themselves out or find new jobs; companies lose orders because they can’t fill demand, and U.S. households, just can’t resist bargains. Demand will eventually win out over restraint, and the spending/hiring cycle will ramp up in due time. Just make sure you’re ready for it.

Unusual recession

“This has been an unusual recession in term of severity and the circumstances that triggered it,” noted Abby Joseph Cohen, president of the Global Markets Institute at Goldman Sachs in a recent interview in The Investment Professional magazine. “There has been enormous financial disruption along with a deep and painful recession.” Unlike the prior two recessions which were relatively mild and in which the economy responded well to standard pro-growth policy tools like interest rate reduction and targeted fiscal stimulus policy, the Great Correction of 2008-09 was more extreme and standard policy tools couldn’t be applied, said Joseph. It has been marked by a frozen financial system and economic climate. Goldman Sachs economists expect GDP to be slightly positive in the second half of 09, although Joseph warns the U.S. economic recovery will be linked with the global economy more so than ever before.

What could derail the recovery? Joseph points to three things:
1. Ongoing weakness in the domestic U.S. economy
2. Unresolved financial issues involving mortgages, credit cards and commercial real estate
3. Potential policy missteps in the U.S. and abroad

What’s been lost in all this consternation about the economy is the extent to which innovation (and adoption of new technology) has accelerated.

A nation of early adopters

We’re all gadget geeks now, according to a Forrester Research report released last week which surveyed more than 50,000 households in the U.S. and Canada. Researchers found 63 percent of Americans now have broadband connections, and nearly 10 million households added HDTV in the past year, a 27 percent increase.

Despite the recession, online spending remained strong, with older consumers leading the way. On average, older consumers spent on average $560 online in the past quarter, and one in five, spend over $1,000 over that period. In addition, researchers found that 86 percent of families with children had mobile phones and were more likely to use music, video playback and other advanced features.

More people are also migrating away from the home and office to access the Web via their smartphones. About 15 percent of cellphone owners were using the Internet on their phones in 2008, showing that for a growing number of Americans, there is an increasing “expectation that all the same services and resources are available to us, no matter where we are,” said Charles Golvin, Forrester analyst in a statement.

Outlook murky for ad advertising

All signs point to a relatively robust recovery in ad spending beginning next year, said Matthieu Cooper, a UBS analyst in a recently released report from his forum on the global media climate. Not everyone agrees. For starters, magazine ad pages were down 28 percent for the first half of 2009, according to Publishers Information Bureau. Again, that’s nearly 30 percent lower than the first half of 2008 – which wasn’t exactly a banner year for the print media folks.

Most analysts and ad execs agree the worst is over, but there is little consensus on the strength and duration of the recovery. One reason for caution is that advertisers are waiting….waiting …waiting to commit their budgets. As a result, ad execs and media companies say they have little clarity about spending prospects even for the short term. We may even be seeing a shift back to subscriptions, paid content and other forms of non-advertising revenue.

PWC says the gap between advertising and other forms of media company revenue will continue, as ad spending will remain below 2008 levels for at least another half decade. By contrast, spending on media and entertainment by consumers and businesses will rise to $812 billion in 2013, from $707 billion this year.

If you’re smart, you’ll embrace the new climate of working harder for your money. Marketers and media owners who really take the time to understand their partners’ needs will find a home for the smart dollars still circulating out there. Those that don’t may find themselves left out in the cold, waiting for the good times to return. And it may be a mighty long wait.