One interesting by-product of the current economic turmoil is that while people are becoming more cautious about spending, they tend to research product information more thoroughly and in greater detail. This is done through things like word-of-mouth recommendations and through available written information (usually found in print, brochures and of course in large quantities on the Internet, particularly on a Brand's corporate websites). So the Internet in particular has to key role to play in purchase behaviour, which means digital media and search marketing take on a more important part in the marketing mix. This point of view is contrasted with a view from a certain type of media agency executive who believe that in a time of crisis, media budgets will flock to traditional media, namely newspapers and print media.
This is the first global economic downturn where digital is now considered a relatively mainstream media option. Budgets will be affected across the board and the direction they'll travel (back to mainstream or increase in new media) is actually open to debate because it's a first time event. That said, the accountability and ROI focus argument should mean digital remains the obvious choice in time of economic crisis, however this will vary according to:
1) How digitally developed marketers are in specific markets
• Those marketers that already 'get it' are probably those for whom new media has already been working relatively, or, very well. They will stick with it through this crisis, and possibly even look to increase the proportion of spend dedicated to it. They'll do this based on the understanding they have a very strong opportunity to further accelerate the development of their brands in an arena that their consumers are in and which isn't going away.
• Those marketers who have remained conservative towards digital may become even more difficult to entice. They'll normally want to stay with what they know however I think there are opportunities here, especially the potential for paid search as it allows for an efficient way to show results fast.
• On a practical note it can be argued that when asked to contract budgets, many marketers take into account the ease of cancellation of non-traditional campaigns versus traditional media with frequent long term contracts and stinging cancellation penalties. Digital media may simply be an easier cancellation to absorb as the amounts still aren't as high when they attack the schedule with a red marker pen.
2) Where consumers are actually spending their time in those markets
• Whilst print undoubtedly has a role to play, in many markets it's a declining medium whilst online and search marketing in particular have grown and played a huge role in redefining how, when and where consumers get their information; in essence acting as a substitute for print. To this end why would consumers choose to regress back to print during a downturn? It doesn't make sense when digital formats offer all that information with so much more ease of access and interactivity. The statistics say that consumers are showing a strong move away from print and onto online. To this extent, the sensible marketer follows their consumer (while the best ones stay in front).
Consumers in a downturn are much more price sensitive - online offers the ability to compare prices in a far more comprehensive and up-to-date manner than print ever could. Then comes the best marketing tool of all – “word of mouth”. Word of mouth is more easily accessible online via forums and reviews, forming a vital precursor to purchase. Print can offer this but never at the same level of discourse and interactivity of a social media site, forum or review site.
However, it’s not all good news for digital media. There are a number of key considerations to take into account, particularly for Asia:
• In developing markets, the actual cost of access to the web (whether via Internet Cafes or home connection) may be seen as a discretionary purchase, an audience who previously paid for this may find other uses for that cash. If the economy really crashes then could this mean a contraction in overall numbers online in markets with heavy Internet cafe or dial up usage.
• Likewise, in those same markets, the uptake of in-home broadband will slow as consumers who were considering the upgrade decide against further outlay and live with the bandwidth they've got. This in itself is not a huge problem as at least these consumers remain online and can be reached, but bandwidth limitations will affect the degree to which more engaging executions can be rolled out from marketers.
Overall, the current economic downturn is one driven by financials, which therefore underpin all commercial budgets. It's not like the dot.com bubble bursting. It's a credit crunch which means lower liquidity, no credit, less cash, no budgets. To this end digital budgets will be affected along with all other channels, although if you look at Google’s recent Quarterly Results suggest that Search Marketing is the exception, but it is digital that is likely to recover fastest, and probably at the expense of print.