PROMO Magazine last week released their new 2007 Industry Trends Report which includes results from an annual survey of marketers and agencies. The editorial team from PROMO is scheduled to review these results at the PROMO Live show taking place in Chicago next week, September 18 & 19. In the meantime, here's a quick overview of what they will be saying.
The report confirms now more than ever that promotional marketing is no longer the stepchild to advertising and that the two are really blurring together. More firms this year, nearly two-third or 65%, are now saying that promotions are part of their overall marketing strategy. Only 9% said that they develop them separately and another 24% said they develop them after in order to use other disciplines to lead the promotional strategy. So, this conclusion coincides with what we have been hearing earlier this year both at PMA's Annual Conference, which I wrote about in this past post, as well as at the Interactive Promotions Summit, which I covered in this particular post.
The report also states that budgets now have become more evenly split between consumer promotion, advertising and trade. The plans call for promotion budgets to continue to grow and advertising to further decline. 42% said they plan to increase consumer promotion spending with a third of those dollars specifically allocated to online media.
It shouldn't be a surprise that measuring promotions is now more important to marketers as promotions have become a bigger part of the overall marketing strategy. Sales growth is still the number one factor in determining the success of a promotion. However, increased brand awareness has now become more of a factor. Some other measurement results utilized include ROI, increased customer knowledge, incremental sales, lead generation and response rates.
Direct mail is again the most widely used medium, with 37% of the mix, and a close second is the Internet with 32%. When asked what percentage of their consumer and trade promotion budgets would be spent online, 24% said 25-50% of their budget, however, 36% said 75-99% of their promotion budget would still be offline.
The report goes on to give an overview of the many different categories of promotions. I'm just going to mention two of them here since they relate more to my business as well as to this blog.
The first category I'd like to highlight is "Games, Contests and Sweepstakes". Of course the report features the biggest trend to hit this category, and one that I have been writing quite a bit about,... contests with consumer- generated content. More and more brands have been hoping on the band-wagon and letting the consumer be their advocate, and in many cases, creating the actual ads as well. Dorito's really popularized this trend with their ad contest in which they broadcast the winners during the Super Bowl. I've done many individual posts on contests this year that you can review and I have two in particular that you may really want to check out: The Top 10 CGC Promotional Contests Part 1 and Part 2. Both have become very popular.
Companies spent $1.83 billion dollars creating games and contests in 2006 and the numbers are expected to reach $1.846 billion by 2009. 17% of companies outsource their playable promotions, so since that is what my business, DDC Marketing Group, specializes in we hope to see an increase as well over the next couple of years.
The other category that I'd like to highlight from the report is "Interactive". Larry Jaffe, Editor in chief of PROMO writes "No need to wait - the future of online promotions is here today". This survey also confirms what we've been reading in all other reports as well...the increase in Internet advertising is making up for the lack of growth in traditional advertising media. Online ad spending is the only medium experiencing double-digit growth which hit a new record of $4.9 billion in the first quarter of this year.
Paid search advertising is expected to exceed $11 billion by 2008 and hit almost $9 billion by the end of this year. The report also makes note that the college kids of today became of age with computers, cell phones and the Internet. Therefore, they interact with media differently than the generations before them and spend up to three hours a day online compared to 30 minutes for the general population.
There's quite a bit more information in the report that you can download for free here on PROMO's website. Take a look and let me know if you'd like to highlight something else that's in the report. All in all it sounds like a good outlook for us promotional marketers.