The early part of the 21st century has witnessed an explosion in the number of media that marketers can employ to reach their customers. This began in the 1990s with the use of the Internet as an advertising medium. Web pages became the “new” medium, with banner and other types of similar ads (e.g., buttons, rectangles, etc.) that customers clicked in order to be sent to the advertiser’s website. Internet advertising augmented the set of communications tools that marketers had used for decades: television, radio, print (magazines, newspapers) and outdoor advertising.
These traditional media are not disappearing. According to Advertising Age, it is estimated that nearly $285 billion was spent on advertising in the U.S. in 2006, with nearly half of that on cable and national TV.  Radio is experiencing a new boom, with the advent of satellite and other digital formats. Outdoor ads are becoming more creative all the time, with digital technology enhancing potential interactivity with customers in urban areas. Finally, while newspapers and magazines have been the most negatively affected by new media, they are still important for business-to-business and retailing marketers, among others.
However, it is clear that major marketers are shifting their budgets today into new media categories. For example, Procter &Gamble spent $3.5 billion on “measured” advertising in 2006, which includes print, TV and other “old” media. But the company also spent $1.4 billion on “unmeasured” media, which includes events, contests and the new digital media. The U.S. auto industry pulled $1 billion out of the traditional “measured” media in 2006 and put much of it into the Internet and other new media formats.
Why Are We Seeing This Shift Away From the ‘Old’ Media?
What is driving this movement toward new media? There are at least four factors commonly cited (in no particular order):
- The existence and improvements of new technologies at home and in the workplace. For example, the rapid penetration of digital video recorders (DVRs) that enable people to fast-forward through TV commercials means that advertisers need to seek other ways of reaching their target markets. Also, the increased sophistication of mobile devices provides marketers with another medium offering huge audience penetration. This is in addition to the rapid diffusion of broadband in the home and new devices that make it easy to watch streaming Internet content on TVs.
- Marketers today are talking of creating “experiences” for their customers in an attempt to differentiate their products and services from competitors. It is difficult to do this with the traditional media, which tend to be one-way communications from seller to buyer. As a result, marketers are looking for ways to interact more with their customers and vice versa. An example is Kraftfoods.com, where consumers can share recipes and cooking tips and communicate with each other directly.
- While advertisers still talk about the popular 18- to 34-year-old demographic, there are vast differences in the media habits of an 18-year-old compared with someone who is 30. It’s generally accepted that today’s markets are becoming fragmented, and traditional demographic breakdowns are becoming less and less useful. In particular, teenagers and early 20- somethings (often referred to as Generation Y) are less likely to watch TV and listen to the radio and more likely to get product information from friends and to communicate via text messaging on their cell phones.
- Marketers are more interested in “behavioral targeting”; that is, focusing on developing personalized messages that deliver real-time information where people are shopping. This is particularly easy today on the Web (where it’s possible to track “clickstreams” – the paths that people take when surfing the Web) and is becoming more prevalent in any geographical location through their personal GPS “system,” the cell phone or other mobile device.
The emergence of “alternative” media and increased competition has fragmented markets, shifted power in the transaction to buyers and resulted in less TV viewing.
These changes have impacted marketers and the “modified” mass communications model, as shown in Figure 1. Historically, marketing communications have been one-way, with marketers developing content (ads) and then choosing media (TV, radio, print) for distributing it to customers. Customers in that scenario did not have the opportunity to “talk back.” In the new media environment, customers interact with the messages and the media by blogging, clicking banner ads and setting up pages on MySpace with product recommendations. Customers also talk freely among themselves in chat rooms and on bulletin boards, in addition to communicating with companies.
These changes in the marketplace are not simply U.S. phenomena. The same trends are occurring in other countries. For example, on a trip to India, this author found that people of undergraduate age are just as familiar with and use social networking and other similar media just as frequently as their counterparts in Western countries. The same holds true for China, Singapore, Korea and Japan.
As a result, while there is still a considerable amount of experimentation and searching among these new ways of reaching customers, it is clear that many of them are here to stay and that we will witness continued expansion in the ways that companies attempt to reach their customers. At the same time, users of these new media face an array of problems in implementing and measuring communications campaigns that leverage both “old” and “new” media.
What Are the New Media?
Although there may be disagreement over what exactly comprises the set of “new” media, the following would be included on most lists:
- Internet advertising: This includes traditional Web page ads like banners and the newer, most popular form of ads called paid search, which was popularized by Google.
- Product placement/branded entertainment: Because consumers now have the ability to skip ads in recorded programs, more companies are looking to incorporate their brands directly into content such as TV shows and video games.
- Social networking sites: Of all the new media, social networking sites like Facebook, MySpace, Second Life and YouTube have generated perhaps the most publicity. In fact, the growth of these sites has led to the notion that we are now in the Web 2.0 era, where user-generated content and discussions can create powerful communities that facilitate the interactions of people with common interests.
- Blogs: A blog is a website, usually dedicated to a theme such as technology or a favorite TV show, established and maintained by an individual who offers his or her opinions and invites others to comment, thus creating a dialogue around the theme.
- M-Commerce: Mobile commerce (mcommerce) is still in its infancy in the U.S., but it is widely used in many other countries such as the U.K., Japan, Korea and China. Marketers can send a variety of messages via cell phone to consumers who have agreed to receive such messages, termed “opt in” customers.
- “Buzz” or viral marketing: This is also referred to as word-of-mouth (WOM) marketing. For many product categories, customers rate friends, families and professional colleagues as their main source of information when purchasing products and services. The marketer’s goal is to stimulate WOM about a brand among trusted personal sources, rather than through an unknown actor in an ad. WOM marketing actually employs a number of different media – social networking sites, special events, blogs, online communities and text messaging, among others – to help spread news about brands from personal sources.
Many companies today are using some or all of the above new media to develop targeted campaigns that reach specific segments and engage their customers more closely than traditional media can. For example, the luxury fragrance brand Chanel has used a number of the media outlined to promote its Coco Mademoiselle perfume, including:
What Are the Major Issues Facing Marketers?
The new media are clearly valuable additions to the tool kit marketers have used for years. The ability to engage customers through interactivity and communicate with targeted segments delivers benefits that traditional media cannot.
However, with these increased communication capabilities comes a new set of problems that must be faced by CMOs and other senior marketing managers. The Marketing Science Institute conducted two discussion groups at conferences held in April and September 2007 to explore the major issues these senior marketing executives face and found the following areas at the top of their list:
There is considerable uncertainty about what metrics to use to gauge the effectiveness of the new media. For example, what are the appropriate metrics to use with social networking sites – site visits? That is one measure, but it does not indicate how engaged a customer becomes with a brand after visiting the site and communicating with others. Brand engagement?
In 2006, the Advertising Research Foundation surveyed a number of research firms on the definition of engagement, and there were as many different definitions as there were firms involved. Internet advertising has used clickthrough rates for many years, but today’s marketers want to measure completed purchases to gauge the effectiveness of banner and similar advertising, not just count how many people were transported to the advertiser’s website. The traditional metrics used for TV, radio and print (e.g., reach, frequency) do not work in this new environment.
Integrated marketing communications (IMC) prescribes that marketers should be consistent in their messaging and support of the basic brand value proposition, even while the nature of the executions varies widely.
It is easy to see that, as the number of communications methods increases, it becomes increasingly challenging to ensure that the messaging is consistent across all the media. Moreover, marketing managers no longer control the messaging the way they used to be able to. In TV, print, outdoor and radio, the communications are one-way and controlled; with blogs, social networks, WOM marketing, etc., it is not possible to fully control what customers are saying about the brand. Therefore, a classic IMC campaign integrating one-way media with new media devices presents a control problem that did not exist before.
Planning and Budgeting
Developing a media budget and plan has never been more difficult. Despite vast improvements in technology in allocating money over media, the state of the art is dependent upon traditional metrics like reach and frequency. As noted earlier, these metrics are relevant for new media. But on what basis do you allocate money to creating a social networking site? Or a blog? Or WOM stimulation? The new media metrics’ equivalent of reach and frequency measurement generally do not exist.
Therefore, the following questions must be addressed:
- What should digital media objectives be?
- How do you set an integrative budget with traditional and new media?
- What is the point of diminishing marginal returns with these media?
- Should the new media be viewed as supplementary (adding some frequency to reach goals) or complementary (delivering something different)?
- How much money should be allocated to each medium?
In the past, there was no question that the marketing manager controlled the message and the media. TV advertising, for example, is classic one-way communications, with the manager controlling what is said about the brand and, through media purchases, how and where it’s being conveyed. “New” media do not permit that level of control. Blogs and social networking sites are largely outside of the authority of the marketing manager, both in terms of the message being delivered about the brand and what is being said in online conversations. This shift in control requires new thinking on the part of the manager about how to (or if to) use one of the newer media.
Perhaps the key issue is how to measure the impact of spending in these media. While we have many years of experience with marketing-mix modeling, we have relatively little experience measuring the impact of, say, money spent on social networking sites alongside the amount spent on traditional media. More importantly, it is not clear that the sales or profit effects of TV advertising would be the same for new media. They can’t be assessed the same way. An advantage of the new media is that experimentation is relatively inexpensive and quick to evaluate. Thus, it is easy to test different Internet advertising approaches. However, the spending levels in new media are lower than traditional media, which may make standard statistical methods difficult to apply.
The ‘Bottom Line’
Companies that wish to communicate with their customers need to consider the impact of the rise of “new” media. Whether it is a business-to-business or business-to-consumer company, manufacturing or service, marketing managers today have to understand that their customers are using a variety of media to obtain information about products and making purchase decisions based on that information.
While it is exciting to have expanded options, we still do not know much about how to manage them optimally. As a result, many companies today are experimenting with parts of their communications budgets to see how these media “work” in their environments. Within a few years, as marketing professionals better understand how to measure their impact, these new media will be a standard component of most media plans.
- Advertising Age (2007), “Top 100 Spending up 3.1% to $105 Billion,” June 25, p. S-2.
- Bob Tedeschi (2007), “P.&G., the Pioneer of Mixing Soap and Drama, Adds a Web Installment,” The New York Times, October 15, p. C1.
- Adapted from: Donna L. Hoffman and Thomas P. Novak (1996), “Marketing in Hypermedia Computer-Mediated Environments: Conceptual Foundations,” Journal of Marketing, 60 (July), p. 53.