Imagine you’re a shopkeeper on Canal Street in Lower Manhattan in the 1850s tying to market your wares to passersby. In the old days, you marketed apples, newspapers and cudgels by shouting out your message to the masses. Some hear you. Some Don’t. Some hear you and ignore you. But for the ones that need something from your shop, you sell them there on the spot and never give a thought about whether you’ll ever see them pass by again. Up until the mid-90s, this was traditional marketing. Thankfully, those days are gone.
Interactive marketing is a relatively-new approach for reaching out to – and interacting with – your prospects and customers. Interactive, unlike traditional, is facilitated by internet technologies that allow the marketer to move away from a solely-transaction-based effort to a mutually-beneficial conversation.
But what is it really? What’s the future? Excellent questions!
John A. Deighton is a Professor of Business Administration at Harvard University and founding co-editor of the Journal of Interactive Marketing. Mr. Deighton is noteworthy in this topic because he’s the man that gave us the most faultless definition of “interactive marketing” to date.
Interactive Marketing: the ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us.
What makes Mr. Deighton’s definition so appropriate is that he is describing a dominant trend where empowered buyers necessitate new and different marketing strategies that are low on shouting and high on personalization. This approach to communicating with your customers and reacting quickly to their needs is evidenced in the success that companies like Apple and Facebook have enjoyed by leveraging interactive marketing and expediting time-to-market for their products.
That’s enough exposition. Here’s where the rubber meets the road. At present, U.S. companies spend over $34 billion annually for interactive marketing (search, e-mail, social media and mobile marketing). That’s a big number to begin with. Going forward, the year-over-year growth rate for this spending trend projects a $76 billion spend in 2016 for the same.
This growth is significant in that it allows spending for interactive marketing to surpass television ad spending for the first time in history. TV advertising, much like with newspapers, magazines and radio, is seeing a drop in budget spending as interactive media spending is increased.
A survey of 108 marketers in the U.S. showed that 71% planned to increase their interactive marketing budgets by decreasing their traditional marketing budgets. At the front of the line for the budgetary chopping block were budgets for ads in magazines, newspapers, direct mail, and on television.
And the future? The greatest growth will come in the form of mobile marketing (marketing on or with a mobile device) which will pass e-mail and social media spending this year. The numbers quickly escalate from there, where mobile display and mobile search marketing account for an estimated $2.8 billion in 2012, $5.7 billion in 2014 and $8.2 billion in 2016.
Social media comes in 2nd place with an expected $4.9 billion by 2016. E-mail marketing, currently considered one of the most reliable marketing means (and with low overhead), is expected to see only $2.4 billion in annual spending by the same year.
Here’s the takeaway: Hawking your wares in a traditional marketing approach is giving way to better methods of marketing. Marketers everywhere are poised to embrace the growing role of mobile in their interactive marketing mix. It is expected that e-mail marketing will evolve and overthrow direct mail as the primary direct marketing vehicle. And social media will become real-time marketing, reaching customers and prospects in the ways that they want to be reached, using the networks that they prefer.