Thursday, November 22, 2007

Marketing Spend Shifting to Below-the-line

A new study conducted by Winterberry Group indicates that marketing efforts are shifting from above-the-line (ATL) to below-the-line (BTL) efforts. In other words, marketing campaigns are moving away from using mass media branding through the use of generic and broad messages and moving towards utilizing more direct response marketing methods.

According to Winterberry Group data and secondary research, ATL marketing makes use of print, broadcast, and outdoor advertising to reach large audiences that strengthen brands and convey general product information or elicit emotional responses from consumers exposed to the advertisements. On the other hand, BTL marketing uses direct mail, insert media, database marketing, interactive marketing, and promotional marketing to create specifically aimed marketing campaigns that offer consumers the ability to easily respond while allowing marketers to track the success of the efforts with little difficulty.

"Simply stated, above-the-line marketing that utilizes generic messages to build awareness is no longer the best way to influence customer behavior," said Bruce Biegel, managing director of Winterberry Group. "Below-the-line initiatives are more successful because they stress targeted and customer-centric communications. Below-the-line also creates measurable results and ROI metrics, which are important to marketers under growing pressure to prove the value of their campaigns. We expect that this demand for quantitative results will continue to intensify for at least the next five years".

According to Biegel, the rate of the shift from ATL to BTL spending was the most surprising aspect of the findings. Winterberry Group’s study found that since 2003, ATL spending grew an average of 5.5% per year, while BTL spending grew 7.8% per year. BTL spending was led by search, e-mail, and online advertising. The study expects these growth rates to continue through 2007, and that the industry as a whole will grow 6.9% from 2003 to 2007.

"The biggest surprise to us was the rate of the shift," Biegel told. "When we started looking at the numbers, we knew that ATL was slowing, even though overall marketing spending was growing. We found ATL was falling a lot faster than expected, even though it was being propped up by cable TV spending”.

The results of the study found two main reasons for this major shift. The first is that consumer attitudes have been changing. Instead of settling for generic, one-sided messages that aim to convey a message to a large, anonymous, and uniform audience, consumers have become more demanding. They insist on responding better to messages that are more engaging and personal, that allow for two-way communication and interaction with the marketer through preferred communication avenues. Advances in technology have allowed marketers to target consumers and track results with more accuracy and efficiency.

This ties into the next factor, which is media fragmentation. As consumers demand more personal and conversational messages, they also demand messages that are made to fit their individual and unique personality and characteristics. The growing diversity of targeted consumers along with the larger options for communication channels makes it difficult for marketers to effectively reach their target audiences. “Every consumer has a different attitude, a different way to reach them. Marketing messages need to be more focused, because the consumer is in control”, Biegel said.

One way marketers are trying to reach consumers is with multi-channel marketing. Many marketers find multi-channel campaigns are more effective, and improve the performance of all channels. This has been borne out in data from the Internet Advertising Bureau that found overall sales can improve by anywhere from 7 to 34 percent, depending on channel, when multiple BTL marketing programs are used in concert.

By coordinating a direct mail drop date with in-statement ads and email, a marketer can expose consumers to the same message in multiple media. More marketers seem to be picking up on this. A recent study by the Direct Marketing Association found 42 percent of marketers sell primarily via two channels; another 40 percent use three.

A recent change in interactive marketing reflecting the maturing of the medium is that it's no longer viewed as a separate component with its own rules, said Paul Chachko, founder and CEO of BTL-focused marketing services firm V12 Group. "A couple of years ago, people used it as its own channel. We're using interactive as a component in our overall strategy."

Another sign interactive is maturing is the change from a single budget line for interactive to separate lines for search, lead-generation, email, and retention activities, Biegel said.

ATL marketing channels as those striving to reach mass audiences with messages that reinforce brands, communicate general product information or inspire emotional response. This includes print and broadcast advertising, as well as outdoor advertising and yellow pages. BTL marketing is made up of targeted, direct marketing efforts with convenient response mechanisms and that are easy to measure. Examples include database marketing, direct mail, interactive marketing, insert media and promotional marketing.