The Wall Street Journal reported last week that one of the first budget areas to be cut back due to the financial crisis is "experimental" advertising. The newspaper noted that digital technologies such as web video, mobile phones, gaming, social networking sites, and other virtual worlds had been widely touted as the "next big thing" in advertising.
For example, this virtual-type advertising will be cut to about five percent of Chrysler's marketing budget this year, down from as much as 10 percent in previous years.
"We won't experiment in a lot of things that are fun to have," Deborah Meyer, the carmaker's chief marketing officer, told The Journal. "All of our dollars have to go to hitting in-market shoppers with the appropriate media."
The article noted that these campaigns often reach a small number of people, and standard measurement systems have not been developed.
"When we get into the need to drive results, you can't spend money on the experiments and hope to keep your job and get your sales goals," said Peter Kim, senior partner at Dachis, which advises Philips Electronics NV's Philips Healthcare, Johnson & Johnson and others on marketing strategies.
"Virtual worlds are probably one of the things that haven't been proven effective just yet," added Lars Bastholm, an executive creative director at independent digital marketing shop AKQA. "I can't see us selling virtual worlds to anybody right now."
According to eMarketer, digital media spending remains small compared to the $21 billion spent on online spending in the U.S. last year. Advertisers spent $878 million last year on mobile marketing, which includes ads delivered through text messages or displayed on a mobile website. A paltry $15 million was spent on widgets and applications, described as small computer programs that can contain videos, interactive games and music that web surfers can post to blogs, social-networking or personal websites.
Some emerging advertising will still get some support given the low costs involved. Chrysler, for instance, will continue to spend on active social-networking sites.
PepsiCo also believes emerging media remains an important way to engage its core consumer. "The market is not going to drive us to miss one of the largest opportunities that we've had in a long time," Bonin Bough, director of digital and social media at Pepsi, told The Journal.
Discussion Questions: Will the financial crisis significantly slow investments in so-called experimental media advertising? Is it a prudent decision by brands to cut back on such spending or are they missing the boat?