WSJ says experimental ad budgets are getting cut October 15, 2008Posted by jeremyliew in advertising, virtual goods.
Last week I posted on which online media companies will survive the ad recession and noted that experimental budgets are the first to get cut. Today’s WSJ finds evidence that this is already happening:
In recent years, marketers have set aside a portion of their ad budgets to experiment with digital technologies such as Web video, mobile phones, gaming and virtual worlds. But with broader economic turmoil reaching Madison Avenue, these “experimental” budgets are among the first to hit the cutting-room floor.
Chrysler LLC has already slashed its experimental ad buys. With each ad dollar facing additional scrutiny, especially in the hard-hit auto industry, these ad buys will now make up about 5% of the auto maker’s marketing budget, down from as much as 10% in previous years, says Deborah Meyer, Chrysler’s chief marketing officer.
In good times, the maker of Chrysler, Dodge and Jeep brands tapped technologies like gaming and mobile to build awareness of its vehicles. “We won’t experiment in a lot of things that are fun to have. All of our dollars have to go to hitting in-market shoppers with the appropriate media,” Ms. Meyer says.
Areas like mobile, virtual worlds and widgets are expected to be hit particularly hard, as it remains unclear what kind of impact ads in these media have. These campaigns often reach a small number of people, and standard measurement systems have yet to be 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,” says Peter Kim, senior partner at Dachis, which advises marketers such as Philips Electronics NV’s Philips Healthcare and Johnson & Johnson on marketing strategies.
If you’re trying to sell advertising that isn’t standardized, you should read the whole article.
As an aside, the article suggest that in game advertising and virtual world advertising will be affected as a subset of this trend, making virtual goods even more central as the business model for games and virtual worlds:
Ad executives say creating an entirely new form of advertising to put in untested places like virtual worlds — or three-dimensional online computer games — may not be worth the effort in tough advertising times. “Virtual worlds are probably one of the things that haven’t been proven effective just yet. I can’t see us selling virtual worlds to anybody right now,” says Lars Bastholm, an executive creative director at independent digital marketing shop AKQA.