US Digital Ad Spending Set to Suffer

17 October 2008

DETROIT: Digital adspend levels could face severe cutbacks as marketers tighten their budgets, with many advertisers tipped to follow the example of Chrysler's cmo Deborah Meyer (pictured) who "won't experiment in lots of things that are fun to have."

According to Meyer, "all of our dollars have to go to hitting in-market shoppers with the appropriate media". Spending on digital technologies such as online video and mobile ads comprised 10% of Chrysler's marketing budget last year, but this total has now declined to 5%.

She says that social networking sites remain of interest due to their audience size, but otherwise "all of our dollars have to go to hitting in-market shoppers with the appropriate media."

Spending levels on mobile ads, widgets and "virtual worlds" like Second Life are expected to be among the main casualties, due to their limitations both in reach and measurement.

Peter Kim, of digital specialists Dachis, which works with Philips Healthcare and Johnson & Johnson, says: "When we get into the need to drive results, you can't spend money on experiments and hope to keep your job and get your sales goals." 
PepsiCo, however, will continue to use a variety of "emerging media" in an effort to engage consumers, despite the challenging economic conditions. 

Says Bonin Bough, the company's director of digital and social media: "The market is not going to drive us to miss one of the largest opportunities that we've had in a long time."

Research firm eMarketer estimates that US mobile adspend totalled $878m (€651m; 509m) last year, with outlay on online applications like interactive games and widgets reaching just $15m.

Data sourced from Wall Street Journal; additional content by WARC staff