The Homa Files

Excerpted from Wall Street Journal “Marketers Cut Back on Digital Media” by Emily Steel, October 16, 2008

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Financial woes likely will derail the growth of a slew of advertising technologies that until recently were being hailed as the next big thing.

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…

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.”

Spending figures for emerging advertising remain small compared with spending in the overall online ad market,…  in 2007,  U.S. advertisers spent $878 million dollars on mobile marketing, which includes ads delivered through text messages or displayed on a mobile Web site.

 U.S. ad spending on widgets and applications — small computer programs that can contain videos, interactive games and music that Web surfers can post to blogs, social-networking or personal Web sites — was $15 million.

PepsiCo says emerging media remains an important way to engage today’s consumers. “The market is not going to drive us to miss one of the largest opportunities that we’ve had in a long time.” 

Edit by SAC 

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Full article:
http://online.wsj.com/article/SB122403310652235021.html

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