Budgets are shifting from offline media to online media. Online is where a growing number of consumers browse and purchase their products. Research supports this figure showing a 1,200% per annum growth of the World Wide Web.

So much for the big numbers. So much for the hype. Let's have a closer look at what really is going on...

"However the World Wide Web is still growing at 1,200% per annum, this rate is no longer true for the UK nor for the rest of Europe", Roy Dewell states. Growth for the UK in 2008 is in reality 216%. Dewell took a step back from the big numbers in his latest white paper "The growth of UK e-commerce is slowing down".

Over the last 5 years the e-commerce market has seen a year on year growth rates of 100% + in users and double digit percentage growth in value of sales.

But if we look at the next 5 years, we see:

• growth of UK web customers reduces from 216% (2008) to 10% per year.
  
• growth in annual e-commerce sales reduces from 28% (2008) to 10%.
  
• number of sites offering e-commerce will double (+200%).
  
• conversion rate of 6% achieved in 2008 will fall to 3% or less.

Endaf kerfoot, Thinker-in-Chief at Brand New Adventures, pointed us to this video.

A humorous look at digital asset management and marketing operations management issues at the "Agency in Review Downs" from Maxnow.

Q4 of 2008 reported a record breaking all time high in marketing budget cuts. According to the Bellwether report, 42% of the companies in the survey reported a reduction of their marketing budget. The Q1/2009 survey reported a number of 34%, the Q2/2009 showed 28%.

The Bellwether report raises the question; are marketing executives and their managers becoming more optimistic (less pessimistic?) about the financial prospects of their company, or is their simply no marking budget left to cut? Since the trend in the budget cuts is slowing down for two quarters since the Q4/2008 survey, Bellwether is optimistic the bottom is in reach. However, companies will remain under pressure to cut marketing costs end become more efficient. More for less is no longer a desire but a necessity.

According to the marketing supply chain, 52% of marketers are already making changes to plans and budgets as a result of the economic crisis. The Aberdeen Group reports that 64% are instituting regular collaboration between procurement and marketing.

In July of 2008 we reported that is was time to tackle the trend and rationalize -and possibly reduce- marketing expenses. Marketing was already under growing pressure and the crisis has accelerated the need for marketing operation excellence even further. So we wonder, will the crisis help to create a new mindset, resulting in marketing to become more relevant? There is no need to wait silently for the crisis to pass by and hope marketing budgets will increase. By becoming more accountable it is possible to have better arguments in budget discussions and bring relieve to the performance pressure of the marketing department.

Media channel effectiveness for building brand equity has shifted significantly over the last 2 years. MarketingCharts compared the ANA 2007 figures with the ANA 2009 figures and concluded the following.

• TV (down to 64% from 80%)
• Magazines (down to 51% from 67%)
• Radio (down to 30% from 36%)
• Outdoor (down to 26% from 35%)
• Newspapers (down to 19% from 36%)

These examples confirm the massive landslides going on in the marketing communications landscape;

• from broadcasting to narrowcasting
• from offline to online
• from ATL to BTL

One of our mantras at MarketingGovernance.com is that most marketing departments struggle to cope with this shift. Marketers try to utilize the existing “traditional” marketing processes and systems to deal with new and complex challenges. They try to 'narrowcast' using an infrastructure originating from the broadcasting era resulting in a wide array of operational consequences and frustrations.

Barbara Bacci Mirque describes in her article The Digital Agency Compensation Paradox that "marketers are currently grappling with the fact that in many circumstances the production costs of digital media exceeds that of the media costs. Since production is something for which agencies need to be compensated, digital agency compensation costs are rising. What I have heard some senior marketers say is that their bosses don’t understand this situation since digital media was initially touted as being more efficient than traditional media. Some of this can be attributed to inefficient processes that currently exist in the digital media ecosystem."

All to often, operational & organizational marketing costs are secretly tucked away somewhere deep within the campaign costs. Only when a separate budget is allocated and invested in the improvement of the marketing organization, the advantages of cheaper media channels can become clearly visible and fully utilized.

After looking at a 100 organisations, Professor Robert Shaw says he found proof in his latest paper, return on ideas that “marketing can drive value that far exceeds its costs”.

As stated in our previous article, every business department in the company is forced to rethink and prove their added value in relation to the company results, including marketing. In his paper, Professor Shaw provides best practices and the infinity model for marketing to become more accountable for its creations and create value to the organisation.

The model consists of three sequential steps: imagine, predict and demonstrate value when launching a new campaign or product. The required skills for these steps usually cannot be found in just one person or within one department.

Consequently, “the quest to create more money from marketing is a team effort” of financial and creative staff, says Shaw. Being accountable does not mean that there is no place for being creative, it is complementary. Every marketing campaign still starts with a great idea but should be followed up by predictive analysis and a demonstration of company value.

Implementing the infinity model is the first step towards a new mindset. Make sure that from now on there is a structured way of doing marketing projects. Define the objectives in a measurable and structured way and collaborate with your colleagues from the other departments.