Advertising and marketing executives have lived by an old axiom for a long time: When tough financial times strike a company or the economy, marketing is first to be cut from the budget.
But it seems there is finally an exception to that maxim–digital marketing. It’s true that dot-com players have cut back on both online and offline spending, but traditional advertisers are increasing spending and recommitting to long-range digital marketing plans. While growth is expected to be slower this year, experts still forecast an increase in online ad spending to more than $8 billion from an estimated $6 billion last year.
We looked back how marketing executives from big companies–had to say about digital marketing decades ago. Here is what five executives from some of the best-known traditional brands in the United States said:
You’ve all used traditional television, radio, and print advertising for years, so how do you view the Internet as an advertising medium? What kind of advantages do already-established offline companies have over dot-coms?
Vivienne Bechtold (Procter & Gamble): I don’t think of the Web as an advertising medium. It’s a marketing medium. The advantage the folks sitting around this table have is essentially bricks. Bricks and mortar are traditional equities, but also digital equities.
In the beginning of the whole dot-com thing, everyone thought not being tied down by bricks and mortar was a positive thing. But people are now realizing that having a physical presence plus a digital presence is the strongest proposition of all. Consumers live in both the digital and nondigital worlds, so they want to be able to see your brand and understand your brand in both worlds.
Richard Lennox (Diamond Trading): The Internet allows an opportunity to make really powerful connections with consumers in a way that is entirely unique to that medium. But it does not give you any buffer or safety from having a bad business model or a bad product.
The Internet allows you opportunities to talk to your customers on a continual, dialogue basis in a way that we’ve never had before. I think if you approach it that way, then you’re using it as a medium, as opposed to just an advertising platform.
Paul Guyardo (Home Shopping Network): One of the things that we all have here is the ability to leverage our existing assets, and that’s key. The Home Shopping Network is televised in 70 million homes. That’s a huge tool. We can leverage television to drive traffic to HSN.com. And [we’re doing it] at zero marketing expense, because it’s not costing us a dime to add that URL to television.
We’ve been in the direct-selling business–the e-commerce business essentially–for 23 years, so we have a huge back-end infrastructure. A lot of people forget it’s easy to make the front end look pretty. But what about the less glamorous part of answering 68 million calls a year? And fulfilling 34 million packages a year? And the incredible infrastructure that’s required to do that? In our case, we just leverage off our existing assets.
Mark Nassutti (Eddie Bauer): I boil the advantages down to three things: brand, infrastructure, and management. Dot-com pure plays don’t start out with a brand. So they have to hustle and spend a ton of money to build a brand.
Second, they don’t have the infrastructure. It’s one thing to have infrastructure that can deliver large quantities of product to a distribution center or public store. But it’s quite another to deliver individual items and individual packages to individual consumers. That’s where the retail and catalog combination and brick-and-mortar players have a distinct advantage.
Then the third thing is management. A lot of the management teams that were put together to run dot-coms were inexperienced. They hadn’t run large organizations. They hadn’t run fast-growing organizations. And that was a significant handicap.
Holly Higgins (Hewlett-Packard): I don’t want this conversation to only be about how traditional companies have this tremendous advantage over dot-coms. I actually think dot-coms have done incredible things to challenge everybody and to make everybody stronger. It was really a shock a couple of years ago, for an old-line technology company, Hewlett-Packard (HWP, info), to realize, “Wow, in so many ways we’re starting from ground zero.” It was like, “Now we’ve got to be able to excel in this new e-world model.”