May 1, 2008 12:00 PM, By Brian Quinton

If a recession hits, will interactive marketing be one of the first budget lines on the chopping block?

That question hangs in the air over the 2008 Promo Interactive Marketing survey. The economic climate is uncertain. Consumer confidence has sprung a leak. Retail sales are down. Federal Reserve chairman Ben Bernanke hints that a recession may be “possible.” Even the great and powerful Google saw paid search clicks flatten out in February, according to comScore's figures.

Despite all that, Promo's research suggests that marketers will raise their bets on interactive promotion.

More than 43% expect to increase budgets this year. That's down a tad from the 49% last year who predicted greater online spending — but still a strong vote of confidence. Taken with the 37% this year expecting their interactive expenses will stay the same, it suggests stable growth for the broad range of interactive channels. Even in a difficult economy, when sales and conversions are presumably harder to come by, interactive marketing remains a valuable way to get a message out to customers — and may in fact be more valuable than ever.

“Digital is now integral to marketing,” says Daniel Stein, CEO of EVB, an Omnicom agency. Omnicom and New York's Toy were the minds behind the Office Max “Elf Yourself” viral campaigns. “Not only are they not cutting back on their digital campaigns, but our clients are looking at a lot of digital-only plays. That's where their consumers spend their time, so it's more efficient.”

“If you've got to manage your marketing budget to a tight ROI, search and e-mail are the last channels you're going to cut back on because they're more measurable than anything else online of off,” adds Sarah Hofstetter, vice president of emerging media and client strategy for 360i, an agency that designs digital campaigns — including social media — for clients from Comedy Central to H&R Block.

“And with other online channels, at least you can say these people played this Web game this many times in a given day,” she adds. “That's still a heck of a lot more measurable than a billboard.”

The survey also shows that marketers are going far beyond e-mail and newsletters to engage customers digitally. The number of respondents running online promotions, for example, jumped from about 37% last year to almost 47%. More than 40% run games, while 27% offer sweepstakes.

Newer techniques are picking up steam. For example, almost a quarter of respondents are now doing viral marketing, compared to just over 15% last year. Mobile messaging, including mobile coupons, also showed a marked increase of more than six percentage points, to almost one in five respondents this year.

“In economic down times, rather than spending money on broadcast-oriented campaigns, we think marketers will find it more palatable to spend pockets of money on developing conversations with consumers, and mobile's good at that,” says Mark Emery, senior director of agency relations for Air2Web, which enables mobile marketing and coupon campaigns. “Mobile is a great, easy addition to offline campaigns such as print.”

As for what the aim of those online campaigns might be, marketers in the 2008 survey were much more conscious than last year of the chance to create brand awareness or associations using online marketing. Almost three quarters of respondents use online marketing to build their brand with viewers. That's about 15 points higher than last year. And 61% said they used Web advertising to strengthen customer loyalty.

And while about 40% use e-mail to blast a direct-response offer for a discount on products recipients already know, the same proportion said they have made the Web an integral part of new product launches.

Brand awareness also showed strong growth as a metric for judging effectiveness. However they measure it, 41.5% track results, compared to 36.5% in 2007. Engagement with Web content also gained as a marketing yardstick.

One surprising finding is that 40.3% “do not know” whether interactive campaigns provide a better return on investment than offline efforts. Put that group together with the 10.4% who said they don't measure ROI, and you've got more than half of marketers working without a clear notion of how cost-effective their ad dollars are.

The know-nothing group is considerably larger than the 28% who turned up in last year's survey, more than offsetting the slight decrease in those who said they don't monitor online ROI (12% in 2007 and 10.4% in 2008). On the other hand, 22.2% said online marketing produces a better ROI than offline strategies (26% last year). Another 11.8% said both are equally effective dollar for dollar. Only 4.9% said interactive campaigns' ROI is inferior to that for other channels.

Yet fewer participants held out hope that they could get new funds for Web campaigns or as part of a general increase in marketing spend. Instead, an even greater proportion would fund Internet campaigns with money shifted from traditional mass media such as TV and print. Almost 18% will raid those offline budgets to fund online promotions, against 15.2% last year.

And user-generated content? About 11% let fans submit videos, either for marketing use or as part of online promotions. Another 11% plan to start this year, while 35.6% would consider tapping that source of free creativity.

METHODOLOGY

This survey was conducted by Penton Research, an in-house unit. It was e-mailed to 9,840 subscribers to PROMO magazine in its daily e-mail newsletter. The data were collected from Feb. 14 through Feb. 27, 2008.

An initial copy of the survey, offering a chance to win one of four $50 Amazon.com gift certificates, was sent Feb. 14. Two follow-up e-mails, along with the sweepstakes offer, were sent to non-respondents.

Results are based on surveys retuned by 148 qualified participants.

The methodology, data collection and analysis were conducted by Penton Custom Research Department, and conforms to accepted marketing research methods, practices and procedures.

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