Crisis sparks e-marketing boom

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Cape Town, 10 Mar 2009

Online marketing is flourishing because of the global recession, not despite it. This is according to Internet marketing professionals, who are experiencing an upturn in their businesses as traditional advertisers feel the pinch.

A well-known dictum during times of economic hardship is that marketing and advertising are among the first to experience corporate cutbacks and downsizing, as these functions are not seen as core business. Debates have raged on the merits of doing this, but online, or digital advertising, is seen as a means to get more bang for the advertising spend buck.

The global recession, although not directly experienced in SA yet, is prompting local companies to review their marketing strategies and look closely at making online advertising the centre of their campaigns.

“During recession, the legacy, or unconscious, advertising spend is scrutinised and the marketing department, knowing how precarious their position is, look at how they can generate sales leads and actually earn their parent company money,” says Dave Duarte, Nomadic Marketing director.

Rob Stokes, founder and CEO of search engine optimisation company Quirk eMarketing, says business has picked up strongly since the global recession really began to bite in October.

“We have had some clients cut back on their spending with us and some have even gone bust altogether, but we are getting new clients almost daily and this has been the busiest period for us in our 10-year history,” he notes.

Duarte says key to online marketing's attractiveness is that it is easier to measure return on investment (ROI) than in other media.

“Traditional online advertising spending is gone. You place an ad, it gets published and the money is gone. With online advertising, it stays around on a site for far longer and the ROI is far easier to measure,” he says.

Arthur Goldstuck, CEO of online research firm World Wide Worx, agrees and says a key problem with the local advertising industry is that the agencies have not yet fully embraced the concept of online advertising.

“The two key obstacles to the local market is the lack of awareness of online advertising by the traditional agencies, and the lack of awareness by the agencies of their clients.”

Goldstuck says the traditional agencies are still too dependent on the 16.5% placement commission they receive for advertising. He explains that they have yet to get their heads around the new market paradigm that is presented by digital campaigns.

“Although the trend of shifting towards online advertising is there, it is one that has been developing for some years. The global recession has just strengthened the trend,” he points out.

Another measure of the increased interest in online advertising is the amount of information being requested by companies and marketers. Stokes says he continuously has to explain the industry and how it works to new clients. Duarte says enrolment for his Nomadic Marketing course at the UCT Graduate School of Business has increased. Goldstuck says his research firm is also experiencing a surge in demand for its products and services.