Digital Media for Retail in an Economic Downturn

Posted on 02. Jan, 2012 by in Digital Marketing

If you have spent any time following the news recently it is impossible not to notice that it feels as though the world economy coming to a standstill whilst the Eurozone crashes. We have seen one article after the other about the financial debt crisis in Greece, Italy and Spain and about how much UK unemployment has risen. All eyes are now on the leaders of the European Union as they discuss how to save the euro from collapse. But what is the potential impact on the advertising industry as these macro events unfold?

In meantime, we are seeing numerous contradictory articles about the luxury and retail sales boom, particularly in the APAC region. There have been numerous stories detailing growth; from those regarding people from overseas markets traveling to the UK to make purchases due to cost efficiencies, to how luxury fashion brand Mulberry trebled their profits during first half of 2011. We have also seen the luxury industry increasingly extend the scope of their digital activity to include branding campaigns.

Burberry are hailing their decision to move the majority of their marketing spend to online as a success, with pre-tax profit up 26%, whilst after a shaky start to the festive period John Lewis’ have seen some record Christmas sales. The UK retail sales index rose in December and Market Watch highlighted that branding managers are being optimistic about 2012 budgets for digital media. In the US online retail sales for November also showed growth. So does this indicate a trend towards increased media spend for digital even though the macroeconomic trend is one of contraction?

There are certainly many reasons to increase digital spend. Unlike press, for example, digital advertising represents an accountable channel for communicating with consumers in an environment where an actual purchase is often only a few clicks away. What’s more, Forrester Research have found the journey of the purchase offline often starts long before the actual transaction online, with the internet influencing $3 spent in stores for every $1 spent directly online.This highlights the increasing importance of reaching the audience and optimising your

brand perception online – if you aren’t there when a consumer starts their research you are likely to miss out when they purchase, be that online or in a bricks and mortar store. The amount of time that is being spent online grows every year and booming in BRIC markets, where Russia, for example, now has become Europe’s largest internet scene with over 50 million regular users.

So even though the evidence points to the economy slowing, with some predictions suggesting 2012 could be bleaker than last year, the potential for (wisely invested) digital media remains positive. Across the broader landscape the digital economy continues to become increasingly important relative to the offline one. By adapting to the way consumers carry out research online, even on high ticket items, before deciding what to purchase (on- or offline), digital marketing is growing steadily and is becoming more and more vital for brands to use strategically. Despite the downturn consumers appear to be more prepared than ever to pay for genuine convenience – just look at the growth in smart phones and paid apps. For luxury brands digital continues to represent a cost-effective and measurable way to reach consumers. If you can engage with consumers online and make the decision process and the purchase experience that much easier there is still plenty of scope to win in a challenging economy.

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