In the last NetProfit, we looked at the huge gap between budgets allocated to online marketing channels and those that go to traditional offline channels such as print and television. This week, we'll look as what DoubleClick President David Rosenblatt sees as the steps that must be taken to balance these budgets. We'll also look at the role that search engine marketing in playing in building brand awareness online.

They're Showing Online the Money, says MarketingSherpa

But first, after the initial column, Anne Holland from MarketingSherpa contacted me to let me know that the results of their recent survey show that more and more B2B marketers are looking to increase effectiveness by turning their budgets to online channels.

Sherpa asked professional marketers which marketing tactics they would be spending more money on. 37% said they would be increasing their e-mail budgets "a bit". Search marketing came in at number two at 28% and PR at 27%.

The biggest surprise was the amount of flux that is being built into marketing budgets. Marketers are steering away from long term commitments. Only 7.6% of respondents said their budgets are allocated through the end of 2003. The remainder said they plan to relook at their budgets quarterly (40.5%), monthly (34.1%) or even weekly (19.8%).

There are two reasons. First, everyone wants to see whether the economy is going to go into a sustained recovery. Secondly, those that control the purse strings are starting to pay more and more attention to online marketing success stories. While there are not currently significant portions of ad budgets allocated to online, there is a lot of money sitting in the "undecided" category that could quickly swing online if the conditions are right.

The survey also found, as we suggested in the last column, that the portion of budget marked for online goes up dramatically as you move from PR and branding marketers to sales lead and direct marketers. Brand advertisers indicated they typically spend about 10% of their budgets online, while this climbs to 50% or more for sales lead marketers. There's an irresistible irony in the fact that the marketers who live and die by ROI and performance have discovered online far before the main stream marketers.

Part II of MarketingSherpa's Survey held even more good news for online, but more about that later.

DoubleClick's "Must Dos" for the Online Ad Business

So, it appears that business to business marketing is tentatively starting to look online. What will it take to capture a bigger slice of business to consumer budgets? DoubleClick's David Rosenblatt outlined some steps that online advertising has to take first:

• Make it simpler and more profitable for agencies
  
  Online marketing has to be sold in terms that agency buyers can understand, using a language they're familiar with. And, above all, there has to be room in pricing to allow agencies to make a profit on it.
  
• Make online advertising more compelling
  
  The possibilities for online advertising are endless, but so far there are few examples of creative and effective ad campaigns. One is the campaign for BMW done by Fallon (www.bmwfilms.com). Research has shown that online advertising using rich media such as Macromedia's Flash increases response rates by 6 times and brand association scores by 2 times.
  
• Create transparent, comparable research standards
  
  Currently there are no clear measurement standards that run across all channels. Even if current measurement numbers aren't perfect, they can act as a starting point as long as they're standardized and consistent. Some companies such as Nielsen//NetRatings and IMS are developing standards.
  
• Synchronize marketing efforts across the entire mix
  
  Marketing efforts have to work together across all channels, including online and offline strategies. The customer has to be put in the center of the marketing mix.
  
• Integrate new media into your organization
  
  Don't deal with online at arm's length. Bring the team handling new media into the traditional marketing department. This is the fastest way of achieving step 4.
  
• Invest in automation, both to reduce cost and raise response/conversion rates
  
  Use the abilities of CRM and sales automation to make sure ongoing relations are built cost effectively and every sales touch point with the customer is capitalized on.
  
• Avoid SPAM, or anything that looks remotely like SPAM
  
  No elaboration is required. How much spam did you clear out of your inbox today?
  
• Make what we already have work
  
  There are always new marketing mediums and opportunities, but the fact is the most powerful one of all, the Internet, isn't yet being utilized to a small fraction of its total potential. Let's finish discovering the potential here before we move on.
  
• Pay attention to price
  
  We have to remember that online marketing is more about marketing than technology. Technology is simply the vehicle. The message and the pricing of the medium will have its roots in traditional marketing.
  
• Give consumers control
  
  The web is all about control. If you don't give your customer control, you'll lose the customer to someone who does.
  

Search and Awareness Marketing

So, in the world of online, where does search marketing fit? It's been proven as a very effective medium in reaching potential consumers in the consideration and purchase phases of the buying cycle. It has also come out of the gate as the fastest growing segment of the online marketing industry. In 1999 search accounted for less than 5% of all online marketing expenditures. In 2004 it's expected that the search slice of the online marketing pie will be over 25%.

Good News for Search from MarketingSherpa

In Part II of the MarketingSherpa Survey, B2B marketers were asked two questions.

What would you spend $50,000 on if your CEO handed you the money in addition to your regular budget and said, "Please test something new."

What would you spend $50,000 on if your CEO handed you the money in addition to your regular budget and said, "Spend this for maximum impact on sales."

Remember, the money could be spent on anything, online or offline.

The winners for question 1 were:

1. Search engine marketing
2. Email marketing
3. Webinars
4. Revamping current Web site
5. Direct postal mail
6. Launching an email newsletter
7. PR

The winners for question 2 were

1. Direct postal mail
2 & 3 (tied). Telemarketing and email
4. Search engine marketing
5. PR
6. Revamping current Web site
7. Webinars

In both cases, online channels seemed to be hot topics. If you're in the mood for testing, online channels took 5 or the top 7 spots. And if you're looking for the safest bet, online took 4 of the top 7 spots.

But is Search a Brand Builder?

We all know search works when you have a serious buyer, but can it be used to build brand awareness? As we've said in Part I, branding is where the serious ad dollars are spent. According to a study commissioned by Overture (Goto at the time), the answer is yes. Search listings outperformed both banner and tile ads in building both unaided and aided awareness, effectively more than doubling the numbers achieved by other online marketing channels.

Awareness

Source: NPD Branding Study, February 2001

Trusted Names Effective Draws in Search Results

In our own research study, done this April, we simulated a search experience in the consideration phase of the buying cycle. We asked respondents their reasons for clicking on certain search results, some of which were from trusted brand names in the relevant industry. Brand awareness was the third most popular reason for choosing a specific search result, behind "objective opinions and consumer reviews" and "looked to be the most relevant to my search". 18.6% of respondents made their choice based on brand awareness. If you can combine relevance and brand awareness, you've got a search result that will draw a substantially higher percentage of click thrus.

Online is Ready, but are We?

The case for online, and search in particular, seems to be building each day. In the end, I believe the hesitation in adopting online as a mainstream marketing channel has less to do with any real or perceived faults and more to do with our reluctance to fundamentally change how we do things. When we talk about anything to do with the Internet, we have to remember that our society has a built in "adoption cycle" that we have to go through before we embrace new and different things. The greater the advancement moves us from our comfort zone, the greater the time required for the majority of people to embrace and understand it. Small, incremental changes are much easier to assimilate. This adoption cycle is nothing new. It has built into human nature. What the last century has done has dramatically shortened the cycle, and this continues with the advancement in the pace of technological change

We must remember that the movement to online, whether we're talking commerce, legal issues, privacy or marketing, marks a paradigm shift of enormous magnitude for society. We're trying to catch up, but it will take some time. And, as we have in the past, we will try to understand the new reality by placing it in the context of a current reality.

Remember Television?

The last time a new medium with the potential for dramatic change happened was the advent of television in the 40's and 50's. Like now, the advertising industry was slow to embrace and understand the new medium.

Regular broadcasting began in 1948. Network wide sponsorships didn't really establish themselves until the 50's, and these were in the form of sponsored shows, like Kraft Television Theatre, the Colgate Comedy Hour and Coke Time. This sponsorship format was directly transferred from radio advertising. It took until 1960 for advertising agencies to understand how viewers interacted with the new medium and come up with current concept of self contained commercials running in separate breaks. It took 12 years to figure out how to use television effectively. Widespread online advertising started in 1996 or so. So we're about 7 years into it, and, like television, we're just starting to understand how it works.

Online Will Not be Denied

While all Rosenblatt's points are valid, in the end, the overwhelming potential and advantages offered by online marketing channels will overcome any resistance. Advertising will embrace the medium, because it has no choice. It's like trying to ignore the freight train that's heading for your bedroom.