Ellis Booker

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• Ellis Booker
• Editor

ebooker_at_crain.com312 649 5457 www.btobonline.com

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Agenda

• Trends in b-to-b marketing
• Real recovery?
• Recent surveys
• Business media
• Internet
• Predictions for 2004
• QA

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Real recovery?
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Question

• Whats your prediction for the U.S. economy
  during the next 6 months?

Double-dip recession?
Zero growth?
Modest growth?
Higher-than-predicted growth?
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BtoBonline.com poll (9-9-02)
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Expectations
University of Michigan/eePulse Inc. Leadership
Pulse study of 920 worldwide business leaders
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Is it wise to cut?
During the 1974/1975 recession
Companies that did not cut advertising had the
highest growth in sales and net income during the
two study years, as well as the following two
years.
Those that cut advertising had the lowest sales
and net income during the same period.
Source American Business Media
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Assessing the effects

• Should Firms Increase Advertising Expenditures
  during Recessions (--Marketing Science
  Institute)
• 2,662 firms
• Studied 1972-2000
• Divided into consumer-product, industrial
  product, service firms
• Looked at annual accounting stock data
• Regression model

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Assessing the effects, conclusions

• Consistent with earlier research
• Advertising contributes to financial performance
  for up to three years
• Spending during recession produces bigger
  benefits
• But
• Consequences of spending decreases during
  recessions did not have much impact
• Best advice maintain budgets if possible

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Where companies cut during a downturn

• Push for price cuts from suppliers 48
• Reduce marketing/advertising 44
• Reduce sales and earnings targets 41
• Lay off employees 39
• Exit some businesses 31
• Reduce RD spending 30
• Close facilities
  24

Source Winning in Turbulence, Bain Co., 2001
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Budgets on the rise?

• North Kingston, R.I.--Sales and marketing budgets
  are expected to increase in 2004, according to a
  survey conducted by "Sales Lead Report," a
  newsletter published by Mac McIntosh Inc.
  Nearly 58 of the executives polled said their
  sales budgets would increase somewhat or
  significantly next year. Only 11.5 of executives
  said their sales budgets would decrease somewhat
  or significantly in 2004.Nearly 54 said their
  marketing budgets would increase somewhat or
  significantly in 2004, and only 7.7 said their
  marketing budgets would decrease somewhat or
  significantly. The report was based on
  responses from 3,900 subscribers of the
  electronic version of "Sales Lead Report."

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Advertising employment

• Down 1.4 in Dec. 03
• Total employment dropped 2.4 in 2003 to 430,600
• A third consecutive annual loss.
• BtoBs own survey confirms the trend
• What are the staffing plans for your marketing
  department in 2004?
• Increase 30.2
• No change 64
• Decrease 5.8

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BtoBs Spending Plans Priorities survey
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BtoBs Spending Plans Priorities survey
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BtoBs Spending Plans Priorities survey
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BtoBs Spending Plans Priorities survey
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BtoBs Spending Plans Priorities survey
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Business media (print)
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Getting better

• 2001
• Magazine spending fell 17.7
• Events fell 3.2
• Net decline of 12.7
• 2002
• Magazine spending fell 13.3 (to 11.2 billion)
• Events fell 1.2 (to 8 billion)
• Net decline of 8.7

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Projection

• 2004 Advertising growth of 4.1 in general
  roughly 3 for b-to-b
• Compound annual growth rate of 4.8 for
  2002-2007, reaching 24.2 billion in 2007
• Veronis Suhler Communications Industry Forecast
  Report

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Publisher challenges

• Titles closing survivors jettisoning assets to
  pay down debt
• Many struggling to pay for substantial Web
  investments
• Lots of excess banner inventory tumbling CPM
  rates
• Publisher predicament
• Advertisers demand new pricing structures
• Advertisers demand new, better ROI measures
• Advertisers interest in online must be revived

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Impact on publishers/editors

• No more mega launches.
• A dot-com focus is old-think.
• The big story today is how large, established
  organizations are taking what Internet
  start-ups learned to increase their efficiency
  and profits. --Jim Daly, former editor, Business
  2.0
• Emphasis on reporting metrics.
• Emphasis on integrated products.

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More impact

• Moving from broad to targeted.
• ...its taken a permanent piece of the IT media
  market from the broad media guys.
  --TechTarget CEO Greg Strakosch
• Packaging and programming to dominate.
• Editors who lead by readership surveys and
  demographic research.

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Macro changes in publishing

• Integrating print/online/event assets
• New online ad formats
• Targeted publishing vehicles
• Providing much more measurement
• Making guarantees

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BtoBs Media Business
Launch June, 2003 Monthly September,
2003 Sections Features (2), News, Ad Sales,
Online, MA, Events, Circulation, People,
Benchmarks Audience Business publishing
decision-makers Extras E-newsletter, PDF
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Watchwords

• Integration, integration
• Targeted
• Measurement ROI

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But holes in measurement, integration

• Nearly three quarters of marketing executives in
  the U.S. and U.K. believe their company can't
  effectively measure campaign ROI.
• Sixty-five percent also struggle to integrate and
  share customer data across their
  organizationdata they need to understand what
  their customers think and want.

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More holes

• Only 28 of business marketers measure program
  effectiveness by measuring most of their
  communications tactics and of that, only 37
  track sales as a measure of success when
  determining the ROI of a marketing program.
• Tactical metrics to justify marketing budgets
  68 Web logs, email response logs 54 Survey
  research 51 Lead-tracking databases46
  Response codes versioned for specific ads, web
  promotions, direct response vehicles 44
  Internal anecdote gathering among sales force
  26 CRM or third-party analytics package 25
  Magazine sponsored readership studies 6 Other
• Mobium Creative Group survey, Sept. 10, 2003

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Internet
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Digital Marketing Dialog survey

• Sponsored by BtoB, CMO Council, USA Today
• High points
• Nearly two thirds of marketers now view digital
  marketing having a high or very high level of
  strategic importance
• Nearly 40 plan to spend more than 20 of
  marketing budget on digital efforts

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Digital Marketing Dialog survey

• Perceived advantages of digital
• Low cost of implementation 64.7
• Speed of delivery customer response 58
• Measurable ROI 58.1
• Top purposes
• New customer lead generation 84.5
• Brand awareness recognition 70.7

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Digital Marketing Dialog survey

• Obstacles
• Spam legislation/privacy
• Analytics
• Deliverability
• Integration with other marketing assets

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BtoBs NetMarketing 100

• An annual ranking of the best b-to-b sites
• Judged on navigation, design, content, technology
  extras, e-commerce features
• Shades of difference among the top 20
• Poor execution still out there
• Old content, no search, hidden contact info
• Trend toward tools

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GE Plastics

• Site has a tool that allows outside engineers to
  design virtual prototypes
• Click to connect button
• A new engineer for one of the Big 3 automakers
  was using the site
• A GE salesperson determined, based on this users
  activity, some sourcing needs.
• Based on this, GE sold 500,000 lbs. Of materials

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GE Plastics

• The site provides a click to connect button to
  access GE Engineers either by text chat or phone.
  
• Engineers are on hand 25 hours a day, 6 days a
  week.
• Answer questions in 9 languages.
• Site contributes more than half of GE Plastics
  total revenues

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Lessons from Amex, GE, others

• The most effective Web sites drive branding and
  transactional activity together
• Few marketers have the skills or capital to meet
  this challenge
• Continually evaluate the content application
  needs of your audience
• Revisit how customers prefer to be reached, how
  they consume information and marketing messages
  and how their habits for both are evolving.

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E-mail

• E-mail marketing to reach 15 of all online
  advertising dollars by 2004, up from 3 2002
• E-mail sent for customer retention had an average
  click-through rate of 10, with a conversion rate
  of 5
• E-mails sent for customer acquisition had an
  average click-through rate of 7, with a
  conversion of 2.5

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Spam crisis

• Deliverability of messages is a huge problem
  facing e-mail marketers.
• 71 of respondents said spam filters were
  erroneously blocking their messages, and 59 said
  they have experienced decreased click-through
  rates as a result.
• Only 39 of marketers that use a hosted Web
  technology service for e-mail delivery use
  click-through rates to further target recipients
  after an initial mailing, and only 41 use open
  rates to further target recipients.
• "The State of E-mail Marketing Perfecting the
  Appropriate Mix of Art and Science," Jupiter

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More spam

• 11 of consumers have switched e-mail service
  providers in the last 6 months another 14 are
  considering switching in the next 6 months
• CAN-SPAM compliance
• Should you consider alternative mechanisms?

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Basic anti-spam

• Scew up the unsubscribe
• Fail to answer the e-mail
• Sell a name
• Trick people into giving permission
• Rent a spam list
• Mail too often
• Spam your own customers
• Ignore the angry people
• Bore your readers
• Break the law
• Loose control over your lists

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Search marketing

• 25 total Web advertising
• Rapid growth
• 43 increase in 04 to 2 billion and more than
  7 billion within four years.
• 76 of marcom execs use it today 64 plan
  increased spending
• Trends
• Local search, portals
• Contextual search products

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Communities, online off

• Event trends
• Why Webinars havent supplanted luncheons
• Will big shows return?
• Webinars
• Newsgroups and discussion groups
• These hubs are filled with influencers

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2004 predictions

• On-going noise-to-signal problem (Spam)
• Search
• Online video
• Analytics
• SMB
• Tech marketing rebound
• In Nov., IDC said it expected IT spending to grow
  4.9 in 2004. Now it believes the market will
  growth by 6-8.

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QA