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Each issue of CMO Close-up features an interview with a CMO, as well as other marketing executives answering that issue's "Big Question."
This week's feature:
Close-up with Laura Howard, CMO, ECI Telecom
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Issue Alert - Top Stories |
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Dealing with the old end-around
Agencies and media companies adjust as marketers communicate directly with customers
Sean Callahan
Story posted: September 14, 2009 - 6:01 am EDT
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B-to-b marketers today have more opportunities than ever before to communicate directly with their customers and prospects.
Old stand-bys such as sales calls and direct mail now stand alongside such newer formats as corporate Web sites, e-mail marketing and Twitter that have provided marketers with less expensive forums to speak directly to their customer bases. In the face of that, both advertising agencies and business media companies have been forced to adjust the ways they deal with clients.
“We're going with the flow,” said George Rafeedie, principal at marketing communications firm Blue Silver. “We adjust to what the marketer wants to do—as long as it makes sense.”
“It is changing b-to-b media, in my opinion, and not for the better,” said one media company executive who spoke on condition of anonymity, complaining about the creeping “commoditization” of magazine audiences in general and of leads in particular.
The trend toward marketers spending more on direct digital communications may be larger than most agencies and media companies anticipated even a few years ago. Analyst firm Outsell believes these new forms of direct communication—especially corporate Web sites—help to explain the plunge in trade publication advertising, down 30% in the first half, according to American Business Media figures.
“Companies can reach their consumers directly these days, and investments in social software, community building and a company's own online promotions will continue to suck the air out of the room,” Outsell VP-Lead Analyst Chuck Richard said. A recent Outsell report that surveyed 1,223 individuals estimates that corporations will spend about $65 billion on their own Web sites this year, an expenditure that is almost equal to annual ad spending on broadcast and cable television.
Additionally, of the companies Outsell surveyed in February that planned to spend less on trade magazine advertising, 29% intended to redirect that money to investment in their own Web sites.
A Forrester Research report conducted online in January and released in April, “B2B Marketers' 2009 Budget Trends,” showed the broad appeal of Web site and e-mail marketing to b-to-b marketers. The two most popular tactics for b-to-b marketers this year (317 b-to-b marketers responded), according to the report: company Web sites (cited by 94% of respondents) and e-mail (cited by 84%).
So how are advertising agencies and business media companies responding to these changes in the marketplace, which have been coming for a decade but were accelerated by the recession?
“In fairly short order, we've gone from a world that has been primarily concerned with building awareness to one that has become increasingly concerned with engagement and interaction with customers and prospects,” said Rick Segal, CEO of agency GyroHSR North America, who said advertising agencies must be skilled in a number of disciplines, such as video, social media, direct mail and Web site construction, and not just creating ads. “We've moved from a world where you throw a few things out there to throwing a lot of things out there all the time.”
Trade publishers are also making efforts to move beyond print advertising as their main source of revenue, with forays into webcasts, white paper postings, online videos and other digital formats designed to generate leads that marketers can contact directly.
Publishers say that even as b-to-b marketers are able to communicate more directly with customers and prospects, their databases always need updating, which is where business media has always been useful. “The customer database ages over time, so if they [marketers] don't keep replenishing it with new names, then it's useless,” said Larry Greenberger, group publisher of Cygnus Business Media.
Much of the work that business media companies are doing for marketers involves lead generation. One technology media company executive, who asked not to be indentified, expressed concern that the focus on leads is turning business media into a commodity business. Instead of merely providing access to an audience for a fee, publishers searching for revenue now find themselves being paid on a per-lead basis. “All the risk has been shifted away from the marketer and onto the media company,” the technology media executive said.
In this past, the executive said, providing access to the audience via an ad campaign and list rental might yield $100,000 in revenue for a business media company, and the marketer that rented the list might have ultimately found 200 strong prospects. Today, the media company has to do the work to find the prospects for, say, a marketer-produced webcast and might get paid $50 a head for those who register. In that scenario, generating 200 leads would equate to a 90% drop in revenue for essentially delivering the same prospects. “It's troubling, quite frankly,” the executive said.
Other media executives said that publishers must create more value from the leads they deliver to marketers. Kevin Vermeulen, senior VP-events at ALM Media, said his company helps score leads for customers via efforts online and by telephone.
Sean Griffey, CEO of Questex Media's Fierce Markets, said the marketing venue may have, in many cases, moved from print to online, but the basic premise of b-to-b media has not changed. Media companies must attract valuable niche audiences with strong content, then connect marketers with those niche audiences. One of the key differences these days, Griffey said, is that the Internet enables smaller niches, which should in turn deliver leads that marketers are willing to pay higher prices for.
To do this, media companies need to set up sophisticated systems to attract and identify their audiences. “We ask some basic level of basic demographic questions—title, company and the like—when we sign people up, but truly the best way to know what someone is really interested in is by their behavior. If they've done three webinars on a topic and read four white papers, then we know they're a good prospect in that area,” Griffey said.
That, he said, is the way to avoid commoditization. “In this environment, if my competition is giving you leads for $35 a head, and I'll give it to you for $34, that's a race to the bottom.” M
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7 Comments
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Denis OMalley
Nelson & Miller Publisher's Rep
October 14, 2009 02:02 pm
Representing Society of Automotive, American Society of Heating Refrigeration and Airconditioning Engineers, and Pipeline & Gas Journal, almost all of my advertisers and prospects tell me that they read magazines as avidly now as ever...I don't see print as a dead medium.
But no doubt businesspeople consume information differently online than in print. Success in B2B world will result from leveraging all of our content and industry relationships throughout all multimedia platforms.
Impact & frequency is what builds a company. Right now given the economy, lead generation is king and the driving force, not building up the brand
Salesgirl
October 5, 2009 11:03 pm
At the end of the day you can't replace a $10K ad page with a $2K (insert digital product here) and expect that math to add up for the media companies.
guest
guest
October 6, 2009 12:26 am
Kevin Vermulen from ALM/Incisive doesn't even know how to turn on a computer. How is his company help generate online leads?
Steve Kirstein
OnProcess Technology - Dir Marketing
October 7, 2009 11:24 am
To paraphrase the old joke about the dog:
Q: Why does the B2B company reach out directly to its prospect?
A: Because it can.
You mean we no longer have to fork over huge, speculative, up-front CPM-priced sums for a vaguely defined "potential readership (or viewership)", then cross our fingers and pray?
Imagine that.
At least some of the interviewees understood that they need to provide tangible added value or change business models.
The Communicator
FameFoundry.com
September 14, 2009 01:31 pm
Good report, however just as many agencies who recognize the benefits of changing the way they do business are resentful toward it. It's because they don't understand it and can't sell it. Clients recognize the smoke and mirrors and the inflated costs associated with traditional methods. The recent recession has caused clients to take a closer look at how they spend their marketing dollars. More at www.famefoundry.com.
Anthony Green
Concep - President
September 14, 2009 08:51 pm
Certainly accurate but I'm amazed that some people interviewed in this article are only just realizing the profound shift to digital?
Dianna Huff
Principal, DH Communications, Inc.
September 22, 2009 07:10 am
Anthony,
Yep, completely agree with you. And the quote from this exec killed me: "All the risk has been shifted away from the marketer and onto the media company," the [anon] technology media executive said.
Isn't this an agency's job -- to deliver measurable results to a client? If an agency knew how to use the new tools available, it shouldn't be exposed to "risk."
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