Research Center >> February 2008

What to Do When the Chips Are Down? Innovate
Consumers are taking control of advertising content and consumption. They want stories and they want ’em on their own terms.

“For most of us in this room, the ‘R’ word hasn’t really hit … yet, but it could be a rocky road ahead,” quipped Bob Felsenthal, Publisher of BtoB Magazine at last week’s New York Business Marketing Association breakfast in Manhattan. Jim Spanfeller, President & CEO of Forbes.com concurred: “So far so good for us, but I’m concerned based on historical media spending patterns and the latest numbers coming out of Washington.”

Despite competing with Super Tuesday Primary elections and the New York Giants Super Bowl victory parade in New York last week, the BMA confab was surprisingly well attended. A mix of business marketers, the old media guard, new media digerati and agency professionals filled the stately, wood paneled ballroom of the Yale Club with inspired talk of micro-targeting, social networking, podcasting, integrated platforms and other B2B marketing trends expected to bubble to the surface in 2008.

Felsenthal, with Obama-esque candor, warned the audience that the status quo would be no more: “What we do know is that things will change as the economy changes,” causing a ripple of nervous laughter among attendees. “The rate of change is accelerating, not decelerating, and we anticipate some seismic shifts as media dollars start to follow the eyeballs,” intoned Spanfeller. “The amount of media dollars spent online is increasing, but it’s not commensurate with the amount of time consumers are spending online.”

On a more upbeat note, Felsenthal assured attendees that the latest BtoB Magazine survey determined two-thirds of business marketers will have larger budgets in 2008 than they did in 2007 and only a fraction of those who didn’t garner budget increases will see actual cuts. How will their spending increase?

• 79 percent will be increasing their spending online
• 50 percent will be increasing their spending on events
• 28 percent will be increasing their spending on print

Among online categories, 70 percent of business marketers will be increasing their spending on Web sites and e-mail marketing; 39 percent will be increasing their spending on Webcasting and video; 36 percent will be spending more on banners; and 30 percent will be increasing their spending on sponsorships and social media.

So why haven’t B2B marketers increased their Web spending to meet the apparent demand? Spanfeller pointed to high turnover at agencies, privacy issues and “an incredible amount of infrastructure issues on the Web. It’s still not easy enough to do business on the Web.”

“When the chips are down — real or perceived — these are the times that drive innovation,” said John Osborne, VP & Associate Media Director for global advertising agency BBDO. “We should see more transparency, such as CEOs writing blogs; more social networking and more focus on emotion in communication and the art of story telling.”

“As old-line insurers, we’re focused more on customer retention than on acquisition this year,” said Nicole O’Rourke, Aetna’s VP of Advertising & Brand Management, who is earmarking about 15 percent of her budget to digital advertising in 2008. “Half of all our advertising is focused on continuing the Aetna dialogue with customers — how to make it more compelling. We’re doing a lot of Webcasts, podcasts and downloadable media.”

BBDO’s Osborne said his focus was on building lasting relationships with clients, although it’s increasingly difficult when marketers keep changing jobs at client companies. “We have to avoid getting complacent and keep getting better analytics. We operate in a healthy state of paranoia … I hope I don’t get left at the curb.”

Aetna is also minding its marketing numbers. “We’re making a tremendous investment in ROI measurement,” said O’Rourke. “Some things are still incredibly hard to measure. Good marketers must be good business people. You need to know how your business makes money, how it works. I can’t just go in to top management and talk about how we increased traffic so much on our Web site. They’ll say ‘Great. How much new business did we get?’”

Spanfeller noted the Web has also opened up new possibilities for doing research. “We can measure the effectiveness of specific advertising creative in ways we never could before. We can also do much deeper research into the wants and behaviors of the audience.”

On the subject of online video, BMA panelists were unanimously enthusiastic. “It’s going to be huge,” said BBDO’s Osborne. “TV advertising drives you to the marketer’s Web site where you can get much deeper content in a variety of formats.” Spanfeller said the Web is not necessarily a medium or a channel per se. “It’s a platform.” And because it’s a platform, “the consumer has control. You can select the content you want. When you want to get it and what format you want to get it in. It can be video, audio, text, chat or all of the above.”

O’Rourke said TV and print are must learn to work together with online. “For example, a TV or print ad will drive customers to our Web site where they will download a white paper about one of our plans, say for women-owned businesses, and then continue the discussion with an Aetna sales representative.”

The panel echoed the importance of story-telling. BBDO’s “total work” concept is about integrating all the media components to tell a compelling story, said Osborne. “It’s not so much about commercials,” said O’Rourke, “we’re doing vignettes about our plan holders. How do you get more out of your plan? Is Medicare insurance right for you? Is your family size changing? Your health plan has new needs.”

When it comes to search, panelists tiptoed around the sensitive issue of “click-fraud” and agreed that it’s still the most-talked about form of online advertising and still garners the largest share of online ad budgets — about 40 percent — but they said B2B marketers are becoming more knowledgeable of its limitations.

“No doubt, search continues to be an important part of the equation for us, especially for (customer) acquisitions, but it’s not without challenges,” said O’Rourke. “Look at trademarks. Search makes it too easy to buy someone else’s trademark and run ads for it. I’d also like to learn more from search technology, so we can make the search engine on our own site more effective.”

Spanfeller said that paid search sometimes get “too much credit” for the conversion results from an integrated media campaign. “Let’s say after five or six exposures to media ads, the consumer finally types in a keyword and makes a buy. Search gets all the credit.”

So mind your numbers. Tell great stories and operate in a healthy state of paranoia. There won’t be a lot of easy wins for B2B marketers in 2008. But, as the New England Patriots learned the hard way on Super Sunday, those who come to the battlefield better prepared will get their share.