Online Advertising: Where Does It Fit Into the Marketing Mix?
It depends where prospects are in the purchase cycle.

Jesse James, the infamous outlaw of the Wild West was asked one day why he robbed banks. The answer: “Because that’s where the money is.” If you ask analysts, media buyers and ad agencies why so much money is shifting into digital advertising, the logic is similar: that’s where the eyeballs are.

As we discuss in the Market Research section of today’s issue, Internet advertising is now the sixth most heavily used advertising medium in the U.S. It grew at a 77.5 percent compound annual growth rate the previous 10 years and is expected to grow nearly 40 percent annually over the next half decade. This according to the Jordan Edmiston Group, a New York-based M&A firm specializing in media deals. To put this growth rate in perspective, ad spending on network TV has been growing at a 4.2 percent annual rate, newspapers at 2.9 percent, magazines at 4.0 percent, radio at 7.0 percent. The only other medium to attract a double digit increase in ad spending over the same time period was cable TV, another highly targeted medium, at 17.3 percent.

The Web may not be a marketer’s magic silver bullet — that went out during the dot-com bust — but it does help you out in several important ways. First, it’s the most effective and most heavily used advertising medium for reaching the at-work crowd, especially if you’re a B2B marketer trying to reach influential decision-makers (and their deputies). Second, the Web is the medium that consumers turn to first in the early stages of the purchase cycle — i.e. when they’re doing research, educating themselves about your product or service category, exploring vendor options, doing due diligence and the like. In other words your digital marketing messages are most effective when targeting potential buyers at the top of the buy funnel. Don’t expect to close the deal on the Web — especially if you have a high ticket item with a long and complex sales cycle.

The idea is to get them to your Web site, induce them to call your toll-free number, download your white paper, sign up for a free trial. This gets them primed for your sales force (or trade show exhibit team) to take over and close the deal. So it’s all about Web, events and the sales force right?

No so fast. Trade magazine advertising is still the most highly trusted medium among business decision makers, according to recent studies conducted by Harris Interactive and American Business Media. It’s where you want to put your brand emphasis so when customers are narrowing down their choices and making final decisions, you stay at the top of their minds.

Still Not on Board With Digital?

Like it or not, the trend toward digital is likely to continue. Consumers are increasingly media-savvy and in control, according to a recent Jordan Edmiston Group report. “They want to participate in media, manipulate media and interact with media. New forms of content are emerging that cater to these desires.” That’s why experts think nearly $16 billion will be spent on Internet advertising in 2006 — compared to just $8 billion at the height of the dot-com boom in 2000 and $6 billion during the bust-era trough of 2002.

Here’s another fact to mull over. There is a pretty big disconnect between ad spending devoted to the Internet and the consumer mind share devoted to the Internet. It’s just a matter of time before the ad spend on Web advertising catches up to the amount of time consumers are devoting to that medium

Sources: Interactive Advertising Bureau; PricewaterhouseCoopers; National Newspaper Association; Radio Advertising Bureau; Television Bureau of Advertising; Universal McCann

We’re not saying digital is more or less effective than other media. In fact, it’s very complementary with trade magazine advertising and trade shows (see chart below). Each medium has its unique strengths, depending on where a prospect is in the purchasing cycle.
Again, it’s not that one medium is better than the other, but a campaign works best when all three legs of the stool are utilized and you realize the unique strengths of each.

A recently published study by Harris Interactive on the importance of business media among executives in companies with $5 million or more in annual sales, found that B2B media are held in high regard among executives with a strong majority who consider B2B magazines, events and digital media to be more informative and reliable than general media sources.

Here’s what came out. The Web is the “at work” medium and it’s the first tool that most busy execs (and their staffs) use to do research on products, services and strategic partners they’d like to learn more about.

During all phases of the purchasing process, a synergy of different B2B media offers executives the guidance they want every step of the way. The most used resources throughout the research process, at each level, are highlighted below:

Different B2B media are perceived by executives as having different strengths:

If you’re still mulling undecided about how to allocate your 2007 media budget, let us make it easy on you. Just put your money where the eyeballs are — and rebalance your spending appropriately.