This month, a subsidiary of the industrial giant GE Electric Co. launched a business that, among other services, will sell advertising space on its e-commerce sites.
And today, direct marketing stalwart VentureDirect Worldwide Inc. will unveil B2B On Target, marking the first foray by a direct marketing company into a b-to-b Internet advertising network.
GE Services Network, from GE Plastics, Pittsfield, Mass., will offer marketing, intellectual property, operations, design and financial services to small and midsize businesses.
GE Plastics’ plan is believed to be the first example of an established, industrial brick-and-mortar company forming a business to sell third-party advertising on its corporate domain.
GE Services Network plans to sell advertising on the industry-dominant GE Plastics site and GE Polymerland marketplace portal. And it is expected to announce an agreement with advertising network B2BWorks Inc., Chicago, to act as its third-party advertising sales company, BtoB confirmed last week.
Indeed, GE Services Network could be the launching pad for a horizontal b-to-b advertising network, since GE has a dominant position in more than a dozen industrial sectors.
Web traffic at the two GE sites is significant and should cause potential advertisers to pay attention. Gepolymerland.com receives 1 million page views and 38,000 visitors each month, and is expected to reach sales of between $4 billion and $5 billion in 2001. The corporate site receives nearly 750,000 page views and 60,000 visitors per month. It surpassed $1 billion in sales for 2000.
But GE’s plan is not without critics. Chris Hansen, advertising and marketing services analyst with Banc of America Securities L.L.C., San Francisco, said GE could use its time better.
"GE has a lot more important things to do than selling advertising and marketing services,” Hansen said. "If GE hires an advertising sales force to market their b-to-b sites, they will be moderately successful, but it will always only be a small business for them. They are better off partnering with someone."
In fact, it appears GE is hedging its bet through the partnership with B2BWorks. The agreement calls for B2BWorks to sell inventory that GE Plastics does not sell direct, according a GE Plastics spokesperson.
VentureDirect’s B2B On Target goes into head-to-head competition with B2BWorks, Andover, Md.-based Engage Inc.’s Business Media unit and DoubleClick Inc.’s Sonar Network, New York.
It’s offering will represent publications from such big-business names as The McGraw-Hill Cos., BPI Communications Inc. and PC World Communications Inc.
"B2B On Target is an incredible b-to-b product because we can offer site-specific, channel or run-of-network advertising, [and exposure] in newsletters and [access to] e-mail lists," said VentureDirect President Rich Baumer. B2B On Target was a response to skyrocketing demand by traditional direct marketing customers, he said.
Based on daily calls coming into his company, Baumer said VentureDirect estimates 70% of its
b-to-b customers are primed to purchase advertising keyed to job titles. B2B On Target charges $25 per thousand for run-of-network advertising, and $45 per thousand for vertical industry-specific advertising, he said. That’s slightly below the rates typically charged by B2BWorks, which has said it pushed for $50 per thousand for run of network and in some cases can get several hundred dollars per thousand for vertical advertising placements.
"We are drawing on 20 years worth of direct marketing relationships to launch this product," Baumer said.
B2BWorks’ Reineking said, "We certainly are pleased to welcome them to the playing field, because it validates our business model."
Both GE Network Services and B2B On Target arrive on the scene at a time when existing Internet advertising networks are under pressure from the demise of so many dot-coms and generally reduced Internet ad spending. But GE and VentureDirect will have to offer more than Web advertising banners in order to be successful, ad buyers and analysts said.
One top media buyer called on B2B On Target and GE Network Services to provide advertising pricing based on leads generated, versus the more common cost-per-thousand pricing that many other ad networks charge.
"Buying gross impressions across a run of network, or even gross impressions across a vertical, does me no good," said Matt Thornhill, exec VP of the b-to-b advertising agency Abovo Marketing Group, Atlanta. "I don’t need to buy a network. I need to buy an audience. And that’s the thing the incumbent [ad networks] have yet to address."
B-to-b advertisers buy advertising banners offered by b-to-b Internet networks simply because the fees can come out of traditional print marketing budgets, said Ann Zeller, VP-research for the Direct Marketing Association, New York.
About 38% of advertisers use banner advertisements today, making it the fourth-largest Internet advertising category in usage. This, Zeller said, ranks behind search engine listings (66%), customer e-mails (54%) and reciprocal advertising and links (43%). Yet banners place 11th among all Internet marketing techniques in efficacy, only rating better than unsolicited e-mail, according to research by the DMA.
B2B On Target’s direct mail heritage should serve it well, Zeller said. "Direct mail companies have infrastructures for doing this kind of marketing," she added. "They are used to the database requirements."
David Williams, president and director of media services at b-to-b interactive advertising and marketing company 360i.com Inc., Atlanta, said advertisers will look for flexibility from their two newest advertising sales outlets.
"A lot of networks are only offering standard 468-by-60 [pixel] banners, and in business advertising we are finding more real estate can be a lot more powerful," he said.