With this fresh new flow of cash, marketers from such companies as Amway Corp., Sharp Electronics Corp., Matthew Bender and others are unfurling long, costly lists of enhancements. Electronic commerce, intranets, extranets, content development and site maintenance rank among the top expenditures slated for 1998.
Bar is being lifted
"The bar is being lifted," says Jeff Ratner, associate director, Y&R Advertising's Young & Rubicam New Technologies, New York. Like other developers, Y&R has been increasingly called on to help clients develop and justify Web budgets.
"It's no longer about spending $200,000 to test the new medium," Mr. Ratner says. Companies that are committed to doing business electronically are upping the ante, "budgeting anywhere from $500,000 to $2 million to get that return on investment."
Sharp Electronics is one company putting its money where its mouth is. Its Web budget is expected to double in 1998, with the majority of dollars dedicated to beefing up an already content-rich consumer product site.
"We've gone beyond brochureware to create a vehicle that's heavily customer-service oriented," says Jack Schneider, Sharp's director of marketing communications, whose budget occupies two distinct lines under communications.
Mr. Schneider says this past year's addition of e-mail links to customer service, a list of frequently asked questions and a dealer locator helped eliminate 40,000 calls to the company's toll-free number, representing $100,000 in savings.
Next year's budget will fund even more new content, including downloadable software, registration cards and coupons, as well as a fourfold increase in banner advertising.
Site helps save money
"It's definitely become a more expensive site," says Mr. Schneider. "But it's also helping us save money."
Sharp is not alone. Legal publisher Matthew Bender plans to increase its 1998 Web outlay by 15%, even though the site will lose money this year. The additional dollars are slated for in-house hires to handle site maintenance and development of customer loyalty programs by its Web developer.
"No one is telling me to curtail spending," says Jim Longo, director of marketing information and technologies, Bender.
The company made a bold statement about its commitment to the Web when it created a separate P&L for the site last year. Mr. Longo's business plan, which showed the Web to be more cost-effective in selling information than books or CD-ROMs, helped gain funding to transform its static pages into an industrial-strength, commerce- and database-driven site.
B-to-b an easier sell
Not surprisingly, business-to-business ventures such as Bender's have become the darlings of the corporate financial set for 1998. "It's an easier internal sell," says Anita Bloch, president of Red Dot Interactive, a San Francisco-based Web shop. "The customer base is already there."
Amway Corp. recently created an interactive media department as a new line item under corporate communications. Among other things, the new unit was responsible for shepherding the company's 5-year-old distributor network on CompuServe to a secure Internet site this past June.
The results were as dramatic as those experienced at its consumer site, which now averages 20,000 unique visitors per week; the number of distributors tapping the Amway Business Network leapt from 6,000 to 14,000, according to Ron Brown, manager of communications development.
The company has already recouped some of the money in reduced printing and mailing costs, Mr. Brown says. A slight increase in budget next year will be allocated to additional staff hires, he adds.
Beyond reaching existing customers, corporations are loosening the purse strings to finance Web ventures that expand target markets. Y&R client Ford Motor Co., for example, has dedicated separate dollars to build an Internet, intranet and extranet for a new parts division.
"It's easier to get Web dollars for a start-up," says Mr. Ratner.
For businesses changing their distribution value chain, Web budget approvals are getting even easier. "We're working more frequently with large companies to help forecast and budget for these enterprise shifts," says Robert May, founder-CEO of Ikonic, a San Francisco-based Web shop, which has set up a new division to do Web budget plans.
"Financial services companies, for example, are speaking directly to consumers for the first time. Their Web sites are more complex than just putting up electronic brochures."
As return on investment becomes more attainable, Web marketers who once struggled with non-existent budgets are now securing funds that represent as much as 25% of marketing dollars.
Assured Access Technology, an infrastructure provider to Internet service providers, plans to quadruple its marketing budget in 1998, one-quarter of which will be spent on Web site enhancements that "further automate the customer-service process," says Bruce Baton, director of product line management for the Milpitas, Calif.-based company. "That's up from 10% in 1997, when we first developed the site."
Expenditures will include an new intranet, extranet, enhanced content and construction of a configurator. This last item has been used successfully by Cisco Systems and Dell Computer Corp. to let users design their own products, thus eliminating costly ordering mistakes that companies must reconcile.
"We sold a tight-fisted CFO on these additional expenditures by showing that we could delay the hiring of a fully loaded salesperson or engineer for a year," Mr. Baton says. "At $150,000, that buys an awful lot of configurator or intranet."