BtoB

Marketers to stress customer acquisition in 2005

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B-to-b marketers will continue to increase ad spending in 2005, focusing on customer acquisition and driving sales over brand awareness.

These are some of the key findings of an exclusive BtoB survey, "2005 Marketing Priorities and Plans," conducted online last month among more than 300 marketing executives.

Customer acquisition was named by 28.4% of marketers as their primary goal for 2005; driving sales was cited by 26.8%. In the 2004 survey, driving sales was cited as the primary marketing goal by 31.8% of respondents, followed by customer acquisition (28.4%).

Brand awareness was cited by 17.5% of respondents as their primary marketing goal, compared with 15.6% in 2004. Other marketing goals for 2005 are lead generation (16.4% in 2005 compared with 14.2% in 2004) and customer retention (7.7% in 2005 compared with 7.1% in 2004).

"Customer acquisition and retention will be our major goals," said Mark Rentschler, marketing manager at Makino, a Mason, Ohio, manufacturer that provides machine technology for the metal cutting and die/mold industries. While Makino will do some brand advertising for its wire EDM (electric discharge machinery) in order to build awareness in that category, Rentschler said his marketing budget will be down in 2005. This is primarily due to the fact that the company has a larger marketing budget in years in which the International Manufacturing Technology Show is held. The show, held every other year, took place in Chicago this year.

BtoB's 2005 survey found that about half (49.7%) of respondents plan to increase their ad budgets in 2005, up slightly from 48.2% of respondents that planned to increase their ad budgets in 2004. Only 14% of respondents said they planned to decrease their ad budgets in 2005, compared with 15.7% in 2004; and 36.3% said their budgets would remain flat, roughly the same as in 2004.

At Machine Solutions, a Flagstaff, Ariz., company that provides supply process and testing equipment to the medical device manufacturing industry, the ad budget will be up, said James Kasprzyk, director of global marketing. The 5-year-old company will invest most of its marketing dollars in building brand awareness, Kasprzyk said.

Machine Solutions plans to increase its print budget, using very targeted medical device journals domestically and internationally, he said. The company will also increase its online budget, using enhanced listings on medical device supply sites, banner ads, an e-mail newsletter and a redesigned Web site.

Schneider National, a Green Bay, Wis., trucking company, likewise will make brand awareness its top priority 2005, said Tom Nightingale, VP-corporate marketing. Customer acquisition will be a close second, he said.

Schneider overhauled its corporate marketing department two years ago and has been ramping up its marketing investment, which is now at a sustainable rate. For that reason, the marketing budget will remain flat in 2005, Nightingale said. But he revealed the company plans a major brand repositioning campaign in 2005 that will involve print, online, direct and events.

When asked how they would allocate marketing dollars across media, 68% of survey respondents said they planned to increase online spending in 2005, compared with 62% in 2004. Direct mail will also receive a boost in 2005, although not as great as in 2004 (47% in 2005, compared with 53% in 2004).

One-third of marketers plan to increase their print spending in 2005, compared with 37% in 2004.

When using print, "More money is going to be spent trying to get the best placement," said Kevin Arsham, associate director of strategy and b-to-b specialist at OMD Worldwide, the media agency of Omnicom Group.

"People will be fighting over back covers and front inside covers," he added.

However, many marketers are decreasing their print budgets in favor of online.

As with other marketers that say they can realize a greater return from online investments, Makino will decrease its print budget in 2005 and increase its online budget, primarily in the area of Web development.

"We will continue to expand the interactivity of the site, making sure that instead of just being a marketing site it has a lot of user functionality," Rentschler said, pointing to areas such as e-commerce and CRM, which will be expanded on the site.

Web development was cited as the primary online area for marketing investment in 2005, with 38.4% of respondents indicating they planned to increase spending on their Web site. (The 2004 survey did not ask specifically about Web site spending.)

E-mail will continue to see increased spending in 2005 by respondents (21.5%), but not by as much as in 2004 (40.9%).

The survey also found that 13.5% of respondents will increase their search budgets in 2005, compared with 21.3% in 2004.

The 2005 survey also seems to indicate that banner ads are losing favor, with only 5.2% of respondents planning to increase banner advertising in 2005, compared with 7.5% in 2004.

"Budgets are shifting to non-advertising vehicles," said Courtney Buechert, managing director of McCannErickson, San Francisco, whose b-to-b clients include Microsoft Corp., AMD and Applied Materials. "Digital is being valued as a CRM/DM type of engagement."

The survey did not ask about database marketing, but many marketers said that will be an increased focus in 2005.

"Database marketing use is going to increase," said Jennifer Dorsey, customer development and loyalty manager for U.S. Small and Midmarket Solutions & Partners at Microsoft Corp. "Interest in customer analytics and understanding is important, and we'll see more investment in this area."

In other results from BtoB's 2005 survey, 68.8% of respondents said they plan to launch new ad campaigns in 2005. Hiring will mostly remain flat: 67.6% of respondents report no change in hiring plans in 2005, while 28.8% said they would be hiring. Only 3.7% plan to decrease staff.

When asked to rate their ad agency in terms of willingness and capacity to tailor programs to fit their marketing goals, 36.3% said "excellent" and 57.8% said "OK." Only 3.9% rated the relationship as "poor" and 2% said it was "unacceptable."

Media partners faired nearly as well: 24.7% said it was "excellent," 65.8% said it was "OK" and only 8.7% said it was "poor." 

Carol Krol contributed to this report.

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