A new survey provides strong evidence that the Web is becoming ever-more mainstream for sales and marketing—even as the medium struggles to gain a larger share of advertisers’ budgets.
Fifty-four percent of b-to-b and business-to-consumer marketers consider the Web a standard sales channel, ranking it second, behind direct sales forces (59%), according to respondents to DoubleClick’s Marketing Spending Index study, to be released this week. The spending index found online outranks retail, reselling, telemarketing and catalog marketing as a standard sales channel.
"These companies seemed much more optimistic than Wall Street about revenue growth in the next 12 months," said Susan Sachatello, chief marketing officer at DoubleClick Inc., who presented the findings at the company’s Insight 2002 conference in New York late last month.
While almost half of the 700 marketers surveyed (49%) indicated "reach" is the biggest barrier in allocating more dollars to online advertising, the study found the Web’s gross rating points (GRPs), a standard measurement for determining TV viewership, are in fact competitive with television. GRPs delivered for the top 25 Web sites were 160 among 18- to 49-year-old adults, compared with 172 GRPs delivered in primetime TV.
"If b-to-b marketers are shying away from the Internet out of skepticism, this study suggests that large Web sites can deliver audiences relative to TV and magazines," said Rob Frydlewicz, a research consultant to DoubleClick.
In spite of high attendance at the DoubleClick’s two-day conference—several sessions were standing-room-only—both presenters and attendees were realistic about this year’s unexciting prospects for online advertising.
"The number of companies cutting back advertising right now is growing," said DoubleClick CEO Kevin Ryan in his opening remarks.
If anything, the conference underscored the thorny issues that continue to trouble marketers and their agencies, issues that have kept them from spending significant money on Internet advertising.
Dominating both the formal agenda and the hallway conversations were subjects such as online’s lack of measurement standards, inconsistent reporting, privacy issues, complicated media buys and poor creative execution.
"Until we move from a broadcast perspective, nothing will change," said Charlie Tarzian, CEO of Euro RSCG Circle, a digital advertising agency, during a panel discussion among advertisers and Web publishers. "You’ve got to bite the bullet from the agency side and make enormous investments," he said, referring to the need for standards that will make planning and buying less complicated and less labor-intensive.
Economics just don’t work
"The economics of this industry just don’t work," said Doug Knopper, VP-advertiser and agency solutions at DoubleClick. "TV is easier and more profitable."
Knopper echoed the now-common refrain that "new tools need to be developed" for planning online buys. DoubleClick’s own innovations tied to its new media planning tool, MediaVisor, will begin to "make the process easier and less complex," he said.
Erin Gold of Telus Ventures, a Toronto-based telecommunications company and a DoubleClick client, said one frustration is that advertisers and Web publishers will always be at odds. "The advertiser wants cost-per-click, but the publisher doesn’t," she said.
But there were more optimistic comments, too. Forrester Research analyst Jim Nail, who presented an industry forecast, said he thinks Internet advertising is "gaining credibility," compared with six months ago.
Nail said while advertisers may not be ready to open up their wallets and spend the money, there will be lots of testing of campaigns this year, with perhaps 5% to 10% growth in online spending. He doesn’t predict a true turnaround until 2004.