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Marketers' Web efforts focus on creating value

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The Web Price Index crystal ball is a little murky these days. Pricing trends are hard to spot, and there’s a broad spectrum of ideas about what the future holds. So we chatted about the state of Web site development and marketing with Rob Cosinuke, president of Digitas Inc., Boston, an Internet marketing services company whose client list includes General Motors Corp., AT&T Corp., Morgan Stanley Dean Witter & Co. and Xerox Corp.

Cosinuke co-founded Strategic Interactive Group, which merged with Bronner Slosberg Humphrey to become Digitas. He has been with the company since 1995.

BtoB: What are some key trends you’ve seen in the past 12 to 18 months?

Cosinuke: There are two key themes that I’ve seen come up over and over and over. Our clients are really trying to derive value out of their Web investments—much more so than in the 1996 to 2000 time frame. It’s getting to be less from a price sense and much more from a return-on-investment sense. It’s, ‘How well will this particular application be used to interface with customers, to collect data about those customers and allow us to optimize the value of that customer over time on a one-to-one basis?’

The other big theme is very few Web-only projects. Most projects are becoming more and more cross-channel. We see this over and over with clients, where the question is not so much, ‘What is the Web doing as a silo vis-a-vis other channels?’ but ‘How are we holistically managing customers and does this Web investment fit into our CRM vision?’

BtoB: What factors into the return on investment?

Cosinuke: Well, first, cost. But more importantly how value will be generated for the client. There are two drivers for value: incremental revenue and cost reduction.

BtoB: Are you doing a lot of CRM work for clients?

Cosinuke: More and more, the Web is being asked to deliver business results, usually around improvements to the value of the customer base.

The trend that we see in site building—not the design part—is that more and more our clients have commoditized that and brought a lot of that, if not all of it, in-house. [Site development] is being done in a more effective way, with lower-cost programming support that [marketers] either have in-house or through their primary systems integration partner.

But for site design, we’re still seeing a lot of demand for pushing the envelope around the user experience and user interface. What we see is a lot of the potential and promise of the Web that, frankly, hasn’t come to fruition. So we see our clients pushing hard on personalization more than ever before and to me that means, ‘How do I manage customer relations?’ That’s more about CRM.

In the next 12 months, things like personalization and merchandising are going to be more at the forefront than they have in the past. They’ve been kind of hyped in the past, but now if [marketers are] going to spend, I think our clients are going to focus on these value drivers.

[There’s a renewed focus on] basic database marketing. Make the systems [that have been developed] work from a segmentation standpoint, from a targeting standpoint, for customized treatments by segment and need—tailoring the communications and then using the systems to help drive better analytics and continuous improvement.

BtoB: Is this true in the b-to-b realm as well as b-to-c?

Cosinuke: It’s much more b-to-c than b-to-b, but b-to-b is slowing getting there

BtoB: What do you think the holdup is?

Cosinuke: I think the holdup is largely the fact that in the b-to-b space all of marketing is about supporting sales and sales forces. The integration of marketing automation systems with sales force integration is still part of the promised land, but it hasn’t come to fruition. The b-to-b space is much more about tools and software to support sales forces. Call center integration, outbound calling environments to support lead-generation and so on.

BtoB: How does the current state of the economy affect the bottom line and the rate card?

Cosinuke: It’s actually improved our bottom line, believe it or not, because we have much more control of forecasts. We have a really strong sense because we’re much more deeply engaged with our clients. Our forecasts have become much more accurate. Therefore, our cost structures can be managed in such a way that we’re actually achieving Wall Street margin forecasts, quarter on quarter on quarter.

But we have not been able to increase prices lock, stock and barrel. That’s going to be an ongoing challenge. We work in an industry with a lot of young professionals. They want to get raises, they want to get promoted, they want to be in a growth industry. Increased prices is part of that. But this sort of decline has actually been good for our business on a macro level because it’s given us much more control.

Where you can show that you’re driving value, there’s flexibility not just in pricing but in scale. If you can deliver value right now, clients have the marketing dollars to pull into those lanes. And then it’s less about rates because you’ve got volume and scale.

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