Special Report: Engage, B2BWorks execs define success

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Engage, B2BWorks execs define success

The two leading b-to-b advertising networks, Engage Business Media and B2BWorks, are locked in a battle. While both manage clients' ads on a network of b-to-b Web sites and offer a range of ancillary marketing services, they approach this work from very different perspectives and strengths.

Newcomer Engage Business Media has the advantages of big budget backing. A division of Engage Technologies Inc., it can tap the resources of owner CMGI Inc.'s formidable business-to-consumer network of marketing companies. Launched in May, Engage Business Media already has made use of parent Engage's advertising sales team, as well as personalization experts at Flycast Communications Corp. and experienced Internet advertising personnel at Adsmart--two CMGI companies.

B2BWorks has the advantages of being a first-mover. Formed in early 1999, the privately held Chicago-based firm has signed some of the top trade publishers in the industry, often exchanging equity for exclusivity. It has managed to raise $16.9 million to date and is credited with creating the notion that b-to-b Internet advertising services must develop separately from b-to-c ones. B2BWorks currently claims coverage in some 60 vertical industries.

BtoB recently spoke with Joanne Currie, general manager of Engage Business Media, and Bill Furlong, president and CEO of B2BWorks. In separate interviews, BtoB reporter John Evan Frook posed identical questions about how b-to-b marketers should structure Internet campaigns, the role of the publisher and the future of direct marketing.

BtoB: Let's pretend I'm a b-to-b marketing executive, and I'm considering signing up with one of you. What's your best pitch?

Currie: If you look to reach one of our 12 vertical markets or soho [small office, home office] audience in general, we have a much stronger solution. We've focused site acquisition efforts on core verticals. That's allowed us to build critical mass in all those verticals. The way we approach this business is to get serious critical mass in these verticals before moving forward.

Furlong: Consider us because we believe in an integrated approach to bringing products to market. You already do traditional marketing, and we're not telling you not to. Do your trade shows, sales, direct marketing and print advertising. But if you've spent money building e-procurement and e-commerce systems, you're now saying, "Where are the people?" What we do differently than the other folks is that we can do more than ad banners. We can bring together all the other platforms within the Web world, including e-mail newsletter sponsorships, opt-in e-mail lists, content sponsorships and directory programs.

BtoB: Suppose I represent one of the 2,000 largest companies in the U.S. What's the best approach to b-to-b Internet advertising?

Currie: Big companies are looking at spending $1 million at a time throughout various properties. We recommend to our clients most highly an e-mail newsletter. Even if a site only has 40,000 impressions monthly, they ought to have a strong e-mail newsletter, going out to 50,000 to 100,000 people. They've also identified the job function those people are in. It is a precise, targeted audience for them to hit. We usually recommend that at least half their budget be spent on e-mail newsletters. We always recommend banners [as 35% of the budget]. Banners are not dead in b-to-b marketing. They are still very strong. The remaining 15% should be their own e-mail marketing with opt-in e-mail names.

Furlong: We suggest you create a new marketing budget for your online program, which is anywhere from 2% to 5% of your overall marketing budget. Look at it as not only an advertising budget but also a direct marketing budget. It should be separate from your Web site building budget, too. You should make a significant investment because Internet b-to-b advertising is branding, direct marketing and justification for your own Web site and e-business platform. You should define what you are looking for: that is, whether you want a sale, a sales lead, a visit to the Web site, or you are filling out a registration for a sweepstakes. I would suggest e-mail as an integral tool to the online marketing campaign.

BtoB: What if I'm a marketer at a small business? How does the model change?

Currie: If I were a small marketer I would probably focus 90% of my budget on e-mail newsletters. They are more targeted, have higher click-throughs. If youdon't have a lot of money to spend, it is tough not to get lost in a banner campaign. The payout for a small business is definitely in an e-mail newsletter program.

Furlong: For that small company, it is not about buying run-of-site but buying types of visitors or particular content areas within the site. It is less about volume and more about drilldown, which obviously has a higher CPM [cost per thousand]. Our model, vs. others, has heritage publishers with controlled-circulation data. We're gaining the ability to be more molecular in our targeting. I'd recommend building your own e-mail database through sponsorships in our newsletter network. We'd also put them in more directories.

BtoB: After you've collected a lead through Internet marketing, how do you use the Internet to treat that prospect?

Currie: No business we work with sends more than two e-mails per month. Pitch them every second week. We've found that the drop-off rate--the "unsubscribe" rate--significantly increases if you go beyond every second week. Remember that these are really valuable relationships. Those names are the lifeblood. You have to be really, really careful not to overuse them.

Furlong: Never falsify a domain name to send e-mail. Provide the ability to stop future messages. Put in the subject line what your e-mail is about. Remember, that the "From" line of an e-mail message is a brand tool unto itself. If you have a trusted brand, leverage it. Offer the customer white papers, access to privileged information on your site or a free conference to a trade show. And make live sales people available for follow-up.

BtoB:If I'm a b-to-b publisher, why should I sign with you for representation?

Currie: If you are one of those 12 verticals, then you need the strongest possible audience, which will bring you the highest CPM. We have access to Engage's [b-to-c] sales force of more than 200 salespeople and a specific vertical sales force of 16 people.

Furlong: We've brought together a variety of ASPs [application service providers] to help the publisher become a better Web business, including serving technologies, Yellow Page directory software and new content sources. We don't just sell advertising but help build a business.

BtoB: We're hearing a cry for new metrics specifically designed to meet the needs of b-to-b advertisers. How should b-to-b marketers look at return on investment from a b-to-b campaign?

Currie: We don't use the CPM model. We use the cost-per-lead model. We realize that a lot of b-to-b sites don't have a lot of impressions, and the CPM model doesn't properly value how important those impressions are. Cost per lead runs from $10 to $30.

Furlong: The CPM model will be an anchor, but the ultimate is cost-per-acquisition [CPA]. It is a little too early to say what will work. Every vertical has a different nuance, [and] we'll find out what they are as we plough forward.

BtoB:How do you expect traditional direct mail and online b-to-b marketing to converge?

Currie: The clients we are working with are really looking for replacement as opposed to convergence. There's a little bit of convergence going on right now, but the intention is to replace. It allows marketers to concentrate on their core business and allow someone like us to manage a program for them at one-tenth the price of a direct-mail program. That's definitely where the very large players are going.

Furlong: Online b-to-b direct won't replace traditional direct marketing. It absolutely will complement the tool. You'll see it as a real-time [tool] to buttress the use of traditional direct marketing. Offline database companies are going to want to participate, and they'll figure a way to leverage their significant offline assets and build new businesses. Those moving ahead solely online will find that their data is good, but they also need to find offline data. There will be a slew of partnering on that front.

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