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Special Report: Making an impression

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Andrew Lovasz never thought spending money could be so hard.

Lovasz was working the phones last month in hopes of placing a major automotive industry supplier's first Internet marketing campaign. But he found many trade publishers were brain dead when it came to the Web.

"It was difficult to place advertising on the sites of a number of publications because they were unfamiliar with the terminology of doing business on the Net," said Lovasz, the b-to-b media director for Internet media strategy firm Beyond Interactive Inc. "I had to give them tutorials on how to do business with them. Imagine doing that 50 times."

To shield media buyers from the hassle of dealing with multiple publishers or individual Web sites, advertising networks have evolved.

Advertising networks sit between a publisher and an advertiser. They're designed to provide publishers with a means to supplement their own sales efforts, which increasingly include online components along with print, trade shows and other media.

Because the in-house staff can't possibly sell all of the Internet inventory available, advertising networks provide publisherswith an attractive way to boost the bottom line without threatening their own sales team. Advertising network salespeople sell Internet exclusively. In business-to-consumer, they've proven their ability to increase revenues.

But in b-to-b, these networks may have even more promise. Sites that can deliver a highly targeted audience--for example, chemical engineers working in the toy industry--need not have lots of traffic to be of value to a b-to-b marketer. These sites would never have the traffic necessary to be of interest to a b-to-c advertising network, but they are of great interest to b-to-b companies. More often than you'd expect, these prime sites have no Internet ad sales staffers at all. In that scenario, the advertising network operates as the sole advertising revenue source for the site.

A big question

A big question is whether b-to-b advertising networks will be able to corral enough niche publishers to make a difference. A b-to-c advertising network such as DoubleClick Inc. can get a substantial amount of action simply by signing its share of the top 25 trafficked sites. A b-to-b network, on the other hand, might need hundreds of sites--including some with as few as 25,000 monthly impressions--to achieve their desired reach.

"Offline, a b-to-b advertiser can buy a targeted list and reach people with specific job titles," said Andy Jacobson, a VP at DoubleClick and general manager of its Sonar Network. "There aren't too many Internet players who can reach human resource executives, doctors, accountants, nurses or lawyers effectively," he said.

Uncertainty in the b-to-b sector also is exemplified by the fact that neither DoubleClick nor rival 24/7 Media Inc.--two established b-to-c ad network companies--has yet created formal plans to serve the b-to-b market. The reason? The numbers simply aren't there.

Although b-to-b Internet advertising is expected to eclipse $2.56 billion by 2002, it reached just $410 million in 1999, according to Forrester Research Inc. That's equivalent to 4.14% of the $9.9 billion b-to-b marketers spent on b-to-b print advertising last year, according to the trade association American Business Media.

DoubleClick's leading b-to-b categories are travel, finance, small office-home office (soho) and information technology. Advertisers in those sectors are showing up in record numbers, Jacobson said, but the needs of those marketers can be met without splitting b-to-c and b-to-b operations. Consequently, there has been no call from advertiser clients for DoubleClick to move off its core competency and create a new offering, he added.

At 24/7 Media, just seven of its 730 employees are dedicated to b-to-b advertising, focusing on health, soho and finance. But it won't always be that way. "We truly feel we are in the early growth stage as of right now,"said Scott Paternoster, senior VP-sales. He contends that b-to-b direct advertisers are finding Internet campaigns to match or exceed results from direct mail.

"A big advantage is that the turnaround time on an e-mail campaign is two days vs. three weeks," Paternoster said. "Clients can adjust campaigns much quicker."

Others also are showing definite signs of life. Lex Sisney, CEO of Commission Junction, said b-to-b advertising is on the rise at his network, which offers publishers a mechanism for selling hot links to advertiser sites built into content. Corporations, he believes, have been focusing on building their own e-commerce infrastructures, which has throttled the b-to-b advertising market thus far.

"Businesses are still building Web-enabled back-end operations, integrating suppliers and creating new systems for fulfillment," Sisney said. "Once they do that, you'll start to see b-to-b marketers looking for ways to bring partners into their network."

As b-to-b ad networks ramp up, they hold worlds of promise to media buyers. But some suggest total reliance on a network is both incomplete and unwise. Rather, buyers first should implement a planning, placement and measurement strategy well in advance of execution, said Evan Grossman, senior-VP at interactive marketing service company HookMedia Inc. Grossman knows his subject. He personally shepherded more than 40 b-to-b campaigns from concept to launch.

Too often, b-to-b marketers approaching their first campaign are unclear of their goals, whether it is brand awareness, lead generation or sales, he said. Frequently, they are unprepared to track results when the campaign is underway. It is not enough to rely on a single advertising network for the b-to-b purchase, Grossman said. A well-executed plan will include both network and off-network purchases, he said.

"Managing interactive media is more complex than managing advertising in print publications," Grossman said. "B-to-b networks can be of value in finding a collection of sites, but there's still value in reaching out to a number of sites in your specific vertical. The rise of b-to-b networks will make it a little easier to purchase media directly, but in the long run they don't have the tools to measure return on investment."

Paradoxically, while there's a shortage of buyers of b-to-b advertising today, there is no shortage of service provders out to curry their favor. A spate of new companies recently announced plans to serve the b-to-b market. Take AdExchange Inc., one of a number of companies promsing to meld Web advertising, rich media and e-commerce data into unified reports. This should allow b-to-b marketers to better follow the efficiency of their campaigns. AdExchange.com begins operations this month.

"Technology is everything at this point," AdExchange CEO Paul Grand said. "Today, you can't track transactions because the systems are disconnected. Ad serving platforms can't talk to rich-media platforms, and commerce platforms are totally disconnected. Summing up a return on investment is close to impossible right now. Integrating those platforms is the way for b-to-b marketers to get a handle on return on investment. There are definitely a few cards yet to be played here."

Advertising networks B2BWorks Inc., Engage Business Media and an array of other competitors promise to aggregate publishers in vertical industries. Such direct-marketing firms as VentureDirect Worldwide Inc., Harte-Hanks Inc. and American List Council--long the also-rans in the Internet game--are beginning to unify b-to-b print and b-to-b online purchases.

The merger of traditional and new media networks will be critical for media buyers, said Chad Roffers, senior-VP online sales for trading exchange OneMediaPlace.

"Convergence is absolutely something that's coming...and coming faster than people might think," Roffers said. "We've seen demand for cross-media packages for 12 months. It is the better solution for advertisers because they get a comprehensive media plan in one purchase."

Despite the frustrations, Beyond Interactive's Lovasz remains bullish about the cost-effectiveness of b-to-b advertising on the Internet.

"I've seen instances where we've spent $100 per thousand impressions and qualified customers for a lot less than it would cost in other media," he said. "I'm not saying Internet b-to-b advertising is going to crush television, trade shows, print or direct sales, but I've seen it work."

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