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Top trends for 2007: Marketers' influence grows even as customers demand more control of the message

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OUTLOOK 2007
Marketers' influence grows even as customers demand more control of the message
Online Advertising continues phenomenal climb
Budgeting for 2007
Marketing Plans and Priorities for 2007
Marketer Roundtable
 

The reach of the Internet has changed everything. Users are just as interested in creating content as they are in watching it. Campaigns must be developed with an eye toward global expansion. And in a flooded media environment, marketers must truly understand their target audience's behavior and interests to cut through the clutter.

Following is a look at the top 10 marketing trends for 2007, based on interviews with marketers, ad agencies, media companies, analysts and industry experts.

Rising influence of CMOs

As marketing becomes a much more critical function in organizations, chief marketing officers are gaining more influence at the executive table. This trend is certain to continue next year, and the industry may see more CMOs ascending to the CEO spot.

Jim Gregory, CEO of brand consultancy CoreBrand, said 2007 will give rise to "third-generation CMOs," with much higher levels of accountability and influence.

"When the first generation of CMOs came out [in the early '90s], they didn't really fit in with the C-suite," Gregory said. "They were people with communications backgrounds who were just getting a fancier title. They were not really attuned to what the CEO and CFO were doing."

Second-generation CMOs, who became established in the late 1990s and early 2000s, were more proficient at building internal communications teams and articulating the value of marketing to the organization, Gregory said.

Now, third-generation CMOs have gained the respect of the CEO, the CFO and the COO, he said. "Third-generation CMOs have been in the position for a while and are being groomed for leadership of the organization," he said.

Gregory pointed to Beth Comstock, former CMO of General Electric Co. and current president of digital media and market development at NBC Universal, a division of GE, as an example of this new breed of executive.

"As the president of a major division of GE, she is clearly at the top echelon of GE top management and is CEO material, whether she is at GE or elsewhere," Gregory said.

Web 2.0 explodes

Marketers will embrace Web 2.0 applications in their quest to connect with customers and build loyal communities of users.

One of the most vivid examples of Web 2.0 technology is Second Life, a virtual world created by technology company Linden Lab, in which users create online identities and interact with each other.

Several companies, including Sun Microsystems, ad agency AKQA, Reuters and Wells Fargo have set up online storefronts and identities on Second Life, where they sell products and services to other Second Life visitors, test concepts and products, and hold virtual events.

Other Web 2.0 applications that will gain traction in 2007 include user-generated videos, blogs, wikis and social networking.

"Technologies that support Web 2.0 and user communities will be very critical as we go into 2007," said Sandra Lopez, integrated marketing communications manager at Intel Corp.

"We are looking at various technologies where we can deliver a very engaging user experience."

Intel recently introduced a live group chat banner ad to promote its new Quad Core processor (see story, page 14), and is exploring various uses of social media and online communities.

According to a November study by the American Marketing Association, 49% of Internet users said they would seek out shopping information on social networking sites, and 29% said they would buy products on such sites.

Global expansion

Many b-to-b marketers are entering new markets and expanding campaigns globally, with China, India and the Middle East at the top of the list.

Speaking to a roomful of marketers at the American Marketing Association's inaugural mPlanet conference earlier this month, IBM Corp. Chairman-CEO Sam Palmisano called this "an extraordinary time in international business."

"Your generation of leaders, not mine, is going to deal with the realities of globalization," he said in a keynote speech that focused on IBM's business in China and India, two countries he called the "epicenter of a massive economic and demographic shift."

IBM recently relocated its global procurement center to China and its global services delivery operations to India.

GE this year announced it would invest $250 million in developing marketing infrastructure in India, and it expects to double its work force there in the next few years.

It will also continue to build out its marketing infrastructure and sales forces in China, the Middle East and Latin America.

Dow Chemical Co. will expand its "Human Element" campaign, which debuted in the U.S. this year, into markets including Europe and the Asia-Pacific in 2007.

AMD will continue to work on its 50x15 Initiative, a commitment to connect half the world's population to the Internet by the year 2015. It will also continue to build out its market presence in Latin America, Africa, the Middle East, India and China.

Boom in online video ads

Online video advertising will really take off next year, with spending on online video ads increasing by 89% over this year to $775 million, according to a report by research company eMarketer.

By 2010, spending on online video ads will reach $2.9 billion, eMarketer projected.

"At some time early in 2010, $1 in $10 devoted to Internet advertising will go for video placements," said David Hallerman, senior analyst at eMarketer.

Despite the surge in spending, online video ads will make up only 4.2% of total online advertising in the U.S. next year, eMarketer predicted. But new technologies are advancing the use of online video.

In October, Accela Communications rolled out an online video series called "Innovate" that plays within a banner ad and is sponsored by companies including Hewlett-Packard Co. and AT&T.

Google's $1.65 billion acquisition of video-sharing site YouTube in October is another indication of the growing interest in online video ads.

In November, ON24 launched a new online video platform called BannerCast, which delivers webcasts and other streaming video content in banner ads.

Measuring engagement

In conversations with ad agency executives, marketers, industry associations and researchers, everyone is talking about engaging the user.

Last month, the Interactive Advertising Bureau launched a new ad campaign with the tagline "Media more engaging" to drive home the message that online advertising is the only medium that provides true engagement with the audience.

"Interactive advertising lets you combine the ability to target and create a dialogue with the audience that matters to your brand, lets your customers experience your brand the way they want to and allows you to measure the effectiveness of your marketing dollars," said Sheryl Draizen, senior VP-general manager at IAB.

As marketers use new interactive technologies, such as online video and social networking, they will need more sophisticated ways to measure user engagement with the experience.

The most commonly used metrics for online video ads are length of time spent watching; number of stops, pauses and restarts; and interactivity, such as entering information into a request field.

Agencies are also developing new metrics for their clients to use in evaluating user engagement on Web sites.

Avenue A|Razorfish, for example, uses a metric it calls page IQ (interactivity quotient), defined as the number of unique visitors who take some action on a Web site (clicking, scrolling down, entering information) divided by the total number of visitors to the site.

Another metric the agency uses is scrolling analysis, which measures how far down the page users will go to view content.

More sophisticated search

Search continued to lead growth in online ad spending this year, accounting for 40% of total online advertising revenue in the first half, according to the "Internet Advertising Revenue Report" from IAB and PricewaterhouseCoopers.

EMarketer said search will continue to account for more than 40% of online ad spending through 2010.

According to Forrester Research, 79% of marketers have used or piloted search marketing programs.

"There's a lot more competition for the same keywords, so it's getting more expensive," said Charlene Li, an analyst at Forrester. "It gets harder to be relevant in such a competitive space.

"Many marketers still believe they can do it on their own," she said. "You can, but if you are in a highly competitive space, you won't get as much out of it as you could. For some marketers, it may be time to go talk to a search marketing agency."

Marketers are also going beyond simply picking the right keywords to analyzing what happens when a user clicks.

"To improve our client search campaigns, we are leveraging information about the keywords that drive individual users to a site to better craft ad messaging to elicit a repeat visit," said Eric Eller, senior director of product marketing for Advertising.com, a display ad network that also has a search marketing division.

Eller said localization and socialization of search are trends to watch in 2007.

"Soon, advances in search technologies will allow marketers to identify users based on local and social attributes, which will eventually lead to more sophisticated targeting techniques," Eller said.

Need for leads

Generating leads to acquire customers and drive sales will be top of mind for b-to-b marketers next year.

According to BtoB's "2007 Marketing Priorities and Plans" survey, acquiring new customers is the No. 1 marketing goal for 2007, cited by 62.3% of respondents.

To do this, as well as to drive sales, b-to-b marketers will use a host of lead generation tools in 2007, including new techniques as well as tried-and-true methods.

A study by MarketingSherpa found that free trials, webinars, white papers, blogs and podcasts topped the list of the most effective lead generation tools used by business technology marketers.

A separate study by Direct Impact Marketing found that 65% of b-to-b marketers selected e-mail, blogs and Web analytics products as their favorite lead generation tools.

Marketers will also continue to use traditional marketing for lead generation in 2007.

According to an October report by the Direct Marketing Association, telemarketing had the highest response rate (2.60%) for generating leads. E-mail came in second, with a 2.45% response rate.

Behavioral targeting hits the spot

As marketers learn more about online users through research and new tracking technologies, they will be able to deliver even more targeted and relevant messages to them through a variety of online tools.

"The majority of our clients are using behavioral targeting to deliver a more personalized message to their customers and improve conversion rates," said Lee Sherman, senior VP-general manager of global solutions at Avenue A|Razorfish.

For example, Alaska Airlines uses behavioral targeting to segment audiences into distinct groups based on online actions, such as booking a ticket online, setting up an online profile, signing up for an e-newsletter, starting a mileage plan, signing up for an affinity program Visa card and joining the executive lounge.

"By taking every single visitor and putting them into one of those categories, Alaska Airlines can deliver clear and simple messaging," Sherman said.

The next evolution, Sherman said, is overlaying geographic targeting on top of behavioral targeting, such as promoting regional travel based on the user's location, coupled with their online behavior.

Trade shows make a comeback

In a sign of the growing hunger b-to-b marketing executives have for information about trade shows, the Trade Show Exhibitors Association in October launched About Face?The Journal of Face-to-Face Marketing. The quarterly publication covers the nuts and bolts of the exhibition industry and provides readers with what Publisher Stephen Schuldenfrei calls an encyclopedia of the events industry.

Launching a b-to-b title focused on trade shows would be unthinkable even three years ago, when the exhibitions industry was still reeling from dramatic cutbacks in business travel after the Sept. 11 attacks.

Yet after a few lean years, trade shows have bounced back. The irony is that as the Web continues to penetrate business markets, there is an increasing demand among business executives for the sort of face-to-face dialogue that trade shows can provide.

"Exhibitions have rebounded steadily since 9/11," said Michael Hughes, associate publisher and director of research services at Tradeshow Week. "Exhibit space demand has been growing by 3% per year, and show producers' top lines have been increasing by approximately 6% to 8%."

Hughes added: "Both buyers and sellers highly value face-to-face interaction, especially as online media expands rapidly. More and more corporate buyers need to see the people behind the brand before they buy, and shows offer the most efficient way to compare companies and their teams."

E-mail still going strong

Looking like a true survivor, e-mail will continue to shine for the foreseeable future. For one thing, it delivers.

"E-mail and telephone are the least expensive and most expensive mediums [respectively], and you have close to the same response rate," said Bob Weinberg, president of RW Consulting, pointing to the DMA study that found e-mail had the second-highest response rate for lead generation (2.45%).

E-mail beat direct mail, which garnered a 1.27% response rate in the DMA study.

According to MarketingSherpa's "Email Marketing Benchmark Guide 2007," marketers report that e-mail is alive and well. Almost half (42.4%) of b-to-b marketers said the impact of e-mail is increasing slowly, and 35.6% said its impact is increasing significantly.

MarketingSherpa said many marketers are beginning to test opt-in registration forms to find what works best to improve opt-in conversions.

Another trend to watch in e-mail marketing next year is the use of mobile marketing. MarketingSherpa found that 29.4% of marketers are following mobile marketing but won't be allocating resources to it in 2007, while 7.6% are allocating resources to test mobile marketing next year.

Carol Krol and Matthew Schwartz contributed to this report.

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