Major Sites Missing Out on B2B Ad Dollars

Business-to-business marketers lag in moving to the Internet due to Web
media’s inability to tightly target and segment audiences, according to a
new study from research firm GartnerG2.

The study, for which Stamford, Conn.-based GartnerG2 interviewed more than
30 Fortune 100 B2B advertisers, found that B2B advertisers are reluctant to
move online due to the lack of tools to reach their customers.

While niche players like B2BWorks have experienced strong growth from
representing vertical industry sites and interactive services to business
advertisers, the major Web publishers have yet to develop ways to leverage
their massive reach, wrote Denise Garcia, the author of the study and
research director for GartnerG2’s media practice.

As a result, B2B marketing efforts totaled less than 11 percent of all
online advertising dollars spent during 2001 — representing about $892
million, GartnerG2 found. Additionally, a sizable portion of that sum came
through customer retention efforts, such as marketing via extranets and
internal communications.

Customer acquisition efforts, meanwhile, accounted for relatively little of
the activity. In part, Garcia said that’s due to shortcomings by Web portals
and major publishers, who command a dominant share of Internet traffic, in
implementing ways to narrowly segment their audiences — a prerequisite
for wooing B2B advertisers.

“B2B marketers say they are not spending their budgets to advertise because
most sites have broad appeal and cannot identify the specific markets they
are targeting,” Garcia wrote.

Additionally, B2B advertisers, like their B2C peers, feel they lack the data
necessary to compute return on investment, justifying advertising and
marketing spending in a tight economic environment, GartnerG2 found.

The study’s findings do provide cause for optimism, though. Some of the
tools are already in place for savvy Web publishers build up their targeting
capabilities and to develop audiences that appeal to B2B brand advertisers.

Ironically, one such tool could come from the non-advertising products
introduced by sites in recent months to compensate for the soft ad market.
Yahoo!, for instance, offers fee-based services to consumers, and
Webcasting, extranet development and Web hosting services to businesses,
supplementing its media revenue. Services like those, Garcia wrote, could
act as a source for segmenting B2B audiences and building targeted lists.

“These new revenue streams will enable online media companies to segment
their audience for targeted B2B advertising,” Garcia wrote. “Until that
happens, B2B marketers will continue to use their sites as tools for
customer retention and not for customer acquisition, and they won’t spend
the majority of their marketing dollars to advertise online.”

Additionally, sites for some time have been experimenting with larger ads,
rich media, and other new marketing formats. These formats can reasonably be
expected to perform as well for B2B clients as they’ve been proven to do for
consumer-focused clients, (by groups like the Interactive Advertising
Bureau, which also is working to promote standardized models for measuring
ROI).

GartnerG2 said such practices would expand the B2B segment so that it
represents 22 percent of total online ad spending in 2005, about $3.42
billion. In third quarter alone, Garcia said B2B ad revenues are expected to
grow 22 percent — the largest single quarterly increase in the firm’s
five-year projections.

Reprinted from Internet Advertising Report

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