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Get Your CMO to Spend More Online!

Get Your CMO to Spend More Online! Geoff Ramsey

Download the PPT
and send it to your CMO!

Marketers, we've created this article and the PPT as a special resource just for you. Do you want a bigger interactive marketing budget? Download the special, expanded Power Point version of this article, tweak it to your specifications and then send it straight to your CMO. And let us know how you changed it for your industry: that will help us achieve the iMedia mission of advancing interactive marketing.
-- Brad Berens, iMedia Executive Editor

Even though both the trades and the mainstream press are filled with stories about the rise of the internet and how interactive marketing is key to the future of any brand, there are still CMOs out there who resist spending money online.

It's time to change that.

In the next few pages, you'll find seven crucial things to tell your CMO to get your brand to invest more online. On the last page, you'll find the PowerPoint that Strategic Dynamics' Tony Romeo, iMedia's Brad Berens and I presented at September's iMedia Brand Summit in Lake Las Vegas. We've created that PPT as a resource for you to take, tweak and send to your CMO.

Let's get going.

Author Notes:
Geoff Ramsey is CEO and co-founder of New York-based eMarketer, a firm which aggregates and analyzes statistics and related information covering every aspect of the global Internet, e-business and online marketing. Read full bio.

"Why rock the boat?" your CMO might say when you propose spending more money on interactive. The TV :30s are working just fine.

But the media landscape is changing, and we can no longer rely on traditional approaches to marketing.

TV effectiveness is on the wane -- ratings are down -- yet costs continue to rise. Look at this 2006 data from McKinsey & Co:

  • Over the past 10 years, ad spending on broadcast TV has risen 40 percent, while the number of viewers has dropped by almost 50 percent

  • Upfront CPMs for TV broadcast spots increased 7.3 percent in 2004/2005 and 2.6 percent in the 2005/2006 season

  • The cost of a Super Bowl ad has increased 14 percent between 2003 and 2006, yet the audience shrank.

American Express CMO John Hayes has said, "Where else in the world can you be convinced to pay more for a commodity that's experiencing diminishing returns?"

Decline in the percentage of adult TV viewers who can name a brand advertised in an evening TV show.

Research from Forrester and the ANA predicts that by 2010 traditional TV advertising will be only one third as effective as it was in 1990!

And don't forget about the rise of TiVo and other Digital Video Recorders (DVRs). The ANA study also found:

  • 70 percent of (ANA) advertisers feel that DVRs and VOD will “reduce or destroy” the effectiveness of :30 spots

  • When DVRs enter 30 million households, 60 percent of advertisers said they would cut back on TV, with one quarter slashing their spending by 25 percent

  • 80 percent claimed they would reallocate these dollars to the web

At eMarketer, we predict that the 30-million mark for DVR penetration will occur in late 2008.

Proctor and Gamble CMO Jim Stengel summarized the state of TV in a nutshell: "In 1965, 80 percent of 18- to 49-year-olds in the U.S. could be reached with three 60-second TV spots. In 2002, it required 117 prime-time commercials to do the same."

"Haven't I heard all this before?" your CMO might ask, reminding you that the promises of internet advertising popped in the 2000 bubble.

But times are different now. Nearly 70 percent of all Americans have some kind of access to the internet, with more than 63 percent having access directly from home.

The average American now spends about 65 minutes per day online, and according to Forrester Research those aged 18 to 26 -- a key demographic -- now spend more time online than they do watching TV.

And for these Americans, the internet has become a more important medium than TV.

comScore Media Metrix CEO Peter Daboll has said, "For marketers, particularly those looking to reach consumers at pivotal points in their lives, such as planning a marriage, buying a home, or having a baby, few media can match the web’s ability to facilitate communications keyed to an individual’s specific needs."

Some CMOs acknowledge that the internet is good for direct response and useful for promotions, but they can't see online as a branding vehicle, but brands can use the internet to connect emotionally with consumers-- particularly with broadband, which enables new and highly engaging forms of branding.

Perhaps due to the rise in broadband (67 percent of -- or 52.2 million -- online U.S. households are on broadband), branding as an online objective is increasing relative to direct response:

Did you know that...

  • 38 percent of all online advertising dollars today go towards branding efforts?

  • 67 percent of all U.S. households will be on broadband by year-end 2006, and over one-fifth of internet users regularly watch video content online today?

  • Broadband video allows us to reach our audience with the sight, sound, motion and emotion of television, but with better measurement, more granular targeting and opportunities for interaction and viral sharing?

And online video elicits powerful brand engagement:

When it comes to capturing attention, the internet is second only to TV, beating magazines, newspapers and radio (according to a 2006 Burst Media study).

The internet is exceptional at driving sales, whether the actual purchase happens online or off:

  • Americans depend heavily on the web to find information about products and services

  • Over three-fourths (78 percent) of those online use the web to shop for products and services before buying, and two-thirds (66 percent) make purchases directly online

  • 80 percent of Americans online use search engines, and they frequently use them to research products they’re intending to purchase. Using search, marketers can reach highly interested prospects (“hand raisers”) with great efficiency

And when it comes to broadband, the numbers get even better: over 80 percent of broadband users buy products online:

For some industries -- like automotive -- the internet is the information resource of choice regardless of connection speed. According to J.D. Power and Associates, 89 percent of new-vehicle buyers use a search engine or portal at some point in their research, and 94 percent of used-vehicle buyers do so.

If your CMO isn't ready for online and adopts a "let's just watch and wait" attitude, then it's your job to let him or her know that you're wasting valuable time by not moving forward -- and quickly -- with interactive because both your consumers and your competitors are already there.

Many recent surveys show that marketers across the board are spending more online:

  • BtoB Magazine: 72 percent of marketing execs worldwide plan to increase their spending online in 2006

  • ANA: 80 percent of advertisers say they will spend more of their budgets on web ads

  • TNS Media Intelligence: 49 percent of CMOs at Fortune 500 firms plan to increase their online ad spending by 30 percent

Don't let your brand get left behind!

As Interpublic Media CEO Mark Rosenthal says, "We are at the tipping point of dollars sailing out of traditional media and into Internet or emerging media."

If your CMO reaches this point, then he or she will probably be wondering what a bigger online investment will get the company.

That's your cue to say this:

  • We’re spending inefficiently now and with little understanding of effectiveness

  • We need to learn about interactive, and there is plenty of data, outside support and expertise that we can tap into

  • Plus, the internet, because of it’s measurability, allows you to quickly and cheaply test what works (and what doesn’t)

  • We need to get on the learning curve now

Your homework assignment:
Be ready for the question, and have a plan at that ready for what you're doing to do with your new, bigger interactive budget. Your plan should cover:

  • Internal capabilities that you need to develop

  • Your future strategic partners

  • Learning by example

  • Education and training

  • Industry data and case studies available

But you don't have to start from scratch-- keep reading to find out about the free resources iMedia, eMarketer and Strategic Dynamics have created for you.

Geoff Ramsey is one of the most exciting visionaries in digital marketing today. Originally from Vancouver, Ramsey is the chairman of eMarketer. He is not only on the cutting edge of research trends and best practices, but also offers a rich...

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