The Interactive Marketing Paradox
By Steve Latham, CEO of Spur Digital
Even as the Web becomes mainstream, most Houston companies are missing the opportunity to market online. Here's why and what they can do about it.
It's official. The Web is once again in vogue with marketers.
While overall advertising is flat, online ad spending will grow 30 percent this year to $16 billion, as more and more companies begin to allocate budget to online media. I use the word "begin" because despite the well-known benefits of the Web, the rapid growth in ad spending and the rising value of online media companies, (MySpace, iVillage and About.com recently fetched $1.5 billion) the shift to interactive marketing is still in its infancy.
If you want to know which way the winds are blowing, consider this: according to Credit Suisse First Boston, 30 percent of our daily "media time" is spent online. "Media time" is the time spent each day reading a newspaper, skimming a magazine, watching TV, listening to the radio, or browsing the Web. Yet, only 5 percent of marketing dollars are allocated to the Web. You don't have to be an economist to figure out where things are headed.
We all realize the Web has changed the way we live. Whether at work, at home, or on the road, we rely on the Web for many of our daily activities. As an advertising medium, the Web offers numerous benefits, including: the ability to target, take action and measure results. These translate into improved results and higher ROI.
Here in Houston there are many cases where companies are making drastic changes to their media mix. After successfully testing online media in 2005, The Houston Museum of Natural Science increased its online budget by 700 percent in 2006, now that online media is accounting for 30 percent of its ad budget. While the HMNS case may seem extraordinary, it's becoming common, and it's driven by one thing: ROI. With few exceptions, the Web offers marketers an unparalleled opportunity to maximize ROI in a way that is tangible, measurable and very profitable. This is the fundamental reason online ad spending will more than double to $28 billion by 2010.
We are not advocating that marketers should stop buying traditional media. But companies that fail to incorporate the Web into their strategy are missing a big opportunity and are at risk of being flanked by Web-savvy competitors. With few exceptions, interactive should be a part of every company's media mix.
Hopefully none of this comes as a surprise to you. So where's the paradox? Well, if everyone knows the Web is a "must have" marketing channel, why are so few companies and agencies (especially in Houston) marketing online? Beyond some of the softer issues such as corporate culture, resistance to change, vision and leadership, there are two underlying factors that make it hard for traditional marketers to capitalize on the Web:
- Lack of Expertise. Within most companies and agencies, the Web is not widely understood as an advertising channel. While most marketers understand print, radio, TV and direct mail, very few know how to plan, execute or measure online marketing campaigns. There is a strong and growing need to educate Houston marketers on the topic of online marketing. This is one of the main reasons behind the recent launch of the Houston Interactive Marketing Association. With the goal of raising visibility and utilization of online marketing, the HiMA was recently created by Houston's leading agencies and corporations. To learn more, visit www.HoustonIMA.org.
- Shortage of Talent. While many agencies would love to hire an interactive marketing group, it is increasingly difficult to find talented people who understand online marketing strategies, media planning, creative, campaign management, measurement, and optimization. The small talent pool is a big issue facing agencies across the country. Here in Houston, it's especially challenging.
So this is the paradox: marketers see the opportunity to market online, but they don't have the knowledge, tools or people to capitalize on it.
This is where they have three options:
- Ignore the Web and bury their head in the sand
- Attempt to figure it out by doing it themselves, or
- Partner with a 3rd party expert
I believe option #3 is really the only choice. Houston businesses can't afford to make the mistake of assuming "our customers are not online". If companies don't address the growing opportunity to market online, someone else will, and most cannot afford to risk that.
There is also risk in trying to figure it out on the company's or client's budget. Competition is increasing and demand is growing faster than supply, thereby increasing the difficulty and the cost of testing new campaigns. Without knowledge of where and how to advertise, and the tools to measure results, your chances of success are low.
Smart marketers realize they are best served by partnering with experts to help them incorporate the Web into their marketing strategy. As with any business activity, it's usually best to outsource that which is outside your core competency. With rare exceptions, it's a better, faster and less expensive way to achieve one's objective.
Some of Houston's best agencies have partnered with interactive shops to help their clients incorporate the Web in their marketing mix. We've had the pleasure of working with FKM, Rives Carlberg, Marion Montgomery, Pierpont Communications, Brivic Media and MMG Media to plan and execute successful online campaigns for their clients. I believe this is a visible sign of things to come.
Despite its glorious start and its spectacular fall, the Web is now a key component of our business and personal lives. While there are some challenges to harnessing the Web as a marketing channel, it just takes innovation and flexibility to overcome them. Marketers that incorporate the Web into their strategy will reap benefits for years. Those that don't may still get by, but without an integrated solution that addresses such an important media component, their prospects for success are limited.
Steve Latham is the CEO of Spur Digital (www.SpurDigital.com) and the founding President of the Houston Interactive Marketing Association (www.HoustonIMA.org). An expert in online marketing and advertising, Steve has planned and managed online marketing campaigns FedEx Kinko's, Southwest Airlines, the Houston Museum of Natural Science and Amegy Bank, to name a few.