shar vanboskirk senior analyst forrester research

TeleconferenceOrganizing For Interactive MarketingShar VanBoskirk

Senior Analyst

Forrester Research

July 9, 2007. Call in at 10:55 a.m. Eastern Time

2Entire contents © 2007 Forrester Research, Inc. All rights reserved.

Theme

Interactive marketing organization success is

more about maturity than structure.


Agenda

• What is the current state of interactive marketing organizations?

• How should marketers organize their interactive marketing groups?

• How can marketers mature their interactive marketing organizations?


Marketers are shifting budgets “downstream”...

Bannerads

EmailWeb sites

DRTV

TV

Outdoor

Newspaper

Radio

Magazines

Direct mail

Telemarketing

Search

Richmedia

Blogs

Affiliatenetworks

DIRECT

ONLINE

ADVERTISING


“In the next three years, do you think marketing will be less effective, aboutthe same, or more effective in each of the following?”

Source: May 2, 2005, “US Online Marketing Forecast: 2005 To 2010”Base: 77 marketers

0% 20% 40% 60% 80% 100%

Less effective About the same More effective

9%

1%

4%

12%

13%

8%

10%

23%

40%

26%

33%

53%

46%

53%

44%

13%

23%

21%

23%

29%

38%

34%

62%

52%

68%

61%

40%

49%

44%

53%

78%

75%

75%

65%

58%

55%

56%

14%

8%

7%

7%

7%

5%

3%

3%

Search engine marketing

Web sites

Wireless

Email

Online display ads

Online classifieds

Product placement

Direct mail

Radio

Outdoor

Magazine

Television

Newspaper

Yellow pages

Print classifieds

. . . And expect online effectiveness to increase


But interactive is still just a fraction of overall marketing spend . . .

(numbers have been rounded)

Display advertising

Search engine marketing

Online classifieds

Email marketing

Total

2009 201020082007200620052004

Digital marketingspending

(US$ millions)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Percent of total advertising 5% 6% 6% 7% 7% 7% 8%

Display advertisingSearch engine marketingOnline classifiedsEmail marketing

$2,173

$4,268

$1,393

$4,128

$11,962

$2,654

$5,671

$1,451

$4,890

$14,666

$3,119

$7,067

$1,522

$5,695

$17,403

$3,584

$8,287

$1,600

$6,379

$19,849

$4,000

$9,463

$1,557

$7,017

$22,037

$4,375

$10,533

$1,606

$7,578

$24,093

$4,705

$11,571

$1,664

$8,109

$26,049

Source: May 2, 2005, “US Online Marketing Forecast: 2005 to 2010”


. . . And is still out of sync with consumer behavior

0% 10% 20% 30% 40% 50%

TV

Newspapers

Radio

MagazinesOnline for personal

or work reasons*

Percent of ad spending oneach media type in 2004

Percent of total media timehouseholds spend with eachmedia type

Base: US households*Base: US online households

Source: Forrester’s Consumer Technographics® 2004 North American Benchmark Study, McCann Erickson, and IAB

34% of media time

6% of all ad spending


This shows up in IM orgs being very tactically focused

Base: 132 interactive marketers

Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey

“Which of the following functions are the responsibilities ofyour interactive marketing team?”

86%

77%

74%

71%

64%

59%

54%

31%

28%

77%

46%

43%

28%

Analysis and planning

Execution Email marketing

Web design/management

Online advertising

Search engine optimization (SEO)

Paid search

Other emerging channels (blogs, RSS, and eService)

eCommerce

Inbound marketing

Mobile marketing

Web analytics

Market research

Cross-channel customer experience management

Persona development


Who is telling us this?

Respondents by revenue Respondents by industry

Base: 115 interactive marketers Base: 132 interactive marketers


Less than $100M23%

$100M toless than $500M

18%

$500M to less than $1B8%

$1B to less than $10B

34%

$10B or more17%

Manufacturing27%

Retail16%

Business services13%

Media and travel23%Finance and

insurance18%

Other4%

(percentages may not total 100 because of rounding)


Respondents also range across sales model and target customer

“Which of the following best describesyour marketing organization’s

primary audience?”

“What is the primary sales model that your marketing organization

supports?”




Direct to consumeror end user

42%

Mix of directand indirect

40%

Indirect, throughchannel partners

17%

Only consumers14%

Primarilyconsumers

36%

Roughly split betweenconsumers and businesses

22%

Primarilybusinesses

15%

Only businesses13%


A few surprises: Firms are not new to interactive marketing

“How long has your company been doing interactive marketing?”




Less than three years21%

Three years to lessthan five years

27%

Five years to lessthan 10 years

41%

10 years or more12%


More tenured interactive marketers actually outsource more

“What percent of your company’s overall interactive marketingwork would you say is outsourced?”



None11%

1% toless than 10%

15%

10% toless than 25%

33%

25% toless than 50%

18%

50% to 100%23%

Almost 50% of IM organizations with five-plusyears of experience outsourcemore than 25% of their work.


And regardless of size and budgeting approach

“Please indicate the statement that best describes your team’s budget.”

“How many people at your company are partof a team dedicated to interactive

marketing?”




Three to five27%

One to two11%

Six to 1014%

11 to 3011%

31 or more18%

No dedicatedteam18%

Dedicated budgetthat our manager/

director sets42%

Dedicated budgetthat someone in another

part of marketing sets16%

Dedicated budgetthat someone outside

of marketing sets10%

Shares budgetwith other

marketing teams23%

Other9%


Interactive marketing is an underdog across firms

Percentage who agree with each statement about theirinteractive marketing organization

(1 or 2 on a scale of 1 [strongly agree] to 5 [strongly disagree])



0% 10% 20% 30% 40% 50% 60% 70%

It is understaffed

It is still an emerging function

It competes with other marketing functions for budget

It is underfunded

It is responsible for identifying new marketing channels

It is a collaborator on multichannel program design

It proactively recommends product and customer strategies

It has substantial support from above

It has substantial support from peer organizations

It is a service bureau that responds to incoming requests

It struggles to prove the ROI of its efforts

It struggles to build and prove a business case for budget


So, how should organizations change?


The customer-centric marketing organization

Source: July 13, 2006, Forrester Big Idea “Reinventing The Marketing Organization”


Think instead about aligning with one of two models

1. Channel managers — Interactive marketing team is its own division used to drive sales through the online channel.

» Typically direct sales organizations like Orbitz or Dell responsible for their company’s site and online transactions, as well as the development of marketing programs that will lead to Web sales.

2. Excellence centers — Interactive marketing team is tapped by multiple divisions around the company to provide expertise on campaigns.

» Typically a “shared service” model prevalent at brand- or product-centric organizations like Nestlé Purina or Caterpillar.


Channel manager orgs are larger

“How many people at your company are part of a teamdedicated to interactive marketing?”

Excellence centers†Channel managers*

*Base: 78 interactive marketers†Base: 54 interactive

marketers


No dedicatedteam14%

31 or more21%

11 to 3014%

One to two10%

Three to five27%

Six to 1014%

No dedicatedteam24%

31 or more15%

11 to 307%

One to two13%

Three to five28%

Six to 1013%


And are governed by more senior management

“What is the title of the executive in charge of yourinteractive marketing efforts?”

Excellence centers†Channel managers*

*Base: 78 interactive marketers†Base: 54 interactive marketers

(percentages do not total 100 because of rounding)


Senior executive13%

Marketingexecutive

42%Marketingdirector

32%

Marketing manager6%

Other marketingposition

6%Senior executive

11%

Marketingexecutive

39%

Marketingdirector

30%

Marketingmanager

19%

Other marketingposition

2%But that doesn’t mean they are

better


The best approach toward integration is to mature within your given model

1. Get into the model that fits your business.

2. Check your current maturity.

3. Move gradually from one level to the next.


Use our guide to determine and grow maturity

*Customer-centric marketing organization (CCMO)


Characteristics of Level 2



Characteristics of Level 3



The best approach toward integration is to mature within your given model

1. Get into the model that fits your business.

2. Check your current maturity .

3. Move gradually from one level to the next.

4. Market internally and experiment.

5. Maintain performance while maturing.


What skills do you need?

“What skills are the most critical for success on your interactive marketing team?”

Base: 132 interactive marketers*Base: 78 interactive marketers †Base: 54 interactive marketers


0% 10% 20% 30% 40% 50% 60% 70%

Channel managers*Excellence centers†

All respondents

Strategy

Campaign planning

Web analytics

Customer analysis

Creative

Communication

Technology and technical integration

Project management

Channel expertise

Multitasking

Data management


And where should your IM team fit?

“Does your company’s interactive team also include any of the following?”

Base: 81 interactive marketers*Base: 48 interactive marketers †Base: 33 interactive marketers


0% 10% 20% 30% 40% 50% 60%

Channel managers*

Excellence centers †

All respondents

eBusiness/eCommerce

Brand marketing

Direct marketing

Product marketing

IT

Customer service

Sales

None of these; we are an independentgroup

Other


In summary

• Interactive marketing is getting budget and attention — at last!

• But marketing organizations are still poo-pooed, back-burnered, neglected, and underleveraged.

• Bring your company’s interactive marketing organization toward integration by:

» Identifying your best organizational model.

» Gradually maturing from one level to the next using Forrester’s guide.


Shar VanBoskirk

+1 617/613-5845

[email protected]

www.forrester.com

Thank you

shar vanboskirk senior analyst forrester research

Documents

interactive marketing

interactive marketing

interactive marketing

marketing organizationsupports

interactive marketers

interactive marketers

us online marketing

tenured interactive