08 October 2007

Why companies are not marketing online as much as we would all like to think.

A new McKinsey survey of marketing executives from around the world shows that in marketing while companies are moving online across the spectrum of marketing activities, there’s also a problem with Web 2.0.

In July McKinsey surveyed 410 marketing executives from public and private companies around the world, representing industries such as business services, energy, retail, technology, and telecommunications. It asked respondents about the frequency and effectiveness with which they applied Web-based, digital techniques to five core marketing functions: sales, service, advertising, product development, and pricing. It also asked about future plans for digital marketing, including where respondents anticipated spending more money in the future.

However, while the survey shows marketing making a swift transition online, executives also indicate that they are making less frequent use of digital tools, including e-mail and informational Web sites to Web 2,0 tools such as wikis and virtual world.

Their concern, and one that DIFFUSION has seen echoing around the world since the first dotcom collapse, is the lack of capability and knowledge at companies and their agencies as well as an absence of meaningful metrics. It’s particularly notable that more than half of all current advertisers surveyed by McKinsey see this as a barrier—a proportion significantly higher than it is among nonadvertisers. Perhaps, it’s more to do with the fact that media agencies are still selling along traditional lines (see DIFFUSIONblog The Future of the Media Agency 21 July 2007) and so the real returns are still be masked by a fondness for brand building campaigns, rather than tactical activitiy focussed around identifying and selling to distinct customer needs. Hence, pay per click advertising looks great on paper but in reality, if its only ever awareness, and never translates to sales then there is a problem.

It’s also going to be a similar catchcry for companies looking to to reach customers through Web 2.02 tools such as blogs, podcasts, social networking (witness the corporate shutout of Facebook rather than embracing it as a social commerce tool), virtual worlds, widgets and wikis (increasingly being used by corporate to manage company perceptions externally). As the survey notes, will my company and agencies be able to keep up with what are ultimately ever expanding technologies and more competitive usage of these added to increasing customer sophistication and what is now the sheer visibility of global access to goods and services.

The survey reports that in 2010 respondents expect a majority of their customers to use the web as a funnel to discover new products or services online and a third to purchase goods there. A majority of the respondents also expect their companies to be getting 10 percent or more of their sales from online channels in 2010 — though, twice as many companies as have hit that mark today. But while these expectations appear to be driving plans for future spending, at least in some areas, DIFFUSION believes that companies who don’t plan for this expenditure and build capability around it are going to be left behind, not only by competitors but by their customers.

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