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.
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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?
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Marketers are shifting budgets “downstream”...
Bannerads
EmailWeb sites
DRTV
TV
Outdoor
Newspaper
Radio
Magazines
Direct mail
Telemarketing
Search
Richmedia
Blogs
Affiliatenetworks
DIRECT
ONLINE
ADVERTISING
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“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
Online display ads
Online classifieds
Product placement
Direct mail
Radio
Outdoor
Magazine
Television
Newspaper
Yellow pages
Print classifieds
. . . And expect online effectiveness to increase
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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”
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. . . 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
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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
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Who is telling us this?
Respondents by revenue Respondents by industry
Base: 115 interactive marketers Base: 132 interactive marketers
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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)
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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?”
Base: 132 interactive marketers
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
(percentages may not total 100 because of rounding)
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%
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A few surprises: Firms are not new to interactive marketing
“How long has your company been doing interactive marketing?”
Base: 132 interactive marketers
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
(percentages may not total 100 because of rounding)
Less than three years21%
Three years to lessthan five years
27%
Five years to lessthan 10 years
41%
10 years or more12%
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More tenured interactive marketers actually outsource more
“What percent of your company’s overall interactive marketingwork would you say is outsourced?”
Base: 132 interactive marketers
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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.
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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?”
Base: 132 interactive marketers
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
(percentages may not total 100 because of rounding)
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%
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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])
Base: 108 interactive marketers
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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
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So, how should organizations change?
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The customer-centric marketing organization
Source: July 13, 2006, Forrester Big Idea “Reinventing The Marketing Organization”
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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.
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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
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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%
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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)
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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
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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.
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Use our guide to determine and grow maturity
*Customer-centric marketing organization (CCMO)
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Characteristics of Level 2
*Customer-centric marketing organization (CCMO)
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Characteristics of Level 3
*Customer-centric marketing organization (CCMO)
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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.
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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
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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
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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
Source: Forrester’s Q3 2006 Interactive Marketing Organization Online Survey
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
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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.
29Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Shar VanBoskirk
+1 617/613-5845
www.forrester.com
Thank you