B2B Marketing – Online vs Offline

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We have been generating new ideas on twitter for new blog posts regarding b2b data and the topics regarding offline and online marketing are heavily requested, so we have done some research and found some interesting stuff. Here’s a really interesting example.

We speak with lots of b2b clients on an ongoing basis and obviously, during the past few years there has been a significant shift from offline marketing to online marketing. In fact the transition in spend has been so marked, that it is quoted that online spending now outpaces TV advertising and a variety of other traditional marketing channels. So why is this interesting?

Well, we regularly receive direct mail in the office and also other forms of direct marketing such as inserts in the press and so on. Currently, one of the most prominent companies who deliver this type of activity believe it or not is… Google. Yep, that’s right, Google do lots of offline, traditional, old fashioned, unmeasurable and ‘unresponsive’ direct marketing!

What may surprise you more however, is that this makes complete sense – Google’s target audience is obviously not online.

For those of you who now think we are barmy and clearly in need of a tonic or at least a lesson in marketing, we can qualify this a bit further.

Google are obviously interested in finding new customers. Inevitably, this means that they are not trying to target those who are already using them for advertising, but instead they want new customers. It is fair to assume therefore, that these prospects are not currently using Adwords, Adsense or other of their products and services. It is also a reasonable assumption therefore to assume that they are yet to make the full and complete transition to the online world. This is not dissimilar to most businesses, once they have successfully marketed and converted the ‘low hanging fruit’ to use a well loved buzz word.

What fascinates us more is that one of the direct marketing pieces which they use, (which is here, as it is in the public domain anyway) outlines, no – veritably trumpets the fact that 17 pence in every pound is spent online.

Talk about a double whammy!

Not only does this mean that companies who are marketing online are actually fighting it out for a maximum of 17% of the total spend, but also that the Master and Commander of online marketing is actually targeting offline prospects, in order to generate new customers, because they are probably not online. If you bear in mind that presumably the figure of 17 pence in every pound is across the entire spectrum of spend, including consumer spend and it is widely accepted that in the b2b space, the proportion of spend online is lower – maybe half that of b2c, this may actually mean that less than 10% of b2b spend is online! Wow.

When we speak to prospective clients, often they tell us that they are focusing their budget and activity more online than offline these days. In some cases, they are spending 100% of their budget online across search, optimisation, social media, web development, blogs (yes, I know we can talk!), but do they realise that this is for only a minute share of just 17 pence in every pound.

Five years ago, a greater online spend would have made more sense. Back then you could probably rely on the fact that your larger competitors may not have woken up and smelt the coffee yet. But now, these players dominate the space and are very prepared to outspend you to get more of that 17 pence. This means online can be a costly process and what is more interesting is that the greater dominance of larger players isn’t going to turn around. It’s going to get worse. In the future, if you can provide the product at lower margin and buy in greater bulk, you will be able to spend more on a click and therefore buy a greater share of that 17 pence even as it grows.

Clearly, the appeal of online marketing to everyone, including us, is the fact that directly measurable response and conversion is very, very appealing. We don’t dispute this at all, in fact we embrace this whole heartedly.

Having said this, to focus too heavily on online marketing, surely cannot be the optimum way to drive new customers and increase profitable business, particularly in the b2b marketing arena. If we also bear in mind that often online sales are lower margin (as it is easier to do fast price comparisons or use a cashback site.)

In the short term we lose sales, but in the long term, this could prove a costly mistake if we replace our ability to directly communicate with our target audience and our existing customers. We already know of a number of major companies who have already reduced their investment in their existing customer and prospect databases, in favour of increasing online spend. Tesco on the contrary, have massively increased the investment in theirs and no-one could dispute that they are one of the most successful consumer businesses of the last decade.

As both offline and online marketers, let me first explain that we believe that it is crucially important to do a combination of all forms of marketing. We are however advocates of allocating resources and marketing spend to that combination, based on the likely return on investment – for now, it would appear that this means more than 83% should be spent offline and less than 17% online.

Do think that offline marketing has a future or is online marketing the only alternative? Let us know in the comments.

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About the Author:

KnowledgeBank work with Companies to develop their data driven marketing solutions to generate profitable new customer relationships. We also deliver social media training, consultancy and strategy to hundreds of businesses across the UK. If you would like further information about how you can develop your own marketing activity or social media, please contact us on 01772 978 101.