Business-to-business marketing is in a rude state of health, according to the first annual State-of-the-Market Survey by B2B Marketing magazine, with 64 per cent of respondents describing conditions as buoyant or very buoyant. Twenty eight per cent described the market as flat whilst only eight per cent of respondents used the term in decline.
Meanwhile, 96 per cent of B2B marketers anticipate marketing budgets will either rise or remain static during the next 12 months.
The responses to these questions, and a number of others from the survey, suggest that the B2B sector is bucking expectations of a downturn in the economy, with the future promising good prospects and a strong commitment to marketing. This contrasts with the view of the wider economy taken by many newspapers and commentators over recent months, many of whom have predicted a period of economic uncertainty. For example, the IPA’s Bellweather Report of marketing budgets produced quarterly and which last appeared in April suggested that marketing spend may be reigned in during the second part of the year.
However, B2B Marketing’s research suggests that there is little of this pessimism being felt in the business-to-business sector. This is almost certainly because most of the cause for wider economic concern comes from the sharp reduction in consumer spend and the high levels of borrowing. Such issues are clearly less of a direct concern for business marketers. As discussed by Dr Andrew McLaughlin chief economist at the Royal Bank of Scotland, at the recent Period Publishers Association ‘Magazines’ Conference, there are many indications that corporates will actually up their spending and investment levels in the coming months, for example, to replace IT hardware which was last renewed in the run up to the Year 2000 date-change.
Whilst it could be argued that any approaching downturn may not have begun impacting on marketers when this survey was conducted (mid-May 2005), it is surely vindication that the B2B sector may not be influenced directly by what happens on the high street. Indeed, the sector may yet provide a bolster for the economy as a whole.
There were other hugely encouraging findings from this research. The first of these relates to board-level understanding of marketing: according to respondents, 80 per cent of UK B2B companies have either a good or excellent understanding of marketing amongst the senior management team. This is encouraging news for marketers in the B2B sector, demonstrating that these companies are wise to the strategic value of marketing, rather than seeing it as a nice-to-have business function or worse as a cost centre. The implication is that B2B companies are increasingly enlightened when it comes to marketing.
Additional evidence of the importance of marketing could be found in question eight, focusing on ROI for marketing expenditure, which revealed that 51 per cent regarded it as critical and 32 per cent as important.
Similarly, in terms of the departmental hierarchy within organisations, the historic animosity between sales and marketing appears to be eroding: when asked how would you describe marketing’s relationship with the sales department or team?, 58 per cent responded that sales and marketing operate on an equal footing. It was also broadly encouraging that twenty-two per cent of companies stated that marketing actually functions on a more strategic level to sales, although the fact that the remaining 20 per cent said sales takes the lead suggests that in one-in-five companies more progress needs to be made to elevate marketing to its true status.
Yet despite suggesting that understanding of marketing is growing internally, respondents to the survey were less positive regarding the perceptions of business-to-business marketing by the wider profession. According to the results, 46 per cent still believe that the marketing sector as a whole regards B2B as inferior and less sophisticated as B2C. The extent to which this perception is an accurate reflection, and that to which it is the result of an ingrained inferiority complex, is impossible to gauge from this survey. But two things are certain: that more needs to be done to raise the profile and understanding of B2B amongst a wider audience, and that those within the profession need to learn to value their expertise, skills and achievements more.
In terms of use of media, direct mail confirmed its status as the most widely-used in the business-to-business space, with 16 per cent of respondents having invested in it during the next 12 months. It was closely followed by email marketing on 14 per cent, events on 13 per cent and both (traditional) advertising and exhibitions tied with 12 per cent.
However, the growing power of email as a marketing tool was demonstrated by the fact that it beat direct mail comfortably in the question on most effective medium 20 per cent against 14 per cent. Direct mail came equal second with telemarketing, closely followed by events on 12 per cent. The suggestion is that the cost, immediacy and trackability benefits of email are continuing to outweigh any reservations over spam and data protection that may preclude B2B marketers from migrating to it.
Looking ahead, the trend towards email was underlined further by the question on innovation in media, and was cited by 44 per cent of respondents, over double the number that cited search marketing, the second most popular choice, and almost three times the number opting for online advertising which came in third. Perhaps surprisingly, search marketing appears to be very much still the medium of the future, with the largest number of companies anticipating numerous developments in this area, and yet only seven per cent claiming to have invested in it during the last 12 months. Clearly Google, et al, have some way to go to convince B2B marketers that search is a must-have component of their marketing strategy.
Finally on medias: email, direct mail and events look set to absorb most B2B spend during the next 12 months the first two both being cited by 17 per cent of respondents as likely to attract their largest budget share. Clearly although email is the quickest evolving medium, it has yet to completely overhaul direct mail in the B2B sector. This may, however, simply be a matter of time. B2B Marketing’s 2006 State of the Market survey will show how this situation has changed.
On a more personal note, the results suggest that B2B marketers are generally optimistic regarding their career prospects, with 62 per cent stating they felt prospects were good having advanced during the previous 12 months. This compares with 20 per cent who opted for neutral indicating that they had made no discernable progress during the previous 12 months, and a faintly alarming 18 per cent who felt they actually regressed in the same period. This may simply be due to frustration as a result of remaining in a role which they felt they have outgrown.
When it comes to moving on, over two thirds of respondents stated that they will look for roles within other B2B companies, whilst only seven per cent say they will look for non-marketing roles. Whether through choice or necessity, it appears that once a marketer works for the B2B sector, they will continue to do so.
The situation is worse, however, when it comes to employing marketing staff: 24 per cent of respondents suggested that there was a dearth of quality candidates in the past 12 months, whilst 68 per cent suggested that the situation had not improved on the previous year. Only seven per cent described the supply of quality candidates as good. The primary explanation for this is almost certainly the result of limited focus on B2B amongst the numerous under graduate and professional marketing courses and qualifications. Such courses must place a greater emphasis on B2B to provide suitable candidates to fill these roles.
Conversely, the Chartered Institute of Marketing is the most popular trade body amongst B2B marketers, with 43 per cent of respondents indicating that they are currently members. Unsurprisingly Institute of Direct Marketing proved the second most popular body, but more intriguingly 22 per cent stated that they were not currently members of a marketing trade association. It seems the trade bodies have an important task on their hands to reach out to this audience.
Publications were touted as the most popular source of marketing advice by respondents, and B2B Marketing was, in turn, cited as the publication which best provided for respondents’ information requirements.
The biggest issues facing B2B marketers in 2006 will be making best use of limited budgets and understanding new marketing channels and techniques according to the survey results. The concern over budgets is an age-old one in B2B, and one that persists despite the apparent confidence that budgets for the majority will at very least remain constant for the remainder of this year and into next. The implication may be is that whilst budgets are not likely to be cut, their limited size already presented a significant challenge to marketers.
The issue with budgets may also be the underlying reason for the interest in email, online advertising and search which was identified earlier (see figure 5), and accounts for the fact that understanding new marketing channels and techniques attained the joint highest response for this question. Marketers acknowledge that the pressure on budgets are forcing them to seek more cost-effective means of reaching the market, and emarketing presents such opportunities. The race is therefore on to understand these channels and to exploit them as soon as possible. As they continue to evolve, so will marketer’s understanding.
Securing board level support was predictably still recognised as an issue by 14 per cent of respondents, 10 per cent took issue with the quality of internal data and eight per cent are more concerned with the general state of the economy. However, only four per cent were worried about creativity within their communications: given the appalling level of innovation used in all too much marketing activity, this is surprisingly low, and perhaps is a reflection of the failure of marketers to acknowledge the need to innovate. It, in turn, may have resulted in the poor perception of the B2B sector which was acknowledged by respondents and which continues to exist all too widely outside the space. As a consequence, it must not be ignored.
Overall, the survey suggests that the B2B marketing sector is confident and well-placed to continue to grow and evolve. It certainly is not as downtrodden as many outside the sector might expect, and ultimately this confidence will begin to reflect on the outside world. However, whether or not corporate spend is directly affected by the downturn, the next six months is likely to prove more challenging than the previous period, and it will be intriguing to judge how the B2B sector has fared in B2B Marketing’s next State-of-the-Market survey, in June 2006.
While the traditional methods of direct mail and telemarketing are still essential and continue to be effective, email marketing is opening up a new range of opportunities with the majority of marketers seeing its role and importance growing in the next 12 months. Email is great for B2B marketing because it can save vital resources both in terms of time and money and its results can be viewed instantly and are easily measured and analysed. However, this can only be delivered through an appropriate email marketing service. Experian advocates the use of only opt-in, fully managed email marketing services that ensure privacy is upheld, effective targeting and real return on investment is secured. Email marketing can become even more sophisticated when the email address and campaign data is cross referenced and verified against existing data such as that held in Experian’s National Business Database. This enables a highly sophisticated level of segmentation that delivers greater personalisation and targeting of communications materials and messages. Investing in such email marketing services enables fully integrated, multi-channel direct marketing campaigns to be executed across email, direct mail and telephone using a single source of business data.
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