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Hearst Electronics Group Press Release 12-2-2008

 Survey Shows Business Marketers Now Spend Nearly Half Their Budgets Online

CLEVELAND, OH – December 2, 2008 – A survey of business-to-business marketers indicated that the migration of communications budgets from traditional media to online has accelerated to the point where nearly half of all spending, 47 percent, is spent on online marketing techniques today.

The survey, conducted jointly by Hearst Electronics Group and Goldstein Group Communications (GGC), was conducted via email during August and September, 2008 with b-to-b marketing executives throughout North America.

“This type of data reveals best practices among business marketers at a time of tremendous flux,” said GGC President Joel Goldstein.

“The sense of urgency to move to online marketing has been felt by leading marketing organizations for some time now, but the extent to which budgets have been re-defined is dramatic.

While traditional media still play a role in building a balanced program, clearly online spending for webcasts, search engine marketing and generating online content are now seen as the primary drivers of branding and lead generation for most companies.”

Goldstein noted that it’s likely the increased pressure for program measurability and accountability in 2009 budgets is also a factor in pushing programs to more online spending.

“The survey’s goal was both simple and straightforward,” said Hearst VP Publishing Director William Barron.

“Identify how companies are allocating dollars, what’s working and, most importantly, why.

The most advanced marketers today build balanced programs that incorporate multiple points of contact with their targets, from print to online to shows to direct.

The survey reinforced that budgeting shouldn’t be a search for the ‘magic bullet’ but instead must follow a disciplined and proactive strategy.”

While the survey queried marketing executives on sales channels strategies, barriers to growth, and other 2009 plans, the survey’s main conclusions centered around budget patterns for marketing communications expenses.

“When web development, search engine marketing and webcasts are combined, marketers today are spending 47 percent of total budgets on online tactics,” said Goldstein.

“This includes online video and social media, which are very small portions of the budget today but are expected to grow rapidly during the next few years.”

“Traditional media spending on print advertising is the single largest program in the budget for an important reason,” notes Barron.

“Research from all the main trade publishing companies, including Hearst, Reed and the online firm Techinsights, shows that prospects spend a majority of their time in print when researching products and suppliers.

The key point for marketing today is that it is an ‘AND’ not ‘OR’ world, meaning that customers use both print and online tools.”

Part of the reason marketers are so willing to devote such a large portion of their budgets to online may be tied to lead quality.

The single best source of leads, they report, is their web site, at 24 percent, followed closely by search engines at 19 percent.

While one might expect that high spending for online tactics would lead to strong lead quantity, this question dealt instead with a marketer’s source of their BEST leads.

Online and trade shows, at 15 percent, appear to be the most important sources of quality leads.

“In this environment, many budget choices in 2009 will be based on what’s ‘nice to have’ versus what we ‘have to have.’

Programs that are proven to generate the highest quality leads, and that are easiest to track to a lead or sales conversion, will end up as the winners,” said Goldstein.

Search engine marketing currently consumes 11 percent of budgets, when including organic as well as pay-per-click programs.

Barron notes the importance of building strong brands carries through to Google and Yahoo! initiatives as well.

“The value of strong brand recognition can be found typically in your company’s own server logs, the database that identifies what words or phrases people have typed in to Google or Yahoo! in order to find your site,” he explains.

“The dominant phrase is likely to be your company’s own name or product names.

While ideally you’re building search engine visibility to reach new people who don’t know you, the approach still must be centered around balanced brand-building so the market knows your name and you carry some level of visibility in your space.”

Direct marketing is still a player in b-to-b spending, at 12 percent total, evenly split between email and direct mail marketing.

Trade shows continue to represent a large portion of marcom budgets at 17 percent, Goldstein noted.

“While trade shows are certainly among the most expensive tactics employed, and while shows have enjoyed a modest growth spurt from 2002 to 2007 in traffic and revenues, we had expected to see more trimming in that portion of the budget, as senior level executives and buying decision-makers continue to curtail their trade show attendance for many industries,” he said.

Also in traditional marketing, a still robust 11 percent of budget is spent on print materials, meaning that most marketers have concluded they can’t live by online PDFs of brochures and data sheets alone.

Printers can take heart that marketers still see a role in printed literature and catalogs for the b-to-b sales process.

“One of the other areas of inquiry is managing marketing on a global scale,” said Goldstein.

“Companies today are so tied to overseas markets, which presents a challenge to marketing executives who must coordinate a unified message worldwide.

We wanted to measure whether decisions on messaging and budgeting remain with U. S. headquarters, or have dispersed to other areas of the world.”

In this survey, two thirds of revenues come from outside North America for these companies, with 20 percent coming from Europe, and 19 percent from Asia.

North America remains the center, though, for generating marketing materials and messaging:

42 percent report all creative originates at U. S. headquarters, while another 30 percent report these decisions are made “mostly” at U. S. headquarters.

The pattern holds for budget and spending decisions as well, though slightly less so.

Some 43 percent say budgeting decisions are made completely at U. S. headquarters, with another 20 percent saying “mostly” in the U. S.

For demographic purposes, 79 percent of survey respondents carried a marketing or sales title, with another 15 percent as CEO/President.

One-quarter of survey respondents were from large corporations with revenues of $151 million or greater;

nearly a third, or 31 percent, were from smaller marketers with annual revenues at $10 million or less.

The email survey was distributed to marketing executives and top management among North America electronic manufacturers and b-to-b executives during August and September, 2008.

Survey data are based on 99 completed questionnaires.

For a white paper on 2009 Marketing Budget Best Practices, with results of the complete survey, contact Joel Goldstein, Goldstein Group Communications, at jgoldstein@ggcomm.com, or at 216-509-3119.

About Hearst Electronics Group

Hearst Electronics Group is the largest publisher of product information to the electronics industry.

Its directories, e-newsletters, web sites, magazines, webcasts, inventory access tools, and databases are invaluable resources for engineers involved in product design. Hearst Electronics Group is part of Hearst Business Media (HBM), an operating group of the Hearst Corporation.

About Goldstein Group Communications

Goldstein Group Communications, a technology b-to-b agency, brings an unusual combination of corporate communications management and engineer-level writing capability to its national client roster. With deep experience in electronics and industrial markets, the agency is able to draw on its skills to articulate with impact and clarity the technical advantages its clients bring to their customers. Unlike other agencies, staff members for the most part have built their careers on the corporate side of the desk, rather than as agency executives, a perspective that results in a higher level of accountability and measurability in the agency's programs.

Hearst Electronics Group
50 Charles Lindbergh Blvd. Suite 100
Uniondale, NY 11553

William Barron
VP Publishing Director, Hearst Electronics Group

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