Playing Catch Up

Spending on promotion activity via the Internet showed a healthy increase of 13.1 percent to $1.7 billion in 2002, compared to $1.5 billion in 2001, according to PROMO and industry sources. (Note: PROMO is now measuring Internet-based marketing only in this category.)

Overall, interactive marketing spending increased to $3.8 billion, an 11.8 percent increase over the $3.4 billion spent in 2001, according to the Direct Marketing Association (DMA), New York City.

“The promotion arena was still in the nascent part of its life cycle in 2002 on the Internet,” claims Kevin Noonan, executive director of the New York-based Association of Interactive Marketers. “Reducing the cost and allowing more people to participate will be the driving force behind promotions on the Internet because it allows for economies of scale better than any other medium.”

While the DMA reports that 66 percent of respondents to a recent survey increased online sales as a result of e-mail promotions, New York-based marketing technology firm DoubleClick reports that bounce-backs — e-mails sent to abandoned, falsified or otherwise non-working addresses — have reached an all-time high of 12.6 percent. Which leaves the interactive marketing message for e-mail as mixed as the rest of the segment: Things are good, but they could get a lot better.

Steve Gold, chief creative officer, Arc Marketing, Greenwich, CT, agrees that most interactive promotions have a long way to go. “Last year was the beginning of change in the industry,” he said. “Before, it was a technology-driven venture, always. And the reality is that it wasn’t all that interesting.”

But Gold says that’s changing now and a better understanding of the medium is part of the reason his company is running some very successful Internet promotions. “Companies like Kellogg’s, for instance, were very skeptical about the Web,” he says. “They were very back panel oriented — but back panels don’t change. You print 100 million of them and you’re done. On the Internet, we can change games daily, weekly, monthly. We can increase a young consumer’s interest level greatly by being able to change the site to keep the kid intrigued. The technology has always been four or five years ahead of the industry. We’re just now able to show clients why it works better, why it may be more cost efficient than traditional methods.”

Online gaming is one segment not to be underestimated. Forrester Research reported that total video game expenditures exceeded movie box office revenues in 2002.

The key to running successful Internet promotions, industry experts agree, is to run programs that make sense with the overall marketing mix, and to link all communication channels back to the Internet promotion. According to numbers from the DMA, marketers can do a better job of linking those channels: direct mail (58 percent), e-mail (56 percent) print ads (43 percent) and search engine optimization (41 percent) were the most frequently used methods to generate online traffic.

Another key is to figure out just why your customers are visiting the Web site; Gold explains that, “Kids go to your Web site to have fun — and promotions, games, sweeps are all easy to apply. The car industry realized that nobody wants the fun and games. These people want a good user experience, to get in and out with the information they were looking for. Not just price, but how to build a car, how to add and take off options, and dealer availability — less promotional and more informational.”

INTERACTIVE MARKETING SNAPSHOT

total spent in 2002: $1.7 billion

Spending was up 13.1 percent in 2002

Web promotion must be part of an integrated communications strategy

Understand why your customers are online before marketing via the Web