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Dec 18, 2000

Charlie Buchwalter VP AdRelevance Reveals 46% of B-to-B Banners are Good for Branding Only

SUMMARY: No summary available.
Charlie Buchwalter, VP for online ad measurement service AdRelevance, has spent the past year watching B-to-B online advertising statistics very carefully. We called him to get an overview of what's up with B-to-B banners in this year when the media trumpeted, "The Banner is Dead" but business marketers continued heavy online spending.

Q: How are media reports of the banner's death affecting B-to-B marketers online spending?

Buchwalter: Our feeling is it may affect advertising short term, but we do see a kind of inexorable trend towards companies increasing their marketing spending in the online world. We saw banners were 2.5% of the overall advertising spend in 1999, and it appears to have bumped to 4% this year. We see that continuing to grow.

All the journalists say, "There must be a grim outlook with so many dot-coms failing." But most of the ones that are failing spent a very small amount online. It's not affecting the marketplace as a whole.

So, those advertisers who are accounting for a huge amount of online banners are still growing month-to-month. We're also continuing to see standards being set across the board -- how does this online thing work, what kind of sponsorships work, to what extent do I mix cpc, cpm and cpa, etc. Business marketers like bCentral are hammering and hammering and hammering. They are learning what works; while the pundits are on the sidelines wringing their hands!

Q: Which types of B-to-B marketers are spending the most on banners?

Buchwalter: The current list of leaders includes Network Solutions, Netscape, Microsoft, Concentric Networks and Web design and domain registration networks have consistently been the largest advertisers in the B-to-B segment for quite a while.

We see the big B-to-B advertisers breaking down into four groups:

1) The Dominators - These are consistently Microsoft and Network Solutions.

2) Disappearing Acts - These people were big spenders and now appear to be falling off the face of the earth. They include Verio, Tucows and MardenKane.

3) Growth People - These come out of nowhere. ADP [Automatic Data Processing] was the 94th largest spending B-to-B at the start of the year and now they are number eight. It's a pretty significant change.

4) Schizophrenics - They are not doing anything, then they do a whole lot, then they do nothing again. They are all over the map. An example is Sun Microsystems. They were #13 in B2B first quarter, in the second quarter they didn't do anything as far as we could tell, and in the third they were number one!

Q: As a whole, was B-to-B online ad spending a smooth trajectory this year?

Buchwalter: There was almost an exponential rise. Since third quarter last year B-to-B is clearly the fastest growing segment of all the online advertising AdRelevance is tracking. The growth trajectory is coming down a bit now. People are pulling in their horns a bit, they know fourth quarter is very much a retail quarter.

Q: What trends do you see in terms of the creative or campaign offers being made in typical B-to-B banners?

Buchwalter: We've come up with a taxonomy that says there are two kinds of ads on the Web -- branding ads and direct response ads. We've found that although most people believe the Web is a direct response vehicle for click throughs, it turns out a large percent of ads are branding ads.

Overall [B2C and B-to-B ] we're seeing 63% of all ads are branding ads. The majority for B-to-B alone is a bit more skewed towards direct response. 54% of B-to-B ads are direct response ads, most of it geared toward driving traffic. So 46% are branding ads.

Q: How do you define the difference between branding and direct response banner creative?

Buchwalter: We break branding ads into three categories
1) Awareness ads to educate people -- 'Ooh look what we'redoing!'
2) Positioning statements -- 'Our company does this!'
3) Features and benefits -- 'We have these capabilities'

Direct response ads either drive traffic with a large 'Click here to go to this site!' or they consummate the sale immediately, 'Click here and if you buy we'll give you a special deal which expires tomorrow.'

Q: Do you think marketers are getting confused about what a branding ad is versus what a direct response ad is? Because so many of them seem to be measuring success solely by click throughs....

Buchwalter: There could be some who thought their branding ad did such a great job that people would click and go to the site. Some marketers could very well be intending to do something but accomplishing something else.
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