MARKETING Multichannel marketers are shaking off

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1 outlook 2010: MARKETING Multichannel marketers are shaking off the disappointments of the past year and planning to invest in multiple media in order to return to growth mode. Text by Sherry Chiger / Charts by Lisa Santo 81.9% 89.9% Own Own 76.9% Popular media used 85.9% 42.3% 48.5% 60.6% 38.4% Paid search Social media Banner ads on other s Most-popular media used by respondents with sales of less than $10 million 79.5% 92.3% Own 74.4% 74.4% 85.8% 47.9% Social media 61.9% Paid search 52.9% 32.1% 32.1% Social media Paid search 47.1% Banner ads on other s 42.3% 47.9% 26% Consumer publications 40.6% 25.1% 25.1% 33.5% Business publications 40.6% 40.6% 25.1% Banner ads on other s Most-popular media used by respondents with sales of at least $10 million 34.8% marketing Solo mailers/ direct mail other than catalogs Consumer publications We re all sick of recessioninspired axioms such as flat is the new up. But as the results of our Outlook 2010: Preparing for the Upturn survey make clear, such maxims become ubiquitous for a reason. When more than two-fifths of respondents report having missed their annual revenue goals last year, it s easy to surmise that for many, flat sales were a worthy aspiration. But to quote another hoary adage, there s nowhere to go but up. And the overwhelming majority of respondents expect sales to increase this year. What s more, they plan to invest more in social media, , and other marketing tools to help ensure their growth. Media mash-up From the No Surprise Here Department: When asked

2 If you had more money in your marketing budget, what would you spend it on? 15.8% 19.8% marketing 40.9% 40.1% Data/analytics for better targeting 53.2% 50.8% More-sophisticated programs 29.8% which media they used to promote their catalogs, s, or stores, respondents number-one choice was their own, with 85.2% citing it as a promotional channel. Indeed, the only startling element here is that nearly 15% of respondents didn t promote their business via their own site. was, again not 27.3% Print catalog/ direct mail circulation 33.9% 36.4% Search 7.6% 5.9% Sales of less than $10 million Sales of at least $10 million surprisingly, the second most popular medium, used by 79.7% of respondents. And regardless of company size and target market, the company s own and were the two mostused marketing channels. Digging deeper, though, variances became apparent among respondents of differing audiences and sales volume. For instance, while social media was the third most popular channel among business-to-consumer marketers, with 60.6% using it, it ranked only number five among business-tobusiness merchants, with a more modest 42.3% using it. And while fewer than onethird (32.1%) of businesses with annual sales of less than $10 million used paid search, nearly twice as many (61.9%) 20.7% 17.8% marketing 33.5% 52.1% Data/analytics for better targeting 49.8% 54.1% More-sophisticated programs 23.2% 32.9% Print catalog/ direct mail circulation 32% 38.4% Search 6.9% 6.2% Merchants with sales of at least $10 million are the most likely to invest in data/ analytics

3 of those with sales of at least $10 million did so. Overall, the larger businesses were nearly twice as likely to avail themselves of a particular medium than Which metrics have become more important to your business in the past 12 months? 14.9% 22.6% 25.9% 29.5% Catalog 55.7% 56.8% Sales of less than $10 million 40.2% 44.7% Search their smaller counterparts. Whereas 40.6% of the larger respondents used affiliated marketing, just 23.7% of the smaller ones did. Nearly half (47.1%) of the 69.5% 78.9% 14.4% None 11.1% Sales of at least $10 million 4% 1.6% larger respondents placed banner ads on third-party s, compared with just one-quarter (25.1%) of the smaller businesses. And while 40.6% of respondents with sales of at least $10 million used some sort of direct mail other than catalogs, among the smaller respondents the figure was a scant 14%. What s more, 5.4% of respondents with sales of less than $10 million said they didn t use any media to market their business (which makes one wonder how they manage to stay in business at all). Of the respondents with sales of at least $10 million, only 0.6% said as much. Just over half (51%) of all respondents said they used social media to promote 14.6% 23.7% 14.1% 40.8% Catalog 52.9% 61.8% 36.4% 50.7% Search 71.8% 77.0% 15.5% 9.2% 3.3% 1.9% None Social media is still hot: 66% of respondents said they plan to spend more on it in 2010 than they did in 2009

4 61.2% 70.8% their business. But that percentage is likely to increase this year. Certainly spending on social media will: 66% of survey participants planned to spend more on it this metrics tracked: b-to-b vs. consumer 29.4% 36.5% Cost to acquire 48.2% 45.8% 25.9% 21.9% Lifetime value 54.7% 59.4% Open rates Sales Spam complaints metrics tracked: small vs. large Sales less than $10 million 64.7% 71.9% year than they had last year. The only channel that more respondents intended to increase spending on was their own, with 67.8% expecting to boost 27.1% 32.3% 52.4% 53.1% 11.2% 12.5% None 0 1.6% Sales of at least $10 million their spend. Consumer publications was the area where spending cutbacks were most likely, with 13.2% of respondents planning to decrease promotional expenditures there. Radio also proved less popular, with 11.8% intending to reduce their spend on the medium. More than half (59.2%) of total participants said they planned to increase their marketing expenditures this year. Nearly as many (51.9%) put moresophisticated programs on their wish list, making it the number-one channel they d spend on if they had more money in their marketing budget. Data and analytics for better targeting ranked second, with 40.8% saying they d 54.2% 80.8% Deliverability Clickthroughs 25.6% 43.7% Cost to acquire 33% 64.2% Unsubscribe 17.7% 31.8% Lifetime value 42.9% 73.5% Open rates 61.1% 79.5% 21.7% 40.4% Sales Spam complaints 39.4% 68.9% Unsubscribes Deliverability Clickthroughs 17.2% 5.3% 1% 0 None more than a third of the respondents that missed their revenue goals for 2009 said they fell short by more than 20%

5 spend more in that area. Given that respondents were able to select multiple answers to this question, one might wonder why more people didn t check this option or the other options, for that matter. Just 34.2% said they d spend more on search if they could, 28.1% on catalog and other direct mail circulation, and 18.9% on affiliate marketing; 6.9% selected other. Could it be that the majority of survey participants were satisfied with their analytics, direct mail, search, and affiliate efforts? Types of sent: b-to-b vs. consumer 58.8% 52.9% 49.2% 51.3% 48.6% 60.7% 14.1% 14.1% 8.5% 6.8% Prospecting Reactivation Trigger None Types of sent: small vs. large merchants Sales of less than $10 million Sales of at least $10 million 57.5% 50.3% 37.2% 61.6% 42.5% 69.5% 14% 13.2% 11.6% 4% Prospecting Reactivation Trigger None matters Respondents deemed e- mail metrics second only to - metrics in terms of business importance. Nearly three-fourths (73.8%) of participants said site- metrics became more vital during the past year, while 56.1% said the same of metrics. As for the types of metrics tracked, sales were the most popular, with 68.4% measuring them. Clickthroughs were close behind, measured by 65.9% of respondents, followed by open rates (56.3%). A shameful 12.1% admitted to not tracking any metrics. Just as the larger companies were more likely than the smaller ones to promote their business via a number of marketing media, so they were more apt to track metrics. Although 5.3% of businesses with

6 sales of at least $10 million said they d didn t look at any metrics, among respondents with sales of less than $10 million the figure was an unhealthy 17.2%. Along the same lines, whereas only 4.0% of the larger respondents said they didn t send any type of , 11.6% of the smaller participants confessed as much. But while the larger businesses were more apt to use trigger s (69.5% vs. 42.5% of the smaller respondents) and reactivation s (61.6% vs. 37.2%), smaller companies were more likely to use as a prospecting tool. Whereas 50.3% of respondents with sales of at least $10 million sent prospecting s, 57.5% of those with sales of less than $10 million did. More than two-thirds (69.3%) of respondents said that, in addition to deployment and handling opt-outs, their service providers (ESPs) offered data and analytics assistance. ESPs also handled file maintenance and hygiene for 55.2% of respondents, and consulting services for 31.1%. Again, larger businesses were more likely to employ Does it look like you ll have met revenue expectations for 2009? Respondents with annual sales of less than $10 million 21.2% 14.4% Respondents with annual sales of at least $10 million 8.6% 15.1% 21.6% 13% 30.3% 17.8% 29.8% 28.3% Fell short by more than 10% Fell short by up to 10% Met expectations Exceeded by up to 10% Exceeded by more than 10%

7 ESPs for such services. For instance, 62.2% of respondents with sales of at least $10 million had their ESPs handle file maintenance and hygiene, compared with 49.3% of the smaller businesses. Dollars and cents The stats regarding respondents ledger sheets make for some disconcerting reading. The plurality of survey participants 41.1% said that they most likely fell short of their revenue goals for More than a third of those respondents missed their sales goals by more than 10%. Another 29.4% of participants exceeded their revenue expectations, while 29.5% said they expected to have met their goals. Business-to-business merchants fared the worst in terms of revenue expectations: 45.7% said they most likely missed their goals. Of the b-to-b respondents who fell short, 38.3% did so by more than 10%. On the flip side, 34.4% of the business-to-consumer merchants exceeded their sales goals, as did 32.9% of respondents with sales of Does it look like you ll have met profitability expectations for 2009? Respondents with annual sales of less than $10 million Respondents with annual sales of at least $10 million 17.6% 24.5% 12.3% 16.7% 23.3% 6% 18.7% 16% 28.9% 36% Fell short by more than 10% Fell short by up to 10% Met expectations Exceeded by up to 10% Exceeded by more than 10%

8 at least $10 million, but only 27.4% of those will sales of less than $10 million and 26% of b-to-b merchants. Somewhat fewer respondents fell short of their profitability goals than had their revenue expectations: 36.9%. Slightly more than a third of those, however, fell short by more than 10%. Here the discrepancy between b-to-b and b-to-c participants was negligible; 37.9% of the b-to-b businesses fell short, compared with 36.4% of the b-to-c respondents. On the other hand, far more smaller businesses fell short of their profit forecasts than larger ones. Among respondents with sales of less than $10 million, 42.1% expected to have missed their profitability goals, compared with 29.3% of respondents with sales of at least $10 million. But you can t keep a good man or multichannel merchant down. More than three-quarters (77.9%) of respondents expected sales to increase this year. What s more, 45.2% of those hopefuls were truly optimistic, anticipating sales growth of more than What s your revenue outlook for the next 12 months? Respondents that sell primarily to businesses 1.7% 1.7% Respondents that sell primarily to consumers 3.1% 2.6% 18.2% 35.8% 14.9% 34% 42.6% 45.4% Expect growth of more than 10% Expect growth of up to 10% Expect flat revenue Expect decline of up to 10% Expect decline of more than 10%

9 10%. Clearly the consensus is that the worst of the economic maelstrom has passed. All the same, most respondents were not planning to staff up quite yet. Just 35.9% expected to add staff this year. Respondents with sales of at least $10 million were the most likely to hire, with 47.4% expecting to increase their staff, compared with 27.8% of the smaller companies. Among the survey participants expecting to add staff, 49.7% anticipated hiring employees to assist in e-commerce marketing. More than one-third (38.1%) planned to hire database marketing or data analytics specialists, and 36.8% expected to recruit marketing staff. l METHODOLOGY On December 17, 2009 an invitation was sent out from the editor of Multichannel Merchant to subscribers to the print publication. As an incentive to participate, survey respondents were offered the opportunity to win one of four $50 Amazon gift certificates. Subsequent mailings were sent to subscribers of the Multichannel Merchant MCM Weekly, i- merchant and O+F Advisor e-newsletters. By February 21, 2010, the closing date of the survey, 886 responses had been received. Of those, 594 (77.5%) indicated that their company marketed products directly to consumers and/or businesses through a print catalog and/or e-commerce, and those active respondents form the basis of the result to the survey. What s your revenue outlook for the next 12 months? Respondents with annual sales of less than $10 million 3.3% 3.3% Respondents with annual sales of at least $10 million 2% 1.3% 16.3% 41.1% 17.8% 28.3% 35.9% 50.7% Expect decline of more than 10% Expect decline of up to 10% Expect flat revenue Expect growth of up to 10% Expect growth of more than 10%