Our interest was stirred after a visit to a museum about war - hence the link to the previous post. As we have already acknowledged, wars tend to create significant advances in technology – for example, during the Second World War, the advent of computing, radar, modern medicine and lots of other clever stuff were developed in record time, driven by a need for opposing nations to develop a competitive advantage. The Cold War that followed, gave birth to space exploration, satellite technology, networked computers, the internet and so on.

So having established that wars increase innovation in technology, we wondered if there was any crossover between wars and marketing and as you will see, we found some interesting things.

Wars also drive innovations in marketing!

I have included a shot of a poster below, which was used as a recruitment tool. The ‘creative execution‘, (which was reprinted and distributed both as a flyer and a poster) was used widely to encourage people to sign up to the army. You will note that firstly, the opening paragraph is a word picture to help the prospect to visualise their current miserable situation, it also serves to amplify the pain of this. Once they had a (sym)pathetic ear, the recruitment Sergeant’s address was then based in a pub to give the impression that most of the time would then be spent supping large volumes of ale, rather than fighting knee deep in a field with blunt metal rods, facing certain doom.

The pièce de résistance is then a description of a ‘cheap, luxurious’  life, lots of food and then they take it all away, by reminding that not everyone will be accepted, to encourage a speedy response. Not only is this designed as a marketing campaign, but it was accompanied by a word of mouth viral campaign, see below – not only can you live the life of Riley, in the pub, with as much food as you can eat, but you also get the pick of the girls, crikey, the army must have been heaven on earth, rather than heaven in earth!

They used extensive demographic targeting and analysis to increase the number of people who would sign up and using these techniques, they marketed their campaign in areas where people would be more likely to view, empathise and respond. The viral, word of mouth element to the campaign shown above, was also essential as many of the ‘prospects’ could not read. Without meaning any offence in a modern context, apparently this eventually resulted in over 90% of the army being recruited from Ireland!

Of course, the recruiting sergeants were incentivised to land new ‘customers’, hence the development of the targeted marketing approach. As you can see here, there was also acknowledgement that a bit of creative license was also regularly employed, unlike modern marketing…

The year this ‘creative execution’ was employed, believe it or not, was 1801! Now don’t get us wrong, we believe that marketing like this, particularly in a military context, has taken place since humans could communicate and that could mean thousands of years. You only need to look at the Spartans to see that this is the case, but it is fascinating to see what we regard as ‘modern marketing’ methods have actually existed forever, all that actually changes is the medium for delivery of the campaign.

Although, it may not have initally seemed relevant, maybe next time you run a marketing campaign, or design one for a client, this might help you address the fundamentals of the message and even the targeting, as they really haven’t changed much over the centuries. Having said this, we aren’t sure that directing your responses back to a pub would increase the results!

The amount of money out there has dwindled. The banks stopped lending, first to consumers, then also to businesses. This stopped businesses from spending money with other businesses and so on down the chain. Eventually, these businesses had less income and little profits, so they laid off employees to stay afloat. They reduced investment in plant and machinery, training, marketing and they will continue to do this until either the recession ends and the upturn begins or they go out of business. Its a cycle that has been repeating for centuries and it will probably carry on regardless of rule changes, regulation, anger, frustration or anything else.

Ok, I hear you say, thanks KnowledgeBank for the doom and gloom, we know this – where’s the relevance to your b2b marketing musings.

Well actually, we think this means opportunity and here’s why.

Just as wars have always resulted in massive advances in technology like computers, medicine and science, so recessions have resulted in massive advances in innovation in marketing. The reason for this is all to do with the supply of money. Although you, the client, may want to spend more on marketing, the reality is that the return on investment isn’t there to sustain it using poorly targeted activity, this then translates into only really wanting to pay for things that work. To you (and us to an extent) this means tangible solutions with no risk. The snag with this is that they don’t exist, well not in a sustainable or scalable fashion, beyond big promises and usually no cigar.

We believe that this is the real driver behind several trends including Twitter (because its free), Google (because it’s really measurable and they have nice graphs), facebook (because we can pick Marketing Managers in Hull with 3 children and an interest in yoga) and Linkedin‘s recruitment ‘engine’ (because if none of the above work, we can find a new employer!)

Having become leading exponents in several of these, we can also dispel the myth that they are free or even cheap methods of marketing. The time involved in building a signficant presence in most of these is lots and lots. Although it works very well for us and we have more than 20k followers on Twitter for example. Lets face it, Twitter is populated by our prime audience – the marketing experts, so we don’t pretend that we can make it work for anyone else in quite the same way.

These innovative channels are still being developed and we believe that they will eventually be ubiquitous, but for now, incredibly, we are still getting our best results from mailing activity both for ourselves and for most of our clients. This is probably due to a number of factors – we tend to use the best b2b data available in the UK, combined with really innovative analysis and we also reckon that most businesses receive fewer direct mail items these days and that they are almost a novelty, but I would recommend anyone to look at a direct means of communication.

Our blog is not for selling, (as it is on the internet, where you can’t sell, but only enable people to buy ), but you are reading this and of course, you are in our target audience of B2B marketers, and we have got you in front of our buying message, so if you want to, give us a call and we can chat about it – no strings. We have a couple of really innovative solutions which we haven’t even mentioned here as they are so new, but we will happily share them directly with interested parties.

You will have to click through to our website for the phone number though and at that point we can track you too! Ooh, modern marketing.

As we already know, the transition from offline to free online software has to be paid for.

Microsoft have resisted moving online because this inevitably means that they are putting potential clickers into a space where 80%+ of the revenue then goes to Google – in simple terms they would be indirectly funding Google!

The launch of Microsoft Office 2010 online is interesting because it will need to address the issue of keeping the customer online, but more importantly, then keeping them searching with Microsoft rather than Google and therefore driving the revenue to maintain that web presence and ultimately replacing the revenue from the software offline-only version of Microsoft Office.

In this context, the strategy to keep people both online and offline i.e. a software app with web connectivity and storage works both ways – at least while Microsoft work out how to get some market share and revenue back in the search space. Interestingly, Google and Adobe are simultaneously working back the other way – from online to offline using Google Gears and Adobe Air.

To the customer, I suspect this will be quite acceptable, as it provides a gradual means to move to working entirely on the web at some point in the future and for Microsoft, it provides a delaying tactic to re-establish their search capability in the meantime. We reckon they could do with having a browser without a search box sitting outside of the main window though!

Ultimately, what fascinates us and what makes it relevant to marketers, is that all of this is driven by revenue streams, which come from (or through) us, the marketers – the online camp is driven by marketing spend and a desire to grow it by increasing advertising. Offline is only really driven by Microsoft’s reliance on software like Office to generate billions of dollars of income.

The question is – as a marketer, which version would you therefore prefer, online or offline?

Like every form of marketing, “if the customers ain’t buying, then the suppliers ain’t paying for marketing to attract ‘em” and this will be as true for online marketing as offline. Although I have encapsulated this phrase in quotes,to make it look official and from someone with great authority, I actually invented it just now, so if it gets repeated, reference me.

If it is the case that people are not purchasing goods as much, then it stands to reason that they will therefore be searching for goods less. Inevitably, this will mean lower response and conversion from marketing, resulting in lower return on investment and therefore ultimately lower investment in more marketing. So if you are Google, and you derive revenue from this primarily, what do you do? ( Well what do you do that you can control!)

The answer is…

…you need to get people searching more frequently.

So how do you get people searching more frequently?

You get them to be online more.

How do you get them to be online more?

Simple, make it so that the Operating System gets them to the web faster and then keeps them there. i.e it boots up in seconds and it boots straight into the web or more specifically it boots straight into Google. No distractions, no faffing and no opportunity to avoid the ads. Then you make the browser work all of your lovely web based apps, which keep them online even longer, work really quickly in your own browser. If this sounds like a familiar strategy, I think you are catching our drift.

Next, we might see some heavy promotion of the cloud and acquisition of some SaaS companies to keep us online longer.

The question is, once we are online all the time, how will Google grow?

Suggestions are welcome below.

We speak with lots of b2b clients on an ongoing basis and obviously, during the past few years there has been a significant shift from offline marketing to online marketing. In fact the transition in spend has been so marked, that it is quoted that online spending now outpaces TV advertising and a variety of other traditional marketing channels. So why is this interesting?

Well, we regularly receive direct mail in the office and also other forms of direct marketing such as inserts in the press and so on. Currently, one of the most prominent companies who deliver this type of activity believe it or not is… Google. Yep, that’s right, Google do lots of offline, traditional, old fashioned, unmeasurable and ‘unresponsive’ direct marketing!

What may surprise you more however, is that this makes complete sense – Google’s target audience is obviously not online.

For those of you who now think we are barmy and clearly in need of a tonic or at least a lesson in marketing, we can qualify this a bit further.

Google are obviously interested in finding new customers. Inevitably, this means that they are not trying to target those who are already using them for advertising, but instead they want new customers. It is fair to assume therefore, that these prospects are not currently using Adwords, Adsense or other of their products and services. It is also a reasonable assumption therefore to assume that they are yet to make the full and complete transition to the online world. This is not dissimilar to most businesses, once they have successfully marketed and converted the ‘low hanging fruit’ to use a well loved buzz word.

What fascinates us more is that one of the direct marketing pieces which they use, (which is here, as it is in the public domain anyway) outlines, no – veritably trumpets the fact that 17 pence in every pound is spent online.

Talk about a double whammy!

Not only does this mean that companies who are marketing online are actually fighting it out for a maximum of 17% of the total spend, but also that the Master and Commander of online marketing is actually targeting offline prospects, in order to generate new customers, because they are probably not online. If you bear in mind that presumably the figure of 17 pence in every pound is across the entire spectrum of spend, including consumer spend and it is widely accepted that in the b2b space, the proportion of spend online is lower – maybe half that of b2c, this may actually mean that less than 10% of b2b spend is online! Wow.

When we speak to prospective clients, often they tell us that they are focusing their budget and activity more online than offline these days. In some cases, they are spending 100% of their budget online across search, optimisation, social media, web development, blogs (yes, I know we can talk!), but do they realise that this is for only a minute share of just 17 pence in every pound.

Five years ago, a greater online spend would have made more sense. Back then you could probably rely on the fact that your larger competitors may not have woken up and smelt the coffee yet. But now, these players dominate the space and are very prepared to outspend you to get more of that 17 pence. This means online can be a costly process and what is more interesting is that the greater dominance of larger players isn’t going to turn around. It’s going to get worse. In the future, if you can provide the product at lower margin and buy in greater bulk, you will be able to spend more on a click and therefore buy a greater share of that 17 pence even as it grows.

Clearly, the appeal of online marketing to everyone, including us, is the fact that directly measurable response and conversion is very, very appealing. We don’t dispute this at all, in fact we embrace this whole heartedly.

Having said this, to focus too heavily on online marketing, surely cannot be the optimum way to drive new customers and increase profitable business, particularly in the b2b marketing arena. If we also bear in mind that often online sales are lower margin (as it is easier to do fast price comparisons or use a cashback site.)

In the short term we lose sales, but in the long term, this could prove a costly mistake if we replace our ability to directly communicate with our target audience and our existing customers. We already know of a number of major companies who have already reduced their investment in their existing customer and prospect databases, in favour of increasing online spend. Tesco on the contrary, have massively increased the investment in theirs and no-one could dispute that they are one of the most successful consumer businesses of the last decade.

As both offline and online marketers, let me first explain that we believe that it is crucially important to do a combination of all forms of marketing. We are however advocates of allocating resources and marketing spend to that combination, based on the likely return on investment – for now, it would appear that this means more than 83% should be spent offline and less than 17% online.

How is business data captured initially?

In the UK, the starting point for many major data sources is an application, by a business, for a new or relocated phone line. Once this occurs, BT or another supplier arrive at the customer’s premises and validate the line. After confirming the number is live, this is then added the to the OSIS or ‘Operator Services Information System’ file.

A daily update to the file is issued by ‘OSIS’ containing between 30,000 – 100,000 additions, deletions or amendments making the file the only up-to-date and therefore most comprehensive source of telephone number information in the UK.

Once downloaded, the new connections within the file are used by 118 providers and also the major directories to supplement their databases. Initially, the larger directories communicate with the new entries to ask whether they wish to be included in the directory. After a period of time without a response, this typically leads to a follow up call to see if a listing is required. If you prefer to opt out (which the majority seem to want to from everything other than online these days, though paradoxically this is actually the most likely source of unscreened cold calls!), then you do not enter the directory and therefore you will never be present in the majority of business databases, as this forms the primary source for most b2b data providers.

How is the business information updated after this?

Ok, so we have our initial information with differing degrees of gathered and verified information. What happens next?

Well, contrary to the belief of many b2b marketers when they first enter the b2b space – this is the last update the record will receive from most sources until either: -

1. The directory further contacts the business to update the data, most probably when renewing or upgrading their entry or advert and therefore this most likely would be an annual or bi-annual process – not as frequent as many expect.

2. The record is selected to be cleansed and enhanced by a third party data provider.

Many people believe that b2b data is or should be updated constantly but they forget two important facts, namely, there is actually no requirement for any company to voluntarily update any directory entry they are featured in – and they typically don’t. Secondly, there is no official database held anywhere which requires a company to update.

Contrary to what many marketers believe, Companies House is an official register for Company information and Director information, but this is not intended to be comprehensive, it is only updated at 12 monthly intervals, the updates are arbitrary (under £5.8m turnover and even the financial informaiton is minimal – excluding turnover for example!) and finally it primarily holds company registered addresses and Name, not trading names and trading addresses or more specifically, marketing information.

So where does this leave us?

Where the data providers and resellers come in.

If business data providers have one thing in common, it’s much of the base data that sits behind their databases. This leaves a big question. Why do they exist then and what do they do?

The answer to this question is really quite simple. They add value to the data.

Added value comes in many forms with business data and here are some of the many examples: -

1. Telephone cleansing parts of the database – many third parties add extra layers of information to the data, whether this is adding more contacts, turnover, employee numbers, email addresses or other detailed information.

2. Deriving credit and risk scores – using algorithms which can provide an indication of the likelihood of a company to pay its bills.

3. Cross referencing with other data sources – connecting groups of companies and parent -subsidiary relationships.

4. Combining data sources – many business data providers have unique records which they have built up over time. On average from a universe of 2m+ records, this may be 10-20% meaning 200k+ unique records.

Some of the myths debunked.

All of our business data is constantly updated.

As we know, the only effective way to update business data is to telephone each record. So using WolframAlpha (only kidding), we can calculate how many calls this would take to achieve.

A single telephone operator using a predictive dialler can make say 150 dials per day, resulting in maybe 100 switchboard level contacts. Lets assume that every one of these calls is effective and results in a cleansed record.

In one year therefore (which is around 228 working days), a single operator could clean 22,800 records. For the sake of simplifying the numbers, lets assume a combined total universe of in the UK of around 2.28m records, which lies somewhere in the middle of most companies estimates of their universe. This would mean a team of 100 operators could just about clean a business universe during a 12 month period.

Ok, now we have an approximate number to work with, so lets look at the cost of doing this.

Typical salary for a UK based contact centre operator in the UK – £12.8k per annum.

100 operators for one year would therefore cost around £1.28m per annum.

Why is my b2b data out of date?

Now we have our costs, there are a number of other issues. First is the big one. Decay.

On average how long do decision makers stay in a position. This actually varies depending on the position and the type of company, an owner managed company would obviously tend to be much longer than an employed Managing Director. I don’t have up to date research on this but I presume it hasn’t changed much during the last 5 years so typically I will use 5 years for a Managing Director, 4.5 years for a Financial Director, 3 years for a Sales Director, 2 years for a Marketing Director (they are always getting promoted or moving to a bigger company – in many cases, as it is a more recently created and fast changing job role).

What this means for b2b data is that on average up to 20% of Managing Directors, 33% of Sales Directors and 50% of Marketing Directors change every year! Crikey, that’s a lot!

This is important because even if we are ringing every company with our team of 100 operators all year round, in many cases we may call just before or just after the change of decision maker. This means that this record will not be updated and therefore a record will appear incorrect. As there is no centralised register of non-executive Directors, this will inevitably lead to the appearance of an out of date database.

Its interesting that whenever we speak to clients who have sourced a database of more frequently changing job roles like IT, Marketing or Sales, they invariably complain about the freshness of the data – now you may be able to see why. You may also see why most data providers shy away from offering contact level freshness guarantees – it simply isn’t possible to offer one!

So why is this statement wrong?

One of the most noticeable trends in the marketing world is the tendency for marketers to follow the latest money spinner like a flock of well informed sheep. This may sound obvious, as there is no other way of paying the bills, but recently, the rhetoric from some consumer marketers has started to change, to justify why they are just a capable of delivering b2b marketing, because it is really just the same thing as b2c – same audience, same decision making process, this can be quite misleading. Let’s face it, at the moment, consumers are pretty pushed for spending money – and this is also the money that greases the wheels of b2c marketing, whether it is advertising washing powder on the Tube, sponsoring Curly’s hat in Corrie (we obviously aren’t in that demographic, as you can tell) or piling on the adwords.

Stark choices are happening right now and in general consumer spending is pretty suppressed. Agency, advertising and consultancy fees are dropping like a stone in b2c, so what’s the solution for some b2c marketers? Learn how to do b2b marketing and why it differs from b2c marketing? No, it is easier than that, just redefine b2b marketing as being the same as b2c! In contrast to b2c, the b2b space is fairly buoyant, at least in our recent experience – so what are the reasons for why this may be the case. Here are some possible reasons to help you make your mind up, if you care: -

1. Decision making processes are completely different.

A consumer wants new insurance, so they go online, use a comparison site, get some quotes, make some phone calls and then transact. 1 hour later – new insurance. Sound familiar? Not for everyone, I’m sure but that’s how lots of us do it and so do our friends.

A small company wants to purchase new insurance. Either, the decision maker, her PA, his son, someone else or all of the above, perform an initial information gathering process. Are there any specialists in our vertical sector? Can we purchase a product online? Lets call a local broker and get them to find some quotes. (In contrast to the b2c insurance market, b2b seems heavily broker led and not significantly online yet.) Do you know of a large online b2b insurance broker? Thought not. I asked around the office and we couldn’t either.

Next step: Compare quotes, compare aspects of the policies, discuss at board meeting? This all takes time and time also means an opportunity for suppliers to communicate their offer and their company before a decision is made. Finally, get a couple of signatures from the relevant decision maker and off we go. Deal done for another year.

2. Regulation and Legislation

Consumers are not really regulated much, if at all. If John Smith decides not to renew his home insurance, its his loss (literally) if something goes wrong. John has no real responsibility to anyone for ensuring that things are done properly, other than his wife, when someone runs off with her prized bonsai wisteria. If John fails to feed his dog for example, he is not liable to lose his ‘Investor in Pets’ award. If he doesn’t mend his bike, the British Standards Institute wont be knocking on his door any day soon to remove his BMA007 (Bike Mending Accreditation – 007).

Unlike John, businesses have a responsibility to their employees, the public, their investors, their shareholders and their customers and suppliers. In some cases, these are also legal obligations and therefore these also drive purchasing behaviour, meaning a decision is not a simple yes or no process.

3. Companies have to spend, even in recession.

My home computer is a Pentium 4, not dual core, 100gb hard drive. But guess what – it runs the internets, I can write documents, (it spell cheques them too, before I sned them) and it plays my music. I’ll change it next year when I have some more money. Maybe even the year after if this recession lasts a bit longer. Heck, Windows 7 may even be established and running smoothly by 2011/12 too, so I might hang on till then.

In business, continuous and heavier use of equipment and the higher incidence of leasing in companies, means regular replacement cycles. Yes companies can extend these, but eventually it will start to affect the running of the business, it will impact profitability and therefore it could end up costing as much to not spend as to buy new stuff. Companies also have to update their technology to compete or face being extincted by newer competitors – an example of this could be high street retail vs online shopping.

4. Most businesses are fairly small.

Most companies in the UK have less than 10 employees – 92% is a widely accepted number and this does not include the many small businesses who remain undetected. In many cases these businesses are also owner managed and so the ‘Corporation’ paying the bill is actually the owners pocket. Contrary to the belief of many, during recessions, the management are not just signing blank cheques for their ‘consumer’ employees to purchase new products. Everything is getting signed off and scrutinised, regardless of value, in many companies. Now this scrutiny is even happening in the public sector…

5. A company may have spending power, relative to more people and its own customers.

An individual consumer usually has only individual purchasing power – one computer (maybe two), one television (maybe two, if you are an MP), one printer, one swimming pool,  one moat to repair and so on. If you push marketing spend at an audience of individuals, unless mass adoption and word of mouth occurs, this intrinsically limits the return on investment from any marketing activity to multiples of one product purchased and then the repeat spend from future individual purchases.

In contrast, a company will probably be purchasing on behalf of 2 or more people at some point and also separately purchasing for the company itself. In the context of IT requirements in a small business, this may mean a notebook, a desktop, complete with peripherals, software, support and so on for the employees and then in addition, a server, a CRM system, a NAS and other required kit for the company. This can be a significant spend. In a larger business, or an online business, the IT spend can be massively greater than the number of people within the business. Look at Twitter, Facebook or Amazon for example – few people, large IT spend.

If we look at vehicles as an alternative example, a consumer might change car once every three years, whereas in a business with three cars, on a regular replacement cycle, this might one new car per year and therefore the communication strategy changes accordingly.

What we are saying here is that for a variety of reasons, only a few of which we have even touched on, b2b marketing is very different to b2c and always will be as the entities are very different and the decision making processes are more complex. Obviously at the end of every decision making tree, are people. But to therefore assume that they must be acting as a consumer in their decision making and information gathering processes, (what we are all effectively marketing into as businesses), is a trip down a marketing and return on investment cul-de-sac.

It is obvious that many marketers are finding that there is less money out there in b2c world, but for some to try to redefine b2b marketing as the same thing stupid, could produce some costly boondoggles and therefore our recommendation would always be to use a b2b specialist, if one exists in your area and you are comfortable with their approach. We aren’t dismissing b2c marketing and as you can see, we also embrace many consumer approaches to complement our many years of experience in b2b marketing, but its crazy to redefine b2b marketing as b2c marketing 2.0.

Our aim is to look at b2b marketing and b2b data and offer a unique view of these areas.

Thanks for reading and get ready for updates…