Advertising 2.0

By: Douglas R. Kelly

In the new and changing arena of interactive advertising, it's easy to get caught up in the hype around the tools and forget about your goals. Learn how developing a precise and concrete business plan can keep you from digging yourself a hole of lost revenue that you can't get out of. (Titled "The Medium and the Message" in print version.)

Hype and buzz notwithstanding, spending your organization's time, money, and effort to develop online advertising initiatives can result in a money pit—not to mention a major time drain—if the business case for the program is vague, imprecise, or nonexistent. After all, business cases do have a way of getting left behind when a new killer app emerges, bringing with it tons of media coverage and an overwhelming sense that your organization needs to be in that space now.

Few would argue that interactive marketing does not offer substantial benefits. Tools such as webinar sponsorships, banner and tile ads, and search engine optimization are used successfully by nonprofits in many diverse industry sectors. Social media vehicles like Facebook groups and Twitter grow in numbers and influence on a daily basis, giving organizations and their partners new opportunities to reach targeted audiences.

But it's easy to mistake these tools for the goal, for the medium to become the message. And that's when you risk unintentionally digging a hole that will be mighty hard to climb out of come budget time.

Ensuring the Right Fit

Frank Fortin, communications director at the Massachusetts Medical Society, was thinking budget when he and his team looked at the numbers that would be required for the association to make a push into interactive marketing.

Publisher of the New England Journal of Medicine (NEJM), the society also puts out a 10-times-per-year print newsletter, Vital Signs, which is sent to all 20,000 members and to a small group of nonmembers, including business leaders and legislators. "It's an eight-page newsletter, and there's no advertising," says Fortin. "The NEJM does take advertising, and they have a full sales force. And advertising is one of the few things online that is a reliable, if not prolific, income generator.

"Although we've done online advertising on the medical-journal sites, we've never done it on the medical-society site. To do it successfully, you need to set up a sales infrastructure to support and sustain it, to create a positive ROI, and we've looked at this and decided that with the startup costs and hiring reps and that sort of thing … we didn't have confidence it would produce the returns to make it viable financially. Being a fairly small society, with a fairly small circ in our print vehicles, and with fairly small weekly traffic to our website, we never felt the potential return was worth the investment."

Determining member needs, and balancing those needs with those of advertisers and other partners, are critical prerequisites to evaluating online advertising opportunities. And both nonprofits and for-profits need to intelligently match the medium to the message, choosing and implementing interactive tools that are good fits for the organization's goals.

Marketers are devoting more and more dollars to interactive channels, and that trend is accelerating. The "U.S. Interactive Marketing Forecast, 2009 to 2014," a report published recently by Boston-based Forrester Research, predicts that, by 2014, 21 percent of total marketing budgets in the United States will be for interactive media, accounting for more than $50 billion in spending. "What is dramatic here is that, in five years, interactive marketing will represent more than one-fifth of all advertising spend," says Shar VanBoskirk, vice president and principal analyst at Forrester. "That is a huge increase to the role that interactive media plays in the mix today [approximately 12 percent in the first half of 2009]."

Based on responses to a survey of more than 200 marketers from companies in sectors such as consumer products, manufacturing, high-tech, and financial services, the Forrester report indicated that online growth will come at the expense of traditional marketing. Sixty percent of respondents said they will increase their interactive budgets by shifting money away from traditional marketing.

Andy Steggles sees where this is headed, and he's been riding the wave for some time. Formerly chief information officer at the Risk and Insurance Management Society (RIMS), Steggles now works at the firm Higher Logic, helping nonprofits build collaborative communities. During his time at RIMS, he and his colleagues created "e-groups," a combination listserver and forum where members could use either the more technical forum kind of functionality, the traditional question-and-answer functionality of the listserver, or both.

Members using the tool could receive postings and discussions in digest email form, opening the door to a revenue opportunity. "The cool thing about that is because the email is HTML, it's rich in format and functionality and can accommodate banners and advertising within the email," says Steggles. "I'll give you a hypothetical.

You've got one e-group with 10,000 people. In a medium/large association, you can easily charge between five and 10 cents per generated email. Let's just assume everyone is set to receive the daily digest [version], which means no more than one email a day, no matter how many messages have been posted. Let's also assume there are five messages a week over five days. One email is going to 10,000 people, five days in a row, you're charging 10 cents. That's a $1,000 a day in nondues revenue, or $5,000 a week, for 52 weeks in a year. You can imagine the sort of revenue you could get there."
RIMS made money in spite of themselves. "When RIMS embraced this a few years ago, the intention was never to make money through advertising," says Steggles.

"The intention was just to have a new medium in which we could promote our annual conference, professional development events, and things like that. After a couple of months, we started receiving emails from some of our traditional advertisers saying, ‘Hey, can I get my banner on there?' I think originally, we were like ‘No, you can't, it's for us only, and we're not looking to advertise.' And eventually, we were like, ‘OK, how much?' The compromise initially was to do two weeks of every month with external advertising, then the other two weeks for internal advertising [RIMS house ads] … that's kind of a nice compromise."

Has Anyone Asked Them?

‘‘How do you integrate an advertiser's message within a social media environment without overwhelming or commercializing it?" —Tom Lasch

While it's natural to err on the side of caution when it comes to member reaction to advertising and other commercial content, that reaction sometimes can be a surprise. "There's advertising in our magazine, and that pretty much has been it," says Elizabeth Weaver Engel, CAE, director of marketing and sponsorship at the National Association of Children's Hospitals and Related Institutions (NACHRI). "We don't sell in our meeting programs, we don't sell ads in our weekly member newsletter, we don't sell ads on our website. As I understand it, the perception [within NACHRI] was that members would not like that. I'm not entirely certain if they were ever actually asked. But there was this perception that members would not like that."

Engel and her team developed an ad-supported news bulletin and took sample designs straight to a number of NACHRI members for feedback. "We told them, ‘We're talking about doing an ad-supported weekly news bulletin for you with information about pediatrics, about what's going on in hospitals, about what's going on in hospital administration, about what's going on in actual practice, and so on. It would be ad-supported, this is what it would look like, what do you think?' Our members, surprisingly for some of the people here, said, ‘It looks great, we'd love to have it … we don't care about the ads, that's fine, ad-supported is great.' That has opened the door to doing this."

The news bulletin will take the form of a weekly email. It will offer an opt-out option for recipients, and it has led to the NACHRI team beginning work on another communication channel with advertising and sponsorship potential: The association plans to launch a private social network for its members this spring. "We are pretty seriously considering soliciting advertising for inside the social network," says Engel. "It'll be a community of practice controlled by the users, and it will largely be member-generated content."

This kind of targeted, motivated audience can be very attractive to advertisers, who want to reach their audiences more vertically than ever. Tom Lasch, publisher's representative at Cleveland-based LaRich & Associates, says "Advertisers are becoming less concerned with ‘pushing' a message to potential buyers. They're more interested in cocreating experiences for potential buyers, whether that's developing content together with the association, or finding ways to communicate with the membership via social media … they want to partner with the organization to create these experiences.

"An association's customized, or specific, social media platform offers a kind of captive audience of professionals, of peers. But it's a real challenge: How do you integrate an advertiser's message within a social media environment without overwhelming or commercializing it to a point where the credibility is lost?"

Social networks offer a built-in answer to Lasch's question, but advertisers—and associations, too, for that matter—have to tread carefully in this area. "Word-of-mouth schemes—where people are planted in person or online to ‘talk up' products—are unethical," says Tim Coco, president and CEO of Coco+Co. in Massachusetts. "In fact, the Federal Trade Commission requires those pushing your offerings to disclose their relationship to your business. But social networks in this context are best, perhaps, for word-of-mouth use. And word of mouth may involve other members of the social network engaging their peers, or perhaps even inviting their friends. There's inherent testimonial value when a peer invites a friend, as opposed to a company asking for fans."

Search Opportunity

Search marketing has evolved into a major player, constituting a key piece of many organizations' marketing and advertising budgets. Forrester's interactive forecast reports that nearly 60 percent of U.S. companies' interactive marketing budgets is dedicated to search marketing. "Companies are making huge use of paid search today because everyone is prioritizing direct- response channels," says Forrester's VanBoskirk. "Use of paid search is not going to decline moving forward, but I do expect that, as other channels mature, the percent of their overall mix dedicated to search will change as they distribute budget to emerging channels as well."

Lasch thinks many associations are missing a revenue opportunity when it comes to search engine optimization, or SEO. "Because we're not seeing much in terms of associations offering SEO to advertisers, the greatest share of dollars is being lost to the Googles and the Yahoos," he says. "I think association publishers haven't yet fine tuned their product offerings to really compete in that space. Look at [software supplier] SAP. They have an online ad budget of $100 million, $20 million of which is allocated to SEO. All of that $20 million is going to the large search engines, instead of [at least a portion] going to associations, simply because associations don't offer SEO on their sites."

A key reason for associations offering little to no search value is because they choose to lock down most or all of their content, reserving it for members only. "Every association is going to value that differently," says Steggles. "Of course, the more traffic you get from the search engines, essentially, the more ‘inventory' you've got for the advertisers. So you have to be less conservative with what's members-only versus what's available for the public. There are some compromises you can do … at RIMS, we wanted to show the magazine as a member benefit, but we didn't want to give away the world. Clearly the content is the most valuable thing, but the value of the content tends to decrease based on its age. In other words, if you write an article on enterprise risk management, that article is incredibly valuable right now. In a year, it might not be as valuable. Each [new] issue of the magazine was restricted to members-only. But then after ‘x' period of time—you can put in the date range, for example after 30 days—the permissions change on the article. So it opens up to the public at that time. RIMS has archives of monthly magazines that's incredibly popular, from 2002 or 2003 onward, and the amount of unique content that's stored in those archives is amazing. It's really valuable, and it gets a ton of traffic from what's called the ‘long end of the tail' in the search engines."

Think also in terms of opening up the content generated in your organization's social media channels. Discussions, questions, answers, blogs, article comments, and responses—all of these represent unique content that is regularly updated, and it's generated by users. That can be a powerful incentive for advertisers who want to engage with those users.

Intelligent use of any of these interactive marketing or advertising tools is key to turning them into revenue generators. "I think everyone, including associations, needs to go back to basics," says Coco. "Marketing is reaching a particular audience with a message. The rules aren't any different because of social networking. The rules are actually the same for all media. If your audience is there, you need to reach them. Reaching an audience with a given vehicle means using the strengths of that vehicle."

Douglas R. Kelly is editor of Marine Technology magazine and a freelance writer in North Carolina. Email: [email protected]