B2B Marketing Outlook Australia 2011 A research report exploring B2B marketing usage, intentions and directions

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1 B2B Marketing Outlook Australia 2011 A research report exploring B2B marketing usage, intentions and directions March 2011 Research conducted by: Research supported by: 2011 Green Hat Marketing Pty Ltd. All rights reserved. No part of this document may be reproduced in any form without the approval of Green Hat Marketing Pty Ltd. Any quotation from this document must be attributed to the author.

2 Research conducted by: Green Hat is a B2B marketing consulting agency providing a range of strategic, research, marketing program and campaign services. We have been servicing clients in the high tech, financial services and professional services sectors since hat.com.au Green Hat acknowledges the support of the following partner organisations: Since our foundation in 1966, ADMA s mission has been to create an environment for the advancement of responsible, effective and enlightened marketing. During our history the industry has been transformed technologically, legislatively and socially, placing greater demands on marketers but also bringing enormous new opportunities. Not surprisingly, in that time ADMA has evolved too. It s fair to say that we ve grown from our traditional roots into a very different association today and one that, in the future, will continue to develop with our members changing needs. What remains constant is ADMA s dedication to providing advocacy, knowledge and community. These are terms many may not have heard used to describe our reason for being, but they have always been at the heart of our commitment to our members. The Australian Marketing Institute s record of service to the marketing profession goes all the way back to our origin in Over the intervening years we have continually evolved to meet the changing needs of marketers, delivering services to help members maximise their professional growth. Today the AMI represents professional marketers throughout Australia, including practitioners from all marketing functions and industries. Through our unified voice, the Institute has established strong links with business, academia and government to become the voice of the marketing profession. B2B Marketing (UK) was established in 2004 to fill a gap in the market for a dedicated B2B marketing information resource. B2B Marketing Online is part of a portfolio of products, including B2B Marketing Magazine, training events, annual conference and the B2B Marketing Awards, which reach over 50,000 professionals working at the very heart of the business to business marketing community Green Hat Marketing Pty Ltd. Page 2

3 Table of Contents Purpose 5 Section 1: Key Findings General Observations Traditional Marketing Digital Marketing 7 Section 2: Research Results Methodology Demography of Respondents 8 Industry 8 Organisation Size by Revenue Market Offering 9 Lead Times 10 Typical Order Value 10 How What You Sell Impacts on the Sales Cycle Marketing Resources 12 Size of Marketing Team 12 Size of Marketing Budget 13 Change in Marketing Budgets 14 Justification for Marketing Budgets 15 Change in Allocation of Marketing Budget Looking Back at Marketing Objectives 16 Marketing Challenges 17 Challenge Varies by Industry Budget Allocation 19 Effectiveness of Offers Looking Forward to B2B Marketing Objectives Budget Allocation Green Hat Marketing Pty Ltd. Page 3

4 2.7 Marketing Tactics in Intended Use of Traditional Marketing Tactics 23 Intended Use of Digital Marketing Tactics Social Media 25 Social Media Sites and Online Communities 25 Social Media Involvement 25 Australia versus the US 26 Section 3: Summary Green Hat Marketing Pty Ltd. Page 4

5 Purpose This research was specifically designed to establish a picture of B2B marketing in Australia. This was considered particularly important as B2B marketers have had to try and draw conclusions from either B2B marketing studies in the US and UK or B2C marketing research in Australia. Given these reports often presented different conclusions, it is timely to establish what was really going on. We wanted to answer key questions such as: What B2B marketing activities worked in Australia in 2010? What were the main challenges? What is the planned B2B marketing budget mix in Australia for 2011? What will be the split between traditional B2B marketing and digital marketing? Green Hat, with the support of the Australian Marketing Institute (AMI), Australian Direct Marketing Association (ADMA) and B2B Marketing (UK), set out to find some answers. We are pleased to be able to say that, thanks to the participation of over 200 respondents, we are able to provide a clearer picture of B2B marketing in Australia Green Hat Marketing Pty Ltd. Page 5

6 Section 1: Key Findings This research confirms many of the things that are generally accepted by B2B marketers. It also reveals findings that are not generally known or accepted and highlights current directions in marketing activities. B2B Marketing spend will increase in 2011 While around half of 2011 B2B marketing budgets are similar to the year before, nearly 40% will be larger, with one in seven significantly larger at a year on year increase of over 20%. The use of digital marketing varies with organisation size The bigger the organisation, the smaller the portion of the budget given to digital marketing. The smallest companies gave it 29% of their budget, with the allocation progressively shrinking until the largest companies gave it just 13%. Drilling further, three in four (75%) of companies with marketing budgets under $500K used at least one form of social media, while almost a third (32%) of those with budgets over $500K did not use any social media at all. Lead nurture and lead management will get more marketing budget than print advertising and sponsorship As far as share of budget funds go, lead nurture and lead management drew level with print advertising and sponsorship in 2010 and will exceed it in 2011 (17% to 14%). For every dollar spent on traditional lead generation, an additional 53 cents is spent on nurturing and managing the lead. 1.1 General Observations Generating leads is the major focus of B2B marketing Generating leads topped the rankings for marketing objectives, significant challenge and share of budget. It was also the reason most used to justify marketing budgets. The finance industry finds B2B marketing more challenging Results from a small sample size indicate that the finance and insurance industry finds marketing more challenging particularly when dealing with in house issues such as CRM and marketing/sales integration. 1.2 Traditional Marketing Events are making a comeback Events, briefings and seminars top the list of the marketing activities companies will be doing more of in Print advertising takes a hit One in four organisations that currently run print advertising plan to do less in This is also reflected in reduced 2011 budgets for advertising (excluding online) and sponsorship Green Hat Marketing Pty Ltd. Page 6

7 1.3 Digital Marketing Social media one in four are talking, one in five are not listening When it comes to social media activity, 24% of organisations are publishing content in social media or blogs. At the same time, 18% are not participating at all, while the rest are listening to varying degrees. Online videos are the next big thing Online videos rank as the top marketing activity organisations are going to start doing in Websites and microsites are fundamental Not only does nearly everyone have a website or microsite, they also ranked number one for growth in Green Hat Marketing Pty Ltd. Page 7

8 Section 2: Research Results 2.1 Methodology This research was conducted during December 2010 and February Respondents were approached by and telephone, and their responses were collected via an online questionnaire. It was well supported by the B2B marketing community, and provides a good sample of B2B marketing activities in Australia. 201 people answered over 80% of the questions 158 people completed the survey 2.2 Demography of Respondents Industry As expected, respondents were not evenly distributed across industries, with industries that are more active in B2B marketing more strongly represented. Which most accurately describes your industry? Other Industries 31% Information, Media & Telecommunicat'ns 39% Education & Training 6% Financial & Insurance Services 9% Professional, Scientific and Technical Services 15% 2011 Green Hat Marketing Pty Ltd. Page 8

9 Organisation Size by Revenue We asked respondents to indicate the range of their annual revenues, in order to gauge organisation size. What is your organisation s annual turnover? 15% 26% Less than $1M 11% $1M to less than $10M $10M to less than $50M 8% $50M to less than $100M 11% 29% $100M to less than $500M $500M or more 2.3 Market Offering The majority of B2B marketers are offering a combination of products and services with only 7% marketing products only. What best describes your market offering? 7% Market products only 60% 33% Market services only Market solutions (combination of products & services) 2011 Green Hat Marketing Pty Ltd. Page 9

10 Lead Times Lead times, from prospect introduction to order closure, can have a major impact on marketing activities. Respondents were roughly split down the middle between those with lead times of four months or more and those with three months or less. What is the typical sale lead time from prospect introduction to order closure? 7% 16% 42% 35% Less than one month 1 3 months 4 12 months 12+ months Typical Order Value Order value can also be a significant factor in B2B marketing activities, as it is an indicator of the complexity of the customer s buying decision. Typically, the larger the order value, the more people involved in the decision within the customer organisation. What is your typical order value? 8% 16% 15% 28% Less than $10K $10K to less than $50K $50K to less than $100K $100K to less than $1M $1M or more 33% 2011 Green Hat Marketing Pty Ltd. Page 10

11 How What You Sell Impacts on the Sales Cycle The general trend with lead times is that the larger the value, the longer it takes to sell. Surprisingly, up to 20% of companies are managing to sell large ticket items in relatively short lead times. Impact on Lead Time by Order Size 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2% 5% 3% 17% 42% 46% 41% 35% 12% 9% 40% 55% 72% 40% 39% 7% 16% 13% 3% 3% < $10K $10K <$50K $50K <$100K $100K <$1M $1M+ 12+ Months 4 12 Months 1 3 Months Less than 1 month In correlating the market offer and lead time, products can be sold in a shorter time than services, and the combination of products and services takes the longest. Impact on Lead Time by Product Type 100% 90% 8% 6% 80% 70% 60% 50% 40% 30% 20% 48% 28% 30% 43% 48% 36% 12+ Months 4 12 Months 1 3 Months Less than 1 month 10% 0% 15% 16% 21% Solutions (Combination) Services Only Products Only 2011 Green Hat Marketing Pty Ltd. Page 11

12 2.4 Marketing Resources This is perhaps one of the most interesting sections for B2B marketers enabling them to benchmark their resources against those of their peers. Size of Marketing Team Being a B2B marketer is to be part of a minority within the profession. The majority of marketers are B2C and, within the organisations they work, B2B marketers can expect to be part of a small team even in larger organisations. If you are a member of a B2B marketing team of more than five people then you are in the exception. What is your planned marketing team for 2011 (full time equivalent)? 4% 6% 10% Less than 5 FTE 5 to 9 FTE 10 to 20 FTE 20+ FTE 80% 2011 Green Hat Marketing Pty Ltd. Page 12

13 Only when an organisation has a turnover greater than $50 million will a B2B marketing team grow beyond 10 staff and, even in organisations with revenues of over $500 million, nearly one third of B2B marketing teams include less than five staff. Marketing Team by Organisation Turnover 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4% 4% 96% 96% 12% 28% 12% 16% 59% 10% 31% 31% <$1M $1M to $50M $50M $500M $500M+ 20 FTEs or more 10 to 19 FTEs 5 to 9 FTEs Less than 5 FTEs Size of Marketing Budget An oft quoted rule of thumb for the size of B2B marketing budgets has been 1% to 3% of revenue. This research does not debunk that rule, but it does appear that the variance in marketing budgets is larger than this, as shown in the graph below. Marketing Budget by Organisation Turnover (excluding marketing salaries) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4% 1% 34% 41% 69% 13% 96% 58% 44% 7% 17% 9% 7% <$1M $1 50M $50 500M $500M+ $1M+ $501K $1M $101K to $500K <$100K 2011 Green Hat Marketing Pty Ltd. Page 13

14 Change in Marketing Budgets While around half of 2011 B2B marketing budgets are similar to the year before, nearly 40% will be larger than in 2010, with one in seven being at least 20% larger. How does your 2011 budget compare to your 2010 budget? 2% 6% 14% Will increase 20% or more over 2010 Will increase 5% to 20% Will stay the same (within 5%) 25% Will decrease 5% to 20% 53% Will decrease 20% or more over 2010 The most significant increase in 2011 marketing budget is for organisations with an annual turnover of $1 50 million with almost half (49%) increasing their budgets by over 5% to 2011 Budget Changes by Organisation Turnover 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2% 7% 9% 14% 43% 63% 63% 48% 28% 25% 16% 31% 21% 10% 9% 7% < 1M $1 50M $50 500M $500M+ Decrease 20%+ Decrease 5% 20% Stay Same Increase 5% 20% Increase 20% Green Hat Marketing Pty Ltd. Page 14

15 Justification for Marketing Budgets The majority of B2B marketers are accepting accountability for marketing outcomes in the form of sales leads and/or revenue. How do you justify your marketing budget internally? (multiples allowed) Sales revenue attributed to marketing activities 71% Sales leads attributed to marketing activities 59% Brand awareness 49% Level of marketing activity (eg # of campaigns) 30% Other 5% Change in Allocation of Marketing Budget Overall, 2011 budgets are up, so where is the extra money going? In the most part, it is to do more of the same. There are only minor adjustments to traditional demand generation activities and public relations. The increases go to digital and social media at the expense of print advertising and sponsorship. How did you spend your marketing budget in 2010, and how will you spend it in 2011? Traditional Demand Gen (eg events, direct mail) 33% 32% Digital Marketing (eg website, SEO, social media) 21% 23% Lead Nurture & Lead Management Advertising & sponsorship (excl online) 17% 17% 16% 14% Public Relations Other 6% 7% 8% 7% % 5% 10% 15% 20% 25% 30% 35% 2011 Green Hat Marketing Pty Ltd. Page 15

16 2.5 Looking Back at 2010 This section provides an opportunity to learn from the challenges and achievements of the year just past. Marketing Objectives Marketing objectives reported for 2010 had a strong emphasis on lead generation and lead nurture. How significant were the following marketing objectives in 2010? Generate leads Nurture leads Grow brand awareness Up sell and/or cross sell to current customers Integrate marketing with sales Maintain contact database quality Measure marketing ROI Optimise CRM usage and lead management processes Obtain sufficient marketing budget Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Significant Somewhat Significant Not Significant N/A 2011 Green Hat Marketing Pty Ltd. Page 16

17 Marketing Challenges The number one marketing objective, generate leads, is also the most significant challenge while the second ranked objective, nurture leads, is the seventh ranked challenge. What have been your B2B marketing challenges in 2010? Generate leads Grow brand awareness Optimise CRM usage and lead management processes Obtain sufficient marketing budget Maintain contact database quality Measure marketing ROI Nurture leads Integrate marketing with sales Up sell and/or cross sell to current customers Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Challenging Somewhat Challenging Not Challenging N/A 2011 Green Hat Marketing Pty Ltd. Page 17

18 Challenge Varies by Industry The research indicates, based on a small sample size, that the finance and insurance industry found a number of the challenges more significant than other industries in particular, optimising CRM usage and lead management as well as maintaining database quality and currency. Significant Challenges: Finance & Insurance Industry Compared to All Industries All Industries Finance & Insurance 67% 60% 60% 40% 46% 40% 40% 40% 32% 27% 27% 22% 31% 28% 27% 29% 27% 28% 2011 Green Hat Marketing Pty Ltd. Page 18

19 2010 Budget Allocation Consistent with the key objectives and challenges of B2B marketing, the largest slices of the budget are allocated to activities that facilitate demand generation Budget Allocation by Activity Traditional Demand Gen (eg events, direct mail) 33% Digital Marketing (eg website, SEO, social media) 21% Lead Nurture & Lead Management Advertising & sponsorship (excl online) 17% 16% Public Relations Other 6% 8% 0% 5% 10% 15% 20% 25% 30% 35% The results also show that: Smaller organisations (by turnover) spent more of their budget allocation on digital marketing (29% versus 13% for larger companies). Conversely, larger organisations spend more on advertising and sponsorship (22% versus 9% for smaller companies) Green Hat Marketing Pty Ltd. Page 19

20 Effectiveness of Offers With such a strong focus on demand generation, a key question is: which types of offers were effective in attracting leads? The results indicate that content is the most effective offer, followed by workshops. It is also worth noting that, while multiple responses were allowed, 20% of respondents did not use campaign offers at all. Which of the following offers have been effective in your campaigns in 2010? (multiples allowed) Research papers/white papers/case studies 45% Workshops 39% Gifts/incentives 32% Proof of concepts Readiness assessments 26% 26% Try before buy offers 16% Online tools such as ROI calculators 13% Other 5% Did not use campaign offers 20% The majority of organisations with turnover over $50m found content offers and workshops effective, while organisations of under $1m were the most likely not to use campaign offers Green Hat Marketing Pty Ltd. Page 20

21 2.6 Looking Forward to 2011 In this section, we examine what is important to B2B marketers in B2B Marketing Objectives The order of importance has remained the same as 2010, however the significance of the top four objectives has grown, particularly lead nurture, brand awareness and up sell/cross sell. How significant are the following marketing objectives in 2011? Generate leads Nurture leads Grow brand awareness Up sell and/or cross sell to current customers Integrate marketing with sales Maintain contact database quality and currency Measure marketing ROI Optimise CRM usage and lead management processes Obtain sufficient marketing budget Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Significant Somewhat Significant Not Significant N/A As can be seen in the graph below, there are two increases of over 20%: up sell/cross sell (from 42% to 65%) and nurture leads (from 52% to 73%). Comparing Marketing Objectives in 2010 and % 90% 73% 66% 65% 52% 49% 42% 40% 39% 39% 37% 32% 34% 34% 28% 25% 22% Generate leads Nurture leads Grow brand awareness Up sell to current customers Integrating marketing with sales Maintaining contact database quality Measure marketing ROI Optimise CRM usage Obtaining sufficient marketing budget 2011 Green Hat Marketing Pty Ltd. Page 21

22 2011 Budget Allocation The share of purse given to traditional marketing activities (traditional demand generation, print advertising, sponsorship and PR) is, on average, just over half (53%) while digital marketing, lead nurture and lead management together receive an average of 40% of the budget allocation Budget Allocation by Activity Traditional Demand Gen (eg events, direct mail) 32% Digital Marketing (eg website, SEO, social media) 23% Lead Nurture & Lead Management 17% Advertising & sponsorship (excl online) 14% Public Relations Other 7% 7% 0% 5% 10% 15% 20% 25% 30% 35% When we correlated the data against company size (by turnover), we found that the bigger the organisation, the smaller the portion of the budget given to digital marketing. The smallest companies gave it 29% of their budget, with the allocation progressively shrinking until the largest companies gave it just 13% Green Hat Marketing Pty Ltd. Page 22

23 2.7 Marketing Tactics in 2011 Intended Use of Traditional Marketing Tactics In what may be a surprise to some, events are back in favour. Print advertising is the tactic taking the biggest hit, with over a quarter of those currently using this tactic intending to do so less in How will you use the following traditional marketing tactics in 2011? Events & briefings/seminars Tradeshows/conferences Surveys/research Public relations Direct mail Telemarketing Print advertising TV/radio/outdoor advertising 0% 20% 40% 60% 80% 100% Will Start More than 2010 Same as 2010 Less than 2010 Will Stop 2011 Green Hat Marketing Pty Ltd. Page 23

24 Intended Use of Digital Marketing Tactics Websites and microsites remain the cornerstones of digital marketing activities, closely followed by nurture marketing and . At the other end of the scale, online/banner advertising continues to have some supporters, but ranks first in the activities that companies are going to do less of, or stop altogether in How will you use the following digital marketing tactics in 2011? Website and microsites Nurture marketing including e newsletters Online video campaigns Search Engine Optimisation (SEO) Social Media Marketing (including paid ad placement) Online communities, portals and forums Webinars e surveys Search Engine Marketing (SEM) paid search Online/banner advertising Mobile marketing Viral marketing 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Will Start More than 2010 Same as 2010 Less than 2010 Will Stop 2011 Green Hat Marketing Pty Ltd. Page 24

25 2.8 Social Media Social Media Sites and Online Communities LinkedIn is the dominant social media platform for B2B marketers. Industry blogs, Twitter and professional blogs also come in ahead of Facebook. Only 18% of responding B2B marketers are not engaged in any social media sites or online communities. With which of the following social media sites and online communities does your organisation engage? LinkedIn 68% Industry blog Twitter 39% 41% Professional blog Facebook 35% 35% YouTube 29% None 18% Social Media Involvement Active involvement in social media requires an ongoing commitment of time and resources. Only 29% of organisations are creators and publishers, with the majority spectators or not involved at all. Which of the following best describes your organisation s involvement in social media? Creator/publisher of blogs and online content 29% Joiner/member of groups but generally do not participate Commentator/participator in discussions but generally do not create Monitor/consumer of content but generally do not become a member 11% 17% 17% Other 3% Inactive 23% 2011 Green Hat Marketing Pty Ltd. Page 25

26 An interesting finding of this research is that a higher proportion of companies with larger marketing budgets (over $500K) don t use any social media. Drilling further, three in four (75%) of companies with marketing budgets under $500K used at least one form of social media, while almost a third (32%) of those with budgets over $500K did not use any social media at all. The size of the marketing budget also impacts on which social media sites are used. LinkedIn is more likely to be used by organisations with smaller marketing budgets. This may reflect the fact that in smaller organisations the relationship between the identity of the organisation and the individuals is more easily understood and agreed to than in larger organisations. Australia versus USA When compared to B2B marketers in the US*, Australian B2B marketers are far less proactive in the use of social media. While nearly two in three (64%) in the US are actively publishing or blogging, just over one in three (36%) are in Australia. *2010 B2B marketing survey by Marketing Sherpa LLC(USA) B2B Marketing Social Media Activity in Australia versus USA 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Aust USA Creator/publisher of blogs and online content Commentator/participator in discussions but generally do not create Joiner/member of groups but generally do not participate Monitor/consumer of content but generally do not become a member Inactive 2011 Green Hat Marketing Pty Ltd. Page 26

27 Section 3: Summary Many of the findings of this research confirm what most B2B marketers have long suspected or even believed: B2B marketing is significantly different from B2C marketing in its objectives, challenges and the tactics used. Other findings may come as a surprise to some, as they reveal for the first time how B2B marketing is being practiced in Australia. It is heartening to see that the vast majority of Australian B2B businesses are increasing or at least maintaining the level of their investment in marketing. Also encouraging is the trend towards lead nurturing and lead management, which demonstrates that marketers are taking responsibility beyond demand generation, and working towards the delivery of better qualified leads to the B2B sales force. Finally, sometimes what is revealed poses more questions. Green Hat and the supporters of this research ADMA, AMI and B2B Marketing (UK) hope that this report provides some useful insights, and assists in your strategy planning for 2011 and beyond Green Hat Marketing Pty Ltd. Page 27

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