Study: Major Sites Missing Out on B2B Ad Dollars

Business-to-business marketers lag in moving to the Internet due to Web media’s inability to tightly target and segment audiences, according to a new study from research firm GartnerG2.

The study, for which Stamford, Conn.-based GartnerG2 interviewed more than 30 Fortune 100 B2B advertisers, found that B2B advertisers are reluctant to move online due to the lack of tools to reach their customers.

While niche players like B2BWorks have experienced strong growth from representing vertical industry sites and interactive services to business advertisers, the major Web publishers have yet to develop ways to leverage their massive reach, wrote Denise Garcia, the author of the study and research director for GartnerG2’s media practice.

As a result, B2B marketing efforts totaled less than 11 percent of all online advertising dollars spent during 2001 — representing about $892 million, GartnerG2 found. Additionally, a sizable portion of that sum came through customer retention efforts, such as marketing via extranets and internal communications.

Customer acquisition efforts, meanwhile, accounted for relatively little of the activity. In part, Garcia said that’s due to shortcomings by Web portals and major publishers, who command a dominant share of Internet traffic, in implementing ways to narrowly segment their audiences — a prerequisite for wooing B2B advertisers.

“B2B marketers say they are not spending their budgets to advertise because most sites have broad appeal and cannot identify the specific markets they are targeting,” Garcia wrote.

Additionally, B2B advertisers, like their B2C peers, feel they lack the data necessary to compute return on investment, justifying advertising and marketing spending in a tight economic environment, GartnerG2 found.

The study’s findings do provide cause for optimism, though. Some of the tools are already in place for savvy Web publishers build up their targeting capabilities and to develop audiences that appeal to B2B brand advertisers.

Ironically, one such tool could come from the non-advertising products introduced by sites in recent months to compensate for the soft ad market. Yahoo , for instance, offers fee-based services to consumers, and Webcasting, extranet development and Web hosting services to businesses, supplementing its media revenue. Services like those, Garcia wrote, could act as a source for segmenting B2B audiences and building targeted lists.

“These new revenue streams will enable online media companies to segment their audience for targeted B2B advertising,” Garcia wrote. “Until that happens, B2B marketers will continue to use their sites as tools for customer retention and not for customer acquisition, and they won’t spend the majority of their marketing dollars to advertise online.”

Additionally, sites for some time have been experimenting with larger ads, rich media, and other new marketing formats. These formats can reasonably be expected to perform as well for B2B clients as they’ve been proven to do for consumer-focused clients, (by groups like the Interactive Advertising Bureau, which also is working to promote standardized models for measuring ROI).

GartnerG2 said such practices would expand the B2B segment so that it represents 22 percent of total online ad spending in 2005, about $3.42 billion. In third quarter alone, Garcia said B2B ad revenues areexpected to grow 22 percent — the largest single quarterly increase in the firm’s five-year projections.