Web marketing: Are you “Shipwrecked on digital island?”

It is no secret that e-commerce has become a critical sales channel.

In 2005, online purchases totaled approximately $175 billion, up 22 percent over 2004. Targeting these online buyers, marketers spent billions of dollars on a combination of web advertising, search marketing and affiliate marketing in 2005. In fact, Internet marketing spending is expected to continue to grow by more than 20 percent in 2006.

This upward growth trend of e-commerce is forecast to continue over the next six years. However, most companies today are missing a huge opportunity to drive growth with their web marketing teams siloed as though they are “shipwrecked on Digital Island.”

Consumer buying and the web

Consumers understand that companies operate multiple sales channels and will leverage any sales channel or combination of channels that are most convenient and suited to their needs. For this reason, the Internet’s impact on marketing results should not be measured solely by sales numbers generated via online shopping carts. That $12.6 billion in Web marketing also is “pulling” in visitors that drive a significant percentage of offline sales in call centers and through store point-of-sale systems.

Research now shows that the overwhelming majority of online shoppers use the Internet as a research tool prior to making offline purchases, with the Internet influencing more than 25 percent of retail sales in some way. This figure keeps growing. Researchers estimate that by 2010 the Internet will play a role in about 50 percent — or $2 trillion — of all retail sales.

Another factor – offline “push” marketing campaigns such as direct mail, articles, newspapers, television, and word-of-mouth – are responsible for driving a significant percentage of Web searches and Web site visits. This further demonstrates that consumers know how and when to use multiple channels to identify products they want at an optimal price and location.

So yes, the Web has become an effective revenue generator. However, its total marketing impact is greater when viewed as a single channel – the hub- of a company’s multi-channel marketing system.

The channel integration imperative

Companies that cannot integrate their marketing channels into a connected marketing mix will miss out on opportunities and jeopardize existing customer relationships. Yet, in many organizations, e-commerce is still regarded as a separate channel, department or business unit. For customers, this means that their needs may not be known and shared across channels, resulting in an incomplete customer picture.

It is also ironic that the Internet, the channel that will influence more consumer shopping events than any other one, is also the least integrated of all sales channels.

At the outset, the Internet was a commercial experiment. Building brochure-ware Web sites began as a technical/creative activity separated from most day-to-day business operations. While the Web got its start as a standalone channel, companies have learned that isolating your web team limits your ability to compete effectively.

In today’s marketplace, many companies realize that optimizing customer treatments and communication costs across all offline and online channels is critical to driving growth. Simply put, the customer must be the focal point of the channel marketing network.

What’s coming next

The time to act is now. With more media becoming digitized over the next 10 years, the need for enhanced multi-channel marketing will be greater than ever.

This phase of the Digital Revolution will include some marketing media giants like cable, television, radio, newspapers, and magazines, bringing with them significant changes in their marketing efforts. Marketers will likely shift a sizable portion of their marketing budget away from advertising to direct/interactive marketing and promotion–vehicles which are more accountable, provide better targeting and can be produced more efficiently with customized content.

Faced with increased competition and market pressures, companies today recognize that this is a customer-centric world. To achieve competitive advantage, you have to understand and meet the needs and desires of individual consumers, at a time when they are ready to buy.

It’s time to rescue the castaways.

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