Prospecting Upsurge

BUSINESS-TO-BUSINESS MARKETERS have always held traditional direct mail close to their hearts, but they’re beginning to cozy up to electronic interaction. Both marketers and vendors are reporting a surge of activity in using e-mail campaigns to generate sales leads.

According to a new study by eMarketer, more than 81% of all businesses are buying directly from suppliers’ Web sites. Online B-to-B commerce will hit $2.7 trillion by 2004, says the report. A Forrester Research Inc. study indicates that businesses are not just flirting with the medium: businesses allocated 25% of their online marketing budget to e-mail marketing in 2000. This will increase to 32% by 2005.

Vendors, too, are proactively addressing what they say is an outpouring of requests for more and better-quality names. In June, New York e-mail marketing firm NetCreations expanded its B-to-B e-mail marketing services to include management of opt-in e-mail newsletters and house files.

That same month YesMail, the Chicago-based e-mail marketing solutions provider, announced a partnership with Biztalk.com, a Web site that provides resources for small business owners and entrepreneurs. The move added 1.3 million opt-in names to its 25-million-name consumer and business database. “There seems to be a shift in marketers moving from a focus on sales to a focus on lead generation,” says YesMail’s Michele Frost, vice president for CRM and strategic services.

In the past year and a half, Manhattan online advertising company 24/7 Media, too, has been putting emphasis on developing its B-to-B offerings. Currently, the company has 400,000 names.

“The most common question used to be ‘What day of the week should I mail?’” Frost points out. “Now it’s ‘What’s the best way to generate leads? What’s the cost to acquire?’ They’re going for the conversions, not the gold rush.”

Some industry participants attribute the growing focus on e-mail campaigns to an increasing awareness among B-to-B companies that the Internet is a viable tool. “In the beginning, we had to convince clients that the Web was a useful medium, and that people were there,” recalls B2B Works’ Arik Pelkey, e-mail marketing product manager.

One marketer who did not need convincing is Chuck Fuller. The vice president for Web and business development at Entrepreneur.com, the electronic spinoff of the eponymous print business title, has been prospecting electronically for magazine subscriptions and ancillary products including books — with mixed results — since 1996.

Currently, Fuller would rate e-mail’s importance in the marketing mix “a 6 or 7 on a scale of 1 to 10.” That wasn’t always the case, he recalls, because lists five years ago were almost nonexistent.

“Choices are better today,” he notes. Fuller points to a recent text campaign designed to garner electronic newsletter subscribers. “We did a blast to Mypoints.com targeted to registration at the site. The $10,000 test mailing was sent to about 30,000 recipients. “We had the best sign-up effort ever. We got a 50% response. Of those nearly 15,000 clicking through, 5,000 signed up and 3,000 confirmed.”

Fuller attributes that success to a variety of factors, including the content, which gave registrants a chance to win a Palm handheld computer. But the quality of the list was clearly significant. “We tried the same offer in the past with different lists and we never got that response,” Fuller notes.

Paul Marobella, vice president for strategy at New York’s Greco-Ethridge Group, an advertising agency specializing in the technology industry, has seen a heightened receptivity to e-mail marketing by clients in the past six to nine months. Driving that, he says, is a greater comfort with issues of spam and privacy as companies self-regulate. Plus, businesses want quick results.

In January, Greco-Ethridge was charged with getting 3,000 leads in 90 days for client applications service provider Interpath — a formidable challenge. The target was companies with $100 million in revenue. The incentive offer was a white paper written by a third party on how to work with an ASP. And there was no wiggle room in meeting that challenge.

“We wouldn’t keep the business if we didn’t deliver,” says Marobella.

The campaign, which was directed to technology vice presidents and directors of information systems, was highly effective, generating the 3,000 leads in half the allotted time.

Not everyone is touting the virtues of B-to-B e-mail marketing. “Prospecting in rental lists is still in its infancy,” cautions Ruth Stevens, president of eMarketing Strategy, a Manhattan consultancy. “Despite high hopes of marketers, B-to-B lists haven’t met expectations. The universe is about 10% of what’s available in consumer e-mail.”

Stevens says part of the reason is that few business marketers are willing to put their house files on the market. And while there are a handful of “good” lists — with selects such as number of employees and Standard Industrial Classification (SIC) codes — they can’t go much deeper. “Unlike the traditional world, people are not trading online files. Many e-mail lists are akin to compiled files offline.”

Marketers readily acknowledge that e-mail prospecting is still challenging on a few fronts: The price of lists is high, ranging anywhere from $250 to $400 CPM (cost per thousand) — double that of business-to-consumer lists.

Fuller and others believe that the advantages outweigh the shortcomings, and that things will get better as time goes on. CPMs will drop as more lists become available and the quality rises. Companies will continue to compile more targeted information on their own, as will rental agencies. At least some house files will go on the market as companies look for additional sources of revenue and realize they’re “sitting on a gold mine,” as Marobella puts it.

Fuller is hoping that’s the case. “In this day and age of alternate revenue sources, [renting our list] could yield a good revenue stream,” he says. But Fuller is moving with caution in a direction that many companies refuse to go at all: in June, NetCreations began managing the site’s house list on a test basis.

“It’s a gamble,” Fuller acknowledges. Precautions include capping list usage to two times a month. “We don’t want to burn out the list,” he says. “We need to see if there will be increased turnover of the names to an unbearable extent or not.”