Software-as-a-service market set to double

A new report claims the software-as-a-service (SaaS) market is set to double in size during 2007, with 41 percent of respondents planning to spend part of their current budget on SaaS applications, yet only 23 percent currently do so.

By Stephen Withers

While only 8 percent regard SaaS as a strategic direction, a further 77 percent of respondents said they are open to considering SaaS on a case-by-case basis. CRM, salesforce automation and finance are expected to be the major growth areas. Substantial growth is also expected in the use of business applications via mobile devices - a field well suited to SaaS.

Fifty eight percent of respondents expected to see an increase during the the next 12 months, with a 105 percent increase in the number of staff using business applications in this way. Of those using SaaS already, 82 percent said the applications met or exceeded their expectations and business needs.

"Fifty eight per cent of respondents using SaaS recorded significant gains in operational efficiency. Forty per cent have experienced increases in revenue,” said Dr. Catriona Wallace, director, ACA Research.

One fly in the ointment is that only a minority - less than 22 percent of the sample - could accurately define the SaaS model. While it is likely that this was simply an inability to articulate the concept among current users of SaaS, we have to wonder how much of the measured enthusiasm among would-be users is misplaced.

Stated barriers to adoption include concerns about security, loss of control, and bandwidth requirements. On the other hand, on-premises applications are seen as expensive to run, with an average of 29 percent of IT budgets going on software maintenance. "Respondents also indicated they were struggling with software upgrades and staff shortages" said Wallace.

SaaS is seen as a way of reducing the total cost of ownership, and the savings made will be redirected to new hardware or hardware maintenance. (We would have expected hardware requirements to fall with the adoption of SaaS, but perhaps respondents have been forced to extend the life of existing hardware due to funding shortages.)

The research was conducted by ACA Research, and involved a phone survey of 120 senior IT executives and line-of-business managers between 25 October and 1 December 2006. Although the survey was sponsored by Salesforce.com, responses from the company's customers were calculated separately.


Mercurial Marketing

Social networking sites have bloomed in the past year or so, but just how valuable are they to marketers and how can that value be leveraged?

by Jessica Sebor

Mothers, fathers, spouses, offspring, siblings, friends, neighbors, bosses, coworkers--for most of us these are the people with whom we develop relationships that influence, to one extent or another, how we function in society. These networks of social and familial contacts give us, among other things, many constructs for managing various aspects of life. In fact, part of how people define themselves is through these personal and professional connections. With more people living more of their lives online, new kinds of relationships--chat buddies, Friendster users, bloggers, MySpace favorites--have appeared, stretching the definition of both social and network. Social networking sites have exploded in number over the past two years, snaking their way through the Web like kudzu. It should come as no surprise that marketers have noticed and are busily cultivating methods to take advantage of this new type of opportunity.

In July 2005 News Corp. CEO Rupert Murdoch purchased MySpace's parent company, Intermix Media, for a staggering $580 million (Murdoch walked away knowing he had gotten the better end of the deal). That's about when it dawned on many e-world inhabitants that online interaction would never be the same. Today, almost half (45 percent) of Web users are active on social networking sites according to the Nielsen/Net ratings. Although MySpace, and more explicitly Facebook, has a younger user base, both are becoming more popular among an older crowd: The sites boast 36- to 54-year-old user segments of 36 and 30 percent, respectively.

At the same time, networking sites like LinkedIn cater exclusively to business professionals (see the sidebar, "Strictly B2B"). With so many people now attuned to the behavior, companies have been scrambling to stake a claim in this emerging space. Tens of millions of people--54 million on MySpace alone--now trumpet their identity, forge relationships, and engage in dialogue in the context of an online community. Where can businesses latch on to this trend? And in such personal forums, is it appropriate or useful for marketers to attempt to take advantage of social networking?

Nikos Drakos, a research director at Gartner, believes that leveraging social networks to connect with customers is not only appropriate but also crucial for companies to consider. However, he says, "When I and others say 'understand social networks,' it doesn't necessarily mean, 'go talk to MySpace.'" How one defines leveraging social networking depends on what the goal is. Viral marketing and brand promotion, for example, may be best done through established sites, as they capture the most traffic. However, this method poses some problems.

ControlTapping into large, established sites like MySpace certainly provides one option, and many companies have gone that route. With so many people visiting these larger Web sites, a company has the opportunity to win much mind share, as well as to interact with its customers individually, thereby humanizing the brand and bolstering customer devotion. Burger King crafted one of the most successful viral campaigns of the past year with the creation of a MySpace profile for its mascot, the King. The profile (really a site within a site) offers those who wish to become Burger King's "friend" the opportunity to play games and download free episodes of TV shows like 24 and Pinks, as well as fancy Burger King logo backgrounds for their personal pages and funny Burger King--sponsored videos (i.e., free advertising). The page to date has attracted more than 134,500 "friends" (or fellow MySpace users) and was credited in part in helping Burger King to boost sales 6 percent to reach two billion in FY ending June 30, 2006.

Other companies--Gatorade, Jack in the Box, and The Learning Channel--have found similar success going this route, but there are dangers and drawbacks to building into a preexisting social networking site--the model may not work well for every company. Companies without a strong brand-based message may get lost in the shuffle. Additionally, such sites allow the marketer virtually no control as to where the companies' message will go. Although loss of customer control is often the case for grass roots marketing, in the context of social networking this becomes even trickier as individual consumers expect to connect to the company directly.

A simple search for "Burger King" on MySpace brings up the company-created profile as well as mock user-generated profiles masquerading as the King or "Burger King," many with explicit language, sexual content, and negative comments about the fast food chain that would give potential customers a perception of the product the company does not, most assuredly, want. It is virtually impossible to weed out the fakes from the originals. Also, "friend" profiles connected to a social networking page can have unsavory or unflattering content. Dan Calladine, research director at ad agency Isobar, says, "If you start a club and offer people free membership, you always have to be definite about who your club is and what your club is." The wrong crowd can drive off other potentially valuable customers.

I'd Rather Do It MySelf.comMySpace, Facebook, and other such sites can serve as valuable marketing tools, but they can also be constrictive. If the framework of the larger social networking sites is not a good fit for your brand or your customers, you can cut out the middleman and create your own. Calladine says that as long as you have customers who are "really passionate and attracted to your product," a brand-based social networking site can be quite effective. "I think anybody can do it, whether they're an automotive, sportswear, or software company. If something is interesting and people want it, there's no sort of limit." Building and owning a site instead of squatting in a larger one can also provide greater freedom to interact with your customers in different ways, such as enabling blog or thread-driven dialogues between users, creating self-service features, or offering promotions, news, and updates with pertinent information.

If a company is looking to build its own social networking site, it has myriad choices; social networking sites can come in many forms. "I think social networking is really something that takes place at [the conception level]. If they're not conceived well, they won't work," says David Ring, president of Sparta Social Networks. It is important to come to the table with a plan outlining what customers might want and how to best deliver this to them. The plan should also detail what a company wants out of the investment. Companies like Sparta, a white label social networking software company, can provide the means to make this idea a reality. Ring reports that he sees more companies jumping in, looking to create branded consumer targeted social sites. A year ago, he says, most of Sparta's business was from start-ups eager to become the new Facebook, but the client profile has shifted in the past six months to major companies looking to introduce Web 2.0 into their marketing mix.

One of such client, Packet 8, a VoIP company, wanted to cut support costs and to create a forum for its users. In the spring of 2005, the company decided to try to reach those goals through the creation of a social networking site for Packet 8 subscribers. "The investment was very low in terms of getting it up and running. It was so easy; it was really just a matter of providing content," says Huw Rees, vice president of sales and marketing. The company created a site available to all Packet 8 customers, which they could link to through their account information page. The site now offers a place to meet and send messages to other Packet 8 users; the option to form online special interest groups; a classifieds page to look for jobs or housing; a blog written by Bryan Martin, Packet 8's CEO; and a forum through which users can ask questions about the product and lean on other users for technological support. The user-to-user help feature has allowed Packet 8 to see a decrease in service costs and an increase in customer satisfaction.

A fear many companies harbor is that creating a space for free user discussion surrounding businesses will equate to airing dirty laundry in public, opening up a Pandora's box of negative feedback, much of which might be unfair or exaggerated. One look at the Packet 8 site illustrates why some companies shy away from these sorts of forums. A recent post on the site reads, "The customer service is GREAT....This company is great all around and so much cheaper than my land line." However, a later post reads: "Upset???? You have NO IDEA!!!!!. . . I am LIVID with the lack of customer support I have received with my most recent problem." Rees says that the company made a decision to monitor for foul language, but not to delete any negative posts. In fact, he cites the high level of interaction in the forums as a marker of success; customers care enough to interact with the brand. Additionally, this open dialogue enables the company to hear what subscribers are saying so that it can tailor its business approach to better accommodate customer wants and needs.

To gain customers' trust it is important that they do not feel censored or that the social networking site is merely a sugar-coated advertisement to promote a purely positive image of the company. Matthew Lees, vice president of operations at Patricia Seybold Group, says, "You need to be genuine if you're going to have presence in this space. Don't be rigid with your brand. Try to be flexible to a degree that you're comfortable with." A case in point: In 2006, while the Packet 8 social networking site soared in popularity, Wal-Mart's MySpace clone TheHub was going down in flames. The site launched in July 2006 and had closed down by October. The site's failure was credited to overpromotion of the Wal-Mart brand and overly stringent control of user content. The site featured videos from "real kids" (aka hired spokespeople) talking through hangar-size smiles about how much they loved the superstore. Wal-Mart monitored all comments on the site and even sent an email to parents of users under 18 to confirm use of the network (a nail in the coffin for anyone trying to interact with a teenager). Users felt stifled--when dealing with a technology that centers on establishment of identity, a high level of restriction is often counterproductive. As with any public campaign, a failed social networking site can do serious perceptual damage to your company. Lees says of Wal-Mart, "Studies show [after the site failed] it had less trust and people are more wary involving Wal-Mart online."

Companies must also be wary of the level of connectivity they ask of customers. If a site demands a high level of interaction, expect it to be used only by the most devoted customers. It would be impossible to connect to a network for every brand an individual buys. Drakos says, "Individuals are not going to be active members of different companies. It's bad enough trying to remember your password to check your flight details." If individuals do join your network, it is important not to bombard them with untargeted offers or irrelevant messages. Calladine explains that in the context of social networking, companies must think of the exchange in terms of friendship. "If someone is your friend, even if you really like them, you don't want the friend to ring you every day, asking you for something."

Additionally, if a company creates a brand-based site targeted at its customers, the viral component drops significantly. If a person doesn't already strongly affiliate herself with a company, she will not to join its network. This effect can be countered by creating a tangential grass roots campaign driving foreign traffic to the site or Web page. Sparta does so through a YouTube video feature that allows companies to create and spread around a film clip with the logo of their Web site attached.

Your OysterAlthough the potential dangers might frighten some companies away, the proliferation of social networking sites makes it impossible (and inadvisable) to ignore the opportunity. Denis Pombriant, managing principal at Beagle Research, says, "There are a lot of cool ideas that business people are now trying to figure out how you can make money from. You certainly have the attention of millions of people. Corporations are thinking that there's got to be a pony in there." With online social networking still very much in its infancy, it's hard to tell how big the pony is or exactly what it will look like; however, for creative companies, the possibilities are quite literally endless and the potential benefits equally so.

One notable social networking development has been virtual environments like Cyworld, a Korean site, and U.S.-based Second Life. People create visual personae that can then walk around, interacting and talking to other users inside of a video game--like interface. Dell has opened up a virtual store in Second Life, which allows visitors to use virtual PCs for their second lives and physical ones for their corporeal lives. With progressions like these, it's not surprising that Calladine thinks of social networking as a kind of limitless comet: "MySpace is the very general head, but it will get to be a long tail."

Strictly B2B B2B companies' customers may not be interested in filling out personal pages about their favorite books and music. However, there is much to be gained through social networking from a B2B angle. Mark Organ, CEO of demand generation software developer Eloqua, says, "I think social networking is massively underutilized by B2B companies for generating leads." Organ sees great potential in sites like LinkedIn (a MySpace for professionals), where companies can find business connections and possible customers.

Companies like Eloqua can further automate this process through sending a trackable link in a personal email and make this more of a visible process from first connection through to the sale. Companies can make internal social networks to help employees understand whom their coworkers know and who might be available or appropriate to reach out to. Social networks can also provide great sources of information for companies wishing to connect with others in their field to stay up to date on the most recent progress and innovations.

Dreamforce '06 Top Five Demand Generation Strategies

Creating demand for your product or service is paramount to the success of your company. With all of the options available, how do you know which strategies and tactics will produce the best results? Join us as we explore best practices in demand generation with results even your sales team will love.

Richard Eldh, SiriusDecisions
Jackie Kiley, Sybase

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Top 10 Online Marketing Predictions for 2007

by Ryan Buchanan

With 2007 in full swing, here are our predictions for the rest of the year to come. In prior years we have given you a mix of business and personal lifestyle predictions, but this year we're sticking to just the online marketing world.

We busted out our omniscient crystal ball, and this is what it told us:

10. Social networking will get more and more niche.
Social Networking has blanketed the news for the past 18 months because it works. YouTube and MySpace have built loyal communities through entertaining user-generated content and great tools for communicating with other like-minded people.

However, Social Networking is going NICHE. People use specific tools to connect, recommend, rate, and communicate within their niche groups. For this reason, there are many types of Social Media now and there will be five times this many by the end of next year:

B2C: MySpace, Facebook, Gaia, Friendster, Second Life
B2B: LinkedIn, Jigsaw
Search: Digg, Delicious, Wink, Technorati
Shopping: Wists, ThisNext, Woot
Expert Communities: Blogs, Wikis
Mapping: Geosearch
Video: YouTube, TurnHere, Splashcast
Images: Flickr

9. Viral campaign Web sites will have a purpose.
Over the past couple of years, I've been forwarded hundreds of quirky sites that are experimenting with viral marketing and have no further purpose whatsoever. There are no calls to action or indications as to why these sites exist.
A few examples of pointless viral sites: Patron's
SimplyPerfect, eROI's WearShortShorts, and CareerBuilder's popular Monk-e-Mail. Next year will feature more substantial viral campaign sites, like Philips's ShaveEverywhere, PassportToFlavor from Kettle Foods, and Snakes on a Plane.

8. User-generated content will be a component on most new Web sites.

Many companies are just starting to realize the great potential of Web sites with user-generated content that enable customers co-create with their brands. Ultimately, allowing users to post their stories through text, images, and video helps to build community and long-term brand loyalty. In short, it works, and companies large (Diesel-U-Music) and small (Dunderdon Workspace) will employ this strategy much more frequently next year.

7. Email marketers will demand more strategy from their marketing agencies.
From the client-side email marketer's perspective, there are only minor differences between the top email marketing software platforms. Email marketers will demand to know more advanced strategies for their email programs by asking questions like these: How does this email render in the default settings of the different email environments (AOL, Yahoo, Gmail, Hotmail, etc.)? What content shows up above and below the fold on the email preview? What content and call to action will really resonate with my target audience? How can I be a resource and still convert click-throughs into qualified leads?

6. Great content is king.
Quality content is more important now than ever before. Each of us receives dozens of email newsletters daily. There are over 100 million viewings daily on YouTube. One in twenty visits on the Web is to a social networking site where new content is generated every second. There is a glut of content, and it's only going to get more crowded.

The key point worth noting is that the few companies providing great content are huge winners because of all of the online and offline marketing channels that work together in a sort of crescendo effect, amplifying the messaging of well-positioned brands. Word-of-mouth spreads so much faster than it used to through blogs, iTunes, YouTube, MySpace, Web sites, and online press.

Fans of the TV program "Grey's Anatomy" can convert nonbelievers because the content of the show is good enough to keep them once they've heard about it. The opposite holds true of "Snakes on a Plane," which had a huge online following but bombed at the box office because the content sucked. Keep this in mind when strategizing and implementing your next viral marketing site or email campaign.

5. Most successful companies will become media companies.
Microsoft became a media company when it began its blogging program a couple years ago. The lawyers lost and marketers won; revealing the inside scoop at Microsoft was virtually the only thing that has healed the company's battered reputation.

More and more companies are starting their own blogs, helping them to become more relevant and newsworthy to a greater audience within their niche. Blogging has essentially forced companies to step into their customers' shoes and provide them with more industry knowledge and news rather than simply ramming products down their throats.

4. The Democrat majority in Congress swings the tide of online marketing. Marketers will push the envelope far more aggressively in 2007 now that the fear of death by Republican firing squad has been reduced. Moral depravity will run rampant in advertising, and the largely Democratic online marketers will revel in the end-result of their twisted creative brains.

3. Greater integration of video into all Web sites.
When I last visited the homepage of CRM juggernaut Salesforce.com, I was immediately struck by how quickly the video flash piece engaged me. Video is not just for TV and YouTube anymore. The ShaveEverywhere site proved that the use of video within viral sites is hugely engaging and effective in converting sales.

We will see many more large, medium-sized, and small businesses integrate video into their primary and campaign Web sites in 2007. One trend we will likely see will be an increase in the use of "webisodes," 3-5 minute daily or weekly video clips that entice users to come back to sites for more all-Web programming.

2. Email mantra: list segmentation + relevant content = improved results. eROI published an
email study in early 2006 showing a direct correlation between smaller, more relevant lists and higher open and click through rates. Instead of sending all emails to a Main List of all of their contacts, marketers are starting to segment their lists into product categories, service categories, press lists, webinar lists, etc.

Marketers who fail to take the extra hour or two to do this list segmentation every 3-6 months will see continued email list fatigue and a resulting drop in performance. Emailers will learn that content needs to focus less on selling a product and talking at recipients, and more on talking with recipients. Updating email content and starting a conversation will be more important than ever as people move toward seeing their inboxes as sacred places that they don't want violated by one-way advertising messages.

1. Thoughtful, cause-related marketing is the biggest winner in 2007.
Pay attention. If you do this right, you will put your company on the map—and make the world a better place. This may just be the best business advice you get all year: Ask your coworker, your department, your entire company what one nonprofit they want to support—and throw a lot of energy behind it. Better yet, co-create a new program or new event with an existing, reputable nonprofit, and you'll see that your employees, customers, and prospects, as well as your kids and your spouse, will help you take this cause, and indirectly your company, to the next level.

The best example of this is a brand we used to take for granted: Dove. Dove launched "The Campaign for Real Beauty" and let the fact be known that the company no longer simply sells soap. Dove is now so much more than a set of commodity products. Dove sells real beauty; natural beauty; non-superficial beauty.

Campaign for Real Beauty Web site features a one-minute film that shows the transformation of an average-looking woman into a strikingly gorgeous supermodel. Only by seeing this process can we truly comprehend the illusion of what are, essentially, fabricated dream girls.

The beauty of this site is that it doesn't end with just awareness of the problem. It launches immediately into an actionable item for 8-12-year-old girls to sign up for Dove's real beauty workshops. The workshops teach girls about the importance of identifying beauty within themselves in the pre-teen years, before the peer pressure to be like the mythical supermodel drives them to anorexia or bulimia.

A couple of years ago, eROI began its own partnership with Portland-based nonprofit, Friends of the Children, by co-creating an event called
Friends Art Fair. In just two years, the event has raised $55,000 and has garnered 2.5 million media impressions thru email marketing channels, print media, and media sponsor KPTV Fox 12 News.


Forbes Hails Salesforce.com's AppExchange as a 'Top Ten Disrupter' of 2006

World's first on-demand application directory called 'iTunes of business software' and included among the year's greatest innovations, powerhouses and change-drivers

Gordon Evans

Salesforce.com (NYSE: CRM), the market and technology leader in on-demand business services, today announced that Forbes magazine has included the AppExchange directory in its list of "Top Ten Disrupters of 2006," hailing it as a "revolutionary model for software distribution." With more than 500 applications available on the world's first on-demand application directory, customers are using the AppExchange as an eBay-style marketplace to browse and find on-demand applications. More than 7,500 customers in 57 countries have installed over 20,000 applications via the AppExchange over the past year. Based on this tremendous success, Forbes ranked the salesforce.com AppExchange number five on its list of Disrupters, which includes innovations, powerhouses and change- drivers such as YouTube, Nintendo's Wii, super-sized philanthropy such as Warren Buffet's $37 billion donation to the Bill & Melinda Gates Foundation, and Al Gore's An Inconvenient Truth.

"As we predicted, the AppExchange is forever changing how companies acquire and implement business applications," said Marc Benioff, chairman and CEO, salesforce.com. "To be included in Forbes list of 'Top Ten Disrupters' is a credit not only to the AppExchange, but also to the explosive momentum of The Business Web and software as a service in general. We at salesforce.com are proud to drive this revolution forward and enable our customers to easily access, evaluate and implement solutions that fit their specific business needs."

To date, more than 250 salesforce.com partners have made more than 500 applications built using the Apex on-demand platform available on the AppExchange. The AppExchange has also delivered 185,000 test drives since its introduction in September 2005.

To develop its "Top Ten Disrupters" list, Forbes.com editors and writers nominated "the people, trends and products that had a major impact last year." The final list was decided by a panel of esteemed judges, including Paul Danos, dean of Dartmouth's Tuck School of Business; Tom Stemberg, founder of Staples and a venture partner at Highland Capital; Clayton Christensen, a Forbes.com columnist, professor at Harvard Business School, author of The Innovator's Dilemma and founder of the consulting firm Innosight; Scott Anthony, a managing director at Innosight and co-author, with Christensen, of Seeing What's Next; and Arlyn Tobias Gajilan, the Leadership editor at Forbes.com.

To view the complete list of Disrupters, visit: http://www.forbes.com/2007/01/22/leadership-disrupter-youtube-lead-innovation- cx_hc_0122lede.html.

Apex and the AppExchange

Apex is the on-demand platform for the next generation of business applications. Apex reinvents traditional customization and integration and enables a whole new generation of on-demand applications that go beyond CRM. All Apex components and applications can be easily shared, exchanged and installed with a few simple clicks via salesforce.com's AppExchange directory, enabling all the innovation that Apex unleashes to benefit the entire on- demand community.

The Apex on-demand platform is generally available today. The Apex programming language is available today for developer preview, and is currently scheduled to be available in beta to salesforce.com customers later in 2007.

About salesforce.com

Salesforce.com is the market and technology leader in on-demand business services. The company's Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. Apex, the world's first on-demand platform, enables customers, developers and partners to build powerful new on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The Business Web across the enterprise. All Apex components and applications can be easily shared, exchanged and installed via salesforce.com's AppExchange directory, available at http://www.salesforce.com/appexchange. Customers can also take advantage of Successforce, salesforce.com's world-class training, support, consulting and best practices offerings.

As of October 31, 2006, salesforce.com manages customer information for approximately 27,100 customers and approximately 556,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Avis Budget Group, Inc, Dow Jones Newswires, Nokia, Polycom and SunTrust Banks. Any unreleased services or features referenced in this or other press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase salesforce.com applications should make their purchase decisions based upon features that are currently available. Salesforce.com has headquarters in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM." For more information please visit http://www.salesforce.com, or call 1-800-NO-SOFTWARE.

NOTE: Salesforce.com is a registered trademark of, and Apex, AppExchange, The Business Web, and Successforce are trademarks of, salesforce.com, Inc., San Francisco, California. Other names used may be trademarks of their respective owners.

Total Recall

Email marketing turns out to be highly effective at connecting with and gaining mind share with small businesses, second only to magazine ads; marketers must tailor tactics to the B2B target.
by Coreen Bailor

SMB-focused B2B marketers overlooking the email channel take note: Small business decision-makers are highly engaged with email marketing, according to the Jupiter Research study "Email Marketing: Assessing Relevance and Use in Reaching Small Businesses." In fact, of the 501 small business decision-makers surveyed in February 2006 Jupiter executive poll, 58 percent of respondents signed up to receive email newsletters. Fifty-four percent completed an email customer satisfaction survey, 33 percent clicked on an email marketing offer, and 19 percent purchased from an email marketing offer.

Additionally, while magazine ads had a higher recall rate than any advertising tactic among small-business decision makers surveyed (31 percent), 26 percent of small-business decision makers recalled most recently noticing email marketing messages for goods or services relevant to their businesses, according to the report. That percentage makes the medium the most remembered form of online advertising rated.

"Unlike email marketing, magazine ads typically serve branding purposes and often are not used as a direct response vehicle to provide an immediate call to action," the report states. "Email marketing tends to remain with users for a longer period of time over other types of conventional and more expensive forms of advertising and marketing, making it the most efficient tool in terms of driving recall."

Magazine and email ads were trailed by trade show or convention (21 percent), newspaper (18 percent), television (17 percent), search engine online/sponsored (16 percent), radio (5 percent), online banner ad (5 percent), and billboard or other outdoor ad (2 percent). "When people recall marketing messages they will probably remember the brand and it will be familiar to them next time they're thinking about making a purchase," says Sonal Ghandi, lead Jupiter analyst on the report.

The report also examines the type of targeted marketing approaches leveraged by B2B and B2C email marketers. B2C email marketers have a higher propensity to segment customers based on geographic (56 percent) and demographic data (56 percent) than their B2B cohorts (52 percent use geographic data, 45 percent use demographic), according to the report. However, B2B email marketers are more likely than B2C email marketers to target customers using more sophisticated segmentation techniques like clickthroughs (24 percent B2B; 17 percent B2C), customer profitability (22 percent B2B; 15 percent B2C), and customer service contact frequency (21 percent B2B; 17 percent B2C). These figures are based on a Jupiter/e-Rewards survey of 97 B2B email marketers and 156 B2C email marketers.

Much of the reasoning behind stronger interest in more sophisticated segmentation methods among B2B email marketers surveyed lies in the need to stand out in the sea of email marketing messages they receive and grab their targets' limited time, according to Ghandi. "Because of a businessperson's time, being that they're at work or they're running a business, they have a lot of things that they're juggling at the same time, so you want to be able to use that message that you're sending them effectively," she says. One could also argue, however, that B2C marketers face a similar plight of getting through to their desired market as they also have to find ways to differentiate themselves among the vast amount of messages consumers receive and compete for consumers' limited availability.

One of the tactics that Ghandi suggests B2B marketers examine is the frequency and timing of messages. "It's better to send your email messages based on what the purchase cycle for a particular product is," she says, adding that this is clearly true in the B2C environment also. "If you sent them an email at the beginning of the consideration phase you have to know when they will be at the point where they're making a decision in the cycle to target them again," she says. "Knowing the purchase decision making cycle for your product is important, and targeting [customers] with email messages according to that cycle is the key."


What you missed at ad:tech - 7 & 8 February

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Online ad spend tops $1 billion

by Asher Moses

Australia's online advertising market grew 61.5 per cent last year, with the full year spend just topping the $1 billion milestone.

The stellar growth rate suggests it will not be long before advertising spending online exceeds that of all other mediums.

The figures were released today by the Audit Bureau of Verification Services - part of the Audit Bureau of Circulations - and greatly surpass the 40.3 per cent growth rate projections made by PricewaterhouseCoopers in its 2006 report titled Australian Entertainment and Media Outlook: 2006 - 2010.

Comparative figures showing last year's advertising spend for competing mediums, such as newspapers, were due to be released next month, PwC partner Steven Bosiljevac said.
In 2005, advertisers spent $620 million on online advertising, which was markedly lower than the newspaper, magazine, radio and free-to-air television spends of $3.79 billion, $978 million, $898 million and $3.216 billion, respectively.

But behind the high dollar figures were flat 2004-2005 growth rates of 5.1, 9.3, 6.6 and 2.4 per cent respectively, the PwC report said.

These pale in comparison to the 61.5 per cent growth enjoyed by the online market last year (up from a 2005 growth figure of 59.6 per cent), suggesting it won't be long before online is the dominant medium.

"Now that the $1 billion mark has been broached, we expect to see 2007 figures soar," Internet Advertising Bureau general manager Patty Keegan said.

Jack Herman, executive secretary of the Australian Press Council, played down concerns that so-called "old media" newspaper publishers were being driven out by new online players.
"What we are seeing is a proliferation of media rather than the new media driving the old media out," Herman said.

He said the "established", larger media players still enjoyed the lion's share of online advertising revenue, so the threat posed by the internet was not as pronounced as some have speculated.


SaaS and Web 3.0

Pointing the way

by Kim Kobza

How will Web 3.0 enhance the customer relationship in a way that Web 2.0 cannot?

Broadly speaking, we think of Web 2.0 as including a second generation of Internet-based services likr social networking sites, wikis, and communications tools that allow individuals to collaborate and share information online in ways previously unavailable. Media, government, and business are quickly learning that Web 2.0 is creating an expectation of being able to interact with brands and issues that are most important to customers.

But Web 2.0 interactions, while insightful to many companies, do not always allow business to glean the full value from customer interactions. In other words, they do not create the predictability and enduring value that is characteristic of other business processes like traditional CRM.

The reason for this is simple. The raw dialogue that is the byproduct of Web 2.0 technologies often lacks the structure and predictability that creates comfort for customers who would like to be a part of a broader community (a social network), but who may feel threatened or simply inconvenienced by unstructured communications.

Should one have to participate in a blog to express a great product idea or enhancement to service delivery that is important to one's quality of life? Should one have to read through other blog entries to submit a meaningful input, or to submit one's own opinion to scrutiny (and sometimes ridicule) just to share a common experience?

The answer--and the promise of Web 3.0--is no! In Web 3.0, media, government, and business will have the ability to create communities with their customers by using advanced systems that will enable the support of communities that create predictability and structure--much as communities in a physical world. Customers will be able to share all forms of user-generated content--video, documents, text, surveys, images, SMS, and IVR files--collected from all types of devices including computers, PDAs, cell phones, TVs, and devices of the future--and to interact with the community members and sponsoring organization, all with a promise of meaningful, high-value interaction.

Also important, the community sponsors will have the ability to manage all forms of content and to support the customer interactions, all from one platform. They will be able to make solid business decisions based upon accurate data and innovative ideas, and to respond immediately so that they convert the value of community into business value. Web 3.0 will enable media, government, and business to build meaningful, rich communities using a business delivery model that is well known to most businesses today: net-native SaaS. Companies like Salesforce.com, Netsuite, and SAP have paved the way by educating customers to the benefits of outsourcing applications, services, and secured hosting in a bundled offering delivered on an "as needed" basis.

The benefits of an SaaS model are trumpeted as (1) speed to market, (2) cost avoidance in solution development and support, and (3) avoidance of development and adoption risk often associated with more traditional software development initiatives, a high percentage of which often fail. Nowhere are these attributes more relevant than to organizations that desire to build social networks with their customers. Speed is important because most organizations just cannot wait to meet the demands for servicing customer interactions. Failure to act will mean that customers will turn to blogs, emails, wikis, and other forms of interaction as they become increasingly frustrated with an organization's failure or inability to listen.

Cost avoidance in traditional solution development and support is also important in building systems that support large-scale customer networks. "Build your own" is a high-risk proposition in that few companies can accurately prognosticate the future of social networks. What is designed and built today may not serve competitive needs tomorrow. And it is not clear that after spending millions of dollars to build in-house systems, customers and employees alike will adopt the technology. Traditional development is a high-risk, high-cost response to the demand for customer interaction inherent in Web 2.0. But there are important examples where SaaS is already making its mark in the emerging demand for enterprise social networks.

Leading early examples of SaaS applications have emerged in media. Broadcast networks, print, and cable media are all confronted with having to serve large audience demand for video sharing, comment collection and reporting, and mobile dialogue. And they are largely responding. In 2006, ABC's implementation of SaaS-based technology allowed viewers to submit questions for President Bush--via the Web, or even mobile phones if they liked--directly to the network and ABC's staff in turn was able to collect, sort, review, and immediately publish selected user-submitted videos into on-air programming to complement George Stephanopoulos' interview with the president.

Similarly, CBS recently turned to an SaaS-based solution to conduct an audience engagement campaign during Katie Couric's evening news debut, which asked viewers to contribute suggestions for Couric's signature sign-off. In less than 24 hours, more than 40,000 viewers--at a rate of sometimes more than eight per second--responded to the call to action by offering their opinions and feedback online. Networks are learning how to repeat these experiences across news, sports, and entertainment programming on a systematic basis. But like business, they do not have much time to retain competitive positions threatened by communities built on highly available, low-cost Web 2.0 technologies.

Web 3.0 will enable business to quickly embrace scalable, repeatable, and consistent methods of building social networks with customers and to manage those networks. By using SaaS businesses can meet the rising demands for customer interaction in a way that delivers immediate and tangible business value. SaaS is a simple solution to the universal problem of how to bridge the gap between traditional CRM and the demand for social networks created by Web 2.0 technologies in a way that honors the needs of business processes.

Head to Head: NetSuite and Salesforce.com

The companies release customization platforms for on-demand, a move that reduces IT risk, yet could spell trouble for midmarket CRM providers.

by Colin Beasty

Looking to dispel the long-held notion that on-demand applications aren't customizable, Salesforce.com and NetSuite both unveiled their first customization and development platforms in October 2006. The vendors have, in the process, placed themselves at the forefront of the next big development in on-demand CRM.

At this past year's DreamForce conference Salesforce.com announced Apex, the company's on-demand programming language and platform that enables third parties to write and run code on the Salesforce.com multitenant, shared architecture. Developers can build applications and software components of any type (not just applications associated with CRM) with Apex, and have Salesforce.com store and run them for a fee. "It gives them total control over the entire system," says Chairman and CEO Marc Benioff.

Just two weeks later NetSuite released SuiteFlex, its own customization and development platform that enables the creation of third-party applications on top of NetSuite. "We're adding the final layer in terms of programming extensions to tailor the entire interface to a vertical industry or the business processes," says Mini Peiris, vice president of product management.

Although the two customization and development platforms look and sound familiar, Rob Bois, research director at AMR Research, says each company's reasons for launching the products vary. "Salesforce is clearly targeting the enterprise segment by tackling the customization problem that has always been associated with SaaS solutions. SuiteFlex is more about customization tweaks, allowing companies to customize their NetSuite products for the verticals they operate in."

NetSuite's Peiris agrees. "The core functionality is already included in the NetSuite platform," she says, referring to the company's CRM/ERP/e-commerce suite solution. "Who wants to take on the complexity of adding that functionality? We're focusing on allowing customers to verticalize their NetSuite products via third-party vendor apps."

NetSuite's built-in ERP functionality, combined with its new customization and development platform, "puts them on the same playing field as Salesforce," says Denis Pombriant, managing principal of Beagle Research. "They're going toe to toe with Salesforce," although he doesn't see NetSuite being "as aggressive with third-party vendors." This, according to Pombriant, could be because Salesforce's AppExchange had a nine month head start--it was released in January 2006.

Regardless of the similarities and differences, both announcements are a clear indication of the next big trend in on-demand, and diminish another "knock against SaaS," Pombriant says. "This style of delivering business applications is the wave of the future. This is more than just a technology, this is a different business model that will carry us through the 21st century."

The ability for companies to now write, publish, and take code from other third-party on-demand vendors and run it on Salesforce.com or NetSuite servers allows them to focus on driving value from their software investments. "It greatly reduces the risk involved in purchasing these solutions," says Bruce Richardson, chief research officer at AMR Research. "It makes upgrades and customization that much easier, and enables the IT department and CIO to focus on innovation and business process."

The announcements should also set off warning bells for the rapidly diminishing legacy midmarket CRM providers. For years these vendors have served the midmarket by offering solutions that weren't as expensive as enterprise CRM solutions, but are more customizable than on-demand. "Their argument has always been that you can't customize on-demand. Well, now you can," Bois says. "That would make me nervous."