Manufacturers Continue to Place More Focus on Online Marketing

Old habits die hard. But they do eventually get replaced as newer, more effective ideas prove themselves.

That's the conclusion that can be drawn from GlobalSpec's 2011 Marketing Trends survey of manufacturers in the industrial sector. The survey of 384 individuals (Presidents/CEOs and/or in marketing management at these firms) indicated that online marketing is getting a much bigger share of the marketing budget and attention than it has in the past. In fact, 49% of respondents indicated that they will be spending more than one-third of their marketing budget online.

One of the most significant jumps was in the area of social media. In the 2010 survey, only 24% of organizations said they planned to use social media as a marketing tactic. Most were taking a "wait and see" attitude to determine whether social media would have the same impact in industrial marketing that it has in the consumer world.

In the 2011 survey, 57% of manufacturers and other industrial companies said they now use social media as a channel to reach out to customers and prospects - more than double the 2010 total.

What makes it even more interesting is the drill-down on why these once-skeptical organizations are now using social media. In the survey, the top reason given for participating in social media was branding -- 77% of respondents gave that answer. Lead generation came in second at 59% and thought leadership at 40%.

This new focus on branding is a good sign overall for the manufacturing sector. Since the economic downturn in late 2008, much of the focus among industrial marketers has been on lead generation. Activities that didn't generate quality leads tended to take a back seat to those that did. Branding was definitely left on the back burner "until things get better."

The survey indicates that may be changing. The increased use of social media for branding means organizations may be feeling better about their economic prospects and are once again willing to invest in marketing efforts that have a softer and more long-term benefit.

Part of that view, of course, may also be driven by the effectiveness (or lack thereof) of social media in generating leads. Only 3% of respondents to the survey said that social media is currently one of their top three sources for lead generation.

What this all seems to indicate is, as with any marketing channel, it's important to know why you're participating in social media in order to set expectations realistically. Spending a huge percentage of the budget on social media in order to drive leads is most likely a poor investment. Spending the same amount to build the brand could pay dividends for years to come.

This trend toward the use of social media reflects a larger trend as well -- a general move into spending more on online advertising. Not only did 38% of respondents say their total marketing budgets were higher in 2011 versus 2010 -- another sign of at least some optimism regarding economic recovery -- 50% say they're allocating more of the budget to online marketing activities.

The reason for this boost is that, while social media specifically may not do much for lead generation, online marketing overall does. In fact, respondents said that three out of four of their best sources for leads come from online marketing channels, with their own company websites leading the way; 78% listed the company website as one of their top three lead-generators.

Of course, that doesn't necessarily mean that the interest originated on the website, which is what often makes tracking lead generation such a challenge. Other marketing efforts -- online and offline -- likely were involved in getting visitors to the site. Still, this 78% figure points to the importance of having a dynamic, informative website that can turn visitors/prospects into qualified leads once they get there.

The other two online marketing methods to crack the top four are email marketing at 28% and search engine optimization (SEO) at 25%.

Make no mistake -- lead generation is still high on the priority list for manufacturers and other industrial marketers. When asked about their top three marketing challenges for 2011, "not generating enough quality leads for sales" came in at the top of the list at 52%. This answer partially may be driven by the number two concern, which is not enough people/resources/time available for marketing (49%).

Third on the list was the need to drive more customers (and prospects) to the company's website. As seen earlier, once customers/prospects get to the website, most marketers feel they are effective in converting them into qualified leads. So the challenge is finding more ways to fill the top of the funnel more effectively while working with limited resources.

Which brings us back to social media. As industrial marketers use it more, and learn how to use it more effectively, social media may very well become a more important vehicle for generating initial interest in the products and services they have to offer. Expect to see the number of companies participating increase even more over the next three to five years.

The economy over the past few years has felt like one long, dark tunnel for manufacturers and other industrial marketers. Yet, there may finally be some light at the end. Increased confidence appears to be leading to increased spending, which (if normal patterns hold) should be followed by an increase in sales.

Chris Chariton is senior vice president of Product Management and Supplier Marketing for GlobalSpec, a vertical search, information services, e-publishing and online events company serving the engineering, technical and industrial communities.