Balancing the Internet Marketing Disconnect

Yesterday I was in a meeting with a partner from a mid-sized insurance firm here locally.  We were discussing all the exciting aspects of Internet marketing, social media and most importantly public relations online.  Jeff Rabkin from Wowza was in the meeting also and was discussing his recent experiences with Mattress Giant.

For anyone who doesn't want to read the article.  The gist is that a Google search for Mattress Giant displays a negative review from epinions.com as the second organic result.

In our meeting the insurance company partner was amazed that negative results could show up and that Mattress Giant was trying to improve their image online. 

He stated, "I start nearly every purchase decision online.  This could really damage a company." 

I responded, "You research most of your purchases online, right?  And how much of your companies marketing budget is targeted towards Internet marketing?"

I didn't have to wait for the answer because I already knew their budget and that the answer was nearly zero.

After the meeting I was reminded of a conversation I had with the VP Sales/Marketing for a $70M company here locally.  The VP was bragging as we walked through the tunnel from one tower to the next in their building about the new $150,000 trade show exhibit they purchased.  A couple of months later we were asked to participate in the RFP process for their new website project.  When the proposals came in they laughed at the $80,000 options calling them "old school".  They ended up going with a proposal for less than $20,000. 

I have to ask myself, how many people will experience the exhibit booth and how many will experience the website? 

Which medium will provide content, interaction, publicity and leads 24/7 and which one will have to lease space in a warehouse during the off-season?  Why do we see such a disconnect in marketing budgets?

So what percentage of your companies marketing budget is spent online?  Even many of the companies we've worked with who are starting to understand the benefits online are only spending 8-10% of their marketing budgets online. 

In 2007 I see this changing dramatically.  Especially from those companies who need/want to create a competitive advantage and stay ahead of the curve.  By 2008 the majority of businesses will have nearly brought their online spending inline with their customers habits.  What do you think?  Am I too optimistic in my predictions?  Or is there another reason why budgets seem so out of balance?

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