Saving money on marketing

<p>With financial markets in turmoil, retail spending down and the economy almost certainly in a recession, businesses both large and small are looking for ways to stretch their marketing dollars.</p><p>For many, the Internet is becoming an increasingly attractive alternative. Online tools provide an inexpensive way to target potential customers as more people go online.</p><p>Kris Anderson, a mortgage broker in Santa Rosa with Allstate Mortgage Company, is reaching out online in several ways -- and saving hundreds of dollars a month in the process.</p><p>Her efforts range from more established online strategies, such as sending out marketing e-mails, to trying new tactics, such as using the site Meetup.com to attract new homebuyers.</p><p>"In this kind of economy, you're trying to be more effective," Anderson said. "Everyone is looking to do things less expensive. But you also want to do things differently and be innovative."</p><p>Small-business owners can market themselves in ways that have little cost, such as by starting a blog. A blog will help a company's Web site appear higher in Google search results.</p><p>Anderson recently replaced one of her bimonthly customer mailings with an e-mail, saving her about $500 in postage fees. She also bought a video camera and has begun producing informational videos about mortgages that she puts online.</p><p>"Once you buy your camera, there is nothing more to spend money on," she said. "Then it really only costs your time. And once I get better at it, it should be pretty cool."</p><p>She also began using the fast-growing Web site Meetup.com, which helps people organize off-line events. While the site is more commonly used by people looking to start a knitting group or NASCAR fan club, Anderson created a Meetup group for people who want more information about buying a first home.</p><p>To register a group on Meetup costs $19 a month or $72 a year.</p><p>Anderson said she's attracted two potential first-time homebuyers through the site, but hasn't gotten any business from it. Still, the experiment is worthwhile, she said.</p><p>Another inexpensive tactic for owners is to monitor online conversations about their business on sites such as Yelp.com, where people review companies. At no cost, business owners can make sure their contact info, hours of operation and Web site is correct on the popular Web site. They can also reach out to customers who had poor experiences, scan for online chatter about their company, and offer coupons.</p><p>Small businesses can also pay to have their Web sites appear high up in search results. Sites such as Google and Yahoo have special sections on the top of search results for companies that want their Web sites to appear when people search for specific keywords such as "Santa Rosa coffee shop" or "Sonoma County apple orchard."</p><p>That strategy is particularly effective in drawing in new customers, such as people who recently moved to the area.</p><p>For larger companies, advertising online offers good value, said John Battelle, a former editor at Wired magazine who now runs Federated Media Publishing, which helps connect marketers to online publishers.</p><p>For instance, businesses that want to reach college-educated women age 18 to 34 can advertise in Vanity Fair at a cost of about $100 per thousand readers, said Battelle, speaking at a marketing conference he hosted last week in San Francisco.</p><p>Or a company can advertise on a Web site catering to the same demographic, and it will cost only about $1.50 per thousand viewers.</p><p>But a big question looms: Is online advertising as effective as using traditional channels such as print and television? And if so, how do companies measure the return on their advertising investment?</p><p>These are the outstanding questions that push down the cost of online advertising, according to online experts who attended the Conversational Marketing Summit produced by Federated Media.</p><p>"There is a fear factor that holds back advertising dollars from flowing to the Internet," said Gian Fulgoni, founder of comScore, one of the best-known companies that tracks Internet behavior.</p><p>If a chief marketing officer allocated a large part of her advertising budget online and sales dropped, she might be looking for a new job, Fulgoni said. Many marketing executives choose to play it safe, and keep most of their budgets allocated in traditional media such as print and television.</p><p>Companies need to change their perception of online advertising as something that simply drives traffic to a company's Web site, Fulgoni said. Instead, businesses should start considering online marketing in the larger context of a company's effort to establish its brand in the mind of consumers, he said. Digital ads lead to sales online, but also impact sales offline in retail stores.</p><p>There are two major types of digital advertising methods: showing people simple text ads based on what words they search on sites such as Google and Yahoo, and displaying banner ads on Web sites that cater to a certain demographic.</p><p>Advertising to people using both methods yields a return on investment of 119 percent, as people are influenced to buy goods from that company online and offline, Fulgoni said.</p><p>Advertising campaigns based just on what a person searches for results in an 82 percent return, while just using banner ads return 16 percent, he said.</p><p>His calculations were derived by overlapping people's shopping habits, which retailers track, with databases that track the same people's online activity and the ads they see, Fulgoni said.</p><p>For instance, comScore worked with Kroger grocery stores to monitor the purchasing habits of people enrolled in its coupon-card incentive program, and tracked how their spending habits changed due to online advertising, he said.</p><p>Studies like this show the effectiveness of online advertising, and that will help maintain annual growth rates of 30 percent for online advertising even in the current bad economy, Fulgoni said.</p><p>That opinion, however, flies in the face of other forecasts predicting that growth in online advertising will slow markedly in the foul economic climate.</p><p>Fulgoni defended his bold prediction, but acknowledged that most online spending comes from disposable income -- and retailers are going to be fighting hard to capture those increasingly elusive dollars.</p><p>You can reach Staff Writer Nathan Halverson at 521-5494 or nathan.halverson@</p><p>pressdemocrat.com.</p>