Remember the days when broadcast advertising was still allocated the big bucks, Web sites were brochure-ware and everyone was excited when ads spiked online traffic for a day?

Gone are the glory days, ad folks. Now, businesses want a highly functional site that pays for itself in inventory integration, new sales, higher margins and increased loyalty. But, that’s not going to happen with a tiny percentage of an already small marketing budget.

According to St. Paul’s Hill Reference Library, business’ marketing budgets are typically 5-10% of overall annual revenue, depending on industry.  But, this includes advertising, public relations, marketing, and promotions. Where does online commerce fit into this equation and why is something with so much revenue potential still pushed to the back burner when budgeting? And why is it still difficult to tie offline marketing strategies to online initiatives?

In 2002, total Internet advertising alone was $4.9 billion, vs. $145.4 billion in overall national advertising spending. According to the 2002 DMA Statistical Fact Book, only 2.1% of all advertising spending went to Internet advertising. And, Internet ad spending was actually down significantly from 2000 and 2001. And, this doesn’t even consider basic site design/development, upkeep and email and online marketing campaigns.

There is an inexplicable disconnect between consumer spending online, and online marketing budgets with roughly 2% of marketing budgets spent on online initiatives – yet more than 30% of consumer media time being spent online.

According to Advertising Ratios and Budgets, the SIC 5810, covering all restaurant and bar establishments, spent 4.0% of their sales in 2003 on overall advertising. And, at a time when in-store foot traffic counts, a very small percentage of that budget is being directed toward online initiatives that drive traffic to the locations.

Of the nearly $100 billion in retail sales, $15.5 billion, or 1.9% is attributed to online retail sales. These numbers will continue to climb, and consumers are increasingly looking to the Web to research and complete purchases – whether ordering a new car or making restaurant reservations. Now, there are more tools than ever to tie online and offline marketing and sales initiatives to quickly realize a positive return on investment.

Marketers are catching on – and those that do so sooner, armed with unique ideas that tie to business objectives, will reap the rewards. Take Buca Restaurants, for example. Buca, like other restaurant chains, has been feeling the pinch of a down economy, the trend in low-carb food, and increasing competition. Buca’s CIO saw this, and realizing the opportunity for gaining back market share, invested in a robust online reservation system that manages and stores reservations for all restaurants.

“Buca needed a reservation application to capture reservation calls for each restaurant. These calls are now routed through headquarters. Reservation details are entered into the web application and the system determines if there is a table available at that time. If not, it recommends an alternative reservation time. Since most Buca restaurants are dinner-only, reservations requests would otherwise go unanswered until midafternoon, leading to millions of dollars in lost revenue,” explains John Motschenbacher, CIO, Buca.

Not only did this new web initiative completely streamline Buca’s reservations system, but also gave management an instant glimpse of individual store sales and performance.

Like Buca, we recommend that clients spend at least 1-2% of their annual revenue on web or interactive initiatives. For example, as a ten million dollar company, your online budget should be at least $100,000 annually. Our larger clients such as Buca and Toro have realized this – small companies should also realize that these are investment dollars and have a ROI.

This is a unique time in history when, by 2008, 75% of U.S. households will be online, and marketers are moving slower than consumer interest. This, coupled with the lack of business spending on innovative online initiatives gives the control to the consumer, rather than business. Isn’t it time marketers took action?

Interested in learning how this can be applied to your own needs?  Contact us today.

If you have any comments or questions about any Aware InSites, feel free to contact us at info@awarewebsolutions.com or call 800-783-8919.