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JUNE 26 2002

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By Christopher Saunders

Continuing the reassuring reports emerging from the battered Internet marketing industry, direct marketing clients are likely to increase their interactive spending this year, according to research by Greenfield Online, DoubleClick and agency Beyond Interactive.

The firms' first Marketing Spending Index, which surveyed about 200 U.S. executives and brand managers, found that 61 percent of the respondents said they're likely to increase e-mail marketing budgets from last year. That's compared to the 50 percent who report plans to boost their overall marketing spending. Additionally, 23 percent of the respondents said they expect to reduce on- and offline spending.

The findings point to an average 17 percent increase in spending on e-mail marketing, topped only by marketers' plans to boost direct response television budgets by 18 percent. Other forms of online marketing are expected to grow about 9 percent during the year.

At the same time, respondents indicated that they are likely to cut into their traditional direct marketing budgets, reducing spending on telemarketing and mailings by 7 percent each, and catalog marketing by 13 percent.

Fueling that move could be findings that suggest that online sales account for 12 percent of respondents' revenue -- above resellers (11 percent), telephone (9 percent) and catalogs (7 percent.) Only retail and direct sales efforts account for greater portions of marketers' revenue, at 30 percent and 28 percent, respectively.

The survey also found that 74 percent of the study's participants anticipate growth in their online sales channels during the next 12 months.

"Point-of-sale has always been a highly effective form of advertising, and as companies' revenue from their Web sites increases, online and e-mail marketing are inevitably becoming larger components of the marketing mix," said DoubleClick Chief Marketing Officer Susan Sachatello. "The expected increase in share of budget for online and e-mail marketing augers well for the online community once overall marketing spending levels increase again."

Yet in spite of an apparent willingness to boost online direct marketing efforts, marketers and advertisers continue to lag in measuring their return on investment from the Internet -- despite industry-wide efforts to encourage the use of such tools. Many major players in the online advertising and marketing sector are signing alliances or rolling out new products to help clients measure a return on investment from their online efforts -- which has the benefit of generating more revenue for vendors while proving the relative effectiveness of the embattled medium versus traditional channels.

But only 56 percent of the study's respondents said their companies had processes in place to measure the return on investment from online advertising, while 60 percent said the same for e-mail campaigns. That compares to the 65 percent that have tools in place to measure TV and promotional efficacy.

Marketers' failure to measure more of their campaigns is also baffling considering they rank e-mail campaigns more measurable than television: survey respondents ranked e-mail measurement tools a 4.46 on a scale of 5 in terms of effectiveness, while television tools came in at 4.45. Tools to measure the effectiveness of online advertising fared somewhat worse, at 4.33, but still ahead of measurability for trade shows and print campaigns (ranking 4.25 and 4.24, respectively.)

Despite the industry's apparent shortcomings in promoting ROI-measurement tools to clients, the study comes as the second promising forecast released this week on the recovery of the online ad and marketing sector. On Tuesday, New York-based researcher CMR said that it estimates online ad spending will grow 5.3 percent during 2002 -- representing a decline from the industry's high-water mark in 2000, but a rebound nonetheless from 2001.