Internet Marketing - An article I'd written back in April 1998 - still relevant? :)

Adding Value: The integration of Internet marketing

The Tsunami cometh.. and some of us are still in little boats, blissful in our own worlds, unaware of the phenomenon that is about to strike.

In barely 5 years, the Internet has growth leaps and bounds from “will this thing take off?” to “who will make money from it?”. Today estimates of Internet commerce range anywhere from US$117B (Forrester Research 1997) to US$200 billion (IDC 1997) in year 2000... usage is estimated to continue growing from the 50-70 million today to 550 million over the next 10 years.

The Internet unofficially began in 1957 when Sputnik’s launch initiated ARPA (Advanced Research Projects Agency) which in turn created the Internet in 1968. From 1968 to 1992, the Internet gestated with primarily academic and military applications with less than a million hosts globally before the World Wide Web propelled it into instant stardom starting 1992. Today we estimate about 15-20 million hosts connected to the Internet.

The significance of the numbers above is that the Internet today IS mainstream... it should no longer be viewed as a fringe medium but to be treated with serious contemplation as a viable channel.... It took the radio approximately 28 years to reach a critical mass of 50 million listeners... the TV took 13 years.  The World Wide Web took only 5 years starting from 1992 !! How then should marketeers embrace this new mainstream medium?

The Internet presents a tremendous opportunity today for marketeers to go beyond the traditional boundaries and truly test their creativity and marketing acumen. Some have started and succeeded spectacularly, some have failed, while others are still in little boats.

What does this mean to the marketeer and marketing? How do the traditional theories apply? How will this phenomenon called the Internet change the dimensions, circumstances, and environments which we were used to for the marketing world? More importantly, what is the value added by leveraging on Internet marketing? 

Location, Location, Location..

Choosing locations for transacting with your customers is still a key success factor.

The Internet offers two main benefits - lower cost and accessibility.

Comparing to channels today using staff manned counters, PC dialups, telephony etc., the cost of this newest delivery channel is significantly lower.

The Internet and the World Wide Web also presents itself to be a globally accessible location to your potential customers, cars, buses, planes not required, just add modem and you’re in. The market is no longer confined to geographical boundaries, barriers to entry defined previously by time and space has been broken down by the Internet. 

With 50 million people online today, marketeers have the opportunity to review their market definition and segmentation to take into consideration the global market. Where are the new markets? How can I make use of the Web to attract and retain them? How will my competitors be using this new channel as well? 

Some examples of successes..

LL Bean (https://www.llbean.com) has traditionally been a catalogue retailer. Prospective buyers who receive their catalogues in the US were their target market. In the 4th quarter of 1996, this company embraced the Internet and started offering their catalogues online. LL Bean today is attracting and retaining customers for 80% less than what it costs to reach people with its printed catalogues. The site has also expanded LL Bean’s reach into a younger audience, enabling the company to grow and service a whole new set of customers.

Arena di Verona (https://arena.it), an Italian opera house opened a multi-language online site enlarged their target market from Italians to the world beyond.. allowing online reservations of tickets.

Charles Schwab (https://www.eschwab.com) opened an online trading facility on the Web, today approximately 39% of their trades are conducted via this new channel.

AMP Inc. (https://www.amp.com), the $5.5 billion electronic components manufacturer, is generating new business as the direct result of its building of AMP Connect, a Web-based product catalog, that now has 75,000 registered users and receives about 60,000 hits per day.

LeHigh Safety Shoes (https://www.lehighsafeyshoes.com) had their first Internet order from Indonesia, half way around the world from their headquarters in Endicott, New York.

These are but a few of the many examples that have claimed successes using the omnipotent Web.

WWWOM

Word of Mouth (WOM) has traditionally been a powerful double edged sword. Happy customers will tell others of their experience, spreading the “word”, and to ease their own post purchase cognitive dissonance. Dissatisfied customers will similarly tell even more people of their disappointment.  Rule of thumb estimates that every happy customer will communicate with 5 other customer, every unhappy customer will relay their complaints to 25 other potential customers.

From our own personal experiences, we know that WOM is highly credible, more believable than advertisements and promotions. Used correctly to any company’s advantage, it forms a powerful tool in disseminating ideas, sentiments, opinions. Neglected, it can potentially become a public relations nightmare.

Internet has the potential to amplify the effect of the WOM. WWWOM (World Wide Web of Mouth) today is a powerful channel for customers to communicate their sentiments to millions of your potential customers.

One of the means for information dissemination is e-mail. One survey estimate a total of 2.7 trillion e-mails sent in 1997. Shocking initially but think of the spam you’ve personally received over the past year...

Case in point. There is an urban legend floating around the world via e-mail some time ago called the Neiman Marcus Cookie recipe. Story goes that a mother and child were having a coffee break at Neiman Marcus Cafe after some shopping. They enjoyed the Neiman Marcus cookies so much they bought the recipe. Later, they realised that they were incorrectly billed for the recipe and sought refund which was promptly refused by Neiman Marcus. The irate mother thereafter, wrote her dissatisfaction about her experience in an e-mail, attached the cookie recipe and sent it to her friends. Her friends in turn sent it to their friends and soon the Neiman Marcus cookie recipe e-mail became one of the most well-circulated chain letters floating in the Internet today.

Truth or hoax? Doesn’t matter. It demonstrates that WWWOM is a potent tool, a powerful, and low cost weapon a marketeer should include to his arsenal. How well this is used or managed will depend to a large extend the marketeer’s understanding of his market and the communication patterns of his audience. 

A recent business example, customers of IOMEGA flooded chat rooms, discussion forums and newsgroups with complaints about the “click of death” - named after the clicking sound heard when the IOMEGA Zip drive becomes faulty and destroys information on the Zip disks. IOMEGA representative claimed that only about 1% of all Zip drives produced by IOMEGA has this problem, but through the efforts of the dissatisfied customers who suffered the “click of death”, the situation was greatly amplified to the rest of the Internet world.

WWWOM does not manifest itself purely in e-mails. The Internet offers a myriad of avenues to share information... newgroups, forums and chat rooms are just as viable alternatives for information dissemination. You will even find web sites created by individuals purely for the purposes of discrediting organisations.

This is probably one aspect of Internet marketing most neglected by marketeers as the effects may not be totally obvious. However, like WOM, positive effort should be directed to creating positive WWWOM that will be in synch with and support your overall Internet marketing strategy.

This could be done in numerous ways. One of which is to host and moderate chat sessions or newsgroups within your customer community, using the opportunity to monitor and influence customer perceptions. Another simple (and fundamental) method is to ensure swift and relevant responses to feedback to your company’s Internet site. Complaints, web-based or mail-based, left unattended can only add fuel to the fire. Finally, as with WOM, why wait to react when you can proactively create positive vibes through credible success stories with customers to feed the minds of the Netizens (ie Network Citizens).

Target, Aim, Personalise, Sell..

The explosion in electronic marketing also provides marketeers with a powerful tool in reaching their audience - the ability to target select groups of buyers and personalise offerings to them.

In contrast to traditional marketing programmes which are generally one-way communications to large groups with presumably similar (but varied) buying interests, the World Wide Web and it’s associated technologies have the ability to allow buyers and sellers to develop closer relationships through targeted marketing of specific buyer groups.

One of the final frontiers of marketing may soon become a reality. In a world of infinite resources, the marketeer’s dream would be to create a specific programme for each individual customer. Focused, targeted, and tailor made. However, in today’s physical world of resource constraints, many marketing programmes have been designed instead to communicate to segments of customers with similar interests and profiles.

Moving into the virtual world, customers have the potential ability to get information, products and services that relates precisely to their exact needs and develops a strong feeling of being highly served by the selling company. Since customers and prospects alike want to feel a personal relationship with the companies providing their needs, the concept of being able to get the information, products and services in a personalized manner and to communicate interactively through e-mail or other electronic means, can dramatically enhances the company's image in the buyer's mind.

Today one can go to one of many sites to get customised news and informational updates. Define the type of news you desire, when you’d like to have it, how you’d like to have it.. and Viola! Magic. Examples of which are PointCast (https://www.pointcast.com) and My Yahoo (https://my.yahoo.com).

Beyond information, technologies exists today for marketeers to also developed Web sites to perform targeted selling of products and services to customers. At Amazon (https://www.amazon.com) online store, your previous choice of books and the preferences you’ve indicated allows the Amazon electronic marketeer to automatically recommend other reads which you may find interesting. 

A few online retail sites are also now able to track your previous shopping patterns, profile your partialities and store it in a database. Based on this, the next time you shop, it can automatically present to you targeted advertising messages as well as present to you specific products which you’ll likely to be interested it. One example is FireFly (https://www.firefly.com).

 

All that glitters is not gold

For every success story of using the Internet, there will be failures that go unreported. But many are embracing and learning about this new media as it grows and evolves.

Building a site does not automatically mean that customers will beat a path to your doorstep. Putting your products and services online doesn’t gurantee sales. Question still remains how can you guide them to your new location.. how would you provide incentives for them to use your site as you’ve intended.. and how do you get them to return (hopefully with more customers).

The World Wide Web today is a maze of millions of sites, guiding customers to your site is liken to the proverbial needle in a haystack. Subscribing to internet search engines alone no longer suffice. The barriers of entry are low, as such the competitive noise level is very high. 

The need for an unique selling proposition for your customer still exists.. this part of marketing work still requires the marketeer’s ingenuity and creativity. How do you leverage on your traditional media to enhance your position in the online media? The entire marketing engine needs to work in tandem and not in isolation.

Other challenges faced include pace.. the Internet evolves very rapidly in terms of technologies, growth, expectations, trends, hypes etc etc. Speed will be a key success factor, speed to market, understanding of the ever-changing environment and responding suitably to the changes.

Net Net

Despite the apparent challengs, the Internet cannot be ignored. The above only scratches the surface of what the promise of Internet marketing can bring. Much of it is still left to brave exploration and experimentation.

However as a guide, there have been a few key common principles underlying most of the successes.

One, focus on business, not technology. The Internet race is not about technology per se, it has to be driven by business needs and objectives. Without which, it becomes difficult to remain focused on how to create additional business value it’s in terms of greater market share, better revenues, better customer satisfaction or lower costs. A site with the latest technologies but doesn’t meet customer expectations will not make the cut.

Two, given the pace of change and the learning that’s required... Start simple and grow fast. Bite off what is chewable, chew it, learn and grow quickly from there. Most Internet projects today should not take more than 6 months to implement for the Internet would have inevitably changed from the time your project began and the time it’s completed.

Three, leveraging on what you have today. Embracing the Internet doesn’t mean abandoning what you have today but more importantly, consideration should be given to leveraging on it for maximum effect. For example, many companies are using their print advertisements to promote the use of their internet site.

Clearly, the world of the marketing professional is changing. The new challenges will bring even more rewards to those who seize the opportunity and gain experience in the new age of electronic business marketing on the Internet. 

The Internet is like Darwinism on steroids, evolve or be eliminated.

The Tsunami cometh...