Successful Marketing on the Internet:
A User's Guide
by Albert Fried-Cassorla
You've heard so much about the Internet. For many marketers, just sorting out the claims and hype from reality can be the main challenge.
Yet it's important to do the sifting, if you want to be in a position to reap the amazing benefits. That's where this article should help you. In a short space, we will try to outline opportunities for marketing on the Internet, who should become involved, and how to go about getting started.
The I-Way: An unprecedented worldwide marketing opportunity
Let me begin with a bold statement, and then qualify it: The Internet provides marketers with the world's fastest-growing new medium. To the early arrivals with quality merchandise, information and services will go the spoils.
Consider these facts and their significance for future commerce:
Today, millions of dollars worth of business are being done as a result of Net activity. No one knows exactly the dollar value of this business. The best gauge is the fact that many businesses come on the Net, few leave, and the Net continues to experience exponential growth.
Some of today's Net-related business is being done on the Net -- that is, with the direct selection of merchandise and payment being made live, as a direct net activity.
Other business is being conducted off the Net, but is directly attributable to it. This includes business that results from Internet users discovering a company and exploring every option up to the buying activity. The actual purchase will then be done off-Net, via a phone call or letter. Off-net commercial activity also encompasses provision of information only, which down the line results in a sale.
Entering the Net soon: Major on-line services
All of the major commercial on-line services will soon have initial or upgraded access to the Internet. This group includes such firms as Prodigy, America On-Line, CompuServe, and Delphi. Why are they coming? Because customers demand access, and these firms know that if they don't provide it, customers will sideskirt them.
For marketers considering doing business on the Net, this means a host of unparalleled new opportunities for those positioned to get these new customers' attention. Therefore, the time to establish a presence on the net is now -- not 6 months or a year from now. By that time, your competitors may be well entrenched.
The Advent of E-Cash
Businesses are now developing encrypted methods of charging for merchandise through credit cards. More development is in the works to safeguard credit card numbers. Very sophisticated electronic cash flow is known as E-Cash. The concept of E-money is old; only some wrinkles are new.
Electronic funds transfer is a phenomenon long known to the banking world, where billions of dollars move around the globe daily via phone -- all in the time it takes a person to sneeze. An increasing portion of this traffic will soon be in the form of payments made by credit card over phone lines by computer users on the Internet.
As E-cash exchange technology and familiarity increase on the part of consumers and businesses, commerce on the I-Way will also grow.
Who shops on the Internet now?
Approximately 30 million people now use the Internet. These are mainly college students, and people in high-tech jobs. Students often have free Net access provided as a benefit of enrollment.
Some upper echelon executives at high-tech companies access the Net. More often, access is common a notch or two below the CEO level, except for high-tech companies. Middle-level corporate users of the Net often use their access to conduct research and purchases related to their jobs. This provides marketing opportunities to companies selling data services, or to any business to business products or services. These same business customers often become consumers and shop as individuals on the Net during their lunch break.
Note that not all Internet surfers are buyers. However, many surfers do ride in search of quality products and services.
What about Bell Atlantic, Time-Warner, and cable companies?
If you're hesitating about setting up on the Net because you're not sure which of various interactive services will succeed, it's time to come off hold. Other systems may grow in time, but the Net is here now.
Other systems make promises on which they may or may not deliver. Many services and alliances have been plagued by start-up flaws relating to technology or pricing. For example, after two years of testing, Time-Warner's much-vaunted electronic venture is expected to reach only 4,000 homes. Of course, wider acceptance will likely follow -- but don't look for Net-like growth.
One of the main advantages of using a proprietary, wide-band service is to allow transmission of movies on demand. The economics of this service are not yet proven. Movies tie up phone lines for a long, potentially expensive time. Another storm warning: In test conducted by TCI and U.S. West, customers bought only three or four movies per month. So video stores may have a good laugh -- for awhile longer, at least.
Cable companies won't be competitors to the Net, since they will provide access to it.
Is Interactive TV the wave of the future?
All interactive TV based systems require a dedicated function box that will have limited use. According to Jason Olim, who runs the successful CD store on the Net, CDnow! The Internet Music Store, "Turning a TV into a computer is harder than turning a PC into a TV."
With a personal computer, much of the expensive hardware needed is already in place. Besides, it's more natural to interact with a box that's a few inches away from you, with a handy keyboard, than with a machine like a TV that sits ten feet away.
High speed interactive TV may be available a few years down the road. To use it, when it's available, may require a $1,000-per-home investment.
The question may then be posed: what about 500 channel TV? Isn't that interactivity? Not in my opinion. Pay for view, or super-fast channel switching is not true interactivity. Olim sums up the differences this way: "TV is high-presentation. Computers are high interactivity."
Meanwhile, the Internet is here, ready and growing
Unlike many other "information highway" opportunities, the Internet is here and ready for your product today. A part of the Net, known as "the Web" is the focus for much, though not all commercial activity on the Net.
The Web is actually called the World Wide Web (WWW). Here is where graphical pages with pictures can easily be accessed and viewed by Net surfers using Mosaic, or similar software products. Mosaic is a browser, literally allowing the customer to browse a shop on the Net. Not all Net surfers feature Mosaic or a service that permits its successful use. Yet more and more such providers are heading towards full capability.
Many shops and malls have set up sites on the Web. The first thing you see when entering a store or mall is its Home Page, which gives you launching points for further activity. In addition, much text is connected electronically to other text and options -- so that you can choose to visit other related sites or pages in a split-second.
Most catalogers doing business on the Net operate on the Web, which allows photos of their products to be shown. Unlike a paper catalog, the customer can have access to a very large number of catalog pages -- far more than a paper publisher can afford to mass produce. Product specs can be made available in great detail for the serious buyer.
Consumer and B2B sales
The Web is definitely a popular area for consumer sales -- hence, the popularity of items like CDs, clothing, and other merchandise.
For business to business companies, the best opportunities are for reaching small to medium-sized businesses. Fortune 500's are increasingly becoming involved as vendors to those companies. Get started now, and in 6 months, you can be positioned to capture this business too.
Can small business succeed on the Net? Yes. Next month, we'll take a close look at two successful Internet businesses. One of these will be CDnow! The Internet Music Store, which provides a great example of small business Net success.
Another example is provided by a company called Aero Astro, which builds small earth satellites for $5,000,000 or less. They provide business to business advertising for satellite parts on the Net and have been steadily drawing customers and sales.
Do you need a high profit margin or high volume to prosper on the Net?
Low margin items can be sold. As with many other areas of marketing, success depends on many factors, including: the special value of your product, what you're willing to risk, and how much you want to invest. Perhaps in the future, every company will want to be on the Net, just as everyone wants to be in the white or yellow pages today.
For now, demographics and psychographics are more the driving determinants of Net success -- they are much more important factors than profit margin. Unlikely Net prospects include traditional people who are reluctant to change, to use a computer, and to work (i.e., viewed as play) to explore new. exciting uses for the computer.
An example of a traditional buyer -- even a traditional direct response buyer -- who probably will not fit the Net mold would be customers of a company like QVC. This firm sells to middle-aged people. Cubic zirconia consumers may be last to get on the Net.
New Internet and Web buyers, by contrast, will be in their 20's and 30's, and highly educated, and business and high-tech oriented. To be a Net explorer requires a major delight in the new. Or conversely, some user may be motivated by fear of getting left out of an important innovation!
What are my choices for setting up shop on the Net?
You basically have three options in participating on the net as a Vendor or business builder. These are, in order of expense and difficulty: setting up your own node, participating on a mall, or providing a low level information service.
We'll give you a brief tour of your three options:
1. Building your own node
You may wish to develop a full node on the Net, as opposed to simple Net presence. This option is most useful for large corporations eager to seek out and reach elite markets, or audiences of the technologically sophisticated.
Both consumer and business-to-business oriented firms may have good reasons to build their own nodes. The main advantages to this option are improved directness of access, and long-range control.
The customer will not need to go through intermediaries to reach you, when you operate your own node. You will also have power to decide issues of presence and pricing. (No one will be charging you rent.)
On the other hand, net node building is not for the faint-hearted or light of pocketbook. This is a full-time activity. You will need approximately $300,000. Of this, hardware is only about $40,000. The balance of your investment will be for salaries for a programmer, system administrator and a graphic artist --- at a minimum.
2. Joining an Internet Mall
Several malls have opened their doors on the Net and invite your participation in their establishments. Some of the more well-known of these are:
One of the best-known malls on the net is Downtown Anywhere. They can deliver up to 4,000 "hits" per hour. A hit is a person visiting your store. Not all hits become buyers.
This mall features more than 30 merchants. Fees range from $200 to $2,000 per month, Another entry option is agreement to a sales commission that may range between 8 and 15%. With this mall, buyers may place an order on-line, but must then confirm that order and provide credit card information over the telephone using an 800 number. Alternatively, they can set up an account with Downtown Anywhere , which then will automatically deliver that number to merchants upon order placement.
American Computer Group / Internet Media Network, Inc.
This company has helped major catalogers establish a site for sales on the Web. Customers include Hello Direct and Paper Direct.
Fees for participation include: $500 per page to carry digitized information provided by you; $1,000 per page developed by them from your text and transparencies. There is also a monthly service fee of $1,000 and an inquiry processing fee.
3. Provide a low-level information service
Your third option is to provide information-only to customers. This can be done, for example, though Global Network Navigator (GNN), a Net service produced by O'Reilley & Associates.
This service can be used to provide text and contact information to customers. They can then contact you off-line.
A low-level service may provide text-only -- but this still may be a profitable venture for you.
Advertising and PR and the Net
Your mere Net presence will not be enough to deliver success. If you're selling on the net, you need to advertise it. This can be done both on and off the Net.
In other words, traditional media advertising will help people know you exist on the Net, and show them how to find you. Try to offer customers both text and graphical modes of accessing your information.
For awhile more, you will be able to gain valuable publicity just by being the first "whatever"-provider on the net. This first-on-the-block opportunity will of course fade with time.... but you can probably add a new wrinkle that makes your access style, or your product and service stand out. After all, that's one of the reasons why you're in marketing, isn't it?
In addition to using traditional media, you can advertise for free on the "What's New?" page operated by GNN. It's cost-free but takes a couple of weeks to kick in. GNN also provides cost-based sites. You can do develop a site for free, or spend money.
Other ways of advertising on the Net include: getting listed on different sites, and publishing a magazine or newsletter on the Net. To explore sites requires astuteness, or hiring a consultant who will be astute for you, searching out opportunities while not violating "Netiquette." Netiquette precludes sending unsolicited E-mail to people who have not expressed an interest in receiving it.
Magazine and newsletter options also provide wonderful marketing opportunities. You can make a magazine which you develop accessible through your net site.
Another option is sending out newsletters via Internet E-Mail using what is known as a listserv. People subscribe, and your newsletter delivers messages to their electronic mailboxes. This is a valuable and profitable service for current and recent customers... and provides us with the latest brilliant incarnation of database marketing!
If you're on the fence regarding the Net, now is the time to hop over it. Begin by becoming a Net explorer yourself. Discover first-hand what it's all about. Proceed in increments from there. But don't wait long... this time, the opportunity is just too great to be missed.
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All contents © 1996 Fried-Cassorla Communications. All rights reserved.