timone NetMarketing
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Marketing nei new media e nelle tecnologie elettroniche


No. 33 – April 24, 1999

 

 

loghino.gif (1071 byte) 1. Editorial: New roles and new conflicts

It's no surprise, in a new and turbulent system, to see new ventures and new conflicts. The outcome, of course is unpredictable; but I think it can be quite interesting to observe which new enterprises are born, which may appear in the future, how they are beginning to compete with each other and with existing businesses.

We see new actors in the world of communication also outside of the internet. Such as connectivity brokers, offering to companies and professional groups a service to find the best package in the growing, confusing complexity of competitive offerings in a newly "liberalized" market. One such enterprise was born recently in Italy; it's called Between and its website will be online on May 3, 1999.

In the net, "portals" are at war with each other and with the individual websites of companies. So far the conflict is mostly in the United States, but it will gradually spread in other markets. "Electronic commerce" is in its infancy, but there's a crowd of weird shadows around its crib; and it's hard to tell the benevolent fairies from the bloodthirsty witches.

Of course competition per se, fearsome as it may be, can be quite healthy. As long as it's open and clear, it can help the market to grow; and customers should benefit. But the scenario is hazy, and some of the waters are murky.

Are customers really free to pick and choose, or are they led by self-appointed guides where they may be the game and not the hunter? Is it better to trust the "portals" or other go-betweens, or to find a direct access to the sources?

Are the "portals" just offering organized information, or turning into brokers or dealers? Will the broad, general doorways prevail, or will specialized services provide better expertise in specific sectors?

The best solution, probably, would be to have a great deal of variety and diversity, leading to the survival of the most efficient (and reliable) competitors – and allowing customers to choose what route or service best suits their needs and inclinations. But there is, and will be, a confusing menagerie of bewildering mutants before the market takes an understandable and believable shape.

We are beginning to have doubts about the doorways that we thought we could trust. We hear complaints about search engines and information catalogs putting up front what maybe is not the best, but is more profitable for them. When a link is offered, we wonder: is it a genuine service to me, an informed opinion of a trusted source – or did someone pay to be linked? Why do some things appear a bit too often, and others become invisible?

The fact is that most online services don't, and can't, charge readers and visitors for their services. So they must be paid by someone else. That's fair as long as we understand how it works. But is it always as clear as it should be?

How many, of the multiplying new breeds, are planning for the long term and investing in the value of a customer franchise, based on good service and trust? How many are going for a quick gain at the expense of reliability?

"Intelligent agents" could gradually become powerhouses, "first stop" points of reference for an increasing variety of markets. For products or services available online or offline. We could see a totally new breed of information traders, gaining more and more leverage. They will be hard to classify, because they can take all sorts of different shapes. Offer broad generic services or cater for specialized or customized needs. Wedge brutal price wars (that could cross country borders) or set high standards of service and quality. The complexity could be quite confusing. The bind of trust, which is vital in any environment but even more so online, could be broken in several places. That could be dangerous, because we know that trust is built slowly and can be destroyed quickly.

I think the most effective medicine to keep the market healthy is a growing breed of educated and choosy customers; and aggressive services that really concentrate on giving them what they want – with a generous dose of high touch. There are countless books and essays on how to sell online. Maybe we need a few more on how to buy.

 

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2. The net "should be" – but it isn't (Vint Cerf)

Six months ago I quoted an interview with Vinton G. Cerf – one of the "fathers" of the net, and president of the Internet Society. He made some other interesting comments in a speech at the Computers, freedom and privacy conference in Washington on April 8, 1999.

He pointed to a number of policy issues that have to be addressed if the internet is to be really accessible to all.

"The internet is for everyone", said Cerf. "How easy to say. How hard to achieve".

Despite the growth of the internet, 98 percent of the world's population is still not connected. In many countries, and for many people in all countries, it is not affordable; the cost of connections and equipment is too high in relation to available income. The net is supposed to be "unrestricted, unfettered and uncensored". It isn't. A lot needs to be done to eliminate existing restrictions – and resist the temptation of adding more.

The net is supposed to be accessed without limitations, and in every language. It isn't. A lot needs to be done to make access easier in many different environments and cultures.

The technology is too complex, and people aren't educated on how to use it. Easier access must be provided and people worldwide must be helped to understand how the net can be useful for them.

"Information wants to be free", but it isn't. The net is becoming more and more subject to "a thicket of conflicting laws" around the world.

The internet should be a medium where users can protect confidentiality and privacy. It isn't. Tools for protection must be available to all, and people must understand how to use them. Encryption must be unrestricted and freely available to all.

The internet will not be what it's supposed to be unless there is a constant commitment to spread understanding, improve availability and avoid restrictions. While "the internet is for everyone", concluded Cerf, "it wont' be unless we make it so".

 

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3. Europe and the US: diversity and harmony (Tim Berners-Lee)

The "father" of the World Wide Web, Tim Berners-Lee, wrote an article in 1996 and revised in 1997: The Web; Europe and the US; Diversity and Harmony. I think it's still quite meaningful today. Here are some of his comments.

Ok, so the first thing you imagine is that the future of networking in Europe is going to be much like that in the US, only a few years behind. And there's plenty of reasons to think that. It's the Anglophone market block of North America which gives the US launch of anything a jump start on the Eurolaunch. It's the cultural deference that the US is a nation of doers rather than talkers. There's the lack of entrepreneurial spirit, which in Europe sometimes we believe left for good on the Santa Maria and the Mayflower. Gimme a break...

When I designed a global hypertext system, and decided for better or worse to call it "World Wide Web", I was pretty much a European – an Englishman working in Switzerland and living alternately in France and Switzerland. I belonged to a number of different overlapping communities. I was also a member of the international community of high energy physics, and of another community, the global internet community of the strange, informal, tolerant and predominantly technical people who sent news articles and electronic mail over the Internet. Neither of these communities were related to geographical borders. Since then, the spread of the WWW has left many people asking whether in a few years the geographical boundaries will be completely irrelevant, and if they are, what will be left.

This leads to some fundamental questions as to what it will be like to exist on this earth when we all have access to the network. Things are changing very rapidly, and any doubts we have about the developed world being online are rapidly disappearing. Predictions of the effect on society range from the horrific to the idyllic, and sometimes the difference between the those two is a matter of point of view. I'll consider some worries about that far off future, but first let's think abut the next few years.

The Web has rushed through the United States like a forest fire in a way it cannot in Europe. The heat of excitement in the content already on the web fuels the pouring of greater and greater resources into providing more content, more facilities, better organization and cataloging. The spread of servers fuels the spread of the clients and vice-versa, as each morsel of information, no matter how esoteric, is available to anyone who may be interested in it throughout that largely mono-language monoculture which is, (in broad oversimplification typical of a European!), the United States. There is an incredible economy of scale.

Europe, however has firebreaks between its cultures. The vicious circle of growing server deployment and readership exists, but it happens slower. If you put up a web page on, say, the local breeding grounds of the gerbil, you will attract gerbil fanciers only of your on language. If you start a discussion on the delights of Real Ale, the wine-drinkers further south won't contribute to your audience. Add to this the historical fact that the internet was invented in the US, and that in European states in the past an emphasis on an independent set of protocols has manacled the development of communications; it is not surprising that Europe seems to be following the US a few years behind.

That is not to say there are not a lot of things which European states can do individually and collectively to make things happen faster. Allowing a stiff open competition for getting internet packets into and out of people's homes as cheaply and efficiently as possible is part of it. Telecommunication monopolies cannot fall too soon. Although in the US the market seems to be set for funding the long distance links indirectly through individual subscriptions, there is no evidence to me that this is working for international traffic. When people ask whether there is a possibility that the internet effectively grind to a halt under the load, I answer that it already has. The transatlantic public internet is overloaded to an appalling extent: access is slow to unusable. In the long term, many argue that the problem of bandwidth is in the "last mile", from the nearest exchange (sorry, the nearest internet router) to your home. In the short term, though, I am quite happy to browse at 28.8kB if only my share of the long distance links can keep up. For Europe as an entity to hang together in the net, it must have good international links within and to the US. If market forces are not paying for this, then as a non-expert in telecommunications policy I can only conclude that it is up to the governments to step in and fix it. Bandwidth is one of the simpler things to fix.

If all the saturated international links were suddenly to be upgraded to ten times there bandwidth, I am sure they would be saturated again the moment folks found out about it. There is a lot of potential use of the web now which is just abandoned because it is so excruciatingly slow. The moment that the time it takes to follow a hypertext link is again more like a second or two, use will soar again. And if you believe Europe getting on line, this is what you are after.

Yes, a lot of people in Europe mostly browse the US, as that is where most of the content is. If anyone should think that slowing down transatlantic traffic is a solution to this, let them think again. To do so would be to give up and imagine that, once Europe has caught on, it will have nothing to say for itself, nothing to create, no culture to put across and celebrate. If you think that, stop reading, stop thinking.

So in Europe we have a challenge to communicate more between cultures. The great thing, of course, is that if one does go to the effort of bridging the gaps, the rewards are so much greater. The web removes the geographical impediment to mixing – but will the cultural barriers survive? Will we end up with a global monoculture, or a mix of meeting places of unlimited variety?

...........................................

European countries have been studying the pros and cons of sharing or protecting their culture for a long time before the Web came along. We have lost Cornish, but there is an attempt to preserve French by law. It is reasonable to be worried. Most of the structure of our society has been based on geographical boundaries of one sort or another. The stability of kingdoms has been determined by geographical constraints such as the time it takes to gather troops, or ride to the capital with a warning of incoming invasion. A huge amount of the hierarchical structure of or world is based on the two dimensional space which the Web is pulling from under our feet. However, my observation of that early internet culture was that, geography-free though it was, it ended up dividing into smaller and smaller enclaves of person specific interest.

In fact, there are two equally frightening prospects. On the one hand is the descent to the lowest common denominator, often represented by US fast food and cartoons, with the loss all that is rich and diverse. On the other, is an extreme of diversity. When anyone can filter mail so that they can read only messages from people who think the same weird things as themselves, and when what they read on the Web they only find by following links from sites of the same strange cult, will they dig themselves into a cultural pothole so deep and so steep that when eventually they physically meet a real person on the street, the lack of common understanding will be total, and the only form of communication left will be to shoot them?

The key to avoiding each of these is in our own individual behavior. The universality of the web includes the fact that the information space can represent anything from ones personal private jottings to a polished global publication. We as people can, with or without the web, interact on all scale. We are like pixels in a mandelbrot set: we are part of the detail on every level of scale. By being involved on every level, we ourselves form the ties which weave the levels together into a sort of consistency, balancing the homogeneity and the heterogeneity, the harmony and the diversity. We can be involved on a personal, family, town, corporate, state, national, union, and international levels. Culture exists at all levels, and we should give it a weighted balanced respect at each level. In Europe, there is perhaps one more level of culture. Our job of maintaining that balance is just that much more difficult, and that much more rewarding.

It's remarkable, I think, that two people who understand the net and the web from their origin, and are both scientists with a strong technical background, agree on one fundamental point: the issues, problems and solutions are not essentially technical. They human and cultural.

 

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4. Is the internet a danger for companies? (Roberto Venturini)

Nearly a year ago, in issue 21 of this newsletter, I quoted some comments by Roberto Venturini about why companies are uncomfortable with the internet. He updated his views in his speech at the Internet Marketing Workshop organized by the Italian Federation of Industry on March 20-21, 1999 (a collection of materials presented in that meeting, in Italian, is available for download on the mktg.it website).

He isn't a world-famous scientist or a "father" of the net. But he is a "voice from the trenches" – a young executive dealing daily with the practical problems of companies trying to operate on the internet, in an "underdeveloped" market like Italy; and he has the guts and honesty to report the realities of his experience. Here are some of his comments.

It's difficult to take a snapshot of a fast-moving, fast-changing phenomenon like the internet. This inherent complexity is made even more complex by messy media coverage, inflicting on the public an overload of sensationalism and rarely providing simple and factual information. The picture is blurred and confusing, especially for companies that need to understand how this new tool can be an opportunity, a risk or an indifferent factor for their business.
...........................................

The internet can soon become a key tool for companies, because of its potential and its efficiency. On the other hand.... the development of marketing and communication activities on the net can be destabilizing.

If we set up a neutral institutional site or an online catalog (and don't tell anyone) we can be quite comfortable. We have no advantages – but no problems. Things are quite different if we develop some real action on the net. As soon as we begin to analyze the project we find a host of collateral effects on our way of doing business and organizing our company. .....

The language, the techniques, the approach to our customers in traditional media are radically different from communication on the net. The expectations are different, the tools and the style are not the same. ...........................................

To use the internet effectively we must learn new skills and open our minds to a new vision.

If we plan to use the internet to promote our company and our products, our first problem is not how to organize a website. Our problem is how to make our target understand that we are there, where we are and above all why they should invest time and effort to come to us.

Online communication (as all communication) needs a sound strategic approach. The internet isn't a magic wand that allows us to do without the basic principles of marketing and communication.

If we are in the business-to-business market, our target is probably limited in number. If we manage to get in touch with the key people in the companies we want to reach, we must try to involve them and get into a dialogue with them. We need to open a two-way communication channel, open a door to feedback, listen and reply to their requests.

If we are in the business-to-consumer market, it's dangerous (and can have a negative impact) to close the feedback door, refuse interaction. If the real strength of the internet is building a relationship with the consumer, it doesn't make sense to operate on the net as we are in the habit of doing in traditional media.

[To communicate online] is to establish a two-way relationship with customers (or potential customers.)

Hence the opportunity (need) to integrate communication .... to develop communication, offers and solutions tailored to our customers' needs ... The internet makes all of this possible; but the project begins to become complex and to reflect on all of the company's marketing.

Being online, being interactive, generates new problems. We are giving our customers an opportunity to talk to us, to ask, to compare. By entering this environment we accelerate a process of new market dynamics and customer empowerment. ..... We need s strong base, not just of programming, technology or graphics, but above all of strategy in marketing, communication and company organization. ...........................................

Often only the crumbs of human resources and time are assigned to the internet. In a world where results are measured in the short term, the attention is focused on more familiar tools. ..... The internet is still perceived as an experiment, its potential is not understood and it's not perceived as a window of opportunity that, sooner or later, will close. It's the typical syndrome of "if none of my competitors are doing it that means that it's not worth doing".

If companies don't think it's important, they don't train their own management to understand this new world. Management will evaluate web marketing according to its experience with "traditional" media and probably won't understand the available opportunities. So we allow our competitors to move ahead of us with a tool that we don't want to understand, in a territory that we fail to control.

Now let's assume that, against all odds and a great deal of resistance, we've been able to push our project through. We're online. What if they come to see us? Simple. They enter our site. And our company is naked. ...........................................

An internet site can have infinite depth and contain every possible piece of information related to our company, our products, our services. It it's shallow, visitors will wonder why. Do we have nothing to say? Do we have something to hide? Can't we do any better? Don't we want people to interact with us? Why? If this is the way they feel, we can be in serious trouble. Especially if our competitors have useful content online (such as prices, technical information, customer service).

We should either be on the internet well – or maybe not at all. Setting up a "token site" can do more harm than good.

To be online "well" is to provide high content service to customers/users. Give information in depth. Offer customized solutions. Give answers. Present our company and our products thoroughly. Satisfy needs and desires. Provide an incentive for purchase.

Traditional distinctions are blurred; a website is a place for direct marketing as well as sales promotion, public relations, corporate and product communication, pre-sale and post-sale service. Everything is contiguous and continuous, there is a constant overlapping of marketing and communication variables. It's not like the things with which we are so comfortably familiar – advertising or a catalog.

It needs a relevant investment of sound thinking and the integration of several different competencies.

An internet project cannot be the work of one person.. It needs teamwork. ..... That's an added complication: we need to involve people from different departments, with different roles, responsibilities and know-how. ..... Another problem is the lack of net experience in our company. If we want the different people to contribute (or al least not be bottlenecks) we should give internet access to everyone, encourage people to use it, provide specific training (on net marketing rather than technology). .....

Resistance is to be expected within the company – opposition to change.

If we want to operate seriously on the net we must interfere with company structure, organization of work, responsibilities and competencies. (In the case of electronic commerce, we must also integrate sales systems and logistics into the process.)

Even when we have been able to bring together the company's operations and, with considerable effort, set up a site, we need to update it. So we must re-involve everyone again, make people understand that it's an ongoing project, a never-ending task, a continuing commitment of time and resources.

It's a taxing process. An added burden while competition is fierce – there are more and more things to be done with fewer people, money, time and resources to manage our business.

To adopt the internet as a strategic tools for our marketing we need to change structures, procedures and philosophies. Break the status quo. Give up "business as usual". ...........................................

After all, the real problem for companies may not be adopting or not the internet, but more broadly accepting innovation and adapting to new market conditions. It would be useful, in any case, to re-think the company. With or without new communication media, there is a need for leaner organization systems, greater flexibility, faster response to a changing environment. ...........................................

So... is the internet a danger for companies?

It can be seen as dangerous because it forces the company to re-think its way of doing business, of being on the market, of being competitive. In one word, to change.

The real danger, however, is that competitors may learn to use the internet effectively before we do. If (as many of us think) the internet will become a relevant reality, many companies that are successful today could be embarrassed tomorrow. An inability to adapt may mark the decline of several leaders; they could find their turf suddenly invaded by innovative outsiders.

Change is uncomfortable. Adopting the internet as a strategic tool is a difficult task – and a risk. But in the next five years meeting this challenge could mark the difference, for many companies, between growth and decline.

 

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loghino.gif (1071 byte) 5. An update on figures

There is no radical change in hostcount trends. Here is the situation at the end of the first quarter for the 22 countries in the Europe-Mediterranean area that have over 50,000 internet hosts (data for March as reported by RIPE – Réseaux IP Européens – on April 8).

  Internet hosts
March 1999		 % change
from February		 % change from
December 1998		 Hosts per 1000
inhabitants
Germany 1,535,136 + 1.0 + 5.9 18.7
United Kingdom 1,512,123 = + 5.0 25.7
Netherlands 681,471 + 10.8 + 8.9 43.7
France 562,914 + 13.8 + 10.1 9.7
Finland 467,207 (- 0.2) + 1.7 91.1
Sweden 420,574 + 2.0 + 10.8 47.4
Italy 359,387 (- 15.8) (- 7.0) 6.3
Norway 330,793 + 0.6 + 3.7 75.4
Spain 316,879 + 5.2 + 3.4 8.1
Denmark 312,072 + 0.5 + 4.6 59.7
Belgium 299,314 + 31.5 + 43.5 29.6
Switzerland 258,162 (- 1.2) + 5.2 36.6
Russia 212,328 + 1.8 + 16.2 1.4
Austria 175,339 + 3.2 + 1.6 18.3
Poland 152,212 + 2.9 + 16.6 4.0
Israel 121,711 + 1.7 + 6.2 21.6
Hungary 100,173 (- 1.3) + 4.4 9.9
Czech Republic 92,588 + 5.5 + 7.1 9.0
Portugal 62,262 + 4.1 + 11.7 6.3
Ireland 61,118 = + 9.4 17.0
Greece 56,239 + 4.3 + 12.7 5.4
Turkey 55,212 + 1.3 + 13.0 0.9
European Union 6,811,662 + 2.7 + 6.2 18.6
Europe-Mediterranean 8,428,408 + 2.7 + 7.1 12.0

While the general picture shows no major changes, there are (once again) relevant shifts in the situations of individual countries. The two "big" countries, Germany and the UK, have relatively slow growth in this period, while several Eastern European countries are remarkably faster than the European average.

Here is an update of the quarterly graph for the five largest countries in the European Union.

 

Internet hosts in 5 European countries – 1996-1999

Source: RIPE (Réseaux IP Européens) – quarterly data – number in thousands>

Note: in this case there is no adjustment for minitel in France.

 

The most remarkable fact is the lack of major changes over an extended period (short-term ups-and-downs can often be just technical adjustments.) France is growing faster than the other "large" countries, but so far conversion from the minitel to the internet remains relatively slow. The UK, Italy and Spain grew faster than the European average in 1998, but were slower in the first quarter of this year.

 

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List of links

Some readers have pointed out that they print the text before they read it – so they can't use online links. For their convenience, here is a list of the links in this issue.

Between – ICT broker http://www.between.it
"Intelligent agents" and Uncomfortable with price http://gandalf.it/netmark/netmar28.htm#heading05
The eternal dilemma: price and quality http://gandalf.it/offline/off11_en.htm
High tech – high touch http://gandalf.it/netmark/netmar32.htm#heading02
Vint Cerf interview http://gandalf.it/netmark/netmar27.htm#heading05
Computers, freedom and privacy convention http://cfp99.org
Europe and the US; Diversity and Harmony http://www.w3.org/People/Berners-Lee/1996/EUUS.html
Why companies are uncomfortable with the internet http://gandalf.it/netmark/netmar21.htm#heading04
Internet Marketing Workshop (in Italian) http://www.mktg.it
RIPE http://www.ripe.net/statistics/hostcount.html

 

 

 

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