Dr. U. N. Umesh
Published on June 26, 2003
Digital Web: You’ll be talking about the future of e-marketing at the WebVisions 2003 conference. But before we get to the future, let’s talk about the past. How has e-marketing evolved over the past ten years?
Dr. U. N. Umesh: There was virtually no e-marketing ten years ago. The early users of the Internet were mostly technically proficient people who used it for narrow purposes. Marketers did not consider it as an important medium because its use was not widespread among the general population.
Internet usage skyrocketed in the mid-nineties and became commonplace particularly with the advent of the browser. E-marketers saw the opportunity to reach millions of people with great ease. Suddenly, marketers came to the realization that Internet users were more numerous than readers of TIME or Newsweek, and there was no lead-time needed to reach out through this medium. Viral marketing became a buzzword—the word of mouth effect of the Internet that helped to spread ideas and opinions rapidly could be harnessed by marketers to achieve tremendous success for a brand or firm.
The Internet usage profile was very appealing to marketers in the mid-nineties, in that most Internet users were well-educated persons with relatively high income, and classified as innovators rather than imitators.
Initially, Internet users were willing to look at ads, try out e-commerce, and fill out forms for the sheer novelty of the activity. By the latter part of the nineties, almost everyone seemed to be in agreement that the Internet was the ideal marketing medium and such a superior dimension compared to all others. The dot-com bubble might have been a direct result of such thinking.
Entrepreneurial activity on the Internet increased exponentially. Even if many of these entrepreneurs are no longer in business, the experience they have gained will help them restart their entrepreneurial activities when new opportunities emerge in the future. Hence, they are to be viewed as latent assets, who will benefit the economy in the future.
It turned out that the novelty of shopping online waned with repeated purchases, and users wanted low prices just as much as the Saturday afternoon hordes of mall shoppers. Most of us got tired of clicking on the ad that said “Make $100 for ten minutes of your time,” knowing that such promises had impossible rules in fine print.
E-marketers had to get back to doing what conventional marketers had honed to a fine skill over several decades—serving traditional markets. Acquisition cost, or the cost of getting one successful Internet customer, became the new mantra. AOL became a definite success by being able to lower its acquisition cost of customers as compared to well-backed industry stalwarts such as Prodigy and CompuServe. Others such as Furniture.com had very high acquisition costs and were forced to shut down. Soon, the realization that acquisition costs must be lowered resulted in massive promotional campaigns, including advertising on many different shows on national television, including the much talked about Super Bowl. But acquisition costs remained stubbornly high and some stock analysts began to doubt if the Internet could ever be a profitable medium.
Within a short duration of months rather than years, the Internet produced a spectacular meltdown. Firms shut down in droves, Internet ad prices crashed, and many Internet professionals became unemployed. E-marketers began to wonder if the Internet and marketing were meant to be paired. Over time, in the early part of the 21st century, some marketing strategies were evidently successful as seen by the sustaining power of the dot-com survivors.
Bootstrapping and using low-cost but highly effective marketing strategies appeared to provide a survival option for some desperate dot-coms. Others took lessons from successful traditional marketing. For instance, Babcock & Jenkins, a Portland, Oregon, marketing firm, found that precise targeting of a customer segment helped to lower costs and reach the most desirable customers. The firm then used a database of past marketing strategies it had developed using the results of past campaigns in many industries to optimize the features of the current marketing campaign that best fit the target segment.
Successful e-marketing in the future is going to be determined by a firm’s ability to determine the
- needs of the customer even when the customer cannot fully articulate these needs,
- design the products and services for these needs, and
- create a marketing mix and deliver it to the target segments of interest in a cost effective way.
Digital Web: To some, e-marketing is a synonym of spam. What is the difference?
UU: Spam is unsolicited advertising in e-mail. To me, e-marketing and spam are really antonyms. To appreciate the difference, one needs to first distinguish sales from marketing.
A good salesman can sell most things just by tremendous effort. Great marketing requires finding out what someone truly needs and producing the product and distributing it at the appropriate price and channel.
True marketing geniuses in recent years have uncovered consumer’s hidden needs and used technology to satisfy those needs. Bill Gates of Microsoft and Steve Jobs of Apple Computers can be categorized in this group.
Spam is a broad-based, undifferentiated, and sometimes hostile approach to achieving sales. By sending out millions of messages at very low cost that achieves a very low, but non-zero, success rate, spammers are able to continue their business profitably. The vast majority of customers do not like spam, and some of this irritation is bound to be reflected on the business promoted in the spam. A firm can achieve positive profits and sales leads with spam, but cannot build a national brand with spam.
This lack of branding, or a negative outlook towards the brand from non-responders, will result in poor long-term sales and problematic relations with the outside world. Spammers are the used-car salesmen of the Internet world. There are no reputable brands such as Microsoft and Sony in the used-car field.
Digital Web: How has the increased problem of spam affected e-marketers?
UU: E-marketing is affected to some extent by spam. The main unfortunate side effect of spam has been the general suspicion that Internet users attach to every e-mail they receive.
Spam filters sometimes curtail genuine e-mail. Some potential customers delete e-mails automatically if the subject line or the from address is not immediately recognized. Having said this, Internet e-mail is but one component of e-marketing.
Regular postal mail used as introduction to companies or information on Web sites, brochures that are downloadable from a company Web site, surveying of customers, and sponsored advertising for improved search engine placement are all components of e-marketing. These are not affected by spam to the same extent as e-mail communication.
Spam is an irritation the same way pollution and traffic jams are an irritation while driving. Vehicles will not disappear but smog and traffic will be ultimately controlled. Similarly spam filters, legal actions, and consumer activism will help to reduce spam but might not end it entirely. So far, spammers have not paid a heavy price, but this might change if, for instance, Internet activists overload the spammer with millions of return e-mail with heavy attachments, or send many confusing e-mails to the firm whose products are being promoted by the spam. There are many laws that have either passed or are being considered that will discourage spamming.
Digital Web: What about Google? How has that search engine affected online marketing initiatives?
UU: Google has helped the Internet search process and benefited all players in the Internet field, particularly marketers. Google has been able to help the average Internet user find relevant information and Web sites.
When someone finds only worthless information, the person’s propensity to use the Internet and engage in e-commerce comes down. The process of finding repeated irrelevant information can cause someone to give up on the Internet altogether as a business medium.
E-marketing is all about giving consumers useful information effectively, because consumers are constantly seeking information. If customers use Google to successfully find information, and sometimes transact business on the Internet, businesses will use the Internet to reach out to current and potential customers. Increased Internet usage, and the increased faith in the Internet to provide relevant information, benefits all Internet stakeholders including Google’s competitors.
Digital Web: What are some common mistakes?
UU: The common mistake in the initial years was the belief that an Internet user was so enamored with the uniqueness of the medium that a purchase would result even if traditional yardsticks such as price and service were left out. Today, every survey indicates that shoppers want value on the Internet, just as they want value elsewhere.
Many real needs exist but consumers and firms may not be willing to pay for them. Successful marketing requires both the willingness and ability to exchange goods and services for payment. The free model of the Internet is no longer the model. However, extracting payment for something that can be costly to develop, such as updated information, cannot always be done effectively.
Needs are changing rapidly. Wireless connectivity is increasing rapidly with a possible concomitant fall in wired Internet usage. Not recognizing this and adjusting e-marketing to wireless devices could result in problems.
Excessive graphics is always an issue even with increasing connectivity speeds. Web designers, graphic artists, and marketing managers have large screens and high-speed connections, and they sometimes assume everyone else has access to the same features. Unfortunately, a majority of users do not have high-speed connections. You could dub this the Detroit fallacy. Many U.S. automobile industry executives did not take the Japanese imports seriously in the seventies and early eighties because all around them people drove American cars and liked them, too.
Product orientation rather than market orientation is a common problem in both offline and online marketing. Too many Internet start-ups focus on the wonderful product idea that they have and spend their seed investment putting a lot of features on the product. They are more concerned about Java and XML rather than to see if enough people will want to buy it, how best to distribute the product, bundle it, and change features if needed.
Digital Web: Because the Web is not a mass medium like television, is it difficult to get a message out on it?
UU: The Web can be used to target messages effectively to the right segment at the right time. Television is good for a mass marketed product where most viewers of a show are potential and likely customers of a product. Too many products do not fit this description. Besides, two customers watching the same ad on television may react differently; only the Web can target the ad and fine tune the message to best suit the individual or segment.
The TV has the advantage of getting a significant part of the national population watching a particular show at a particular time. Web-based promotion can be made to reach just as many people by using multiple portals or alternative methods to expand reach.
Digital Web: Has the customers’ comfort with the medium affected e-marketing strategies?
UU: Yes. The first step was the comfort with basic technology of the Internet. It took many users some time and effort getting used to logging on, downloading, searching, and accessing programs. As they became comfortable with the technology, e-marketers could reach out to them from a product exposure standpoint.
Gradually users became comfortable with the concept of ordering online and waiting for the product to show up after some time. Some consumers are still not comfortable with this concept and prefer to get products immediately at the retail store. Their comfort with this process will change gradually over the years and decades to encompass the entire population. In some countries, where the physical delivery of products is unreliable, e-commerce will have difficulty taking off.
The comfort with security is a more serious problem. Those who do not shop online mention lack of security and privacy as the single biggest impediment to their embracing e-commerce. The challenge for e-marketers is to convince the general population and firms that all transactions and information are secure. More work is clearly needed here to expand the Internet’s use to its full potential.
Digital Web: Does a company need a big budget, or can smaller companies benefit, too?
UU: All companies can benefit from e-marketing. The Internet was viewed as a great leveler where the firm could communicate directly with the customer without the need to work with channel members. This promise, if properly exploited, could be used by small companies just as effectively as by large companies.
For small companies, keeping focused on a niche or a target segment is very important. Equally important is the responsiveness to the customer. An e-mail request from a customer should be responded to as immediately as possible, thus leveraging the power of the Internet.
A small firm should have an easy way to update Web sites frequently. The firm should keep the site simple so that every minor change does not require enormous testing to make sure that it is readable with every browser version and monitor setting. But small businesses should realize that e-marketing implies serious business. While the Saturday bridge game with the retired neighbors can be postponed to the subsequent week or even indefinitely, lack of responsiveness on the Web is viewed as a signal of marketing incompetence.
E-marketing requires a close working relationship between the technical and marketing staffs, and this is not always evident at some of these large firms.
Digital Web: What are some key ways to produce a successful e-marketing campaign?
UU: There are a few important rules.
- Combine online marketing efforts with offline marketing efforts so that they can build synergy. The aim is to build a positive image for a brand that can provide long-term returns.
- Keep in mind that reading off a screen continues to be more of strain than reading a Sunday newspaper on a couch. Clarity and keeping text to a minimum are always useful.
- Most people, including well-educated people, are uncomfortable doing technical procedures on the computer even if they sound simple. AOL paid close attention during its fast-growth days in keeping its sign-up system simple for new users.
- Find out exactly what someone wants and target a message that is fitting. Personalize messages.
- If possible, personalize products by tying the Internet with modern, flexible manufacturing techniques.
- Offer information that the customer actually wants to receive and is looking for actively.
- Tie-in Web marketing with effective service.
- Calculate acquisition cost of getting a new customer. Make sure you account for customers obtained outside the Web as a result of online marketing activities.
- Use the Web to get information from the customers rather than only to send messages to the customers.
Digital Web: Steve Hayden (best-known as the creator of Apple’s “1984” commercial) wrote in the May issue of Wired that consumers are overloaded by advertising and suggested creating better ads was the solution. What’s the best strategy for e-marketers to succeed in the future?
UU: Effective e-marketing strategies will change with technologies in future. As more and more of us get high-speed connections, rich media text will become more commonplace and effective. As wireless proliferates, small ads to match the small screen of most wireless needs should become the norm.
However, the basic principle will remain that ads should provide information that the user needs. If most people receive ads that they need, they will eagerly await these ads, extract information they are looking for, and improve their personal and professional efficiency. However, that is an ideal world.
On a broader scale, the challenge for the e-marketers is to target in on the needs of individual customers and develop products and services most suited for them and deliver it to them in a cost effective way. These steps will require constant monitoring of customers and responding quickly.
Yes, e-marketers can save the world and make it a better place to live!
Craig Saila has been working the Web since 1996, and is now a Web producer for Bell Globemedia’s financial sites, including Globeinvestor. He’s worked in the past with the Ontario Science Centre’s Digital Media Publications group, and as an associate producer at one of Canada’s biggest news sites, CANOE. Throughout his work, he’s divided his time between client-side development and online journalism—dual interests which are apparent at his site, saila.com.