The Benefits of Online Borders
But the harsh reality is that geography does matter and is extremely important to an Internet business's success. Where consumers live determines important, everyday matters such as what language they speak, what content they can receive, what movies they can watch, what sports they can see live, what games they can play and what products they can purchase. More so than age, gender and income level, the location of a Web user can dramatically alter the type of Internet content he should receive.
Additionally, geography has a bearing on the way e-commerce legally can be conducted. Every country has different laws governing commerce, and those laws are being found to be just as enforceable in the online business world as they are offline. New technologies in the field of Internet content geo-targeting have been developed to enable e-businesses to reach the right consumer with the proper content in a noninvasive fashion and in accordance with the laws of differing countries. Here are a few of the myths that geo-targeting technologies are shattering:
Myth No. 1: Internet businesses are not subject to regional and local laws.
Buy anything from anywhere; obtain information about anything - a consumer's utopia but a government's nightmare. Governments enact laws to protect, in their viewpoint, their citizens' best interests. With Internet businesses, citizens are able knowingly or unknowingly to bypass regional laws because many Internet businesses were not distinguishing who was surfing their site. Europe and the United States are tackling these issues.
In Europe, there have been several court decisions regarding the legality of distributing Nazi memorabilia and content that affect Internet businesses.
In France, it is illegal for a French citizen to sell or purchase Nazi memorabilia on the Internet, and last fall, Yahoo France was ordered by the courts to ban U.S. Web sites that sold those products. But French citizens were able to bypass this ruling by logging onto Yahoo North America and, thus, were able to purchase Nazi memorabilia. The courts then took the ruling one step further and ruled that Yahoo must restrict French citizens' access to its North American site.
In December, The Bundesgerichtshof, Germany's highest court of civil affairs, ruled that the country's laws against Nazi propaganda could be applied to Web sites operating outside Germany, and a court in Italy made a similar decision.
It is clear that a law-abiding Internet business needs to know where its customers live. But how? Ask a lot of personal questions and take a chance that the user is being truthful. That's one way, but a noninvasive way would be through geo-targeting technology.
With geo-targeting technology, Internet businesses are able to identify the origin of a Web user by country, province and even city. The technology is constructed from a database of Internet protocol addresses. In the same way a Social Security number provides no demographic information, IP addresses reveal only country, province and city information.
Myth No. 2: Geography doesn't matter.
Legal issues aside, geography does matter to the entertainment industry, and the entertainment industry is exploring the Internet as an additional distribution channel for music, movies, sports and syndication. With the advent of broadband, the capabilities of streaming media joined with increasing consumer demand have created an environment where distributing movies and conducting simulcasts are now a reality.
Streaming movies over the Internet have opened a new channel for movie distribution. Because movies are released by specific cities or regions, the online providers need to monitor the location of the viewer to avoid violating distribution agreements and avoid the same pain that Napster has endured.
Not only can geo-targeting technology provide online providers of streaming media the ability to adhere to geographically based agreements, but it also enhances pay-per-view on the Net.
Myth No. 3: Consumers don't care about geography.
We've talked about third parties placing borders on the Internet, but what about consumers? Without knowing it, placing borders on the Internet will enhance consumers' surfing experiences because content can be geared to the individual.
The goal of any Internet business is to retain customers, and according to the Boston Consulting Group, the average cost for acquiring a new Internet customer was $71 in third quarter of 2000. And many times, a potential customer makes a go or no-go decision on a Web site during the first visit.
With geo-targeting technology, an international firm could set up its Web site so that a Web user logging in from Spain will view content written in Spanish while a user from Australia will see British English.
Geo-targeting technology identifies an IP address in milliseconds. A user never knows that the address is being analyzed and that content is being prepared and served based on geography. The first time a Web user opens a site, the content can be customized and the Internet business never has to ask a single question of the user. The user sitting in Florida never has to see an ad for a parka again.
One's first reaction to borders on the Internet is to think restrictively, but in reality borders can add new dimensions to Internet businesses. Customized streaming media and content based on language, products and culture can now be achieved through geo-targeting technology.
Though regulations are starting to evolve that will change the way consumers and businesses interact on the Internet, many of these rules can be adhered to by knowing one fact about your patrons: where they reside.
Geo-targeting technology is a noninvasive and privacy-protective technique to determine the country, state and city of your online patrons with 99 percent accuracy in some cases. It's transparent to the consumer, and, as a result, Internet businesses can target content from the first visit, greatly enhancing the customer experience.