Hi-Tech, Hi-Touch Database Marketing for 1999

NEW YORK — 1999 will be the year of network database marketing on the Internet, said author Larry Chase at a meeting of the Silicon Alley Breakfast Club here last week.

“Hi-tech, hi-touch” database marketing practices — as in the way online bookseller Amazon.com uses collaborative filtering technology to recommend books based on like-minded readers' purchases — will be the “cost of entry for e-commerce sites,” said the author of Essential Business Tactics for the Net.

“The question is: Who will pay for it?” said Chase to about 200 Internet industry representatives at the Marriott Marquis here.

As marketers collect more information from Internet consumers, Net users will become so “infobeaten up” that they may pay to screen merchants' pitches, Chase said. Or database marketing technology like collaborative filtering may become a necessary loss leader for online merchants, he warned.

Amazon.com was also the subject of a spirited exchange between the two other panelists: Michael Wolff, author of Internet tell-all Burn Rate, and Chuck Martin, futurist and author of Digital Estate.

Martin laid the foundation for the debate by asserting that the Internet is “totally transforming the value chain” for business by forcing the integration of the interactive and traditional arms of business.

“Companies in the future can't live in just one world,” he said.

Rather than being organized around products and services, companies will begin to be organized around customers, said Martin. They will get more information from customers so they can recommend purchases, he said.

“Companies like Amazon.com aren't about buying books. They're about transforming the way people buy things,” said Martin. “Upper management doesn't get this.”

Wolff, however, played the part of curmudgeon to Martin's futurist hype.

“In this industry, things are changing fast because they don't work,” said Wolff. “I agree that people are saying 'how can this change my business?' … I don't believe this is a fundamental change [in the way business is done]. Amazon is in the book business.”

“They also sell books,” responded Martin.

“They only sell books,” retorted Wolff.

Chase asserted that the Internet is, however, having a deep effect on media consumption. “I think it's having a profound impact on share of mind,” said Chase, adding “that's a zero-sum game.”

Martin picked up the debate again with Wolff. “Life as we know it is not going to go away. Stores aren't going to go away. We're just integrating the interactive and the traditional,” said Martin.

“My position is that the Internet goes away because it becomes subsumed by ordinary life and we stop thinking of Amazon.com as an Internet company,” said Wolff.

Meanwhile, Martin said that marketers will hold the Internet to a much higher standard of measurement than other media, simply because they can.

“We're going to see much more results-oriented advertising,” he said.

Chase predicted that the Internet will drive cost-per-thousand impression rates down in other media as advertisers realize they can buy exposure to the same thousand people online for less.

Also, said Chase, the Internet industry in 1999 will see many mergers and acquisitions “like two drunks holding each other up … I think a lot of companies will merge and disappear.”

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