Internet’s Down, but Far From Out

Just as quickly as the media hyped the e-commerce space in 2000, they have turned it into anti-hype with a vengeance. Everywhere you look it’s gloom and doom, causing some people to think that the Internet is going away, that they do not have to pay attention to it. Instead of dwelling on the negatives, it is important to focus on the positives and take a look at the future.

The Internet will have just as big of an effect on the world as it did before its current problems. Internet households, usage and shopping continue to rise. The Internet continues to change the way business is done in the consumer and business-to-business markets and in industry. There is no question that the Internet creates the most powerful marketing medium ever in reach, targeting, speed, interactivity and so many other ways.

Companies continue to discover its power, and I think online direct marketing eventually will be larger than offline direct marketing. Online marketing will explode over the next 10 years. One reason is increased postage rates, which will be due in part to a continued decrease in direct mail usage as e-mail produces better results. Continued rate increases by the postal service combined with increasing costs of paper will only help to accelerate the shift from traditional direct marketing spending to the Internet.

The loss of dot-com spending will only pause online marketing’s growth. In the short term, a lack of funding has caused pure-play Internet companies to pull way back on spending. Because of the stock market’s adjustments, venture capital firms are much more discriminating and are funding fewer companies. In the end, there will be fewer companies competing for a piece of the pie, which will be just as big as it always was.

As marketers continue to scrutinize offline budgets, they will slice away inefficient spending and pack the savings into online marketing programs. Last year’s holiday success of the Toys ‘R’ Us/Amazon partnership is a great example of an offline brand benefiting from the value of online marketing.

However, traditional marketers will continue to sit on the sidelines and take a wait-and-see approach. They will need concrete evidence of what works and what does not. Increasing online spending comes down to marketers’ ability to use online advertising more effectively than offline media. According to a recent Forrester Research study, while online marketing holds distinct promise, increased spending by traditional marketers can be dependent on three factors: overcoming the learning curve, seeing success stories by others in their industry and using more effective targeting techniques.

The study also acknowledges that companies that sell high-consideration products or services such as autos and financial services have been the early adopters and will continue to lead the way. More traditional, well-established companies probably will jump in the next year. Look for companies that market low-consideration products such as soft drinks and household items to take online marketing more seriously next year and be the last segment to join in.

Maybe the above study will hold true, but that does not mean that the adoption process will not happen faster. While more targeted marketing techniques will take time to fully develop, one area that must be focused on now is exceptional client service. Establishing your company as a leader in client service will make it easier for traditional marketers to make the move online.

Traditional marketers have a much better grasp of Internet marketing terminology and products. Moving forward, however, it is important for online marketers to realize that the way traditional marketers understand the 40/40/20 rule is as follows: 40 percent is the offer, 40 percent is list and 20 percent is the creative.

I think this breakdown still will apply online and in that order. With all the rich media techniques available, many online marketers are placing more emphasis on the creative without giving as much consideration to the offer and list, which, in the end, results in lower conversion rates.

The Internet still will change everything. This remains the fastest-growing, greatest medium ever developed, and its effect on our society will be extraordinary despite the short-term market jitters. Don’t believe the anti-hype.

• Tim Choate is chairman/CEO of Aptimus Inc., Seattle, an online direct marketing network. Reach him at [email protected]

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