Predictions for BTC Sectors in 2002

Automotive. Zero percent financing created a rally in November and December. In 2002, this either will continue, in which case marketers will have to target those drivers not yet enticed into the market, or it will be time for the manufacturers to pay the piper and retrench. In that case, marketers will have to meet high sales expectations without using the best incentive in years.

Not one manufacturer sells cars directly to consumers online. And only a few dealers do. Yet 62 percent of new-car buyers and 43 percent of used-car buyers visit 6.8 sites to do research and check prices before they make a purchase, according to J.D. Power and Associates, Agoura Hills, CA. Figuring out how to use the Net to target and influence buyers and to determine who actually sells cars to whom (the role of e-commerce) are high priority issues that will have to be resolved soon.

Either way, the surge in new-car sales will force dealers to dispose of a glut of newer used cars, and that will require savvy marketing to empty those lots while working against the financing clock. Targeting likely used-car buyers, offering gently used cars to convert new drivers into high-end and high-margin brands, and quickly liquidating inventories with an acceptable return on investment will be critical.

A fair amount of experimentation is going on to solve these problems or capitalize on these opportunities. The solutions inevitably will produce friction over who pays, who owns the customers and who gets what in return. Every major automobile company is struggling with its future vision of auto retailing and the role of independent dealers. Tradition, law, big money and big personalities all play a role. Manufacturers and dealers will be sorting out their relationship, what to do about customer relationship management, and how to build new, continuing revenue streams unlike anything previously done in the car business.

Emerging products like telematics (e.g., General Motors' OnStar or its competitors) and satellite radio, sold in new vehicles or retrofitted to cars already on the road, will be the test beds for the logical yet unproven notion that drivers will pay monthly fees for services to dealers and original equipment manufacturers. This will be a very interesting acquisition and retention challenge that could reshape the way consumers view and interact with car companies and dealers.

Pharmaceuticals. The direct-to-consumer imperative is reaching beyond the leading brands and the obvious therapeutic categories. There is no doubt that consumers can be educated and motivated to ask their doctors for specific medications.

The open questions are: Can you launch a DTC campaign without spending hundreds of millions of dollars? Can you spend less and yield a substantial ROI? And can you target and effectively communicate a message sufficient to motivate discrete patient populations not only to get a prescription but to consistently take the medications and comply with the prescribed regimes?

The big pharmaceutical firms traditionally have defaulted to print as their vehicle of choice even amid stunning case studies using television and direct response television. While every firm and every drug has a brochureware Web site, pharmaceutical firms, fearful of the Food and Drug Administration and consumer privacy issues, have not yet cracked the code on using the Web either to interact with patients and consumers or to address professional or even internal audiences. Compared with other business-to-consumer and business-to-business sectors, the use of extranets, intranets, e-mail, databases, Webcasts and online advertising by pharmaceutical companies is primitive. This should spell opportunity for marketers that understand the category and can devise programs to address these diverse audiences and concerns.

Financial services. Three areas in financial services should see significant marketing activity. The move toward online bill presentation and payment, a surge in account aggregation to present a single portfolio view, and the need to rebuild confidence in online trading should bring about new dollars and new assignments.

For several years banks, telephone companies, insurance carriers and others have fantasized about reducing costs and speeding payments via the Internet. Consumers also have imagined a world in which they could reduce their reliance on paper and avail themselves of businesslike electronic payment transfers, which would allow last-minute payments and finesse geographic or currency issues. The existing systems for online bill presentation and payment are awkward combinations of e-mail, printed-paper and reliance on the U.S. Postal Service. Providers like Checkfree and PayPal have established beachheads among consumers. But the real stumbling block has been in back-end electronic processing.

Recently, the tectonic plates have shifted under the banking system. A broad alliance of banks and financial institutions has agreed to common electronic protocols by participating in a network called Spectrum. This behind-the-scenes alliance promises to create networks able to process high volumes of purely electronic payments and transfers, much like ATM networks do. They will be invisible to consumers and invaluable to institutions. Soon individual banks and institutions will roll out branded bill payment programs and beat the drum about them as hard as they can.

Similarly, the technology of screen scrapping, initially introduced by Yodlee, has been widely adapted by a range of financial services providers promising a one-stop portfolio snapshot to consumers. In theory, once you see all your accounts and assets in one place, the site you use as a lens into your net worth gets first dibs on cross-selling and upselling you.

The benefits to sites are obvious. The benefit to consumers is obscure, though several significant financial services players are expected to mount acquisition or retention marketing campaigns using this promise. Success will turn on the ability to articulate and communicate the immediate benefit of putting all your eggs in one basket at a time when popular sentiment seems to favor dispensing assets to mitigate risk.

Online trading is in trouble. From a high of 144 domestic online brokers, several have failed, several have merged and several have been acquired. All are losing assets and wrestling to save profitable customers. A huge number of Americans hold equities and online accounts. As the tax man approaches, anxiety and sell-offs loom. The trick now is to get those people to stay online and trade.

Part of the problem has been the mixed performance of these sites. But generally the Internet bust has dashed the get-rich-quick hopes of a whole generation. Have you noticed that IPOs and stock tips are down significantly as party chatter topics? The task ahead will be to help the leaders (Schwab or E*Trade) re-emerge and restage brands in a world of altered expectations, and help the newly merged or newly reconstituted establish credibility and reach critical mass.

Education. The Internet has enormous promise as a tool for distance learning, job training and retraining, remedial education (GED) and a variety of corporate training and communications applications. In some ways, the surface has just been scratched.

The University of Phoenix pioneered online courses that lead to a degree. It now has hundreds of competitors. Columbia has built a coalition of schools and cultural institutions under the Fathom brand name, which offers Columbia the chance to create a for-profit subsidiary offering quality courses without granting an online Columbia degree.

Other universities are all over the map. Some researchers think that the market for specific job-related courses (e.g., HVAC or computer repair) is much larger than graduate or undergraduate degrees. In either case, content suppliers will need marketing help to design easy-to-use interfaces, to repurpose or adapt courses for electronic media, and to attract and retain students.

Real estate. Realtors' monopoly stranglehold on listings is ending. The Internet facilitates virtual house tours, careful long-distance viewing of property details, and eliminates much of the extraneous yakking done by real estate agents. It can dramatically improve the efficiency of house hunting, mortgage shopping and finding all the details and providers associated with buying or selling a house.

And though some confusion remains among networks like Century 21, affiliated and unaffiliated local real estate firms about who will provide services, connectivity, leads and back-end services, the opportunity to efficiently serve home buyers and sellers with decreasing costs and increasing margins should be sufficient to motivate online development and marketing activity. Striking the right balance between investment in complicated technology and expediting house sales is a challenge sufficient to engage smart marketers.

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