The Internet shakeout has begun. Falling stock prices, rumors that executives are going back to the old economy, Wall Street analysts finally asking about the return on investment on an e-commerce customer – it had to happen.
I am relieved. Living with a bubble is stressful. We know it’s going to pop, but we get crazy trying to figure out when. A dose of reality makes a direct marketer glad. The hype lingers, however, and I want to take a crack at a couple of sources of Internet frenzy that I think need a further dose of reality.
First, there’s the focus on one-to-one marketing. I know it’s cool, it’s correct, it’s even a good idea. My concern is that it’s also impossible.
The notion of treating each customer differently, according to his needs and preferences, is unassailable. It’s what every good salesman has ever done since the beginning of time. And with the arrival of the Internet, the chances increased dramatically that a direct marketer could profitably mimic the power of face-to-face selling through individual customization and personalization.
But it only works if the data is available and accurate. And it’s only ever going to work with our current customers, who have given us a lot of information about their needs.
A misunderstanding has arisen around applying these techniques to prospects. We will never have the data to do it, not in an age of permission marketing. I worry that people who have glommed onto the promise of one-to-one marketing expect it to be a marketing tool as well as a sales technique. They’re going to be disappointed.
Next, there are banner ads. Isn’t it amazing how the landscape has shifted in only a couple of months? The billboards of cyberspace are facing reality. As space inventory continues to grow and CPMs fall, the pressure to evaluate banner performance based on ROI can only increase.
That’s good, but there’s still plenty of hype in the banner biz. No one mentions that cookie-based profiling doesn’t provide the lift to justify its cost. And some people still are convinced that if click-through rates fall, the best solution is to throw more money at dancing creatives that imitate television.
I take comfort in the rise of ROI-driven companies that offer cost-per-click or cost-per-lead services. They’re helping us mend the heartbreak.
Finally, there’s the personal risk of the Internet. Part of this involves stock prices. Plenty of investors are feeling that pain. Part of it is job risk, however. The lure of the Internet has been irresistible, but the media focus on instant billionaires in Silicon Valley has masked the reality that most of these young companies are struggling. They are running out of cash. Their business models are not being proven in the marketplace. And worst of all, they are badly managed and horrible places to work. So direct marketers beware. Look beyond the hype to save your sanity.
It’s not all hype. After all, the Internet is the greatest direct marketing medium the world has ever seen. It’s the greatest communications tool ever. And we are the lucky ones who get to play with it.
The Internet also is taking our current business practices and making them more efficient. Apply the Net to your business and you take out cost and time, and boost productivity. You don’t even have to go to the expense of promoting it any more. Your customers and prospects expect you to be on the Web, and to be using it to make their experience with you faster, cheaper, better.
Finally, the Internet allows entirely new business models to emerge, evolve and succeed. Name your own price. Search the world for the best suppliers. Get frequent-flier points for reading ads. It’s amazing. And new ideas are coming every minute.
The hope’s there, the hype’s there, and it’s a great time to be alive.