Technology Q & A Column

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Technology Q &A Column - From our June 2001 Newsletter

Q: I'm curious about getting on the Internet, but I know some people who've spent a lot of money on web sites and it's not doing them a bit of good. Don't all the dot-com failures show that the Internet is just a bunch of hype anyway? And if not, how can I tell if a web site would help my business?

A: Excellent questions. First, let's clear up the dot-com part. When the media refers to "dot-com failures", they are referring to less than 300 companies that were able to generate large sums of venture capital money during the recent boom. Uninformed investors poured millions into bad projects just to get in on the Great Internet Gold Rush. When these projects failed to generate the expected windfalls within impossibly short time periods, those same investors got spooked and yanked their money out of Internet companies and stocks - both good and bad. The same force that created the boom also caused the bust; the get-rich-quick investing mentality.

Meanwhile, small business continues to do what small business does; build steady growth on a solid foundation. The Internet is a marketing and communications tool, just as direct mail, catalogs, and radio advertising are tools. The big difference is in the tremendous number of people you can reach for very little money by comparison. But marketing principles still hold true - you must reach the right people, at the right time, with the right message in order to be successful. The magic is not in the tool; it's in the use of the tool.

Any business can benefit from using the Internet, but you have to have two things firmly in hand: 1) a professional-looking site that is built from the beginning with marketing, not design, as its main focus, and 2) the correct Internet marketing strategy for your business. Contrary to popular belief, there are not one, but three basic types of business sites on the Web today. They are the e-commerce, the ad-driven, and the credibility (also called demonstration) site. Each type measures success differently. Many sites considered failures were actually successes, just in a different way than the owner was expecting!

The E-commerce site, in which sales are generated completely online, is the most well known type. It is also the most costly to build, the most difficult to maintain technically, and the most vulnerable to security risks. (There is, however, one huge exception; selling valuable information to a worldwide audience. You should speak to your Internet Business Consultant if you're interested in this special niche business.) Only one thing matters on an e-commerce site: sell-through rate. Many Internet ventures of this type have failed simply because the cost to obtain customers was higher than the sales revenue generated.

The Ad-driven site lives and dies based on traffic. These sites tend to be huge, ever changing resource centers based on the "content is king" theory. As the number of site visitors clicking from page to page for information, gameplaying, or entertainment increases, advertisers become interested in reaching your particular demographic. However, these sites have also proven very expensive to maintain. In addition, web-based advertising has yet to prove itself as a revenue generator for the advertisers. As a result, ad space, particularly banner ad space, is selling for far less than it did at its peak in 1999.

If you have a real-world business, and are looking to use the Internet to reach your local market, I recommend the Credibility site. Much more than simple brochureware, this site is an interactive source of information about your business that allows people to answer some of their own questions - and come to you much more qualified and ready to buy. It also gives you the ability to stay in touch with your client base, giving them reasons to come in and giving you top-of-mind status when they are ready to do so. It turns out most sales over $39.95 require some type of personal contact anyway, either by phone or in person, to complete. Take advantage of this reality by using your site to drive people into your place of business, rather than trying to complete the entire sale online.

A well thought-out marketing strategy is critical for the success of your venture. Using your web site as a centerpiece, and integrating it with your current marketing strategy, can produce immediate and amazing results. Most businesses are already utilizing various offline marketing tools, i.e. postcards, yellow pages, newspaper ads, cable TV, etc. Correctly combining just one of these mediums with the power of email and a strong web presence will generate a spiral branding effect that builds momentum each time you take your prospects through the cycle.

The Internet didn't really change the rules; it just makes it much easier to get the rules working in your favor. Commerce using the Web is at record high levels, and accelerating. As usual, big business may dominate the news - but small business dominates the landscape. Upgrade your web presence as soon as you can, and make it central to your marketing mix. Don't let media sensationalism or the "other guy's" mistakes cause you to miss out on your share of the additional business that's yours for the asking.

Grace Cheeseman is the Director of Operations at SkyVault Web Site Services, a web marketing and consulting firm based in Alameda. SkyVault provides a full range of services including training, design/development, hosting, and marketing assistance. Find them at ww.skyvaultgroup.com.