Chapter 10

Where is all this
taking us?

Much of the Internet culture will seem as quaint to future users of the Information Highway as stories of wagon trains and pioneers on the Oregon Trail do to us today.

Bill Gates, The Road Ahead, 1995

It's a sign of how right Bill Gates was back in 1995 when he wrote of the unpredictable future of the Internet that even the language he used then now seems so out of date. No-one today talks of the ‘information highway’, and the special ‘Internet culture’ of 1995 has been supplanted by something new, in which selling has a powerful role, big businesses figure large alongside small organizations, and which caters for new mass audiences. But if we stick to Mr Gates’ wagon train analogy, the Internet wagon train has still a long way to go before it reaches California. There is a great deal of unpredictable change still to come, and it's worth spending some time thinking through the likely shape of the land that lies ahead.

First, we have identified a shift from an Internet dominated by early technology enthusiasts and highly educated specialists to a mass market. Most Internet users are not IT people, and many access the network from home. This shift is not going to be reversed, and the trends that it has ushered in are only likely to get stronger. In particular, technology is being replaced by marketing and customer service. Internet services are increasingly being built around the needs and desires of the market. In this sense, the maturing Internet is becoming more and more focused on customers – more like any other communications medium, in fact. Throughout this book we have emphasized the importance of using traditional marketing techniques on the net (segmenting your market, developing a clear marketing mix, promoting sales, etc.). This reflects the way the net is going. Customer-focused businesses are going to be the winners on the net just as they are in other media, and the importance of marketing-led approaches is only going to rise.

Second, from a commercial point of view we can see that the Internet is going to become more and more competitive. There has been a dramatic rise in the numbers of Internet users, but the rate of business investment on the net has if anything been faster as firms raced to carve out a strong online identity before their rivals. The pace at which new users are logging on means that – by definition – the point will soon come when there are no more new users to take up the service. As this point approaches, firms will not be able to build business plans around capturing new users, but they will have to fight to take customers from each other. Life will not only become more competitive, but also more unpredictable, especially so in the information/entertainment sector, where the pressures of Internet competition are complicated by the digital revolution. The fact that television, books, music, articles, radio and pictures can be encoded and transmitted digitally means that the boundaries between some firms are being broken down. Suddenly BT or WH Smith might become online publishers, challenging firms that were traditionally in different sectors altogether. There's likely to be plenty of disruptive movement between sectors as one firm uses its IT skills to enter a new business area.

Indeed, there's already evidence of the increasingly competitive nature of the net. Throughout 1999, the volume of advertising space created on Internet websites grew at a faster rate than the number of new Internet users, causing a fall in online advertising prices.

Another trend is also evident. Big global players are putting more and more money into the net, hoping to dominate the new mass market medium. There have been strings of dramatic acquisitions, creating new online giants which seek to dominate in their sectors. This is only likely to continue as the costs of getting noticed and keeping sites up to date start to tell on middle-sized companies who haven't thought through their online offer as well as they might.

We're beginning to get more of an idea about customers on the net. While the big numbers in online shopping are mainly still on the ‘projections’ graphs, a picture is starting to appear of the way people will operate on the net as they become more familiar with it. They are starting to develop site loyalties, and be more discerning about the sites they'll visit. The net is being used more for a purpose, and less to satisfy simple curiosity. An interesting hint about the growth of site loyalties came in a study which showed that – while the numbers of sites were mushrooming – the number of sites individual net users visited was actually falling! It seems that net users try a few locations, and then discover which places suit them best, and stick with them.

Net technology will also continue to develop. Interactivity is getting easier all the time, and the advent of faster and faster lines to connect up Internet users means that it will get easier to use animated sequences, video clips, and complex software. The advent of ISDN or ADSL lines, which offer much broader bandwidths than conventional telephone links, will make this sort of software much more common. If customers demand more complex software, small firms with low budgets will be squeezed.

There remains one identifiable major uncertainty on the technical horizon – the advent of digital television, which promises some level of Internet access to homes through the TV. Cable users will have highly interactive Internet connections, while digital terrestrial or satellite users may have slightly more limited access. Whatever the level of access, television will revolutionize net access, with the real possibility of creating universal Internet access within ten years. Bill Gates’ pioneers on the Oregon Trail are about to be overtaken by a wholesale migration. But how these new migrants will behave is open to question. Internet access feels very different sitting back in the sofa with a remote control in the hand, to the way it feels sitting up at a PC. And then there is mobile phone technology to consider (e.g. WAP). Time horizons have been short on the net, prediction has been hard. But even as the technology matures, it remains impossible to see accurately a long way down the ‘Road Ahead’. New technologies promise new disruptions, and businesses planning investments will have to remain flexible and open to change as it occurs.

The result of all this? We can suggest a number of things.

• Getting noticed will become harder as the net becomes more crowded. Customers will face more real choice of service provider, and marketing skills will become more and more important.
• There will be more focus on back office efficiency as the forces of competition start to punish firms who are not able to control costs.
• Customers will become more price sensitive as time goes by. There are some good reasons for this. First, as they get to know their way round the net, they will find it easier to compare prices. In fact software is now available which enables customers to find the best offer for the goods they hope to buy. Second, as the net matures it is likely that the more price-sensitive customers are going to go online. These are the people who have waited (and waited) to buy a PC, and are now able to get a very fast desktop at bargain prices. Once they start shopping, they are going to make sure they get the best deals. It's also inevitably the case that as more firms put their wares on the net, there are more and more offers to choose from. When there are six (or sixteen) online bookstores all selling the same book, it's likely that those setting high prices will be punished. All of the theories suggested that the Internet would drive down prices. It looks as if this is happening.
• Some firms that thrived in the traditional media will fail to adjust to the Internet channel, and will be destroyed. They will be remembered in the same terms as the towns which refused to admit the railway, and soon after died. The successful will see the Internet as an opportunity, and many powerful offline brands will transfer their skills to create a successful online presence. For these firms, the key will be leverage. By using their name and reputation across different media they will become more successful than their rivals which ignore the Internet, or which only compete and communicate online.
• The Internet is not the end of the road. Digital television and mobile phone data communication is coming. But the final shape of this particular communication revolution will be determined not by the technologists, but by the choices and needs of consumers, without whom all of the networks in the world are empty and silent.

It's an exciting picture, and not a little daunting. But what we have given you in this book is a key lesson in the importance of real marketing skills in this seemingly technical world. This is the only approach that can offer you a successful future – and it is all the more powerful because so many firms have not yet recognized how important it is.

The net will continue to change. But you are in the privileged position of being in on the process. The medium is still open, and full of opportunity. You are only constrained by your imagination. And your imagination will be fuelled by technical and creative developments that take place almost every day. You have the advantage that you are not looking at this innovation from a technical perspective and therefore your innovations are marketing focused and by implication more likely to succeed.

We would like to reinforce this in our parting message to you. The Internet and other online services contain a great deal of corporate dribble. A great deal of it is media hype propagated by people with vested interests. It is also heavily dominated by IT people who are not adept at marketing and merchandising. Adopting the methodology suggested in the book and using a good creative team or agency can mean the difference between an overnight wonder and a lasting success. It is important not to be carried along by the hype. You may even decide that the Internet does not fit with your marketing strategy. If so, remember it's OK to pull back and review its relevance over time!

Whatever you decide to do, we hope that you have appreciated the core message of the book, which is that although the technology is new, your approach to it does not have to be. Using traditional marketing concepts will ensure that your message is communicated to your target audience in a meaningful and powerful way. Implementing your Internet marketing plans in this structured way will put you years ahead of your competition, who may have rushed in on the rather wobbly bandwagon.

Conclusion

Mary Cronin (1995) completed her seminal book on Internet commerce with the statement: ‘The electronic highway is not merely open for business; it is relocating, restructuring and literally redefining business in America’. Cybermarketing has been intended for a European audience, where the same process of relocation and restructuring is going on today. We have attempted to show how the Internet affects the process of marketing as a discipline and how it can be integrated into an organization's overall marketing effort. Throughout this book we have emphasized the central importance, not of technology, but of customers. Success and failure in business depends on customer choices, and marketers are uniquely well qualified to understand what those choices are and how to use the Internet to ensure that customers choose their products. This involves a holistic approach and, almost without exception, those companies who have been successful in their use of the Internet have been those who have integrated it fully into their marketing and business strategy rather than just simply using it as another advertising medium.

The analogy is similar to the invention of the printing press where marketers ask ‘to what business benefit can this technology be used?’ The only answer is ‘what do you do, what do you want to do and what are you trying to achieve?’ Imaginative and integrated marketing is the only answer. We hope that in this book we have outlined the concepts and ideas which can act as a framework for this wider creative process.

We welcome your feedback about any issue discussed in this chapter and indeed this book. We can be contacted via the website that accompanies this book. We look forward to hearing from you.

www.marketingnet.com/cybermarketing

References

Bill Gates with Nathan Myhrvold and Peter Rinearson (1995) The Road Ahead, Viking.

Mary Cronin (1995) Doing More Business on the Internet, Van Nostrand Reinhold, New York.