INTERNET MARKETING CONTINUES TO GROW Whether your business is based in the San Fernando Valley or Death Valley, you are behind the times if you have not become aware that the Internet is the world’s largest public electronic market place. It is estimated to reach between 20 and 50 million people world-wide. The last two years have seen three major developments: The Internet has exploded in use. It is now growing at over 10% per month (and that’s a conservative estimate). A sophisticated way of exchanging info between computers has been created. With simple mouse clicks people can access info anywhere in the World Wide Web of info. Innovative businesses have discovered that the Internet can be exploited to offer a number of services both internally, for their customers and for their strategic partners. The World Wide Web (often simply called the WWW) has made more user-friendly the previously daunting prospect of using the Internet. It is forming around it an industry of software developers who are creating more sophisticated ways of using the WWW. This in turn is spurring businesses to offer new and innovative services which exploit the competitive advantages which the Internet offers. The last twelve months has seen a rush of companies providing services via the Internet. All of them keen to exploit the extraordinary reach of the network and its depth of info resources. The WWW delivers multimedia info from anywhere on the Internet directly onto the desktop screen. The Web has a `magazine’ like feel of info. The systems can handle graphics, audio and video as easily as text. The resulting documents are effective ways for companies to get their info across to their audiences. Listed below are several of the primary forces driving commercial uses of the Internet today. Cost The Internet is cheap, especially when compared with private data networks which require global reach. This is not to say that the Internet is free as there are a number of costs associated with connecting into the Internet and securing the gateways established by the corporation. Internet email, like other email is also a cost effective replacement for fax traffic and courier services. Technology Recent years has seen the sudden availability of high speed telecommunications links available at a reasonable cost. The spread of desktop computing has also made person-to-person telecommunications much more attractive as a critical mass of people now have networked personal computers or workstations. Telecommunications has now reached the stage where telephones were 90 odd years ago. A 130 years ago when the telephone was invented it was not an immediate success. Early adopters could but a telephone but who could they call? It took time (some 30 years) for a critical mass of users to emerge. The time frame of the Internet is shorter but the same adoption problem existed in business use. Corporate Restructuring Restructuring, re-engineering, rightsizing or outsourcing – whatever the label the result is often a reduction in head-count and an increasing interdependency between corporations. Central aspects of the virtual corporation require electronic communications between such partners so that they can remain responsive to the marketplace. Time-to-market can be radically reduced and customers can be more fully involved in product development because the associated transaction costs are reduced. In other words it is easier and therefor cheaper to communicate with geographically remote customers and partners. Expanded Marketplaces As business globalizes for increasing numbers of small and medium sized firms, only the Internet provides a way for these companies to establish a global presence. The Internet gives you a presence in many markets, and the WWW and news groups are just two ways of reaching those markets. Compatibility The Internet developed TCP/IP telecommunications protocol is the de facto international standard. This Internet innovation has become the standard for many private corporate networks so it is relatively easy for gateways to be installed which links a companies networks to the Internet. Demographics The skills of the work force are also changing in the 1990s. Millions of students became skilled in using the Internet to complete their studies at college and university. They understand its usefulness to business. They represent a source of bottom-up innovation as they influence their colleagues and the organizations they work for. As always, the reasons for the Internet innovations are complex. Both bottom-up demographic and top-down cost pressures are being applied and are driving open telecommunications into corporations. The primary business implications of the internet are listed below: Structural The Internet is a powerful enabler of cost effective and speedy communications between geographically remote parties. Although the interface of the Internet is difficult to use and prone to frustrating delays its fundamental usefulness tends to override this. Internally, corporations are using it to improve communications between their business units, offices and employees. Because the Internet is significantly cheaper to use than a dedicated data communications link, units which previously could not justify a link can now be connected via the Internet. In a world of electronic commerce, physical size is not as important a factor in your ability to compete as in the `physical’ world. Relatively speaking cyber-commerce gives a greater boost to small, nimble, technologically sophisticated firms who are able to offer responsive electronic-based services. Of the forces driving innovation in the Internet, none is more powerful than that caused by the current wave of corporate restructuring. The pressure which this is exerting on corporations is relentless in its quest for ways of doing more with less. The Internet represents one way of achieving this by having a direct effect in cutting a corporation’s telecommunications bill and delivering a more responsive organization at the same time. Strategic Alliances can be supported through the Internet because it can now support rich forms of info exchange as well as email memos and file transfers. The first steps are being taken to use the Internet for video delivery and shared workspaces. The WWW is spreading rapidly and in a few short months of availability became a more popular service than services like gopher and ftp which have been available for years. Acceleration The pace of competition and change is more intense than at any time in recent history. Rapid telecommunications are a natural productivity tool which will be used by businesses as they strive to out-compete each other in the market. Time-based competition is a key feature of the modern business environment and the Internet reduces lead times. Relationships As electronic communications allow speedy info exchange, it is a logical consequence that its widespread availability will have the effect of increasing communication between businesses, their partners and their customers. Not only will the amount of communication increase but also its `density’ of info content will increase. Both strategic partnerships and customer links can become closer because of the facilitating effect of additional multimedia communications. Customers and others can participate more fully in the product development processes. Active relationships between parties become possible instead of the more traditional passive relationship between buyer and seller in the physical markets. Competitive Domains The Internet is a new domain in which companies are competing. It adds another layer of complexity, another option which a business can use to compete. More than ever before customers appreciate access to info on demand at their place of work. The Internet’s scale gives it the edge ver other info distribution outlets as it is larger than any other existing open, interactive network. If a customer can contact her sales representative via email, check on product availability on the WWW and use WAIS to find solutions to problems then a company which cannot offer the same level of service will be disadvantaged in the marketplace. The Internet has developed an interesting relationship with business and this relationship represents a new model for competition. Business relationships using the Internet differ from traditional relationships in the following important ways: 1. A sense of community exists both between business partners and between businesses and their customers and suppliers. 2. Customers actively participate in the development of products and services. This may not be new in itself, but what is new is the degree of interaction. 3. Customers receive direct feedback of multimedia info directly related to their questions. 4. A feature which is directly related to points 2 and 3 is that the customer becomes a more active participant in the info market and the business becomes (relatively) more passive. The customers come to you. 5. The non-commercial parts of the Internet are becoming active incubators for new business ideas. It is acting as a test-bed of innovation for the larger business community. The role is analogous to that played by research R & D; centers in the development of new products for businesses. Infrastructure On the purely technical level, TCP/IP will increase its dominance as a standard telecommunications protocol. Economies of scale play a role in the Internet’s standard increasing in importance. Marketing One of the main competitive strategies currently used on the Internet is the use of info `infomercials’ to demonstrate to customers that they should buy the full product. This is particularly popular with info providers. Both in their print products (especially magazines) and more sophisticated electronic products (especially financial info). An advantage to this model is that the consumer can try the service before purchasing. The objective of the sellers of electronic info is to find as many outlets for their info as possible. This is the reason why a company will offer gopher, ftp and WWW access to their data. They are not concerned with the pipe used, just the amount of (chargeable) info consumed. Human Resources The impact of commercial use of the Internet has a fundamental impact on the human capital of corporations. The skills required to use Internet technology are sophisticated. A measure of difficulty greater than using a desktop computer to write or to make a spreadsheet. The difficulties with which people have had adapting to personal computer technology is a good indication of the resistance which many people will have against the Internet. Even with the new wave of Windows-based, icon driven software packages, the Internet will not be transparent to the user. Significant new skills will have to be mastered before the all benefits networked distributed computing will be realised. This presents corporations with a learning challenge at two levels. Firstly the organisation will have to learn how to master this technology. Organisational learning will be a key factor in the spread of commercial use of the Internet. The second level of learning will be the individuals who will require a significant level of re-skilling if they have not grown up in the education system which used the Internet as a learning tool. The Internet represents both a threat and an opportunity to business. Some companies have used it to sell their existing product lines. It has also created an entirely new business called Internet Security Services through which it will sell security solutions and offer support to other corporations who wish to use the Internet. This is a new market and a new business opportunity for them. The danger to slower moving companies is clear as who can afford to ignore a market of millions?