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No 2001/1 - February 5, 2001
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  Will BtoB manage to rescue an advertising BtoC space that happens to be weaker and weaker every day?

Will BtoB manage to rescue an advertising BtoC space
that happens to be weaker and
weaker every day?

Dinosaurs: are bricks going to cover clicks again?


Ever since the Internet was born, portals have been one of the sectors that best capitalized… on the dot-coms budgets.

Through, among other ways, exclusive partnerships that could reach a few hundred million dollars, their position as front door on the web, whether as a home page for the web surfer or as favourite result providers at the end of a search, ensured them a sufficient income up till now.

And yet, online advertising has been noticed to lack effectiveness lately and this is now starting to darken the commercial reality for these actors.


What's more, and the last important negotiations that were carried out well show it (let's take the eTourism sector, for instance): dotcoms now demand that the income generated though the portal is proportional to the results truly achieved by the cyber-retailer.

This sudden turn is simply due to the fact that dotcoms noticed that generating traffic is not the key to online success, but that customizing visitors is another very important element which first requires a good customer screening.

But please be aware that you cannot customize anyone, just because he happened to turn up on your site. This potential customer also needs to fit your target customers. Failing that, you'll have spent a lot of money trying to attract someone who is very hard to convince, since he does not belong to your "natural" customers.

And yet, portals often prove more effective through mass traffic.

Even though key-words make it possible to carry out a first screening of the visitors, you must remember that what lead a web surfer to make a purchase is a much more complex matter.

Portals are well aware of this problem, that's the reason why they are now offering their visitors specialized mini-communities and eServices allowing them to better target their visitors and, as a consequence, the commercial offers they make to theirs clients.

But this is not enough to regain the confidence of the dotcoms, which are now expecting a great deal from advertising campaigns, much more so than they used to.

Keywords commercial effectiveness depends very much on how motivated the web surfer happens to be. When typing in a word, he might only be looking for a specific function or for a simple piece of information… and not necessarily for a cyber-retailer!

But please do not forget that the web keeps on changing and that the web surfers' behaviour is only just starting to be analysed, whereas the behaviour of the average web surfer is becoming more mature as well as more complex.

And yet, if you do not fully understand the way web surfers use the Internet, how can you expect to get a precise answer? It is just as if you were using a blunderbuss, this old rifle that sends lead everywhere at random, hoping against all odds to reach something.

The simple act of buying key words that will generate the appearance of an ad banner (which remains a luxurious tool for eMarketers and that portals keep+ on selling at luxurious rate) remains a problem as far as commercial effectiveness is concerned.

Of course, as reporting in AdKnowledge's "Q2000 Online Advertising Report", with a one per cent CTR (knowing that the current average CTR for normal placements is approximately 0.51 percent), ad banners generated by key words remain among the most commonly used online marketing tools.

But does this mean that a one per cent CTR for a display cost which happens to be much more expensive than a classical ad banner is a good deal for a cyber-retailer? Does an "eventual" customer acquisition justify such a cost?

This is precisely what an increasing number of financial analysts have been thinking lately since they called for a downgrade of portals shares' value. That's how shares of Yahoo! hit an all-time low of $25 after five brokers reconsidered the portal advertising potential.

Yet for a few months now, Goto.com, a new comer among all the portals, has been acting somewhat differently from its peers, since it adopted a B2B strategy.

Well aware that key words and ad banners were slowly loosing their touch, Goto.com decided to set the advertising aside from its income sources and to dedicate itself to the sale of its search results only.

That's how cyber-retailers and other sites who wish to be listed in Goto.com results after a search has been carried out, first have to agree to pay Goto.com an amount that will be proportional to the number of times their URL appears in its search engine returns.

First of all, you can wonder why a web surfer would want to use a search engine whose results will automatically be filtered? The answer is effectiveness.

A web surfer who uses Goto.com will only get results that have previously been "cleaned" of any type of strangeness and irrelevant answers he would automatically get on a classical search engine, answers that would mainly result from personal sites.

The second interesting element is that, since the base is limited, time answer is much shorter on Goto.com.

And yet, it was far from easy to convince loads of web surfers to use Goto.com instead of Yahoo! when they had to search for something.

That's the reason why Goto.com set up an affiliation and partnership program that is rather original.

Not only do you get listed on Goto results (against payment) but you can also reduce your expense by allowing your visitors to make a search, from your own site, straight on Goto!

This means that you give your visitors access to an eService that allows them to make a search on the Web and the result is that these visitors are bound to come back on your site.

The given site has every reason to be happy with the system that has been set up and the same applies to Goto since the latter sees its online visibility increase as more and more similar partnerships are made.

One had to come up with the idea and above all manage to sell it to other web sites. The first results we've seen so far seem to be rather good, whether it is for Goto or for its affiliates. It will prove most interesting to analyse the results of such strategy in a few months' time.

Anyway, this is an interesting BtoB answer to the drop in CTR and let's congratulate Goto for its inventiveness.

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    Dinosaurs: are bricks going to cover clicks again?  

The announcement of a slow-down in the American economy, coupled together with the first strains dot-coms are presently starting to feel, seem to influence the Internet development strategies followed by traditional retailers.

Many traditional retailers, commonly called dinosaurs by online only merchants, are greeting the first strains that are presently shown by the new economy.

Two factors can explain their satisfaction: first of all, they feel good, since they feel their own safe way to approach the economy was the right one since they are still alive while the others are not!

Secondly, and once they've gone beyond this self-satisfaction stage, they admit that the difficulties they met while trying to overcome their online backwardness will perhaps be reduced by the… disappearance and/or difficulties faced by the new post-dinosaur Web species.

Many analysts are indeed getting worried since loads of traditional merchants, comforted by the slow-down in the Internet industry, are reducing their Internet technology and marketing investments, which will only result in worsening even more the sector growth prospects.

And it goes without saying that such attitude can only have a negative impact on Web professionals, SSII and other Internet actors, already deprived of many dead dot-coms or with budgets that have been cut dramatically.

Even though it might somehow be understandable to try and reduce its investments when there is a recession, it would be totally unrealistic to adopt the same attitude on the web today.

Indeed, traditional actors are presently being offered incredible opportunities. The premium that was offered on the Net to the first comer has often turned into a positive experience for the second one.

Being able to learn from your competitors' past failures and experiences is a real opportunity that might not arise ever again. This is precisely why clicks and mortar should on the contrary seize the opportunity to quicken their arrival on the Internet.

This statement is also linked to a simple fact: web surfers are still there and there is no doubt that the Internet is and will become more and more a tool that will be wholly integrated to their everyday life.

This is precisely what the analysis carried out by BVA TFC Research shows, analysis which studies net surfers' behaviour both at home and at work.

It would be suicidal to give up on such an important population that exists on line and even though some of your competitors might presently be facing difficulties, this does not mean in any way that its customers will disappear along with them.

As far as I am concerned, I always thought that the best way to use the Internet would be to use both on and off line synergies.
I haven't changed my mind in any way, and what's more, Web experience and its first results have proven that I'm right since we now have studies and analysis that support this statement.

Forrester Research reveals that a customer who shops indifferently at a company's online and offline stores tends to spend more than a traditional customer. According to McKinsey, the impact is even greater since according to this consulting firm, "multichannel" shoppers, on and off line, would spend twice as much as single-channel shoppers.

This is why I think it is getting urgent for clicks/bricks to take advantage of the present situation and invest more than ever on the Internet whether it is in a direct way, or by buying off dot-coms that already have all the technologic and human capital which is required on the Internet and which proves so hard to build from scratch in a reasonable amount of time.

I do not think this Internet recession will last long (and one should know that it is mainly the stock exchange which have caused such recession), since net surfers have already started to modify their behaviour and traditional actors can no longer ignore such changes…if they do not want to remain a dinosaur for ever!

Source : New York Times

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