gian@gandalf.it

No. 21 - June 15, 1998

1. Editorial: The imaginary "webber"
2. The new Italian online bookstore
3. The problems of "Small and Medium Enterprises"
4. Why companies are uncomfortable with the internet
5. The school problem
6. Net pollution

I hope to be able, in a while, to have some data that can give us an idea of quantities – more or less how many people do what. But it’s pretty obvious that there are many different behavior patterns and "surfers" are a small minority.

A few years ago there was a "net community". There were many differences of opinion and attitude, but the number of people on the net was very small; we felt somewhat special, almost part of a fraternity. That feeling has not disappeared completely, but it’s obviously diluted as the net becomes more and more "just another way of communicating".

There is growing diversity. Many people use the net only at work, and only for a few very specific purposes. Many use almost exclusively e-mail. Some follow a few sites, lists or newsgroups and once they have found what they want they stick with that and ignore the rest. I know several people that never touch a computer but ask their secretary (or a colleague, or someone in the family, or a friend) to keep an eye on certain subjects and print what’s relevant. There are people that bought a connection just because they were curious but after a few disappointing experiments never use it. But, above all, there are more and more people that use the net for a very precise purpose, based on their work or personal interests, and hardly ever do anything else.

A few people go "surfing" and looking around. Mostly newcomers; over time they get bored and drop out – or set a pattern of a few specific things of their choice and stick with it.

This makes life difficult and disappointing for anyone attempting to sell (or use) the net as "just another advertising medium". Is it like one more newspaper or television network? What’s the audience, the circulation, the readership? How can I fit this new thing into traditional, familiar standards? Of course they can’t; and this makes them uncomfortable  and confused.

Of course, on the other hand, it’s a big opportunity for people and organizations (of which, so far, there are few) that really understand what the net is all about and how it can do things that traditional media can’t do. But that takes more time, effort and dedication than most people (and organizations) are prepared to invest.

How many people use the net and how often is not the most important fact or relevant information. It’s much more important to know who is interested in what we have to offer. For instance an online library doesn’t need to know if a person logs on once a day or once a month. What’s important is that when a person is interested in books he or she is aware of the library’s existence and able to find it’s website. I’m not joking when I say that potential customers for an online service include people that don’t have an internet connection. If they are really interested they will go to a friend or office colleague and say "Please let’s connect to that site and see what’s new" or "Please help me to find this or that".

This means that quite often it’s important to use tools outside the net to promote a website. Of course "word of mouth" is the most important and effective communication. A satisfied customer will tell friends; and people out there know much better than we do who in their environment is interested in what we have to offer. So will an unhappy customer... and that is why quality of service is so important. But there are also other ways. If I were selling golf balls online, I would consider a counter card in a golf club more important that a thousand banners. If I were selling tennis balls, I would like to be visible in tennis courts. If a food company wanted to attract consumers to its site to read recipes and nutritional information, it should put the web address on the package (this is only one of many examples of how a website can be promoted at no cost).

I think the sooner we forget "total user" numbers, stop chasing "net surfers", and concentrate on the people (online or not) that can be interested in what we have to say or offer, the more effective we shall be in internet communication. Obvious? Yes. But rarely done well, or even clearly explained.

I think this is important, because a bookstore is one of the best icebreakers that can really make e-commerce begin to develop in an environment where, so far, there has been a lot of big talk but very few facts.

The majority partner in BookShop Italia is Informazioni Editoriali, Italy’s leading company in information management in the book business since 1985. They are well known for their Alice website. They started discussing the idea in 1995 with Internet Bookshop, a now large and established online bookstore based in Oxford, and the project matured gradually over time. Their system is based on the technology and experience of their British partner. The objective is to develop a European network offering books in several different languages.

They are not planning to offer discounts (except for special promotions by publishers). I think they are right. Their strategy is based on service, not price. They are not trying to compete with traditional bookstores, but to be the source for those books that are not easily found in the customer’s neighborhood. They expect 95 percent on the traffic on their site to be browsing by people who will buy in local shops.

Of course they consider the "export" market (Italians abroad and people around the world that read Italian) very important. They expect that to be 30 percent of their business.

For deliveries use a mix of courier and mail which they think is the most effective cost-speed combination. They see their "partnership programme" as the most important promotional tool. They are not planning to use banners; they’ve figured out costs and benefits and believe that it’s much more effective to work with sites that actively support their business. Of course they are investing in public relations and getting some press and television coverage (though not yet as much s they deserve).

They are off at a good start. After only one week online they already had 50 orders a day.

I’m unhappy with a couple of things. Their site is a bit slow. I think they have some unnecessarily heavy graphics, but they disagree; they admit that a few software bugs need to be fixed. The make cookies "compulsory" (people can’t order unless they accept them) and I think that’s unnecessary and a bit disturbing. That’s the only reason why I haven’t yet used their service (but I know some of their early customers and they seem quite happy).

In spite of those weaknesses, that I hope will be corrected, I think their strategy and their organization are very good; and I wish them a great success.

There were 30 speakers and practically no audience. Scattered in the Manzoni, one of Milan’s largest theaters, there were about 50 people – and very few of those were from SMEs. That could be just a peculiar anecdote... but it’s one of many symptoms of a big and serious problem.

As usual, most of the speeches were about hype, hope or self-glorification. But a few pointed clearly to problems.

SMEs can’t compete globally any more unless they learn how to manage communication more effectively. They have the instinct and the perception, buy lack the discipline and the tools. Product and commercial communication is a minor part of their strategy; they see it mostly as catalogs and sales brochures or think about advertising, which they see predominantly as television, that they can’t afford as long as it remains (as it is and will be for the foreseeable future) predominantly a generic mass-market medium.

"Corporate identity" is more important, and needs to be managed more effectively. SMEs understand that service and attitudes are relevant, and that communication is not a matter of using individual media but managing all relationships coherently. They do so instinctively as long as they tread on familiar territory – but lack the ability to plan and organize. They don’t trust most available services and consultants, because their expertise is based on larger companies and doesn’t fit the needs of SMEs. There is a vacuum, and nobody seems to know how it can be filled.

New media, and especially the internet, of course fit the needs of SMEs on a global scale much better than traditional media. But that is not understood. The hype, the overstated promises, the bombastic repetition of huge and ever-growing figures and projections, the emphasis on abstruse technologies, make SMEs uncomfortable: and rightly so. There is a strong need for a new approach, a new culture, to bridge the gap.

The problem is pretty clear. But where are the solutions? I think we need to start from the copernican revolution that was discussed in this newsletter six months ago.

He wasn’t addressing SMEs, but large advertisers. He explained how distressing it can be for them to try to use the net effectively. His point is that developing an effective use of the internet can have destabilizing consequences in an organization.

He starts from the fact that in online communication (even more that in communication in general) everything is integrated; it makes no sense to isolate banners from the context. And even if we concentrate on banners the advertiser asks itself which is the object of communication. Its it my product? Or my website? Must the banner just say something very briefly about my product, or attract people to my site? In the first case, other media are much more effective...

Even if a company decides to use banners as "just another advertising medium" (which of course is a mistake) it faces a number of embarrassing problems.

Planning

There are no data! What’s the CPM? How many GRPs? I must think differently, learn from scratch.

How long do we stay "on air"?

Do I buy contacts? Then if I go on a heavy-traffic site I burn out my investment in a couple of weeks... I must change my way of evaluating planning.

The media target

I know my target. I have the demographic and socio-graphic data. How do I choose sites? I don’t have e reader profile. My experience gives me no guidance.

How do I choose?

Do I go after big numbers? (search engines, big-traffic sites). That’s mass marketing. Or should I go after segmentation? (sites that best fit my target or my message). But how do I choose? There is an enormous number of sites.

Data analysis

Clickthrough? Hits? Registration? It’s not difficult to have data on traffic, but what can I learn that has an operating meaning?

Focalized messages

Internet offers me the opportunity of "narrowcasting" – high target segmentation. The opportunity of ad hoc messages for focalized targets. Lots of work, small numbers (though they say that the conversion rate isn’t bad.) But what’s this? Did I think it was advertising and now I find it’s direct marketing?

Creativity

The effectiveness of each message is short-lived (from research in the USA, if people don’t click on a banner the first or second time they see it they won’t do it later.) There’s a need to change quickly and frequently and focus on specific targets. Not, as we used to do, a couple of ads supported by a huge investment. Much more work than in traditional communication – and on-going...

Not just banners

I must think about other solutions... web sponsoring... integration with the host site and its content... co-marketing with leading sites... creating or sponsoring events... Even more project development, more work, for something that in most companies has a very minor role.

All of this is quite agonizing. How lovely appear, in comparison, the happy times when advertising was intrusive, our job was to get the message through before the viewer switched channels, our chance of exposure was in reverse proportion to the attention of the audience... we changed our ad twice a year... Of course the "old times" aren’t gone, that’s where 99.9 percent of the advertising investment is still going – for those companies that can afford the cost. But when they look at the net... here come the ugly times when everything is in real time, nothing is static; communication is on demand, chosen by an elusive and unpredictable consumer; and I am faced with an incredibly high noise factor (millions of sites available). I thought I knew how to persuade a consumer to buy my product... now how do I learn how to give people a motive to come and see my ad?

That’s a good picture, I think, of how perplexing it is to try to advertise on the net even if companies look at it in the most superficial and less effective way, as "another advertising medium". When comes to really using the net for what it’s best, it’s even more bewildering and uncomfortable.

I don’t know who wrote a statement quoted by Roberto Venturini, but it’s pretty clear: On-line advertising is a nuisance, until the moment you need it. Then it becomes Customer Service.

Service, of course, is the key. But that’s sooner said than done.

Understanding that principle is a basic step forward. But then the company must face some really serious problems.

Who, in the company, really understands the internet? Who knows how it works, how it’s to be used? Who understands the limitations and differences? How do we allow (or persuade) all of the company functions involved to contribute effectively? Or at least understand problems or opportunities? Or at least not be bottlenecks? We need to provide information on the company and the product, in great detail. We must be thorough (we can no longer hide behind the limitations of a 30" commercial.) Readers on the net are demanding. They don’t spend time and effort to come and meet us and then put up with a few bits of imagery. Do you have something to hide? Is that all you have to say? Another, big problem is the need for continuity, constant update. And, last but not least, interactivity. People expect dialogue.

Are companies prepared for the complexities and the effort of providing real service online? The obvious answer is no. Here is how they feel... "truth well told" by Roberto Venturini:

The real problem of a website is that you’ve got to stay with it. A taxing task, just as the competition is getting tougher all the time... I’m under pressure from management to cut time and cost... I’ve got so much to do... staff has been cut to the bone...

It seems rather complex... it’s all new, uncharted territory (at least in my market) and I cant’ even copy from the experience of others... it’s a heavy commitment...

Maybe we should just forget it. To get into this new world, in the right manner, we would need deep changes in our way of doing business, we should re-think our strategies, de-structure or decision processes. We should involve all corporate areas, learn new ways of teamwork. It implies a large workload with hardly any short-term returns. It’s a project that uses up lots of time and resources, requires dedication and commitment.

Unfortunately... we are not alone in the marketplace. The internet is a global tool. It’s a "democratic" tool with low entry barriers. My consumer is now accessible to all, from multinationals to small local competitors. There are hungry people out there ready to do everything they can to steal our market, ready to give the consumer more than we do, ready to offer better service, ready to use the internet at its best. They are raising the stakes all the time.

What if the internet really becomes a key communication medium? What if my competitors – or others of whom I’m nor even aware – learn to use it before I do? Can my competitive edge last forever? The entry barriers are sliding away; small companies can sneak into my territory with relatively low investments; competition is increasing; they’re all over the place!

That’s a good description, I think, of the nightmarish perception that most companies have of the internet. The false promises of the banner peddlers may look like an easy way out. I can do it the old way, some companies may think, just throw some real money in there and swamp them. But that’s a dangerous delusion. It’s like taking a pain killer to control a toothache and never going to the dentist. The more companies fiddle with apparently easy, but ineffective solutions, the less they will learn and be prepared when the crunch really comes. And though a lot of the hype is exaggerated, and things are not so fast as some hope and others fear – it is coming... and it takes time to learn.

Two more quotes from Bruno Venturini’s speech. Putting up a site "just to be there" is a way of exposing our incompetence. Doing things properly on the net requires a change in corporate attitude and behavior. Communication and marketing on the internet aren’t just a matter of tools. They need a different culture. And new organization. And speed.

Quite distressing for people and companies that don’t want to change their habits. But a remarkable opportunity for the innovators – especially if they can offer genuine values of quality and service.

Number of students per computer in public schools

A rather grim picture for Southern Europe. We’re a long way from a solution of the lost generation  problem that we discussed four months ago. And it’s not just a matter of quantity and equipment. The use of computers in my country is taught mostly in technical schools, while it should be a tool for all, in all disciplines. It’s also taught too technically, with a lack of depth on the cultural and human values of communication. This is a challenge not only for the school system but for all the educational environment, including media, on-the-job training – even the way in which internet connections are promoted and advertised.

DIGITAL POLLUTION

Pollution is rampant in cyberspace today.

As a species we have a tendency to be wasteful. Much of what we create puts convenience first, rather than our environment or a long-term view of sustainability. It is usually only when pollution begins to cause serious damage that we consider doing something about it.

The nuclear industry is perhaps the best example of how reckless a polluter we can be. Here, we have created waste that will last for thousands of years; waste that we hardly know how to store. The Irish Sea reeks of radiation as British Nuclear Fuels daily pumps radioactive waste into it.

Pakistan and India behave like spoilt children. 'I've got nuclear capacity,' India chides. 'Now I have too,' Pakistan retorts. Of course, Pakistan and India are joining the other spoilt children around the world who have long since been strutting their nuclear toys.

I remember my first job. It was in 1984, and the company had just bought a computer. It didn't have a hard disk. You could buy a5-megabyte hard disk for it but it was some crazy price. 5 megabytes seemed like so much space. However, we managed to run the company's accounts and administration using 5.5-inch floppies.

How things have changed. Now we talk about gigabyte hard disks. And the funny thing is that many of us end up running out of space! No matter how much storage space we get, we seem to find ways to fill it.

Okay, we now have these huge software programmes. But look at how wasteful we are. Back in 1984 when I was using a word processor, I didn't create multiple versions of documents because I didn't have the space. I was more conservative and I managed fine. I cleaned up my floppies regularly of files I no longer needed.

Today, my hard disk is a mess. There's all sorts of stuff stored on it that I don't need anymore. The thing is that because there's so much space, I'm losing the skill and interest in figuring out what to keep and what to throw away. It's easier to keep everything.

There are some 400 million pages on the Internet today. There will be 800 million by 2000. How many of them are any use? How many of them are complete and utter rubbish?

Think about your website for a moment. Are there corners of it where you haven't been in a long while? Is there information on it that is no longer relevant to you or your customers?

Managing a quality website is as much about pruning the information you already have put online as creating new information.

Why? Because when most information gets old, it rots. It becomes waste in the system. Like car fumes pollute our lungs, information fumes pollute our minds. We can't find things as all the dross clouds the quality.

If we don't deal with digital pollution now, it will become a serious impediment to the long-term stability of cyberspace. We could start caring for our new environment by:

(1) Only putting up on our websites information that is of genuine quality

(2) Regularly reviewing our website content and dumping our information waste