NET GAINS

If there is one area of computing that has been hyped more than any other over the past six months it is the Internet, or the World Wide Web. All forms of media have begun to discuss the growth and applications of the Internet, and so-called experts keep popping up and evangelising about its benefits and striking the fear of God into companies that are yet to launch an Internet site.

Some business commentators compare interest in the Internet with the popularity of CB radio in the Seventies – they are convinced it will die out. Others say the Internet is the most important business tool since the telephone.

Businesses around the world are beginning to explore its possibilities. Many advertising agencies and marketing departments are appointing media directors and staff specifically to investigate and plan Internet strategies.

The Internet is basically a global collection of tens of thousands of computer systems connected together.

It provides users with largely free access and information, and makes extensive use of hypertext – a means by which associated topics can be electronically linked to make browsing and compiling information and services easier. It differs from other commercial on-line sources – such as Compuserve and America On-line – in that these systems represent one large computer network where users pay for access by the hour. Unlike such “closed” networks, the Internet gives companies more control over the presentation and management of their services.

The growth in the Internet’s usage is impressive. It is this, more than anything else, that is attracting businesses. Published figures for the number of users vary wildly, anything from 20 million to 52 million. The latest survey by US research company IDC this month estimates that there are 38 million users worldwide.

Figures for the UK are hard to come by. The Internet Society, a UK-based organisation representing the interests of Internet users, conducted a survey in January this year which revealed there were 241,191 hosts registered in the UK. (A host is basically a means by which computers are connected to the Internet, and it can have any number of users, ranging from one to several hundred.)

It is generally accepted that the average number of users connected to each host is 7.5. This means there are more than 1.8 million users in this country. The Internet Society says the number of UK hosts grew by 24 per cent in the final quarter of last year.

In simple business terms, the Internet is the solution to some very old problems, namely how to find out more about your customers and give them what they want. Many businesses that find the prospect of direct selling on-line awkward, or at odds with their company’s objectives, are discovering that the Internet is an effective way to build brand awareness and loyalty.

The Internet is also seen by many companies as a cheap and effective means of offering customer service and support because it enables huge savings to be made on traditional expenses such as telephones, postage and personnel.

Not surprisingly, many firms that are famous for their marketing, such as Coca-Cola, Sainsbury, Volvo and Virgin Atlantic, use the Internet for this purpose. Virgin Atlantic publishes flight schedules for its 14 destinations, with full details of times, fare options and frequent-flyer miles programmes. The site is also used to market its different fares. A potential customer who selects the Upper Class icon, for example, will be shown a list of benefits including complimentary transfers, cabin comfort and airport facilities. As with most other sites, the Virgin Atlantic web allows users to e-mail company staff with their comments. But it is not possible to do bookings on-line.

Virgin Atlantic is also part of the aeronet – a service hosted by Internet provider Demon. Demon publishes additional flight information and listings for Air Canada, Aer Lingus, Cathay Pacific, Lufthansa, Qantas and South West Airlines. Surprisingly, British Airways is not on the Internet. But it is understood that the airline is looking at ways of enhancing its Executive Club programme on-line.

Sainsbury, on the other hand, not only uses its Internet site to promote company activities and initiatives – through the use of press releases, annual reports, store guides and job vacancies but also offers a range of customer services. Recipes from its successful in-store magazine and television advertising campaigns are available for free downloading. An innovative direct purchasing wine service has also been developed by the company.

Wine Direct, initially launched as a telephone mail-order service last November, is an electronic catalogue collection of 40 of Sainsbury’s own-label wines. It enables customers to browse through the catalogue electronically, make selections and submit an order to the supermarket chain. Orders are fulfilled by taking credit card details on the telephone. Additional features such as gift cards and discounted home delivery are also available.

Sainsbury joint managing director David Quarmby views the services as a logical extension of the company’s successful wine-retailing strategy. He says: “As part of developing our services to customers, we are now offering our Wine Direct range over the Internet.

“There is a fast-growing interest in the information superhighway and already a growing community of users. This provides a new and exciting opportunity to reach wine lovers – some of whom might not easily be able to visit a Sainsbury’s store. Home delivery is initially confined to the UK, but we expect to extend its availability overseas soon.”

Sainsbury, which established its Internet site in April, has recently joined the Barclay-Square shopping service. This provides retailers with a secure site to take electronic orders using credit card details. The site, hosted by Supernet – an Internet provider based in the Channel Islands – has been extended to cover Sainsbury’s wine service. Other retailers involved in the project include: Toys R Us, Argos, Innovations, Blackwells Bookshops and Campus Travel. Barclay Square also hosts a Eurostar timetable and reservations service.

Unipalm Pipex, a UK-based Internet service provider, offers connection and service solutions, ranging from a few hundred pounds to 30,000 for a fully-functioning, managed web site. The company boasts 800 corporate customers, including: Sainsbury, Barclaycard, the BBC, Hilton Hotels, EuroDollar and the Bradford & Bingley Building Society – some of the most successful commercial sites in the country.

Unipalm Pipex head of corporate sales Mark Hugo says UK companies are starting to see the benefits of using the Internet. “One of the key advantages about an Internet presence is that you can compete equally with companies much larger than yourselves because on the Internet everyone can be equal. Companies must recognise that this is a way for many tens of thousands of people to find you without spending a fortune on direct mail,” he says.

Accountancy firm Ernst & Young has approached the Internet in a slightly different way. Initially its site, opened in November 1992, was dedicated to communicating with its computer product, services and software suppliers in Silicon Valley. But over the past three years it has been expanded.

The company now sees the Internet as an effective and economic way of communicating with key clients via e-mail, and it hosts a selection of themed discussion forums through usenet groups. Ernst & Young also makes a selection of its publications available on-line and can give tax advice and consultancy over the Internet.

Research by the Periodical Publishers Association (PPA) and Pira International at the beginning of the year suggests that the web is seen primarily by users as a means of gaining information about products and services, and communicating with suppliers.

Hugo says: “Roughly half of UK users are what we call core/full Internet users. This basically means they have full interactive use, with the remainder subscribing to services such as mail gateways to run company e-mail.”

Rock group The Rolling Stones has been quick to employ the Internet to support its 1994/95 Voodoo Lounge World Tour. The group’s site offers fans interviews with band members, downloads music, video clips and merchandising and CD offers. It is perceived as an extension of its already slick marketing and merchandising activities.

Other music sites include Sony, and a myriad of small independent sites promoting fanzines and alternative music scenes.

There are numerous UK and US publishers and third parties offering to supply Internet advertising and marketing options. Typical arrangements include advertisement strips at the bottom of pages, with hyperlinks to more information on the site.

For many companies, this is a sensible starting point because it gives them a small Internet presence, places them on sites attracting larger numbers of visitors and allows them more time to think about what they want to do, and when. It also provides invaluable research.

Ex-retailer David Gold offers one such service, the Internetweb, and has strong views about what Internet users want. The Internetweb is built like a shopping centre and has attracted a variety of services, retailers and manufacturers – ranging from Honda to Neasden Electronics.

Gold believes that sites should be interesting, visually appealing and have atmosphere. In his words: “An Internet site is like a cosmopolitan city – people will visit and come back if there is something there of interest to them.”

John Barnes is multimedia associate publisher at VNU Business Publishing.

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