Mainstream marketers embrace the Net

Advertising: The great online ad shake-up began at the start of 2001 when technology website CNET.com announced a number of new ad formats. These included the now ubiquitous “skyscraper” and rich-media ads embedded within the editorial text. CNET’s pioneering move was soon endorsed by the Interactive Advertising Bureau (US), followed by the IAB (UK).

As the year progressed, advertisers increasingly moved away from conventional banners and buttons, opting instead for interstitials and superstitials – which pop up between Web pages – and pop-unders, which sit beneath the Web page. Microsites also became a popular option for brands that didn’t feel the need to commit resources to a permanent website. Then there were new technologies, such as DHTM (Dynamic HTML), which gave an extra dimension to campaigns for brands such as Cussons and Jaguar.

Major portals – and rivals – Yahoo! and MSN ended the year with very public promises to help their advertisers create bespoke ad campaigns – focusing on ad technology as much as content.

Affiliate marketing: For a while, this commission-based alternative to online advertising threatened to become top dog. But after enjoying its brief moment in the sun and signing up a list of big-name converts, such as Ebay, Virgin and Comet, affiliate marketing quickly faded back into the shadows. Affiliate specialists such as Magic Button and Commission Junction either went out of business (in the case of the former) or announced major restructurings that begged questions about their business model. Other specialists, such as UKAffiliates, claimed to be doing good business, but stressed that they were an alternative to advertising rather than a replacement.

The overriding problem with affiliate marketing in 2001 was the larger economic picture: websites needed to make serious money – now rather than later – and most affiliate deals were a remnant from the dot-com heyday, when all that mattered was who you were aligned with, not how much revenue you generated.

Bill payment: Electronic bill payment made some serious progress in 2001, with a number of high-profile companies experimenting with this alternative to paper bills.

Amerada, for example, launched an online-only combined electricity and gas service, with e-bills posted on its website. Even more significantly, BT finally took the plunge, inviting customers to take part in an e-bill pilot. This seems to have worked well and BT has added e-billing to BT.com.

As well as its obvious environmental impact, e-billing’s claimed advantage is the speed and cheapness of delivery, plus marketers’ ability to piggyback on these communications with personalised offers, based on individual bill analysis.

Broadband: What can one say about broadband – high-speed Internet access – that hasn’t already been said ad nauseam? Having failed to take root in 2000, everyone was hoping – no, praying! – that it would take off this year. But despite all the talk about “local loop unbundling” and supposed intervention by Oftel, BT remained the only real show in town. NTL was also meant to be competing via its frustratingly incomplete cable network, but neither of these titans seemed in a hurry.

The second half of this year has, finally, seen BT putting some marketing muscle behind its Openworld offering, while NTL is claiming a big uptake for its alternative service. But as recent research shows, widespread broadband take-up in the UK remains a long way off and is being hindered by high prices. The only silver lining to this black cloud is that unmetered access on dial-up Internet connections has grown enormously this year, thanks to healthy competition and affordability.

Consumer agents: New Internet-only companies such as Homepro.com and Uswitch.com have highlighted the growing power of infomediaries – companies which act as a meeting point for buyers and sellers, while aligning themselves more closely with buyers.

Increasing competition, combined with the Internet’s ability to compare and contrast prices and products, means a fundamental shift in marketing. The case for consumer agents was made in March, with the publication of Right Side Up by Marketing Week columnist Alan Mitchell. The book makes a compelling, although some sceptics say overstated, case for change. But Bradford & Bingley’s decision to act as a consumer agent for competitors’ mortgages, rather than just selling its own products, was further evidence that change is in the air.

Content management: the notion that non-techies can have a hotline to their company’s website – creating, changing and publishing content without the aid of an IT department – began to take route in 2000. And while 2001 wasn’t quite as explosive for content management as some had hoped, the year closes with more and more marketers taking an interest in this subject.

If finance directors can overcome their compulsion to tightly grip the corporate purse strings in 2002, this area will be destined to blossom. As one content management convert recently told e-volve: “Being able to put special offers and promotions on our website without recourse to the IT department has totally transformed my job.”

Clicks and bricks: This phrase gained currency in 2000, but has come to acquire a new meaning in 2001. Whereas previously it implied the selling of goods and services both online and offline, it is now often used to suggest selling offline while using online as a pre-purchase research tool. That is because companies no longer feel under such pressure to offer an e-commerce alternative to the high street – particularly since fulfilment has proved much trickier than was first anticipated.

Companies do, however, appreciate the potential of an online presence for building brand values, developing customer relationships, showcasing products and services and offering a wealth of information. A prime example is camera retailer Jessops, which uses its website to educate consumers to the delights of digital cameras, but prefers to close the sale in-store, maximising the value of its highly trained sales staff and adding a reassuringly personal touch to the otherwise impersonal world of technology.

CPMs vs click-throughs: Online advertising ends 2001 in very different shape to the way it began the year. The banner ad’s demise as the dominant format has opened up a Pandora’s box of new revenue models and measurements. And the idea of industry-wide ratecard prices has been left in the dust of collapsing dot-coms and shattered dreams.

Weak websites have seen their CPMs (cost per thousand) fall through the autumn, but strong sites such as FT.com and Handbag.com have actually been able to increase theirs. Other sites have shown a newfound willingness to offer advertising deals based on a mix of CPMs and click-throughs. In this respect, it’s been a messy 12 months but an important period of change. The Internet bubble of 2000 brought with it the illusion that online advertising could exactly mirror offline advertising models. This year has shown just how misguided such thinking was.

CRM: Customer relationship management has finally stopped being the ubiquitous buzzword it was in 2000. The global economic downturn has brought software and IT vendors back to earth with a bump and they are no longer able to bamboozle us non-techies. But fewer sales pitches seems to have given companies a useful breathing space, with time to take stock of their CRM systems and processes and to decide what they really want from them.

There has been a steady stream of companies announcing a unification of their call centre and website operations, most recently National Express Group. Even BT, through its BT Retail division, has finally announced its determination to get to grips with its many and diverse customer contact centres, uniting them all through some newly installed Siebel software.

But the key CRM quote of the year must come from the marketing department of matches and tobacco company Swan, which noted: “Our approach to data collecting is pragmatic. Consumers will give you their data if there’s a reason to do so – they don’t want a relationship with us.”

E-mail: This was the year that e-mail took over from advertising as the online marketer’s weapon of choice. E-mail marketing has become so popular that even Doubleclick, so closely aligned with banner advertising in 2000, has now reinvented itself as an ad technology and e-mail specialist.

Marketers’ growing love affair with viral marketing – where company initiated e-mail’s are sent from consumer to consumer, appearing to legitimise the message – spread throughout 2001 like, well, a virus. Unfortunately, malicious e-mail viruses, plus over-zealous use by some bandwagon-hopping marketers, have taken the innocent shine off this new technique.

Moreover, 2001 ends with a new threat to e-mail marketing: looming EU legislation demanding that consumers must opt-in to receiving such e-mails rather than having the chance to opt-out. While some practitioners see this as a necessary way of weeding out the spammers, others believe it’s real victim will be smaller companies whose brands are not already well-known to consumers.

Fulfilment: This remains an unfulfilled promise. A relative latecomer to 2000’s Internet party, the so-called e-fulfilment industry was first to feel the chill winds of economic downturn. Radical new ideas for delivering goods to homes while the occupants are away seem to have been on hold during 2001, but the challenge has not gone away.

Perhaps the most significant move of the year was the Post Office’s decision to offer consumers the option of having packages delivered to their local Post Office, for a small fee. This is a far cry from the space-age drop-off boxes being mooted 12 months ago, but it’s a start.

If e-commerce is to take off, the antiquated fulfilment chain needs an overhaul. As a re

cent Forrester report notes: “Retailers don’t know their true costs [when selling online] and falsely believe that increasing volumes and squeezing vendors will solve their cost problems… As external factors won’t drive fulfilment costs down, online retailers will have to focus on one key metric per component – contact centre, warehouse, and delivery.”

Games: One of the dark horse hits of 2001, games became a must-have tool for many online marketers. Often coupled with viral marketing campaigns, games proved a compelling new medium for building brands and customer relationships. Brands as diverse as Barclays, Durex, Go, Cadbury’s, Lynx, Honda and Virgin have used games to project themselves to new audiences in new ways, often using the potent weapon of humour. Ironically, many games websites have fared badly, notably Gameplay and Freeloader.

But mainstream consumers seem more prepared than ever to indulge in a bit of spontaneous gaming, and have no problem if the game is used as a branding vehicle by marketers – so long as it provides a few pleasurable moments of distraction from the daily grind. Mobile communications devices and Interactive TV are also seeing a surge in marketing-driven games.

Interactive TV: This was supposed to be the big break-through year for iTV, especially as broadband Internet failed to materialise. But as 2001 draws to a close, things couldn’t be looking much grimmer for some of the players in this market. NTL, in particular, seems very wobbly, with relatively feeble revenues and mountainous debts.

Most observers agree that for iTV to take off, it needs either one player to dominate – Sky Digital looks best positioned to do so – or for the industry to agree on a common technology platform. Advertisers have been expected to act as guinea-pigs yet pay high fees. And reconfiguring their campaigns for different platforms has made the whole process far too tortuous.

The other big inhibitor to growth is a lack of shared data to prove the effectiveness of iTV: unsurprisingly, those who do invest money and time in this untested medium tend to keep their knowledge to themselves.

Marketing management software: This is in danger of becoming the Next Big Thing, since it has only emerged during the last quarter of 2001. Although it lacks the obvious sex appeal of yesteryear’s dot-com headlines, marketing management software (MMS) could actually have a bigger impact on marketers’ day-to-day lives.

The idea is to use the Internet to ensure that today’s global marketing departments are singing from the same hymn sheet and equipped to move as fast as possible. Or, as Dan Maurer, chief executive of P&G-backed Emmperative, puts it: “Imagine past projects, market research and in-depth marketing expertise not only available company-wide through a centralised online library, but delivered to users’ desktops when they need them during the course of a project.” Look out for more about Emmperative in e-volve’s January issue.

Mobile Internet: It may sound macabre, but the tragic events of September 11 seem to have acted as a catalyst to the US mobile phone industry, with consumers feeling compelled to be constantly in touch with family and friends.

At the same time, the personal digital assistant (PDA) market has been revitalised by the extremely successful entry of Compaq’s iPaq, Sony’s Clié and Handspring’s PDA-mobile phone hybrid. The coming year should see the emergence of devices which are equally balanced between data and voice.

Paid-for content: This has been the story of the second half of 2001, and it is a cause for real excitement. Rather than regretting the need to charge consumers for what was formerly free, marketers should see this as a chance to enter into much more meaningful relationships with paying customers.

Next year will no doubt produce inspiring examples of the transition from free to paid-for content, with customers valuing the service more rather than less. The revenues provided by this new income stream should give marketers the confidence to invest further in online projects.

Websites that have switched to fees include those of e-greetings card companies, newspapers, finance specialists, e-mail providers and webcasters.

Personalisation: The Holy Grail – Internet services that show an intimate, instinctive understanding of individual consumers – is still a long way off. Indeed, to some degree it may always remain in the realms of fantasy.

The good news in 2001 was that marketers stopped talking about personalisation as if they knew exactly what it meant and were already implementing it. In place of 2000’s hype, this year has been one of slow, steady progress, with companies experimenting quietly. There is still no “killer application” for personalisation, which shows just how much you need the personal touch rather than relying on software, no matter how whizzy.

So perhaps the greatest achievement in personalisation this year was the encouraging number of manned call centres set up to complement website activity, and to provide the all-important hand-holding which nervous online neophytes require.

However, as with e-mail (see above), the year ends with a worrying question mark over one key aspect of personalisation: cookies. The EU is debating whether to make them something you have to opt into rather than opt out of receiving, and it is incumbent on the Internet industry to prove why the latter is preferable.

Promotions: Companies such as Tetley and Coke have shown the extent to which the “old economy” has stormed the barricades of the “new economy” in 2001. Tetley’s enthusiastic use of e-coupons points the way forward to an exciting new era for the promotions industry, as does Cokeauctions. The latter deservedly won plaudits for its creative combination of ring-pulls and website, giving young consumers an instant “currency” and Coke a newfound channel of year-round communication.

Text messaging: Last but certainly not least, text messaging has been one of the most exciting new marketing media since the arrival of the Internet. There was a lot of scepticism about its suitability for marketers as 2001 began, but high-profile campaigns by blue-chip companies soon dispelled doubts.

Most notable was Cadbury’s campaign, starting in the summer and still going, which took commercial text messaging to a vast audience. The potential to gather and analyse consumer data based on time of purchase – an as yet under-researched aspect of text message marketing – is just one reason why 2002 should be another banner year for this medium.