Webonomics : Nine Essential Principles for Growing Your Business on the World Wide Web - Hardcover

Schwartz, Evan I.

Hardcover

ISBN 10: 0553061720 ISBN 13: 9780553061727

Publisher: Broadway, 1997

Synopsis

The World Wide Web has become the most important new communications medium since television, with tens of millions of people now on-line and Web sites
springing up at the rate of one per minute.  It has also created a digital marketplace where consumers can search for the best deals and services in an instant.  While almost everyone agrees that the Web provides excellent marketing opportunities, many businesses don't know how to use it effectively and have been losing millions of dollars because of it.  

In Webonomics, Evan I. Schwartz shows how the new Web economy mirrors the traditional economy in some ways but also exhibits entirely unique
properties of its own.  Using numerous case studies of corporations such as IBM, Volvo, Playboy Enterprises, and Wells Fargo bank, as well as smaller companies and web-based start-ups, Schwartz documents both the tremendous failures and successes on the Web in a multitude of industries.  

Defining nine essential principles for growing your business on the Web, Schwartz challenges the conventional wisdom and shows how using traditional
business approaches on the Web can backfire.  Why are some products better suited to being sold on the Web than others?  Why are certain brand names gaining status and how do you create and then reinforce yours?  What are the new patterns of consumer behavior?  Webonomics answers these questions and shows how to capture the only scarce commodity on this information-based terrain: the attention of the busy people who are spending time there.  Putting the frenetic activity in a context, Schwartz delves into the new economic rules, new forms of currency, new ways to do business globally, and shows how to add value to existing products and build customer loyalty.  

In addition to offering practical wisdom, Webonomics tells a larger story about life in the Information Age.  It's about rising new communities, the next phase of capitalism, a shift in the role of government, and surviving amidst accelerating change, where only the most agile and adaptable businesses will thrive.

About this title

About the Author

Evan I. Schwartz (evan@webonomics.com) is a contributing writer for Wired magazine and a former editor at Business Week, where he covered software and digital media.  He has been the featured speaker at major corporations, business schools, and conferences.  Evan lives with his family in Brookline, Massachusetts.


From the Trade Paperback edition.

From the Inside Flap

de Web has become the most important new communications medium since television, with tens of millions of people now on-line and Web sites<br>springing up at the rate of one per minute.  It has also created a digital marketplace where consumers can search for the best deals and services in an instant.  While almost everyone agrees that the Web provides excellent marketing opportunities, many businesses don't know how to use it effectively and have been losing millions of dollars because of it.  <br><br>In <i>Webonomics,</i> Evan I. Schwartz shows how the new Web economy mirrors the traditional economy in some ways but also exhibits entirely unique<br>properties of its own.  Using numerous case studies of corporations such as IBM, Volvo, Playboy Enterprises, and Wells Fargo bank, as well as smaller companies and web-based start-ups, Schwartz documents both the tremendous failures and successes on the Web in a multitude of industries.  

Reviews

Commercial Web sites proliferate, some even turn a profit, and prudent businesspersons are thinking that knowing what makes for Web site success may be a necessity. Despite its neologizing title, common sense prevails in Schwartz's adviser, as such chapter titles as "Consumers Must Be Compensated for Disclosing Data about Themselves" and "Even the Smallest Business Can Compete in the Web's Global `Marketspace'" attest. Furthermore, Schwartz provides plenty of case studies. He explains why Playboy's Web site, despite drawing nearly four times the number of visitors, is not as successful as Bianca's Smut Shack (Playboy lacks the sense of community that Bianca's provides; her visitors come more frequently and stay much longer). A site has to take advantage of the unique attributes of the Web and not be "shovelware," recycling content from other media, Schwartz says. He soberly emphazises the Web's global nature and its innate aptitude for providing "customer service, selling products directly, establishing a dialogue with customers, and expanding the geographic base of a business." Benjamin Segedin

Schwartz, a contributing editor of Wired magazine, has written the first marketing history of the World Wide Web. Though marketing successes and failures on the web have little history to offer, Schwartz has done a remarkable job of collecting the marketing experiences of companies that have entered this new medium. He introduces and supports new philosophies for web marketing in chapter titles such as "The Quantity of People Visiting Your Site Is Less Important Than the Quality of the Experience" and "Marketers Shouldn't Be on the Web for Exposure, but for Results." Readers will discover how web pioneers like Playboy and Volvo failed in their initial forays. Lucid, thoroughly researched, and packed with essential information, this work will serve as an indispensable resource for both blue-chip and mom-and-pop enterprises doing business on the Internet. Highly recommended for all academic and public library business collections.?Dennis Krieb, St. Charles Cty. Community Coll., Wood River, Ill.
Copyright 1997 Reed Business Information, Inc.

Excerpt. © Reprinted by permission. All rights reserved.

The Foundation of Webonomics

New sites on the World Wide Web have been cropping up at the rate of one per minute.  As it expands at this astounding pace, it's clear that the Web's colorful entanglement of words, pictures, sound, and motion is briskly becoming more than just the most important new communication medium since television. The Web is more like a parallel universe that mirrors the physical world in some ways but exhibits entirely unique properties in others.  And if you hang out there long enough, you will slowly discover that there's nothing less than an entirely new economy taking shape on this digital terrain--and a new way of looking at the way this marketplace of information and ideas works. Call it Webonomics.

Many of the businesses now piling onto the Web may totally misunderstand what this new medium is all about.  They may end up losing millions of dollars and eventually decide that the Web isn't living up to its hype.  Other businesses may totally ignore the Web and get left behind.  Their competitors, meanwhile, will use the Web as a tool to literally steal their best customers away. Averting such scenarios will only come with a keen understanding of Webonomics.

Traditional economics is based on the notion of scarcity--that human desires will always exceed available resources such as food, clothing, and shelter.  It was Thomas Malthus, the English economist, who first postulated that populations will always increase faster than the food supply.  This pessimistic focus on the allocation of scarce resources is what earned economics the reputation as "the dismal science."

Webonomics is anything but dismal.  On the Web, precisely the reverse is true. Since the Web is a fast-growing world of intellectual property that can be copied and downloaded ad infinitum, its supply of resources will continue to soar past human demand for these resources.  Instead of a scarcity of supply, the Web economy exhibits a scarcity of demand.  Indeed, one of the main complaints about the Web is that it's "mind-boggling" and "too overloaded" with information.  On the Web, the main commodity in limited supply is the attention of the busy people using it.  The underlying battle in the Web economy is the ability to command and sustain that attention.

As such, growth of the Web economy has everything to do with the quality of the information there--how interesting and engaging it is, how it is presented, and how it takes advantage of the unique attributes of the medium.  As more and more people continue to enjoy the Web, as they find it worthy of their attention, the Web will continue to grow at its frenetic pace.  Unlike a national economy with limited resources, there are no physical limits on this growth.  Unlike real estate, steel, or even paper, computing power and computer storage is cheap and getting cheaper.  There's an infinite number of bits in the universe and a virtually bottomless hunger for valuable information and knowledge.

The Web is also a world without borders in which the physical location of a company doing business there is of little importance.  Despite efforts to do so, the Web economy will resist efforts by national governments to control or regulate it.  It will be up to each citizen of the world to choose what they see and do.  In this sense, a totally free-market economy had been considered to be only theoretically possible in the past; the Web makes it practically possible for the first time.

The nature of this beast is both good and bad.  Because of the abundant choices available, the combat among companies is, in the words of Sun Microsystems CEO Scott McNealy, one of "fierce Darwinism."  To succeed, businesses on the Web must invent new ways to market themselves, new ways to learn what customers want, new ways to forge lasting relationships with them.


Marketers Shouldn't Be on the Web for Exposure, but for Results

Brochure-Ware

Mass marketing won't work on the World Wide Web.  The idea that marketers can burnish a brand image in the minds of millions is fine for a TV advertisement or a print campaign.  But it's an unrealistic fantasy in this new medium.  What the Web can accomplish for marketers is potentially even more powerful.  Still, countless marketers have ignored what the Web can do well and mistakenly tried to use their Web site to do what they have always been doing--simultaneously shipping the same message to the masses.

Consider the case of Volvo.  In the fall of 1994, Volvo Cars of North America became the first automaker to establish a Web presence and one of the first advertisers on popular content sites.  In those early days of the Web, the most popular content creators, such as Hotwired, Time Warner's Pathfinder, ESPN SportsZone, and Playboy's site, all began charging between $30,000 and $100,000 for a three-month placement of a logo or banner on their digital pages.  These ads are also known as "links."  Click on one of these buttons and your eyes are transported, or linked, to a promotional Web site running on some other computer somewhere else.  After interacting with that advertisement, you will presumably link right back to where you were.

In buying banner advertisements on the Web, Volvo was hoping to enhance its brand image.  And by attracting Web surfers to its site, the Swedish automaker also wanted to give people in the market for a luxury car a new information tool that would make them consider a Volvo more seriously, says Bob Austin, Volvo's director of U.S. marketing.  He notes that only about 6 percent of the adult population has the money and inclination to buy an automobile costing at least $30,000.  He saw those people as having a high overlap with the early Web surfers.  "We know that our potential buyers are well-off and tend to be early adopters--people who enjoy technology," Austin says.  So the company spent about $100,000 developing and advertising what started out as essentially just an electronic brochure.

Not only did the Volvo site fail to lead to many, if any, sales, but it actually caused unintended problems.  The only truly interactive part of the site was the ability to send E-mail to Volvo's U.S. headquarters in New Jersey. "People would occasionally write things like: 'Nice Web site, but the sun roof on my 850 leaks,'" Austin says.  Many state lemon laws require responses to such complaints within a few weeks, otherwise the manufacturer has to take the car back.  Since Volvo failed to staff the site with people who were qualified to respond to such complaints, the Web site became a tool not to increase sales but a potential way to damage them.  So the E-mail feature had to be shut down within a few weeks.

With that bitter experience in hand, Volvo decided to pull back all its Web advertising and simply promote the site in its own TV and print ads.  Austin says he just wasn't getting value for the money spent, especially since the content sites weren't able to provide hard numbers about who exactly they were linking to his site.  "I'm not comfortable throwing more money at advertising the site," he says.  "We're not here to sell Web sites.  Web sites should be here to sell cars."

Volvo made two crucial mistakes.  The first foible was in treating consumers on the Web as a distinct demographic group in and of itself.  Back then, that was understandable.  It's true that the early Web surfers tended to be upscale, well-educated, techno-savvy males.  Although it may always tilt to that core audience, the Web is more and more coming to resemble a cross section of the population at large.  As bigger crowds of people stream into cyberspace every day, the trick for marketers will be to pluck their best and most likely customers from that pool--not indiscriminately trying in vain to reach all of them.

The second, much bigger mistake was failing to take advantage of the unique attributes of the Web.  Providing potential customers with an electronic rendition of a brochure--brochure-ware--is of little value when it's faster and easier to flip through one made of paper.  As a result, Volvo was not able to forge relationships with individual consumers.  The only method Volvo had for trading information with consumers was the nonfunctional E-mail feature.  The worst thing you can do is suggest that you're willing to communicate with customers and then not have the capacity to respond.

A New Psychology

Advertising, it has been said, is all about unleashing desire.  An effective advertisement will make you yearn for something that you previously didn't know you needed.  Ad men, John Kenneth Galbraith wrote in his 1958 book, The Affluent Society, "are effective only with those who...do not already know what they want.  In this state alone, men are open to persuasion."

Consider cigarette ads.  The FCC banned them from the airwaves in the early 1970s precisely because these commercials were able to convince people that cigarettes, although dangerous, are glamorous.  Print ads for cigarettes have a similar effect, even though they may not be as potent.  The Marlboro Man is still one of the world's most recognizable characters.  The vision of a cowboy riding his horse through a shallow lake as the setting sun bounces off the pale mountains is alluring.  The "Come to Marlboro Country" campaign works through ent...

Edition details

• Publisher: Broadway
• Publication date: 1997
• Language: English
• ISBN 10: 0553061720
• ISBN 13: 9780553061727
• Binding: Hardcover
• Edition number: 1
• Number of pages: 256