2. Internet Trends Internationally

2.1. Shopping on line; researching offline. Researching online; shopping offline

Any seller not having a website will lose out badly as time progresses and I describe below how and why it will happen in fact this process has already started and is now picking up speed. Just at the weekend (May 2005) it was reported by Sky TV news in the UK that high street retail sales were down across a broad spectrum yet retail sales in total were up thanks to online purchases. However it gets even more serious than this as far as the average retailer is concerned.

CHRISTMAS SALES IN THE USA ONLINE

Take a look at this forecast below

When the shopping was done and sanity returned in January 2005 the online sales had in fact exceeded 30% yet again. Now of course this growth is of a reasonably low base but the fact remains that online sales are surging ahead at the cost of shopping mall sales.

A research company called www.digitalcenter.org has published for the last 4 years trends concerning the behavior of USA shoppers both online and off-line. Their findings are either exciting or worrying depending whether youre a believer in the web or a stuck-in-the-past retailer. This report is free and I suggest you take a look at it.

One of the major conclusions is that large chunks of the online community are using the commercial Internet in 2 major ways:

• They are doing research online and making a product decision as to where to buy it off-line. In other words price comparisons, product specifications are being confirmed on the web and the shopper then goes off to the real world store to buy. It is obvious that if any store is not found in this kind of research the chances are high that that store will not make the sale to this Internet-savvy customer.

• Consumers are doing research off-line and then coming home and buying online at the best price/service offer using shopping channels like Googles online shopping comparison channel Froogle http://froogle.Google.com/ The image below shows that you can armchair shop for the best price for virtually anything in the simplest possible way. Froogle searches all online stores for the product wanted and returns results from every store with the corresponding price. I bought myself a digital camera in 2004 using just this method and saved $500 (about 50%) on what I would have paid in South Africa

Froogle and other shopping comparison websites allow you to find lowest price for virtually anything quickly and easily not yet available in South Africa (but it will be then watch retailers wake up). This image shows availability of Canon Powershot A95. prices range from $239 to $356 . I think the retailer trying to sell at $356 has a problem.

This book is not written to convince anybody that the Internet is powerful, and the retail channel of choice for growing numbers of shoppers. I have written these few words to highlight that not having a website that gets found will result in two types of market share loss for any company

• Offline shoppers researching online
• Online shoppers researching off-line

SEO allows websites to get higher traffic or eyeballs as its often called.

2.2. Local search ... and why the yellow pages will get thinner not thicker

The local search medium of choice for many years has been the Yellow pages. This medium has been a license to print vast amounts of money for a long time and now it is under great threat from search engines.

The Yellow Pages is a non-interactive, static communications medium. The biggest and most colorful ad will probably get the most phone calls just because they are bigger not because they have the best prices, or best service. In fact it is almost impossible to use the Yellow pages to make any kind of objective conclusion about the company advertised.

What's wrong with yellow pages? ... What'd right with a working website?

In my 13 years in my own business I have never used Yellow Pages advertising much.

As a user (not advertiser) it always seemed to me to be such a hassle and more often than not I was overwhelmed in most cases by the number of adverts that appeared in each section. I thus assumed rightly or wrongly that most other people must have come to the same conclusion as I had so why should I spend money on this type of medium . just to get lost with no way to truly differentiate myself or my company.

What also always struck me as the biggest and most obvious problem associated with this form of advertising was the lack of information I do not mean telephone number or fax number. I mean down-to-earth information to help me make the right decision it was non-existent. I still had to make numerous telephone calls and then make an assessment based upon that call and frankly I had no idea whether I had made a good or bad choice.

How did I choose? more often than not on the size of the advert. Presumably the bigger organizations knew this which meant the little guy would get found less often.

So what is wrong with the Yellow Pages? well I actually rang to find out the costs of advertising in this medium. After 4 calls, being cut off twice and having had no luck rousing anyone in sales I was about to give up when I finally managed to reach a man who was in the print room but promised to get the information and ring me back.

He did ring me back and to say I was staggered by the cost is a true understatement.

I asked for a 4 color 1/8th of a page advert on a white background (to stick out) in the Johannesburg, East Rand and West Rand directories. Heres the quote below (October 30th, 2003). I thought not too bad until he told me this was per month NOT per year.

Same size black on yellow was about 35% cheaper

I thought thats almost R60,000 per year to get lost in thousands of pages. Of course once you are in it is impossible to modify an ad. Then I thought some more and mentally compared with what could be achieved on the web with 10% of that annual expenditure and concluded the following:

• On the web I am not limited to a small box, impossible to change except once per year.

• I can use color, layout, space, images, testimonials and even sound easily at tiny cost to appeal to thousands and thousands of pre-qualified visitors and offer as much valuable information as anyone could ever need including price, downloadable catalogues, FAQs and whatever else you can imagine.

• On the web I can make a special offer just for a week, a month even a weekend if I want to.

• I get the total attention of the visitor to my site no clutter from other ads.

• The visitor can bookmark me for a later visit, easily without lugging a heavy book around and finding the relevant page again.

• My site can be found under as many categories as I wish not a single category.

• On a web I can offer to keep contact with a newsletter and therefore get a potential lifetime customer.

• I have only myself to blame on the web if I am not better than any of my competitors. On the Yellow Pages I remain just one of many ... I have virtually no control and God forbid if my telephone number changes during the year, or it is incorrectly printed.

• The web allows me to establish myself and my business as an expert in the field. It allows me to interact with my visitors.

• Maybe the most important difference I am exposed to a global audience not just those with a landline in Gauteng.

• All this for a maximum of R500 per month, cant be bad.

I dont think I will be changing my view on Yellow Pages . But tell me why do so many companies spend these exorbitant amounts of money on such a poorly performing medium when all they need is a website. The answer in my opinion is that the vast majority of advertisers dont know how easy and effective a website can be.

If you keep an eye on internet developments, like I do, you will have taken note of what is happening in the US, Australia and elsewhere. The one business sector that is guaranteed to lose out to the internet is Yellow Pages . not tomorrow, not even next year but as more and more people become internet connected, net-savvy and learn how to use search engines it is inevitable.

Google and Yahoo and probably MSN have specifically targeted local search as a means or wresting control of this massive d medium away from Yellow Pages.

Thats why its inevitable that the Yellow Pages will get thinner its called progress.

Google has also developed a localized search capability that allows people to search only in specific geographical areas e.g. Manhattan 42nd street only.

Heres an example I wanted to find a place that sold Pizzas in Plymouth (UK) and choose from a list. This is what Google presented me with a great choice, websites to click on and a map showing all locations in Plymouth. They all provide directions to your chosen outlet by the way. Thats magic ..

How can Yellow Pages ever hope to compete with this awesome search and display power?

Of course Itll be a while before we see this in South Africa but ... just watch for the newcomers to take on Telkom. This is an area where newcomers will hit Telkom hard using modern technology and systems like those of Google and Yahoo and others.

2.3. Death of directories and why they are doomed

When did you last use a directory a better question when did you last deliberately use a directory and find what you wanted? If youre like me it was a long time ago.

The simplicity of a search using a targeted keyphrase is so quick and simple and for the right kind of phrase very accurate. Given this situation why would anybody want to use a directory?

2.4. Advertising revolution and the terrible waste of advertising spend

Ordinary people are sick and tired of interruption advertising. For this reason the web is a major marketing revolution.

Consumers are looking for trusting relationships, value for money and WIIFM (whats in it for me). Contextual advertising on the internet goes a long way to providing WIIFM and it represents superb value for money and immediate ROI information for all marketers interested in anything other than so-called brand protection.

Only the internet can deliver highly targeted (i.e. contextual) messages instantly to those looking for such messages and information. An in-depth knowledge of how Internet marketing really works is the secret to success here and SEO and SEM (search engine marketing which normally refers to Pay Per Click search engine campaigns) are vital success components. Advertising agencies do not have SEO and SEM knowledge in general. Frankly most still need to actually acknowledge the presence of the Internet. Most have not reached the lets embrace the Internet stage yet.

Everybody who is anybody in the advertising world will tell you ... it is tough to get any brand noticed in traditional marketplaces these days. Consumers are over-burdened with "brand" messages and starved of true contextual (benefit type, targeted messages providing value to the consumer and not the advertiser)

It is reckoned that the average consumer is bombarded by at least 200 different brand messages daily ... and these messages are received at the most inconvenient time too, for example when you are watching your favorite TV program. This is what is meant by interruption advertising.

Modern marketing is all about what you and I want to hear (WIIFM ... what's in it for me?) when we want to hear it and certainly not what others want to tell us when we dont want to hear it.

Modern marketing is all about value for money, person to person communication. Marketers must know ROI for ad campaigns and this is almost impossible to get in traditional media and when it is discovered with any degree of accuracy or usefulness it is months later and vast amounts of money have been spent.

Brands are not top of the mind anymore except in the eyes and minds of advertising agents. Product benefits and value for money along with ease of purchase and rapid response service are top of the mind for rapidly growing armies of consumers.

Traditional advertising is extremely expensive and if you want to try to build a brand it is even more so. It is simply not possible for mere mortals with limited time and money to succeed using traditional expensive advertising approaches.

Trust is what it is about and nothing beats the internet for building trust with total strangers separated by continents.

GOOGLE CONTEXTUAL ADVERTISING

Google Adwords - one of the very best examples of contextual advertising.

Pay Per Click PPC) advertising is taking adspend away from traditional media in big way. In the first quarter of 2005 Google Adwords accumulated more than $1 billion of adspend and this expenditure on PPC is growing exponentially. Today Google has a higher market capitalization than Time-Warner.

The reasons are simple

• It is contextual i.e. meets the immediate needs of the web searcher

• Results of the ad campaign are measurable in almost real time as is the campaign ROI

• Ad campaigns can be switched on and off any time

• Ad campaigns can be modified and enlarged in minutes

Now how can any traditional ad medium compare with this model?

2.5. The state of website design generally relative to internet marketing in South Africa

Our country is some 3 or 4 years, maybe more, behind Europe, Australia, the USA and many other countries when it comes to the Internet.

There are many reasons for this chief of which in my opinion are as follows:

• High ISP charges for domain registration and hosting (often blamed on Telkom although this is far from the truth)

• Lack of bandwidth available certainly the national telecom operator Telkom is 100% to blame here. The bandwidth is available it has just not been released in order to maintain high connectivity charges

• Lack of affiliate programs

• Lack of shopping channels

• Lack of on-line merchants and exorbitant charges made by those companies offering ecommerce websites such as a major ISP here.

• Lack of easy to use shopping carts

• Lack of Payment gateways for ecommerce

• Website designers not paying any attention to even basic SEO so most website owners complain the web does not work in South Africa when they really mean that their website does not attract any traffic. When you look at the state of the vast majority of South African websites it is plain to see why they fail to attract traffic.

• The media in general rarely publicize any positive, motivational Internet coverage yet they pounce on any single event that has any negative connotation such as the occasional stealing of a credit card number. People are thus scared of the web.

In 2004 we exhibited at the premier IT event in Johannesburg called Futurex. The 4 days we spent discussing Internet marketing with a large number of participants and website owners confirmed what we thought we knew before going to the show.

On returning from the show we investigated every single website of all the participating exhibitors (web addresses were obtained from the show catalogue) and confirmed why so many leading websites stood no chance of ever being found on any search engine anywhere in the world.

So bad was the result of our analysis that I wrote to the main business newspaper published in South Africa. Heres the letter that tells the story of almost exactly 12 months ago. The situation has not changed

Letter to business day editor ... never published to best of my knowledge

SIR

The four days Futurex show at Sandton last week appears to have been an exceptionally successful marketing event in that it seemed to attract lots of highly targeted visitors... those interested in future trends and the internet/communications world in particular. However I wish I could say the future potential of the vast majority of websites of the exhibiting companies was also as exciting.

By the end of the show it had become obvious to us that most web designers and website owners were unaware of even the basic requirements that mattered in getting a website found on the already crowded internet.

In an effort to try and better comprehend what we seemed to have identified as a major lack of understanding about website design, development and purpose within the communications and information technology areas of South African Industry we looked at the websites of every exhibitor who had published their website address in the show catalogue.

We seemed to identify a sorry state of affairs within these "leading" marketing and communications companies internet capabilities .... anyone interested in wanting to know any details can access the internet directory web page that we have created to see how poorly these sites in the main were set up. Here is the web page address for the directory that was created.... http://www.seoza.com/futurexlinks.htm

In taking a look at the link subject and site description text the only question any manager or website owner needs to ask is "Does this directory entry text create excitement about the benefits my company offers to any potential internet customer and based on this are they highly likely to click through to the company website?"

The information in the directory has come from the website concerned without any editing whatsoever. We even struggled to place many websites into appropriate categories so poor was the information on some websites.

We identified a number of serious deficiencies. The deficiencies highlighted were measured against the overriding objective for any website .... Let your website be found by the maximum number of targeted visitors so that future marketing efforts can be geared to satisfying the lifetime needs of those potential customers who visited the website.

These are the major points that we identified from this ad hoc "research." We deliberately excluded foreign exhibitors' websites

1. Of 159 published websites well in excess of 90% were highly unlikely ever to be found on any search engine when important keywords and phrases relating to the particular market sector concerned were entered into the search box of a search engine.

2. The vast majority of the websites viewed were company-focused and NOT customer-focused.

3. A large percentage did not tell the reader of the site what the site actually did in a way any normal person could understand. The level of gobbledygook and computer speak was alarming.

4. The sites were full of Flash design, frames, and other unimportant design approaches that worked against the websites ever being found ... it does appear highly likely that web designers with no internet marketing knowledge and not senior knowledgeable company marketers are being allowed to position many large companies for the future and in our opinion this cannot be correct.

This situation reminds us of the problem, as we perceive it, existing in South Africa around call centres ... what should have been a major step forward in customer service is actually frustrating customers and insulating company management from real problems within a company. It is a kind of abdication of real responsibility.

5. Of the many people we spoke to at Futurex who had functioning websites hardly any knew how many visitors their sites were attracting

6. Very few websites actually provided any mechanism to collect information (e.g. permission-based email addresses) for future marketing efforts. With only minor exceptions did any site call for any action to be carried out ... like visit our online store now, buy now or download our price list or catalogue now.

Many millions of Rands were spent by the exhibiting companies ... the time has come for the same companies to spend a few hundreds to fix up their future internet marketing efforts or continue to pay to remain lost in cyberspace.

Tony Roocroft

http://www.seoza.com search engine optimization and internet marketing

011-454-0105, 083-680-4467