e-Biz Revisited

Trends to Watch

Online advertising may have sunk down to basement level, but marketing is still an essential part of growing your e-business. Banner ads are certainly abundant and cheaper than ever before. However, they're an amorphous proposition for a growing e-business with a tight budget. Getting results is all about good targeting, and banner ads can be iffy unless they're run on tightly relevant Web sites.

Powell has made use of several low-cost marketing tools that can be effective for many types of e-businesses. The first is a newsletter with product offering updates that he sends to an extensive opt-in e-mail list, much of which signed up when EngineerSupply.com was just an informational site. An affiliate program rewards other engineering sites for sending sales his way. He had 50 affiliates signed up after one month, a dozen of which are high-traffic engineering portals. "I haven't done much of the marketing where you just take a shot in the dark," he says. "Most of it's pay-for-performance. It's the only way when you don't have any capital."

Clarke is excited about games--advergaming to be specific. It's not everybody's cup of cybertea, but a craftily designed online game can hold customers' attention while helping your company establish branding. Interactivity is the key element.

As a tightly focused B2B service provider, DataCert doesn't have much need for regular forms of advertising. They haven't ventured into advergaming, but they have found a marketing winner in the offline world. Academic-style e-billing seminars done in conjunction with professional services powerhouse Ernst & Young have been "hugely successful," says Elfman. Web seminars conducted solely online can also draw in leads. Just be sure to take an informational, rather than an infomercial, approach.

Everything from security issues to Internet company failures has taken a toll on the psyches of online customers. To counteract this credibility incredulity, Petersen says, "smaller companies can associate themselves with brand names and have partnerships with established players. That may attract customers because they want to see that you're in it for the long term." The term ROI is being enthusiastically bandied about. That goes not just for your own ROI, but the ROI proposition you offer customers. "Let them know how their investment in you helps them save money or grow their business, because everybody is looking at the bottom line these days," she continues.

It's hard to imagine the words "buzz" and "Internet" going together again without causing nausea. But that's how many analysts are looking at the growing area of Web services. There is legitimate reason. Essentially, Web services are parked on servers that make them accessible from any Internet-access device. A rudimentary example is booking a flight from a cell phone, PDA or computer. Possible applications range from subscription-based consumer services to e-business-enabling services.

For entrepreneurs specializing in building new technology, the market for Web service software and development looks attractive. Heavy-hitters like Microsoft already offer tools, but the area is fresh enough to make room for agile entrepreneurs with strong imaginations. Visit the Web Services Interoperability Consortium at www.ws-i.org to keep up on what's moving and shaking.

According to Petersen, other hot areas to keep an eye on are biotechnology, wireless, storage infrastructure, network security and health care. "E-business to a large extent mirrors what's going on in the economy at large," she says. She also points to international markets as major growth points. Opening your e-business up to overseas sales can be a giant step. Check into international commerce laws and the cost of making your Web site accessible across languages and cultures before you leap.

What we think of as "e-business" is set to expand in the future. After all, the "e" stands for "electronic," not just "Web" or "Internet." Clarke sees wireless playing a big role: "We've been chomping at the bit. It's probably about two years before the U.S. is wired in a way that makes sense and brings costs down." She suggests that wireless e-business entrepreneurs can cast their net for global opportunities until the United States catches up.

Nobody is expecting an e-business resurgence on par with the original rush, and that's a good thing. "E-business is not its own separate category-I think that's been proven," says Petersen. "It's not immune to the laws of business in general. However, the pace of the Internet is different. The customers are becoming more and more like mainstream customers." Entrepreneurs are adapting and playing to the strengths of the Web to help their e-businesses move forward out of the remnants of the storm.

Whether you're an EngineerSupply.com, a DataCert or something else entirely, you can lay a solid foundation on the shifting sands of the Web and grow from there. Consider these parting shots. As Clarke sums it up: "E-business is about business basics done in a digital manner."

And according to Petersen, "If you can cut through the hype, there's growth there. There's potential there. More so than almost any industry." You've already got your feet wet. Now go ahead and dive in.

Let Me See That

E-BUSINESS ISN'T DEAD YET. IF YOU DON'T BELIEVE US, CHECK OUT THE STATISTICS FOR YOURSELF.

  • Shop.org, an association of online retailers, says that 56 percent of online retailers reported profitable operations in 2001. That surprisingly high figure shows that many e-tailers made it through on the strength of a profitable business model.
  • Jupiter Media Metrix reports that two-thirds of U.S. consumers will not pay for any services on the Internet. This should make entrepreneurs think twice about relying on consumer services for revenues. Business services has proved to be a healthier area.
  • Web-native ASP services in the United States will attract $1.5 billion in spending in 2006, up from just $200 million in 2001, according to IDC. This could be a strong growth area for online entrepreneurs.
  • According to Forrester Research, 67 percent of European consumers will be online by 2006. International markets will offer opportunities for e-businesses that make the effort to reach out.
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This article was originally published in the November 2002 print edition of Entrepreneur with the headline: e-Biz Revisited.

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