When In Doubt, Buy Someone Out
With the ink still dry on its wacky deal to sell online advertising for Google, BellSouth has topped itself by announcing an Internet yellow pages joint venture with SBC Communications. And if that isn't enough, the new joint venture has announced that it is finalizing a deal to acquire Internet start-up YellowPages.com. The dust hasn't settled sufficiently to know if the new joint venture will also be selling online advertising for Google, but hey, why not?
What's going on here? Great question. Having had limited success selling to their own home markets, these two regional giants will combine forces so that they can enjoy limited success selling online advertising in their combined home markets. The press release announcing the joint venture proudly notes that it will have "50 million monthly consumer searches, giving advertisers increased traffic." Actually, the new joint venture's Web site will certainly get increased traffic, but the local auto body shop in Macon, Georgia isn't likely to, and therein lies the rub: yellow pages owes all it success to advertising from local businesses serving local markets.
The big yellow pages publishers have always been long on cash and ambition and short on creativity. That's why it's not all that surprising that when they want some fresh new ideas, they pull out their checkbooks and buy some. In this case, the fresh ideas are being supplied by YellowPages.com, a seven-year old Internet start-up, which is being acquired for possibly as much as $150 million, according to some press reports. Do the math: even yellow pages publishers wouldn’t pay that much for a domain name. What they’re really trying to buy is a clue.
Striking the Right Print/Online Balance
This week technology media juggernaut TechTarget announced that it's launching CIO Decisions, a new print magazine with a circulation of 60,000, targeted at senior-level information technology executives in mid-market companies.This will be the third print magazine published by TechTarget, which started life as a Web-based publisher serving information technology professionals, a group that by now you would think would want to receive all information digitally.
Also this week, the British Computer Society , another large group of information technology professionals. released the results of an extensive survey of its membership that found that members preferred to receive the Society's magazine, Computer Bulletin, in print format.What's noteworthy is that an audience so comfortable with technology still has an appetite for print, and that publishers are still willing if not eager to support that appetite. Perhaps it's a reaction on both sides to the problem of noise.
For subscribers, so much is flying by them so quickly in electronic form that it's difficult to keep up. The print format allows them to read where and when they choose, when they can best focus. For content that isn't time-sensitive, this makes a lot of sense.For publishers, launching a new Web-based publication means immediate competition with large numbers of competing Web sites, blogs and email newsletters. In print, the number of competitors is dramatically reduced, and with the reduced amount of postal mail being sent, a print publication can make a big impact fast.The British Computer Society study also found that members did want to receive certain things electronically, such as breaking news and job-critical articles, and they looked to the Society's Web site as a reference archive and member bulletin board.All this suggests that publishing in both print and online formats can actually offer competitive advantages, provided that publishers recognize that the optimal mix of formats will continue to change, and be ready to react quickly. It also suggests how dangerous it can be to ever assume we know what our customers want.
RFID" The "Next Big Thing"?
If level of press coverage is a reliable indicator, radio frequency identification (RFID) technology is poised to become the "next big thing."
What is RFID and why does it matter? RFID technology is deployed through tags that can be thought of like bar codes with little radio transmitters attached. More precisely, they are relatively inexpensive, paper-thin computer chips that can contain manufacturer codes, product codes and serial numbers and can broadcast this information to nearby receivers. RFID tags could revolutionize the tracking and counting of equipment and inventory, and therefore have potential applications in almost every industry. The first widespread rollouts of RFID are about to begin, and where there are products and inventory, there are (or should be) electronic buying guides and marketplaces.
Another important aspect of RFID tags is that the information on them has to be meaningful globally, and that means coordination, which means databases. The big winner to date is Verisign, which scooped up a contract to maintain the primary databases of companies and their products and ship that data rapidly around the world (RFID is designed to allow trading partners to exchange all sorts of product information on a real time basis). However, ICR believes that Verisign sees its biggest opportunity long-term in the movement of the data, not the data itself. That leaves manufacturers or their agents (industry database publishers, anyone?) to upload and maintain the product information.
Further, while the RFID specification provides for a globally standardized company numbering system, it anticipates that vertical industries will use existing product identification systems or create them. Thus, the book publishing industry will likely embed existing ISBN numbers into RFID tags, and the food industry will use UPC codes. Opportunities abound in those industries lacking such standard product identification schemes.
It seems every industry has its own exciting ideas of how to take advantage of RFID technology. The pharmaceutical industry wants to label all prescription drugs with RFID tags containing individual product serial numbers as a way to combat theft and counterfeiting. Almost every industry seems to see inventory applications, as merchandise can broadcast its arrival at the warehouse door, and its departure at the store's main entrance, all without human intervention. Wal-Mart has already announced that it will mandate use of RFID tags by its largest suppliers beginning in January 2005.
Pay-Per-Call: A Ringing Endorsement
CitySearch, producer of online consumer city guides (and a subsidiary of InfoCommerce Group's latest favorite, InterActive Corporation), has raised eyebrows with its announcement that it will be offering advertisers a pay-per-call option, in addition to its existing pay-per-click programs. Pay-per-call is analogous to pay-per-click, but the mechanism for capturing and measuring ad effectiveness is phone response rather than clickthroughs. Advertisers run a special number in their online advertisements, each call is tracked by the service provider, and the advertiser pays based on the number of calls received.What's going on? What we're seeing is increasingly explicit acknowledgement that -- gasp -- clickthroughs are not the same as sales. The great irony here is that the place where pay-per-click advertising apparently doesn't resonate is among smaller, local advertisers, so-called "unsophisticated advertisers" who view pay-per-click as buying increased traffic, not increased business. CitySearch believes, and we concur, that, when it comes to pay for performance, it's a lot easier to prove the value of, and charge for, forwarded phone calls than anonymous clicks. And while it may seem hard to believe, a large percentage of businesses still don't have Web sites, but pay-per-call can work for these companies, while pay-per-click can't. Pay-per-call combines the best of two worlds - the increased reach of the online media, the traditional measurability of direct response and the siren song of "pay for performance." And it proves the significant benefits of viewing old world and new world marketing channels as complementary rather than competing.While the CitySearch embrace of pay-per-call is significant, real credit for this important development properly goes to FindWhat, which launched the concept back in September. FindWhat is working in partnership with technology provider Ingenio; CitySearch is using technology from CIRXIT. This new technology is already hard at work chasing the huge B2C market, though we would contend the opportunities are just as big in B2B. Unlike the consumer market, B2B buyers are not known for purchasing machine tools, overhead cranes and printing presses through online shopping carts. B2B purchases are typically more complex, with longer sales cycles. At some point the buyer usually picks up the phone to call the seller. That's why showing true return on investment is so difficult for those selling pay-per-click programs to B2B companies. A pay-per-call capability is a much more apt and convincing selling tool for B2B publishers.So keep your eye on pay-per-call. For B2B buying guide publishers, this is one killer app that can actually live up to its promise
To Market, To Market
One of the most adrenaline-charged corners of the Internet during the dot com boom was occupied by electronic marketplaces. At their peak, over 1,000 of them existed, mostly in B2B verticals. By some estimates, fewer than 100 of them survive today, and the most successful of them are B2C marketplaces.
Electronic marketplaces are important to buying guide publishers because not much separates the two. Indeed, marketplaces offer a logical evolutionary path for buying guides because they support infocommerce precepts of business process integration and adding value by increasing user productivity. Most tantalizing of all, marketplaces hold the promise of transactional revenues, which can far exceed advertising and subscription revenues. It’s the right destination, but the road to this promised land has been a rocky one. (think IndustryNet – ahead of its time and VerticalNet – out of its mind).
Why are consumer marketplaces flourishing while B2B marketplaces struggle? There are three primary reasons. First, consumer marketplaces are a totally new concept, and compete only marginally with local yard sales and flea markets. They’re asking users to do something new, not change their established habits. B2B marketplaces, by contrast, are rigid and highly structured, and often require substantial changes in how users conduct their business. Second, it’s easier to achieve liquidity with consumer marketplaces – enough buyers and sellers to produce satisfactory outcomes on both sides. B2B marketplaces, by contrast, often need fantastically high levels of industry participation to achieve liquidity, and most fail before to achieve it. Third, consumer marketplaces are a borderline form of entertainment. They tend to be the electronic equivalent of noisy bazaars, with personality, pictures, and generally low price-low risk transactions. B2B marketplaces are more typically designed for the “rational” business buyer, so content is factual, quantitative and so uniform that computers can make purchasing decisions – and indeed some B2B marketplaces were designed with exactly that objective. So it’s no wonder that humans have been slow to embrace them.
The most important trend in consumer marketplaces is that they now are moving from the spot market, auction model to more conventional storefronts, where specific merchandise is dependably available at any time. In a sense, they are morphing from flea markets, where you never know what’s on sale, to shopping centers, where you go because you know exactly what you’ll find. This is a significant evolution and one that is now being adapted by business-oriented marketplaces (think eBay Business). With the organization of large collections of vendors in one place with common front-end interfaces for product discovery and ordering, we’re seeing the next-generation of buying guides, and they will present a formidable challenge. For buying guide publishers, the time for pre-emptive moves is now.