The Big Lie – the complete book online - 30 Internet

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Chapter 30

The Garden of Eden

Internet

The money is to be made in traditional businesses which happen to use the Net for distribution. Soon we’ll no longer think of the Net as anything but a distribution medium, an incredible telephone.

Michael Wolff, Burn Rate

As generations of householders have done, you’ve decided to use the long winter nights to plan your garden. However, you have not sent away for nursery catalogues, you have not kept newspaper cuttings of gardening articles, you own no gardening books, you take up neither pad nor pencil. Instead you slip the “Garden Planner” disk into your CD-ROM player. Using the simple graphic program, you draw the outline of your garden on your screen in exact proportion. You key in the vital statistics: its geographical location, soil type, orientation to the sun and the location of surrounding walls and buildings. A click on the smiling sun icon and your garden is overlaid with a grid representing half-meter squares shown in three different tones corresponding to areas of sun, deep shade, and partial shade. Now you click on the garden encyclopedia icon to select your trees, shrubs and plants. Each variety is shown in full colour, and you click on buttons to see how high and wide it will grow, how it changes through the seasons, what soil and sunlight conditions it needs to thrive, and what maintenance it requires. As you make your selections you drag them to squares on your garden plot. The program will refuse to plant specimens too close together and will bleep to warn you when sunlight or soil conditions are inappropriate. As you build your garden, you can use your mouse to view the display from any angle. A click on the calendar icon will show how the floral display will change month by month.

Switching to the annual calendar, you can see how your garden will mature in five years or ten years time. You adjust the colours and sizes of your groupings by replacing some of your original selections. You can alter the angle of view, too. Clicking on the garden fork icon will reveal what your garden maintenance programme should be month by month. The insect-shaped icon will tell you which pests to be on guard against and how to deal with them. When your garden is exactly right, you print out a hard copy of your design plus a list of the plants you’ve selected and the compost, fertilisers and other products you’ll need.

At this stage, previous generations of householders would have started writing or telephoning to nurseries or making the rounds of the garden centres to try to locate the chosen plants. A tedious task, and if you had chosen unusual varieties, usually you’d have to settle for something else, which could disrupt your entire plan. Instead, you now click on the shop icon to summon up a list of retailers who claim to stock the goods you require. You may choose to check their advertisements, too, before selecting a few suppliers which you find appealing, and sending them your plant and product list by modem. You use the standard stock query form which asks them to respond with availability and prices. When they do, you place your orders by credit card or cash transfer, arranging for delivery to be made to your home or, to save carriage costs, your nearest collection centre. You retain a detailed plan, which you can amend over the years, and a complete record of your purchases. So do the suppliers whom you have contacted. Because they can now predict your pattern of behaviour, the means to retain your loyalty are in their hands. They can offer you a contract to supply the consumable products they know you will need regularly – compost, fertilisers and pesticides – and advise you at the right season of plants which they know will be of particular interest to you.

Gardening is the most popular active leisure pursuit in Britain. More than 80 per cent of adults have access to a garden, and over two-thirds visit a garden centre at least once a year. At the start of the new millennium it was a £3.5 billion industry spending around £33 million annually in classic advertising media, plus lavish amounts on catalogues and direct marketing. It’s one of those pastimes, like DIY and cooking, which anyone can try, but which requires a great deal of expertise to do well. Simply to acquire the necessary understanding in these pursuits traditionally demanded a long apprenticeship and experience gleaned from a great deal of trial and error. Novices would often turn to a professional, a retailer, or an experienced enthusiast for specific advice. However, the boom in leisure activities and the development of modern self-service retailing methods created new high-volume information channels. Sources of personal advice were overwhelmed by the mass media: newspapers, magazines and books, radio and television programmes, and printed literature provided by branded products or retailers. The demand was so strong that information itself has become a product. The best-selling author in Britain today is the enterprising Dr D. G. Hessayon, who as proprietor of PBI, a leading manufacturer of garden fertilisers, recognised the need early on and virtually cornered the gardening information submarket with a series of popular easy-does-it booklets. He has sold forty million of them worldwide.

Today the problem for consumers, overfed from a variety of self-interested sources, is information indigestion. Consumers must rely on their advice. Yet apart from the privileged questioners of the Gardener’s Question Time panel, the flood of information is aimed at mass audiences. The individual amateur gardener still has to dig very hard to find the solution to his very parochial concern: what will look good and thrive in that particular corner of my garden?

In the new age of technology the balance of information power shifts to the consumer. The unique promise of the computerised “Garden Planner” concept is that it will enable you to apply comprehensive knowledge expertly to a very precise area: your garden. You will know exactly what you want to buy to put in it, what products you require to nurture it, and where to get them most conveniently and cheaply. After that, a little hands-on experience will swiftly turn you into the world’s leading expert on your garden.

In many markets such as this the Internet means that suddenly there is a whole new way of doing business. Yet the “Garden Planner” does not yet exist, except in rudimentary form, such as Geoff Hamilton’s Garden Designer introduced by GSP in 1996. Because it requires a total reorientation of the way companies traditionally do business, the “Garden Planner” model – developing new planning and delivery systems to satisfy individual needs – has not yet been widely exploited on the Internet. Companies open virtual shops instead, because that is how they sell now. Yet there are no technological barriers to perfecting the capabilities described above in many consumer sectors. What is missing is the distribution link, and that is simply a matter of commercial enterprise, an effective alliance between a CD-ROM publisher and a horticultural supplier, for example.

According to a Guardian/ICM survey 37 per cent of British adults had online access at home or at work by the end of 1999. People in Britain now do their banking and make financial investments from home over the Internet; they buy computer gear, books, CDs, videos, and fine wines, download music, plan their leisure activities, make travel arrangements, do the weekly grocery shopping and apply for divorces. These activities amounted to well below 1 per cent of all retail sales in 1999, a figure predicted to reach 3 per cent by 2004, according to the retailing research firm Verdict, or 7.5 per cent by 2005, according to the US consultancy Forrester Research. In the US the cable television operators dedicated to home shopping, QVC, Home Shopping Network, and ValueVision, had seen the future and struck deals with portal companies to sell their wares via e-shopping. Nevertheless, at the start of the new millennium selling via the Internet was still in its infancy.

So what was holding e-commerce back? Fraudulent trading was already being effectively addressed. Accessing online service providers was still unnecessarily complicated, but a few cogent exceptions such as Amazon had already pointed the way forward. Physical distribution was still a key problem; systems for the home delivery of grocery shopping were being re-invented, with massive and costly infrastructure. Webvan, the Californian online grocery service, burned through $1 billion before collapsing in 2001. UK supermarkets are cautiously experimenting with a humbler business model – stockpicking from existing shops for home delivery, just as your local grocer did a century ago. However, the major obstacle to the growth of e-commerce remains the mindset of the companies that try to use it. Most of the big companies which could benefit hugely from the Internet are in a state of denial about it. The railways did not start airlines, Hollywood tried to ignore television, IBM did not spawn Microsoft. None of the big communications companies cashed in on the Internet: why didn’t Disney create Yahoo, AT&T start America Online, and Time Warner develop Excite? Because these organisations have a substantial financial and cultural investment in the business they know, resulting in the phenomenon known as “leadership resistance”. All companies have a vested interest in maintaining the status quo. The short term governs: they are fearful of cannibalising their existing trade.

For these companies, the Internet is not yet essential, so they pay only lip service to the new medium. The way they operate now conditions the way they approach e-commerce. An early model was the idea that
e-retailing would be enhanced in the same way that physical shopping is, by grouping online shops together in cyberspace shopping malls, with the big names pulling traffic to all the sites. This ignored the obvious: that customers don’t have to get back into their cars to visit another site. Virtual shopping malls such as Barclays Bank’s disastrous Barclaysquare, which ran on CompuServe, also suffered from not being taken seriously by the big names which tenanted them. W.H. Smith failed to grasp the point of e-retailing by offering only 100 bestsellers.

Retailers view their website as merely another shop and set out their wares in the same way. The “Garden Planner” model, which requires a new dynamic of discovering and resolving individual consumer needs by direct interaction, is still embryonic: in 2000 a new horticultural dot.com company, crocus.co.uk, was offering to deliver from a nursery stock of 6,000 varieties, plus advice on planting, or even to put plants into the ground, but had not made the connection to self-planning. Only a handful of estate agents and car retailers were beginning to develop extra services which contribute to the consumer purchase decision.

Even dot.com companies created exclusively to trade online are still learning how to do it. Websites are almost invariably badly produced and have considerable capacity for generating ill will. The companies which sponsor them make the same mistakes they do in their paper communications; they design their website pages in the leaden style of a corporate brochure. You have to click through a lot of guff to find what you’re looking for. It’s like going into a shop to buy a sandwich and being given a cookbook. Others think the Internet is a shop window: their pages are stuffed with displays designed to dazzle and entice. That’s like going into a department store to buy a pair of knickers and being directed to the fashion show in progress on the fourth floor. An online sales site is neither a brochure nor a shop window. It is a sales counter. The customer is already in the store. The reason he’s there is that he has already reached the second behavioural stage. He is not in pre-contemplation mode; he is contemplating action. He probably knows more or less what he wants. At the sales counter he must be able to ask for it immediately and receive an appropriate response. Too many online sellers decorate their counter, the home page, with promotional displays designed to attract the attention of the aimless browser. The genuine customer can’t see the sales assistant behind the counter for all the clutter.

 

The Big Lie about the Internet is the contention that it is an advertising medium. It seems logical to put advertising on the Internet. Without any of the heavy costs and tiresome proscriptions which regulate other media, the high traffic sites on the World Wide Web can invent advertising devices of all kinds. By 1999 technology had developed to the extent that the lingerie firm Victoria’s Secret was able to run a 21-minute commercial on the net, a full-length catwalk show with a cast of scantily clad supermodels. And the Internet can encompass the whole marketing process: from attracting initial interest, to demonstrating or even sampling the product or service, to taking the money. Surely an ideal advertising medium?

In this role the World Wide Web has so far failed to deliver on its promise. Many new dot.com companies based their hopeful business model on attracting income from on-line advertising. They were fishing in a tiny pond. Even the best-known sites, such as Time Warner’s Pathfinder have not generated substantial advertising revenues. In the UK online advertising accounted for only 0.9 per cent of all advertising revenue in 2000 – about the same value as cinema advertising. The majority flowed to just ten websites, most of them in the information technology sector, such as IBM, Microsoft, and British Telecom, or online retailers such as Amazon and the auctioneer QXL.

The primary technique used by the online advertising sector, accounting for more than 80 per cent of all revenues, was the flash or banner flickering like a neon sign on the Reeperbahn inviting an incautious visit. Despite the irritation factor for surfers, these devices are popular with advertisers, because they know immediately how many people are attracted to their messages, and whether they generate enquiries or sales. Yet, results are poor. According to a 1997 survey conducted by Forrester Research and reported by Internet World, only 2 per cent of these devices had ever been clicked upon. In 1999 the click rate had slipped below 0.5 per cent. These are the sort of inefficient response figures expected for untargeted mass mailings. By tracking eye movements, a 1999 study by the Poynter Project at Stanford University discovered that while 45 per cent of site visitors do actually look at banner ads, it’s only a flicker of attraction, on average lasting just 1 second. And they don’t follow through; the study confirmed a click rate of less than 0.4 per cent. For every 1,000 who clicked, only 18 placed an order. As an average charge for an advertising site banner is £25 per thousand visitors, that works out to an advertising cost of nearly £700 per sale – insupportable for any product likely to be sold online.

For all the hype, in essence Internet advertising is nothing more than a merchandising display, like a retail shop which dangles signs from its ceiling, festoons its aisles with shelf-talkers, puts brochures on the counters, or flags offers on instore television. Like these distractions Internet advertisements will usually be ignored, and for the same reason. The shopper is already in the shop, and has usually come there for a purpose. The effective role of an advertisement on an Internet site is the same as a small ad or a boldface entry in the Yellow Pages – to assist someone to find what he is looking for. Cyperspace man is not prepared to endure irrelevant advertising blather at the cost of his own time and money. The consumer who has entered an Internet site, like someone who has picked up the telephone, is at the point of planning and decision, and in that context there is little opportunity for embellishment. He may be curious enough to trigger an advertisement or two, but is likely to find the process frustrating. He is now in search mode, intently foraging for information in the same way that he scans a catalogue or the classified advertising pages.

The advertising which has found acceptance on online services is that which people want to see: classified ads – and some of them allow subscribers to place standing instructions to automatically receive all ads offering, say, a collie dog, or a three-bedroom flat. The true commercial future of the Internet does not lie in theme advertising. It is shopping from home, by touch instead of telephone.

All service providers are trying hard to control the crowds flocking through their free Internet gateways by diverting them to branded virtual shops. The retailer Boots, for example, established www.handbag.com, offering free internet access and information on women’s issues as a lure. But it’s impossible to control the Internet. Very little initiative is required to wander out of the virtual car park into the limitless trails of cyberspace. Those who do will have access to what manufacturers and retailers have always feared – comprehensive competitive pricing information.

Today companies can get away with selling inferior products at inflated prices because consumers are too ignorant, too lazy, or too busy to comparison shop. The life insurance industry is notorious for selling
poor-quality products for premium prices. Consumers can’t be bothered to learn the detail of life insurance investments, so they are swayed by well-targeted marketing and a “trustworthy” brand name. In 1996 the Prudential, which had recently relaunched itself with a new advertising image, achieved a dramatic sales increase in its long-term life insurance products, at a time when, because it was burdened with the cost of a large sales force, it languished near the bottom of many of the industry’s performance measures. Its neighbours at the tail end of the league tables included other household names such as Royal Insurance, Sun Life, Friends Provident, Britannia Life, and AXA Equity and Law. But the Internet now permits the consumer to take over the product search and selection function, electronically interrogating retailers or direct suppliers and in doing so, comparing terms and prices. Those who can’t puzzle it out for themselves will work through information brokers who can.

John Lewis has traded successfully on its “never knowingly undersold” promise because most customers most of the time can’t be bothered to hunt for a better offer. In the future its customers can make John Lewis a lot more “knowing”. You should be able to select your goods in the shop, dial up a customised search engine on your mobile phone to find a better price, and tell the staff to match it.

Broad-band technology, allowing consumers to access the Web at faster speeds through the PC, interactive television and mobile phones is on the threshold. It will unlock the staggering mass market potential of
e-commerce, by shifting the entry gate from the computer, which requires skill, intelligence, and a degree of determination to operate, to television, which everyone knows how to work.

“Going to the shops” will become a more specialised activity. And when they are in real shops people may do a lot more touching and feeling than purchasing. Because they will be better informed about products and prices. Dozens of specialist magazines with titles such as What Hi-Fi?, What Cellphone?, What Camera?, or What Laptop? have sprung up in recent years to fill this knowledge gap; now they offer websites. Today an informed and determined British consumer will test drive a new model of car at a local dealer, but he will save himself thousands of pounds by purchasing it abroad. Dot.com companies are now moving in to service that demand.

The Internet will create a world of comparison shoppers. Seated at the controls of the information machine, the consumer thrusts the gears of marketing communication into reverse. Those providing goods and services will now have to react to his brief. Retailers, who have already largely foregone the advantages of personal service, on the Internet also relinquish advantages of location and shop design. Information, price, service, and delivery become paramount. E-tailing, as it inevitably became known, has granted start-ups an advantage over bigger companies, which were unable to give their dot.com activities undivided attention. The newcomers achieve faster delivery because they invest heavily in back-office and fulfilment operations, and have developed marketing targeted at individual customers.

 

Advertising will change, too. It has already acquired a new informational role: because there is no handy directory of website addresses, in 1999 a gold rush of fledgling dot.com companies aiming simply to publicise their website address began to pour into the media. Newspapers, magazines and television welcomed these naive cash-rich start-ups by hardening their advertising rates. Apart from this initial publicity function, the Internet will usurp the traditional informational role of advertising. Most newspapers are heavily supported by income from classified advertising for jobs, houses, cars, auctioneers, and second-hand goods. Virtual traders such as autobytel and e-Bay are supplanting them; speciality shopping magazines such as Loot, Exchange & Mart, and AutoTrader have already converted to the Internet. In America classified revenues have begun to decline. In Silicon Valley, in a growth economy, recruitment advertising in the Los Angeles Times fell by 8 per cent in the last quarter of 1998 compared to the previous year; for the San Jose Mercury News all classified advertising was down by this amount.

On the Internet, the advertising practitioners of the 21st century have to reinvent their craft. Their inventory of antics aimed at snatching the consumer’s attention, the communications skills of a drowning man, are worthless in this context. The marketing man’s concept of a remote, bovine mass audience somewhere out there in Adland dissolves into a montage of individual faces, very close at hand. The opportunities to target customers precisely is immense, using intelligent agent technology which determines the individual characteristics and preferences of the potential customer, and then lets him know about specific products or services. In mass advertising, even the most persuasive argument is by nature vastly inefficient because that argument must reach the right person at the right time: when he or she is at a vulnerable (contemplation) stage. If not, it’s ignored. The Internet is much more precise, as it involves pro-activity: the consumer seeks out the advertiser.

Nevertheless, in a competitive marketplace the consumer is unlikely to make a purchase unless the information sought is presented by a trusted name – the retailer, the manufacturer, the dot.com company, or perhaps one of a new breed of specialist distribution agents. So, the essential purpose of mainstream media advertising will remain: to enhance the reputation of the supplier. But now the advertisers will have to manipulate their image-making mirrors not in the distant make-believe Adworld of mass marketing but in the new reality, where because the consumer can so easily initiate contact with the manufacturer or the retailer, he will be able to test corporate imagery against actual performance.

In his 1994 book The Glittering Haze, advertising agency chairman Winston Fletcher trotted out the timeworn “informational” defence of the social contribution of advertising:

 

Advertising introduces people to useful new products and reminds them of old products they had almost forgotten.

Advertising tells people where they can buy goods at low prices and where they can invest their savings at advantageous rates.

Advertising informs people where they can go to be entertained and what they can do to alleviate their pains and sufferings.

Advertising lets people know how to use products in ways they had not previously thought of and how to improve themselves in ways they had not previously dreamed of.

Advertising warns people against behaving dangerously and encourages them to behave responsibly.

Advertising adds extra dimensions – of consistency, glamour, quality, reassurance, value – to the things people buy.

Advertising saves people time, by providing neatly encapsulated, easily absorbed information.

 

This catechism is an evasion. While all of these tenets may have applied in the early days of advertising, its informational role has long since atrophied, and persists today largely in the classified sector. Most of the advertising created over the past fifty years has been devoted to the penultimate benefit listed above: the creation of brand imagery. All of the others, which are based on the provision of information, have now become the province of the Internet. Consumer will use them to arm themselves against the blandishments of advertising.