CMC
Magazine

June 1996 http://www.december.com/cmc/mag/1996/jun/hoffman.html

SPECIAL FOCUS: WEB BUSINESS MODELS

The Vision Of An Accomplished Web Marketer

An Interview With Donna Hoffman

by Chris Lapham

Donna Hoffman has been a notable source of expertise on marketing on the Web. Her research and reports prepared with Thomas Novak at Vanderbilt University have brought credibility to the wired world and provided direction and vision at a time of change and innovation. In this interview with CMC Magazine's Chris Lapham, Dr. Hoffman presents a wide variety of insights, encouragement, and challenges to all of us struggling to help this new medium take shape.
Dr. Donna L. Hoffman

CMC Magazine: Many of the revenue-generating sources for Web sites-- advertising, subscriptions, merchandising--have not been successful. How do you think people can make money online? Is it even realistic for anyone to assume they can or should make money online now?

Hoffman: I think before we ask IF anyone is making any money, we need to talk about HOW we can make money. This is one motivation for our work on commercial scenarios and the investigation of opportunities and challenges for different business models. To a large extent, it seems premature to ask if anyone is making money and I think it is obvious that the Web offers the opportunity for profit.

We are learning a lot from firms use of the intranet, from business-to-business applications (where the money is being made now) and from efficiency gains in the use of the Internet.

Online storefronts are not going to be successful in general until access speeds improve. Sponsored content sites and search agents that sell ad space will likely develop hybrid models that are combinations of advertising and pay-as-you-go fees. Think of a weird and unique amalgam of a broadcast model, cable model and pay-per-view. Ultimately, we expect that non-transaction oriented sites will have some content accessible to all supported by advertising and then some content (or information) that the consumer must pay to access.

CMC Magazine: In your article, "A New Paradigm For Electronic Commerce", you say that the content and business models that will make the Web commercially successful have likely not been invented yet. What forces are working to contribute to their development? If they were invented, what might they look like? What will this new content be?

Hoffman: The Web is moving so fast that I think it is foolish to try and pretend we know how it's going to turn out. We can't even predict the alliances that emerge from week to week!

In my mind, the single most important force is the human need to connect to other humans. The Web is largely devoid of these opportunities for its denizens. We are convinced that the opportunities available that take advantage of the full range of activities in human society, notably the need to COMMUNICATE, will dwarf the sorts of models people are thinking about today.

CMC Magazine: Do you think the continuing investment in online operations and Web sites is justified? If so, why? How much effort should a company put into their web site? What kind of emphasis should it receive?

Hoffman: Absolutely. This isn't a business where you can sit by the side of the road and watch the cars whiz by, saying, "Well, when they put that fast highway in, I'll jump on." I think it is critical for firms to hop on now and start riding the experience curve. You have to be online to understand online.

What sort of effort a firm puts into a Web site and the relative emphasis it receives depends on whether it has terrestrial, "brick and mortar" operations additionally, and what objectives it has for the Web as part of its business plan.

CMC Magazine: What are some of the biggest mistakes marketing executives are making on the Web now?

Hoffman: Heh. One of the biggest is not understanding that LOTS of people are accessing the Internet and the Web at extremely painful modem speeds. A graphics-intensive Web site is not a pretty thing at 14.4. Even at 28.8, it can be a punishing ride at many sites.

What different do pretty graphics make if a visitor takes off after 30 seconds and never returns again?

CMC Magazine: In "A New Marketing Paradigm" you talk about including the consumer more in the development of emerging media. What should marketers be doing differently to accomplish this?

Hoffman: The very first thing new media managers need to realize is that this medium represents a REVOLUTION in communication. This medium is more flexible and sense-stimulating, and consumers have more control and are more active in this medium than in any traditional medium. Thus, we must INCLUDE the consumer in the process. For example, if you want to collect demographic data from consumers, you are going to have to make it worth their while, and that does not mean the chance to win a prize. Innovative marketers are already talking about things like discounts on offerings in exchange for knowing who the consumer is.

What isn't going to work is grabbing information about consumers and using it without their knowledge or consent. I'm convinced that consumer privacy online is going to be a major issue by the end of the year.

CMC Magazine: In your opinion, is personalized mass-marketing and one-on-one selling the real crux of what the Web can offer companies, or should they be focusing on other things as well?

[] Kresser observes the value of the Web for communication.

Hoffman: In my opinion, the real crux of what the Web can offer companies is the ability to be closer to their customers than ever before--first and foremost, this involves communicating with them.

CMC Magazine: In "New Marketing Paradigms" you talk about high information quality and say that "information on the Web should be closer to 'perfect'." Can you define "perfect" information? What do you suggest Web developers do to get close to this idea?

Hoffman: In this context, "perfect" information means "full" information. The Web has the potential to offer much more detail about a much broader array of offerings--at much lower cost to the consumer--than in the physical world. Costs can also include transaction costs--like searching for the information, processing it and then making a decision. With the advent of intelligent agent software, this is going to become a very exciting area. [TOC]

Chris Lapham (chris@lapham.com) lives in the Capital Region of New York State and works as an online content consultant and technology writer.

Copyright © 1996 by Chris Lapham. All Rights Reserved.

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