April 1, 1996

Keystrokes: Don’t be suckered by hype about Web’s profit potential

I mentioned that I was considering writing a book about World Wide Web successes — companies that actually had made money on the Web. He laughed. “Is anyone actually making money?” he said. “I mean, we are, companies selling Internet software and services are, but is anyone else?”

Well, actually some people are making money on the Web, but very few. Right now, the money on the Web mostly is being made by companies that sell Internet services — firms hosting Web sites or selling space in Web “malls,” companies selling software used to get around on the Internet or set up Internet servers, companies selling advertising on the Web, companies, such as my publishers, selling books and magazines about working on the Internet.

But what about real business being done on the Internet? Not businesses making money from the mechanics of doing business on the Web or the Internet, but everyday business — selling cars, flowers, pizza, clothing, CDs, books, and everything else that you’ll also find sold in your local shopping mall.

Well, the Internet’s dirty little secret is that very few companies have figured out how to make money on the Internet. Now, I’m not saying that nobody’s doing it. I recently heard of a newsletter for people writing children’s books, for instance. The owner set up a Web site to promote the newsletter — I don’t remember the actual numbers, but he’s clearly getting enough new subscriptions to make it well worthwhile. But this is an exception rather than the rule.

Most Web sites set up to sell stuff are probably losing money. Very few are even marginally profitable. Why?

Perhaps the question should really be why should these sites make money? We’ve heard so much hype about the Internet and the Web that many people now assume that there’s money to be made, that the information superhighway is paved with gold. Well, it’s not.

For instance, take this claim from BookZone, a Web mall for publishers, a claim that is fairly typical of the make-money-on-the-Internet hype: “Plug your books into the world’s biggest marketplace, The Internet.” The world’s biggest marketplace? What does that mean? I wish I knew: If you can tell me what it means, I’ll tell you why it isn’t true.

First, let’s accept that there may be, say, 20 million Internet users — though I’m sure there aren’t that many regular, active Internet users (the number of users is another thing being grossly exaggerated). Why is that market larger than dozens of other markets? Most of the nations of Western Europe, for instance, are larger than that.

Oh, well, maybe Internet users are more alike than, say, the citizens of France. Nonsense, of course. There is no typical Internet user — there are young kids and old people, people using the Internet at their libraries because they can’t afford a computer, and well-paid computer programmers, people interested in restoring old tractors, and people studying virtual reality. The Internet is a diverse place.

Here’s another problem. Although there may be millions of users somewhere on the Internet (though not necessarily anywhere near your Web site) they simply aren’t spending much money online. Few of them ever purchase anything on-line, and even regular cyberspace shoppers probably don’t spend much on-line, compared with their real-world purchases.

Of course it might help if the Web sites were set up by people who understand advertising and marketing, but all too often they are created by geeks who know more about using and fixing computers than selling them. “The secret to creating a really cool Web site,” I read in a computer magazine recently, “is to create lots of links to other pages.”

Well, I’m not sure of this writer’s definition of “cool,” but I can tell you for sure that’s not the secret to creating really effective Web pages when you are trying to sell something. Why would a Web designer distract buyers with links that take them away from the sales message? Because the Web designer doesn’t know the first thing about selling, that’s why.

This problem is related to another bit of Internet hype: The Internet is different, the rules are different, the world will never be the same again. That’s what we call in England “a complete load of codswollop.” Marketing is all about human nature, and nothing’s changed there recently.

Another basic mistake that many companies make is treating their Web pages as somehow independent of everything else. The page just sits there waiting for people to come by ? and buy. But why should people come by? What do you do to bring them into your “store?” Do you promote the site in the relevant newsgroups? Do you put the Web address — the URL — on all your marketing documents — catalogs, flyers, print ads, business cards? Are you using Internet mailing lists to promote the site? If your customers don’t know you have a Web site and have no reason to visit, they won’t!

It is possible to make money selling things on the Internet, but very few people are doing it. Not every product is suited, and there’s more to selling than simply creating a Web page or two. Before you spend a lot of time and money setting up a Web site, think about how you are going to promote your site, how you are going to maintain an effective marketing message on your Web pages … and whether you are really ready for the Web at all.

Peter Kent is the author of Using Netscape 2 for Windows 95 and Using Internet Explorer (Que). He can be reached at pkent@lab-press.com.

I mentioned that I was considering writing a book about World Wide Web successes — companies that actually had made money on the Web. He laughed. “Is anyone actually making money?” he said. “I mean, we are, companies selling Internet software and services are, but is anyone else?”

Well, actually some people are making money on the Web, but very few. Right now, the money on the Web mostly is being made by companies that sell Internet services — firms hosting Web sites or selling space in Web “malls,” companies selling software used to get around on the Internet or set…

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