(formerly "A Clue...to Internet Commerce")
by Dana Blankenhorn
Volume II, No. XLII
For the Week of October 19, 1998

This Week's Clue: Couponing 

SSP (Shameless Self-Promotion)  

The Paper 

Know When To Fold 'Em 

Clued-in, Clueless

This Week's Clue: Couponing  

Many ideas I've advocated since the Web was spun - HTML e-mail, daily news feeds, and compensation for personal information among them - have become a living reality online. One big idea, however, has not yet been adopted at all, and it's time to consider why. 

That idea is couponing. The concept is that information leading to a sale deserves its price. When someone has learned all they need on your site to make a purchase, they should be able to download a cookie-like file which, when presented to the target merchant, gives the buyer a discount. An equal discount is then given the site offering the coupon, for enabling the sale. If the coupon gives a buyer 10% off on a $300 purchase, in other words, the site the coupon came from earns $30. 

There are close analogs to this concept online. Amazon.com's Associates program is one. If you buy a book through a direct link from an associated site to Amazon, the associate gets 15%. The problem is the purchase must be a direct link. If the buyer makes the link, hesitates, then buys later, there's no payment. (Many associates complain bitterly about this.) Firms like Direct Coupons also offer something like grocery store coupons, but the coupons aren't worth much - there's no profit to a small site in it. 

The problem is, of course, that the path leading from interest to purchase is complex, and the complexity of that process increases with price. If the issue is a can of soda, brand makes the connection. (Especially if, as Robert Woodruff of The Coca-Cola Co. put it, "every can of Coke is the same as any other, anywhere in the world.") For a book, recommendations and reviews are important. For a car, you also need a close comparison of features, and a lot of price shopping, especially when it comes to the money used to buy the car. For a semiconductor that will go into a million toys, there's a rigorous process, and price is paramount. If the same semiconductor goes into a Boeing airplane, the process is equally rigorous, but other factors dominate. 

Every purchase proceeds along its own path, making it hard to break down. Yet in the name of seeking and managing sales, businesses spend roughly 50 cents on every dollar they take in. The budget items are marketing, fulfillment, and customer service. And the Web, unlike all other media, can do all these things. The Web can prospect, pitch, cajole, transact business, fulfill orders and deliver support after the sale. Its potential as a medium lies in its doing all these things. 

Why haven't editorial Web sites captured their share of this money flow? There are some good reasons. Many manufacturers  have taken these functions into their own sites. Others  prefer to capture all this value for themselves and for their customers, using brand advertising to bring people inside the tent, then closing on price. As we've seen with the Amazon concept, making the direct link between editorial matter and purchases can be awkward. Most important (and this is a bad reason), journalists are taught to be divorced from commerce - the closer association needed for coupons to work is considered sacrilegious

But just because few have tried something over time, and there's stubborn resistance to a complex idea, doesn't mean the idea itself is invalid. I submit it's more valid than ever. (Now that Web software is available for managing complex supply chains  and sales chains , the argument of complexity should go away.) 

So break down the commerce equation. Use deep links to bring all the elements together before your targeted niche market. Ask your users to help, by letting you know how they arrive at purchase decisions within your niche. Then take your evidence to your vendors. Point out how, for a little give on price, they can generate X amount of profit from your users. Then, when you get your first deal, track the results thoroughly (coupons are cookie-like files, remember?), and use those numbers on other vendors. It's a long, winding road, but remember this. The proper mix of biased, unbiased, and trusted information is what leads to sales. If you're in the information business, these should be happy days, and if they're not the fault is not in the stars... 

SSP (Shameless Self-Promotion) 

You can now order "Web Commerce: Building a Digital Business," , by Kate Maddox with yours truly (but with on the cover) through Barnes & Noble. It's on sale at $20.95, (down from a cover price of $29.95, and down from Amazon's price of $27.95) part of the Wiley/Upside series. Let me know what you think of it. 

A-Clue.Com has also been picked up by Andover News  as its Monday e-commerce column. Thanks to you, A-Clue.Com now goes to well over 1,000 Clued-in subscribers each week. Thanks to Multimedia Marketing Group  a UnityMail  customer, it's also an in-line HTML file (no more messy Web codes). Besides producing A-Clue.Com, I contribute regularly to such publications as Net Marketing , Boardwatch, Datamation  and Atlanta Computer Currents . Your magazine can join the list - send me an e-mail and let's start the ball rolling. 

You can subscribe (or cancel your subscription) to A-Clue.Com through an e-mail to a-clue@list.mmgco.com or (if you prefer the .txt version) a-clue_textonly@list.mmgco.com. Just put the magic word "subscribe" (or join, if you prefer) in the body or header. If you don't get service, feel free to drop me a note at dana.blankenhorn@att.net. And we want your feedback  as well, always. We're still looking for an advertiser to defray our higher costs. 

Remember that it's Journalism -- checking the news, calling people, listening carefully, writing on deadline -- which keeps the Clues coming, although I also handle consulting and commercial writing (ask about those rates via email). If you're looking for excellent work, give me a call at 404-373-7634. 

And now back to our show... 


The Paper  

While watching our kids play soccer, I had a fascinating talk with the father of one of my son's teammates. Between goals (solely for the other team (I blame the coach) me)), he complained about the losses on his paper's Web site , which at that moment was trying to become a local "portal." He asked for suggestions. 

I replied with this rant. First, the paper's got it backward. Databases, directories and a commerce engine should be at the core of their effort, not warmed-over newspaper articles. Build databases around every aspect of the city's life, especially its retail businesses, and offer access to the database through directories. To make the directories more useful, use personalization  to give people custom views of them. Where are they exactly, how many kids do they have, how old are the kids, how many PCs and cars do they have, what food and music do they prefer, and what political issues move them? As you collect data, in other words, you can give people better service. Then add more services - free e-mail to teachers for the kids, a link to Atlanta 500 tickets  for dad, PTA and job help for mom. Add news for their neighborhood, and ads from stores close to them. Link all stores in the directory to their Web sites (preferably local Web sites for national chains), then offer to commerce-enable all merchants without sites. Build sales and traffic based on close links (with maps) between readers and merchants. Look to start new businesses (like grocery delivery) based on both sides' proven needs. Don't sell advertisers to readers, in other words. Sell commerce to businesses, and convenience to consumers. 

For my pains I got a quizzical expression. The parent offered some words on the loyalty of local department stores and car dealers to the paper. I told him that the market's winners  are advertising elsewhere. I suspect our sons won't be playmates after the season is over. (That's a pity.) 

I seemed to be speaking in a foreign language, and in terms of modern journalism, perhaps I was. But as we left the pitch I also remembered an apology one of my journalism teachers gave me, years after my graduation, on the careers in daily newspaper journalism urged upon us as badges of honor. Those who insist on Cluelessness, I finally concluded, deserve their fate. 

Know When To Fold 'Em  

When smart people sell, take note. In the last week a lot of smart people have sold. Yoyodyne  took an offer from Yahoo, Relevant Knowledge  was acquired by Media Metrix, and (perhaps most surprisingly) Penton bought Mecklermedia

The press conference announcing the Meckler deal proved especially enlightening. Basically, Penton is putting about a quarter-billion into a string of trade shows . The magazines were close to break-even (thankfully, I write for the profitable one , and Alan Meckler will take back 80% ownership of his Web sites for about $13-15 million, a tiny portion of his gains from selling the shows. 

The biggest smile in the room belonged to Boardwatch "Editor Rotundus" (although he's lost some weight lately) Jack Rickard. He'd sold to Meckler a few months before for $29 million in stock, and was coming out of this deal with $38 million in cash. Jack's fortune started as a newsletter for computer bulletin board operators and a tiny trade show. (I was privileged to attend the Atlanta show in 1994 - it filled half a ballroom.) He watched as Internet access became more valuable to his readers than chat and e-mail, and was the only analyst to correctly surmise that phone companies couldn't dominate the business - it was too complex, with too many niches, and minnows can always outmaneuver cruise ships. So what's he going to do now? Keep writing, he says. Journalism is fun. It's a sentiment with which I heartily agree, even if I haven't made a fortune at it. But as Jack's Cheshire cat-like smile grew in my mind, so echoed the voices from Penton labeling him "a genius." 

So here's your Clue. What do we make of it when a genius cashes out? 

Clued-in, Clueless 

Clued-in is AskJeeves , a "meta-search" engine which managed to get a direct link to Compaq's AltaVista (http://altavista.digital.com) and Netscape's , then further distinguished itself with a deal to add a "live guide" from 7th Level who will animate the site. Getting real market share in the crowded search engine business is an achievement deserving a round of applause. 

Clueless is AccountMate , which sent out a press release to 4,000 reporters (touting a product most knew was out of their beats), using carbon copy rather than blind carbon copy. This meant the entire list downloaded with the messages. Worse, it included a 700K attachment! Infoworld magazine  founder Jim Warren, who is still an industry luminary, called it "probably the most outrageous SPAM I have ever received from someone pretending to seek the press' favor." Bring us the head of Ruben Osorio (the poor schmuck who sent us this drivel). (I just hope they understand the last point was a JOKE.) 

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