Internet marketing innovates

By , agencyfaqs! | In | December 13, 2001
In quest of the ever-elusive perfect Internet revenue model, companies face the question is the net a shop or a service?


As Internet companies look for money, they grapple with a fundamental question. Must the Internet be a service like radio, or should it adopt the traditional product-oriented marketing system, and charge for specific products - like the MP3 file you want to download, the article you want to read, or that elusive data that you have been looking for? It is a question that will become all the more urgent when broadband arrives, and streaming audio and video are available.

Right now, Internet companies are in a frenzy of innovation - tying up with offline companies to sell space on the site, selling content, offering value-added services, tying up for paid and free services, coming together with telecommunication companies, toying with the idea of levying a subscription fee for services and exploring more options like syndicating content - it is a never ending list.

There are good reasons for it. Online ad-based models are floundering, some of the high fliers like have bitten the dust, and the chase for elusive cash remains as tough as ever. Throw in the fact that the net is still a baby, and the innovations are also groping attempts in search of the perfect revenue model.

Companies who charge for content, for example, swear by a product-oriented strategy arguing that Internet products are no different from offline ones. And major hopes are pinned on streaming audio, video and specialised messenger services. "Maybe it will take six months to an year, but customers would be willing to pay for broadband services, even if only once a day," says Venu Kumar, of Beanbag Web Casting, a Mumbai-based firm. Adds the manager of a site that sells content, "Your online and offline strategy has to be in synergy. Consumers do not consume offline and online. Brand is brand, and the basic strategy has to be the same."

One company that is banking on its brand name is The India Today Online Group which hopes that quality content will sell on the net, and has made its site pay, with an annual subscription fee of Rs 499, and a long list of reasons why it is worth paying for. However, it remains to be seen if the model translates into revenue. The difficulty lies in convincing the surfer, who has the attitude that the net is one big library, and that he has already paid his ISP and phone bills to access it, to shell out more.

For example, when the US-based Internet research firm, Lyra Research, the publisher of Content Intelligence, asked Internet users in 1999 if they would pay for content, only 15 per cent agreed with this statement: "I think that websites will eventually have to charge visitors for access to their content." And, when Lyra asked users if they had ever paid to access content on the web, only 19 per cent said they had. One key finding: When users did pay, it was "because they had to - the site was the only place where they could get what they wanted".

On the other hand, those who swear by the service model argue that the problem with marketing on the net has been its unwillingness to leave the archaic product model. They argue that the net is an entirely different medium, and that innovative marketing is the key to success on it. Service model advocates argue that the product model merely drives the surfer to an alternate free site, or to pirates, and say that surfers would pay a service charge if they get what they want. The best example is arguments for file-sharing services like Napster, who say that if the music industry were willing to provide unlimited songs as a service, rather than charging for each song as an individual product, surfers would be willing to pay, rather than pirate the songs.

While votaries of both sides clash, there is no denying that the net is different. "The Internet is a place where the consumer can talk back to you. TV, radio, newspapers and magazines talk and you listen but the net is different. If you persist in seeing the net as a one-way medium with you in control, you will never be successful," warns a senior Mumbai-based media planner associated with Ulka Interactive.

Points out Probir Roy, of Euro RSCG, who has been observing the Internet industry in the country for many years, "The unique value proposition of the net is information, communication, and ease of use. It seems that everybody has forgotten that. Unlike traditional media, which is unidirectional and mass in appeal, the Internet is focused, segmented, and very direct in its appeal. It is more personalised and one-to-one."

And pricing methods, says Roy, will depend on the kind of sites. While retail sites could go in for a product marketing strategy, some sites, especially horizontal portals, could merge the two - charging subscribers for specialised content, while also selling products online.

Meanwhile companies are tying up to pool strengths. This month, Yahoo! India, leveraging its presence in the communications and media space tied up with Orange, Mumbai's leading cellular service provider, to offer Yahoo! Mail for SMS. As a result of the tie-up, Orange subscribers can access their Yahoo! mail IDs on all the popular Yahoo! domains (,, through their mobile phones.
"Yahoo! Mail for SMS available on Orange" is an essential part of the company's "Yahoo! Everywhere" marketing strategy.

According to industry reports, e-mail accounts for 50 per cent of the Internet usage time in India, and thus, Yahoo!'s alliance with Orange offered Yahoo!'s 1.8 crore user base in India the chance to check their e-mail, anytime, anywhere. Earlier, another tie-up between the two had made the popular Yahoo! Messenger service available to those with an Orange mobile account.

Another idea that is catching on is tie-ups with offline companies.

Mumbai-based has launched, which allows marketers to own their unique zones on the portal. The model includes off-line tie-ups to build the brand. For example, Domino's has a zone - Domino's Hungry Kya - on, with three unique formats of quizzing and gaming. In the "Make your own Pizza" section, users could select the pizza they choose to make. Ten questions were then asked and on every correct answer an ingredient got added to the pizza. If the user answered all 10 questions correctly, the pizza got delivered to his doorstep in an hour's time.

Another example is Primetime-IP Media Services, a Mumbai-based company that has set up, a database of over 17,000 billboards across 43 cities and 11 states, and offers complete outdoor solutions, from planning to monitoring, to advertisers. Among PrimeTime's clients are Proctor & Gamble, Wipro, Tata Indica, Tropicana, NDDB, Hyundai, Whirlpool India, Zurich India Mutual Funds and HCL Infinet. "The outdoor industry is extremely disorganised. Our net site is a value-added service that comes with the whole package. PrimeOutdoors offers an independent, one-stop solution for outdoor advertising," avers Rashmi Punshi, manager (information services), PrimeOutdoors, Primetime-IP Media Services.

Ironically, despite all these innovations, one of the most difficult things right now is letting people know that you exist in the vastness of cyberspace. Last year, around this time, most offline media was awash with advertisements for net sites. This year, they have all but disappeared. And sites are examining the various options available - from offline tie-ups to just painting your domain name on city walls.

That way, at least you get noticed.

© 2001 agencyfaqs!

© 2001 agencyfaqs!