Tuesday, May 31, 2005
Is Your Boss Monitoring Your BlackBerry?
Private messages exchanged using corporate BlackBerry wireless devices might not be quite so private after all as evidenced by a recent lawsuit filed in Toronto, Canada, by the Canadian Imperial Bank of Commerce (CIBC). The lack of security through the use of such devices, which are increasingly utilized by employees to access corporate e-mail accounts, has not only triggered concerns about the security of the popular BlackBerry wireless e-mail device but spotlights the larger concern regarding employee privacy with respect to personal messages that were previously thought to be untraceable.
In the above case, the CIBC is suing Genuity Capital Markets, a new Toronto-based investment management firm established by six former CIBC employees. The lawsuit centers around CIBC's allegation that these former employees used their BlackBerrys to improperly recruit their colleagues while still working at the bank. The bank submitted numerous BlackBerry e-mails and PIN messages as evidence that the former executives took confidential information from the company and orchestrated a "calculated scheme" to solicit others while they were still employed by CIBC.
The fact that bank management could retrieve PIN messages (discussed below), which were previously thought to be untraceable, has left many in the business world stunned. Standard BlackBerry e-mail goes through a company's computer system, or enterprise server , and can be logged and archived by the system just like any other e-mail message. However, BlackBerrys come equipped with a personal identification number (PIN). PIN messaging is common in financial circles and workgroups. Common belief has held that messages sent from one BlackBerry to another using these PIN numbers, rather than using normal e-mail addresses, will bypass a company's computers, thus making these communications completely private since the messages are being sent directly from one device to another.
Because it is believed these messages cannot be monitored or logged by the BlackBerry enterprise server, many people use the feature to exchange private or sensitive information. The reality is that that is not the case as companies can access all communication sent and received through a company-issued BlackBerry. In fact, there is software available that can capture such PIN-to-PIN communications, and it is being increasingly used by financial services firms and government agencies to log BlackBerry communication. Furthermore, messages relayed in this manner can then be subpoenaed in court, as has happened in the CIBC case.
BlackBerry devices are manufactured by Toronto-based Research in Motion, which currently has more than 2 million users spread out through thousands of companies worldwide. The case against Genuity was established through CIBC's probing of the alleged conspirators' e-mail for evidence, including those of David Kassie, CIBC's one-time vice chairman and a 25-year veteran employee with the firm who resigned in February of 2004, reportedly due to fallout from an Enron-related banking scandal.
Kassie, Genuity's CEO, founding partner and its largest shareholder, denies that Genuity improperly recruited staff from CIBC or took confidential information. CIBC argues that the former employees named in the suit, who all went to Genuity after leaving the bank in early 2004, had agreed not to "directly or indirectly solicit" their former colleagues for 21 months; however, their e-mail records indicated that they were recruiting for Genuity during the summer of 2004. These records were culled from the supposedly secure BlackBerry PIN messages.
Experts in the IT industry say that unless a wireless e-mail device like a BlackBerry is disconnected from a company's server -- and changed, for example, to a personal e-mail account offered through a private Internet service provider -- every message is likely stored in a corporate computer and can be retrieved later. The only way to get around this is to disconnect oneself from one's corporate e-mail and, in so doing, one would be able to send and receive e-mail privately over whatever account one wanted.
The issue at hand is that employees using PINs to pass confidential information back and forth might not know that the messages are traceable, and prior to the CIBC incident, many employees thought that using PINs to send e-mails was a private form of communication. In the CIBC case, the bank is not revealing how it got access to the former employees' BlackBerry messages, but states in its lawsuit that the executives "seemed to have believed [they] did not create any record of their e-mails on the [bank's] central computer systems.
This news should come as no surprise to security professionals, states Pete Lindstrom, an analyst at Malvern, Penn.-based Spire Consulting. "Most people think of peer-to-peer communications as a person-to-person thing," he said. "But somewhere in between, there's almost always a server."
CIBC is asking for $10 million in damages, plus costs, any compensation paid while employees were planning Genuity, all of Genuity's revenue and the right to inspect the IT equipment of ex-employees.
On the legal side, this case is significant in that it marks one of the first times (if not the first time) that an employer has used PIN-forwarded e-mails against former employees in a public court battle. On the practical side, this lawsuit highlights two important points: first, when using corporate resources to communicate, employees should assume that all communications are monitored and recorded -- period. Second, personal privacy when using electronic devices to communicate is an illusion perpetuated by our strong desire to believe that we can keep certain communications private as opposed to a rational belief based on an intelligent examination of the technology being used.
Brought to you by Guardian eCommerce Safe Site Privacy Seal Program.
In the above case, the CIBC is suing Genuity Capital Markets, a new Toronto-based investment management firm established by six former CIBC employees. The lawsuit centers around CIBC's allegation that these former employees used their BlackBerrys to improperly recruit their colleagues while still working at the bank. The bank submitted numerous BlackBerry e-mails and PIN messages as evidence that the former executives took confidential information from the company and orchestrated a "calculated scheme" to solicit others while they were still employed by CIBC.
The fact that bank management could retrieve PIN messages (discussed below), which were previously thought to be untraceable, has left many in the business world stunned. Standard BlackBerry e-mail goes through a company's computer system, or enterprise server , and can be logged and archived by the system just like any other e-mail message. However, BlackBerrys come equipped with a personal identification number (PIN). PIN messaging is common in financial circles and workgroups. Common belief has held that messages sent from one BlackBerry to another using these PIN numbers, rather than using normal e-mail addresses, will bypass a company's computers, thus making these communications completely private since the messages are being sent directly from one device to another.
Because it is believed these messages cannot be monitored or logged by the BlackBerry enterprise server, many people use the feature to exchange private or sensitive information. The reality is that that is not the case as companies can access all communication sent and received through a company-issued BlackBerry. In fact, there is software available that can capture such PIN-to-PIN communications, and it is being increasingly used by financial services firms and government agencies to log BlackBerry communication. Furthermore, messages relayed in this manner can then be subpoenaed in court, as has happened in the CIBC case.
BlackBerry devices are manufactured by Toronto-based Research in Motion, which currently has more than 2 million users spread out through thousands of companies worldwide. The case against Genuity was established through CIBC's probing of the alleged conspirators' e-mail for evidence, including those of David Kassie, CIBC's one-time vice chairman and a 25-year veteran employee with the firm who resigned in February of 2004, reportedly due to fallout from an Enron-related banking scandal.
Kassie, Genuity's CEO, founding partner and its largest shareholder, denies that Genuity improperly recruited staff from CIBC or took confidential information. CIBC argues that the former employees named in the suit, who all went to Genuity after leaving the bank in early 2004, had agreed not to "directly or indirectly solicit" their former colleagues for 21 months; however, their e-mail records indicated that they were recruiting for Genuity during the summer of 2004. These records were culled from the supposedly secure BlackBerry PIN messages.
Experts in the IT industry say that unless a wireless e-mail device like a BlackBerry is disconnected from a company's server -- and changed, for example, to a personal e-mail account offered through a private Internet service provider -- every message is likely stored in a corporate computer and can be retrieved later. The only way to get around this is to disconnect oneself from one's corporate e-mail and, in so doing, one would be able to send and receive e-mail privately over whatever account one wanted.
The issue at hand is that employees using PINs to pass confidential information back and forth might not know that the messages are traceable, and prior to the CIBC incident, many employees thought that using PINs to send e-mails was a private form of communication. In the CIBC case, the bank is not revealing how it got access to the former employees' BlackBerry messages, but states in its lawsuit that the executives "seemed to have believed [they] did not create any record of their e-mails on the [bank's] central computer systems.
This news should come as no surprise to security professionals, states Pete Lindstrom, an analyst at Malvern, Penn.-based Spire Consulting. "Most people think of peer-to-peer communications as a person-to-person thing," he said. "But somewhere in between, there's almost always a server."
CIBC is asking for $10 million in damages, plus costs, any compensation paid while employees were planning Genuity, all of Genuity's revenue and the right to inspect the IT equipment of ex-employees.
On the legal side, this case is significant in that it marks one of the first times (if not the first time) that an employer has used PIN-forwarded e-mails against former employees in a public court battle. On the practical side, this lawsuit highlights two important points: first, when using corporate resources to communicate, employees should assume that all communications are monitored and recorded -- period. Second, personal privacy when using electronic devices to communicate is an illusion perpetuated by our strong desire to believe that we can keep certain communications private as opposed to a rational belief based on an intelligent examination of the technology being used.
Brought to you by Guardian eCommerce Safe Site Privacy Seal Program.
Monday, May 30, 2005
Report: Online Sales To Grow 22 Percent this Year
Online retail sales grew by nearly 24 percent in 2004 and will grow another 22 percent in 2005 as consumers continue to be drawn in droves to the convenience of e-commerce and as retailers become better at converting online shoppers into buyers, according to a new report. The State of Retailing Online 8.0, the annual report produced by Shop.org -- the online arm of the National Retail Federation -- and Forrester Research, said 2004 sales reached US$141.4 billion, an increase of 23.8 percent. For 2005, the report predicts slightly lower growth of 22 percent, taking sales to $172.4 billion.
While sales are growing, profits are as well, the report said, with online retailers boosting their overall operating margins considerably. "With profitability behind them, retailers can now focus on innovation and growth through things like increased integration of their online and offline businesses and internationalization of their sites," Carrie Johnson, Forrester Research analyst and author of the report, said.
The rosy report comes a few days after the latest quarterly figures on e-commerce from the U.S. government's Census Bureau. That agency reported that first-quarter sales rose to $19.8 billion, a 24 percent jump from the year before and a 6 percent increase over the fourth quarter of 2004.
Analysts have long expected the growth of e-commerce to at least moderate, but as the Shop.org study notes, growth has been nearly steady for the 10 years since buying online first became an accepted practice.
Johnson said retailers will need to look to new areas to sustain their growth and said international sales is fertile area. "One way retailers will grow sales over the next several years will be by launching country-specific sites and operations to accommodate a growing number of international customers," she said. Growth will also continue to be fed by the rising number of women buying online. Shop.org Executive Director Scott Silverman said growing comfort with e-commerce among female buyers will drive 33 percent growth for online fragrance sales, a 32 percent rise in over-the-counter medicines and personal care items, and 30 percent growth in the flowers, cards and gifts segment.
"Though initially adopted by men as a shopping tool, women are flocking to the Internet in droves to comparison shop, research and buy," Silverman said. "Online retailers who sell products that are purchased by women are in a favorable position this year, as we expect those categories to grow substantially." The percentage of total overall retail sales being conducted online is also growing rapidly, reaching nearly 5 percent last year when travel is excluded.
This year, the report predicts several categories will see more than 10 percent of their sector's overall sales take place on the Web, with some above 20 percent, including computer hardware and software, with nearly 50 percent of sales coming from the Internet, and books, at 20 percent. Consumer electronics, toys and video games and travel will also be at or above 10 percent.
Profitability and sales growth are both attributed to enhanced efficiency among e-commerce players in converting shoppers to buyers, Johnson said, and in bringing new shoppers into the fold by using the latest Web technology.
In 2004, most new customers came from search engine marketing, as some 43 percent of first-time visitors were directed to a site by a search placement. The report and other data suggest there is work for e-tailers to do, however, particularly those who began as brick-and-mortar retailers. A recent report from Nielsen//NetRatings found such chains lagging when it came to how often they converted shoppers into buyers.
By comparison, multi-channel retailers such as QVC, Lands End, Coldwater Creek and LLBean.com had the highest conversion rates, with pure-play e-tailers such as Amazon and eBay close behind. The top 100 retailers had an average conversion rate of about 5 percent, with QVC topping the list at more than 16 percent.
"Brick-and-mortar retailers are noticeably absent among the top performers in online sales conversion rates," said Heather Dougherty, senior retail analyst at Nielsen. Catalog retailers do have a natural leg up on competitors, she noted. "Customers visiting a catalogers' Web site already have the information they need about the product, and therefore are ready to make an immediate purchase," she added.
However, brick-and-mortar retailers might enjoy other benefits from their Web operations, the Shop.org study suggests. Retailers surveyed by Shop.org said the Web influenced 20 percent of all in-store sales. That, in turn, has created more interest in integrating channels, with retailers posting their online Web addresses in stores and more chains allowing returns or gift card redemptions either online or in stores.
Brought to you by the Guardian eCommerce Safe Site Privacy Seal Program.
While sales are growing, profits are as well, the report said, with online retailers boosting their overall operating margins considerably. "With profitability behind them, retailers can now focus on innovation and growth through things like increased integration of their online and offline businesses and internationalization of their sites," Carrie Johnson, Forrester Research analyst and author of the report, said.
The rosy report comes a few days after the latest quarterly figures on e-commerce from the U.S. government's Census Bureau. That agency reported that first-quarter sales rose to $19.8 billion, a 24 percent jump from the year before and a 6 percent increase over the fourth quarter of 2004.
Analysts have long expected the growth of e-commerce to at least moderate, but as the Shop.org study notes, growth has been nearly steady for the 10 years since buying online first became an accepted practice.
Johnson said retailers will need to look to new areas to sustain their growth and said international sales is fertile area. "One way retailers will grow sales over the next several years will be by launching country-specific sites and operations to accommodate a growing number of international customers," she said. Growth will also continue to be fed by the rising number of women buying online. Shop.org Executive Director Scott Silverman said growing comfort with e-commerce among female buyers will drive 33 percent growth for online fragrance sales, a 32 percent rise in over-the-counter medicines and personal care items, and 30 percent growth in the flowers, cards and gifts segment.
"Though initially adopted by men as a shopping tool, women are flocking to the Internet in droves to comparison shop, research and buy," Silverman said. "Online retailers who sell products that are purchased by women are in a favorable position this year, as we expect those categories to grow substantially." The percentage of total overall retail sales being conducted online is also growing rapidly, reaching nearly 5 percent last year when travel is excluded.
This year, the report predicts several categories will see more than 10 percent of their sector's overall sales take place on the Web, with some above 20 percent, including computer hardware and software, with nearly 50 percent of sales coming from the Internet, and books, at 20 percent. Consumer electronics, toys and video games and travel will also be at or above 10 percent.
Profitability and sales growth are both attributed to enhanced efficiency among e-commerce players in converting shoppers to buyers, Johnson said, and in bringing new shoppers into the fold by using the latest Web technology.
In 2004, most new customers came from search engine marketing, as some 43 percent of first-time visitors were directed to a site by a search placement. The report and other data suggest there is work for e-tailers to do, however, particularly those who began as brick-and-mortar retailers. A recent report from Nielsen//NetRatings found such chains lagging when it came to how often they converted shoppers into buyers.
By comparison, multi-channel retailers such as QVC, Lands End, Coldwater Creek and LLBean.com had the highest conversion rates, with pure-play e-tailers such as Amazon and eBay close behind. The top 100 retailers had an average conversion rate of about 5 percent, with QVC topping the list at more than 16 percent.
"Brick-and-mortar retailers are noticeably absent among the top performers in online sales conversion rates," said Heather Dougherty, senior retail analyst at Nielsen. Catalog retailers do have a natural leg up on competitors, she noted. "Customers visiting a catalogers' Web site already have the information they need about the product, and therefore are ready to make an immediate purchase," she added.
However, brick-and-mortar retailers might enjoy other benefits from their Web operations, the Shop.org study suggests. Retailers surveyed by Shop.org said the Web influenced 20 percent of all in-store sales. That, in turn, has created more interest in integrating channels, with retailers posting their online Web addresses in stores and more chains allowing returns or gift card redemptions either online or in stores.
Brought to you by the Guardian eCommerce Safe Site Privacy Seal Program.
Sunday, May 29, 2005
Trump Unveils Launch of Online University
He's built buildings, written books, married models and starred in a reality TV show. Yesterday, Donald Trump announced his latest venture: Trump University. Don't expect ivy-covered walls or a football team. Trump University will consist of online courses, CD-ROMS, consulting services and Learning Annex-type seminars.
"In today's hyper-competitive business climate, the need for the highest quality education has become more crucial than ever," Trump said. "But people are looking beyond the traditional business education model, which involves hours in the classroom and relies primarily on book learning."
The for-profit university will not offer degrees or grades. Courses will cost US$300 and will take one to two weeks to complete. Trump said longer courses of two to three months would be offered in the future. Michael Sexton, a management consultant most recently with Accenture in New York, will serve as president of Trump University.
Roger Schank, professor emeritus and founder of the Institute for Learning Sciences at Northwestern University, will act as chief learning officer. Schank, who joined Trump and other faculty members at a Trump Tower news conference, said the school would emphasize "learning by doing." "The problem with school is that school is a little academic, a little theoretical, not necessarily practical," Schank said. "It doesn't necessarily serve the general public, who may just want to know how to do something."
Students -- or customers, as Trump University staffers refer to them -- will be able to register starting this week for classes in marketing, real estate and entrepreneurship, with additional curriculum areas planned for the future. "It's going to be a tremendous venture. It's going to really help a lot of people, which is what we really want to do," Trump said.
The faculty includes John Vogel, adjunct professor of business administration and associate faculty director of the Allwin Initiative for Corporate Citizenship at the Tuck School of Business at Dartmouth; Jack Kaplan, adjunct professor of entrepreneurship in the Eugene M. Lang Center for Entrepreneurship at Columbia University and founder and president of Datamark Technologies; and Don Sexton, professor of business at Columbia University and founder and president of the Arrow Group.
Trump said that the idea for a university had been at the back of his mind for years and that the project could develop into a brick-and-mortar school. "When I make speeches, a lot of people show up," he said. "A lot of people."
For more information please visit Guardian eCommerce.
"In today's hyper-competitive business climate, the need for the highest quality education has become more crucial than ever," Trump said. "But people are looking beyond the traditional business education model, which involves hours in the classroom and relies primarily on book learning."
The for-profit university will not offer degrees or grades. Courses will cost US$300 and will take one to two weeks to complete. Trump said longer courses of two to three months would be offered in the future. Michael Sexton, a management consultant most recently with Accenture in New York, will serve as president of Trump University.
Roger Schank, professor emeritus and founder of the Institute for Learning Sciences at Northwestern University, will act as chief learning officer. Schank, who joined Trump and other faculty members at a Trump Tower news conference, said the school would emphasize "learning by doing." "The problem with school is that school is a little academic, a little theoretical, not necessarily practical," Schank said. "It doesn't necessarily serve the general public, who may just want to know how to do something."
Students -- or customers, as Trump University staffers refer to them -- will be able to register starting this week for classes in marketing, real estate and entrepreneurship, with additional curriculum areas planned for the future. "It's going to be a tremendous venture. It's going to really help a lot of people, which is what we really want to do," Trump said.
The faculty includes John Vogel, adjunct professor of business administration and associate faculty director of the Allwin Initiative for Corporate Citizenship at the Tuck School of Business at Dartmouth; Jack Kaplan, adjunct professor of entrepreneurship in the Eugene M. Lang Center for Entrepreneurship at Columbia University and founder and president of Datamark Technologies; and Don Sexton, professor of business at Columbia University and founder and president of the Arrow Group.
Trump said that the idea for a university had been at the back of his mind for years and that the project could develop into a brick-and-mortar school. "When I make speeches, a lot of people show up," he said. "A lot of people."
For more information please visit Guardian eCommerce.
Saturday, May 28, 2005
Searching for Profit in Networking Web Sites
There was a time when David Sze, a venture capitalist at Greylock Partners, could be counted among those skeptical of the millions of dollars being poured into Internet companies that were creating online communities to foster business and social contacts. "Basically, it reminded us a lot of what we saw in the late 1990s," Sze said of the first rush of investment in social networking ventures in 2003. "It was, 'Let's hope some users come, and if they do, we'll figure out how to turn that into a business.' We didn't see a real business model there."
Even now, a year and a half later, the question persists of how these ventures can make money and justify the millions already invested. Still, some of the start-ups have shown such impressive growth in number of users that they are starting to win backing from skeptics like Sze. And there are some signs that selling classified ads on these Web sites may be a solid business model.
Last October, Sze and Greylock Partners took the plunge as majority investor when LinkedIn, a social networking venture based in Palo Alto, Calif., was seeking an infusion of US$10 million to expand its operations. The company had raised $4.7 million in venture financing in November 2003, most of it from Sequoia Capital.
LinkedIn had signed up only 40,000 members on its site when its founders first approached Greylock in 2003, Sze said. By last autumn, it had nearly a million members. Today, the site has 2.5 million registered users. "They're showing the rapid growth you like to see," Sze said. Like other social networking sites, LinkedIn is hoping to create a viable business by capturing a small piece of a classified advertising market estimated to be worth more than $20 billion. That strategy has been tested in recent months. "A lot of these sites rose with great fanfare, but many are still scrambling to make a go of it," said Greg Sterling, an analyst with Kelsey Group, a market research firm.
The LinkedIn Web site allows business professionals to make contacts for sales leads and the like. Users are encouraged to invite people in their business sphere to join the site and connect with people they know who are already part of the network. Joining is free, although there is the nonfinancial cost of deciding whether to give permission or deny access every time someone seeks to make a connection through you. In February, the company announced that it would charge employers $95 to post a job listing for 30 days, the first in a series of revenue-generating strategies. The company would not provide any figures, but a search at the site revealed that it had at least 1,000 job listings over the previous month.
"Everyone knows that the best jobs come through people's networks," said Reid Hoffman, the chief executive and co-founder of the company. "They're giving recruiters access to people they wouldn't normally be able to get to," said Charlene Li, an analyst with Forrester Research. "These are passive job seekers, people who aren't actively looking for jobs who are extremely valuable to the recruiter and the hiring manager." They are not the type of people posting their resumes on big online employment boards like Monster or HotJobs on Yahoo, she said. Monster recently added a social networking component, but Li said that LinkedIn catered to much more highly skilled job seekers than Monster.
More recently, the company introduced what it called LinkedIn Services, which invites users to find local lawyers, accountants and other professionals through one's social network. "People say you shouldn't use the Yellow Pages to find a lawyer, but that's exactly what most people end up doing," said LinkedIn's co-founder and marketing director, Konstantin Guericke. "This is a way of getting recommendations through trusted contacts." He said the company was on target to start turning a profit by the first quarter of 2006. "I would say LinkedIn has successfully made the transition from a novelty site into a model that has some sustainability," Sterling of Kelsey Group said.
But Sterling and Li said they were less sanguine about the success of other social networking companies. Another start-up company, Tribe.net, which is based in San Francisco and raised $6.3 million in venture funding in November 2003, is less focused on business contacts than LinkedIn. Members are encouraged to join "tribes" of mutual interest, whether mountain climbing or searching for low-priced ethnic restaurants, or to create their own. Tribe is a free service that charges for classified ads posted on its site. Ultimately, the company hopes to generate enough traffic to have a brisk business in selling classified ads aimed at specific audiences. A San Franciscan wanting to sell used climbing gear, say, would direct the ad to the "tribe" for Northern
California rock climbers.
Mark Pincus, the company's founder, would not disclose specific revenue figures but said help-wanted ads and apartment listings currently accounted for virtually all of Tribe's revenue. "I think Tribe's concept is sound, but they've had trouble executing," Sterling said. The problem is that Tribe does not yet have the kind of traffic needed to sustain a vibrant local marketplace, a point that Pincus concedes. Tribe had 243,000 unique visitors in March, according to comScore Media Metrix, which measures Internet traffic, compared with the 3.7 million people who turned to Craigslist, a Web site used to find apartments or jobs or sell used items.
And then there is Friendster, which helps people keep in touch online with their social set and was a sensation among teenagers and people in their 20s when it started in 2003. Friendster, which received roughly $13 million in venture funding in October 2003, most of it from Benchmark Capital and Kleiner Perkins Caufield & Byers, seemed rich with potential because it could deliver a golden demographic to advertisers. But early users soon started to complain that the company was slow to enliven its site, and Friendster found itself eclipsed by a pair of newer, more narrowly focused social networking companies, MySpace, specializing in music, and Thefacebook.com, geared to university students. Friendster had 975,000 unique visitors in March, according to comScore, while 11.3 million users visited MySpace that month, and 4.1 million people visited Thefacebook.
Brought to you by Guardian eCommerce.
Even now, a year and a half later, the question persists of how these ventures can make money and justify the millions already invested. Still, some of the start-ups have shown such impressive growth in number of users that they are starting to win backing from skeptics like Sze. And there are some signs that selling classified ads on these Web sites may be a solid business model.
Last October, Sze and Greylock Partners took the plunge as majority investor when LinkedIn, a social networking venture based in Palo Alto, Calif., was seeking an infusion of US$10 million to expand its operations. The company had raised $4.7 million in venture financing in November 2003, most of it from Sequoia Capital.
LinkedIn had signed up only 40,000 members on its site when its founders first approached Greylock in 2003, Sze said. By last autumn, it had nearly a million members. Today, the site has 2.5 million registered users. "They're showing the rapid growth you like to see," Sze said. Like other social networking sites, LinkedIn is hoping to create a viable business by capturing a small piece of a classified advertising market estimated to be worth more than $20 billion. That strategy has been tested in recent months. "A lot of these sites rose with great fanfare, but many are still scrambling to make a go of it," said Greg Sterling, an analyst with Kelsey Group, a market research firm.
The LinkedIn Web site allows business professionals to make contacts for sales leads and the like. Users are encouraged to invite people in their business sphere to join the site and connect with people they know who are already part of the network. Joining is free, although there is the nonfinancial cost of deciding whether to give permission or deny access every time someone seeks to make a connection through you. In February, the company announced that it would charge employers $95 to post a job listing for 30 days, the first in a series of revenue-generating strategies. The company would not provide any figures, but a search at the site revealed that it had at least 1,000 job listings over the previous month.
"Everyone knows that the best jobs come through people's networks," said Reid Hoffman, the chief executive and co-founder of the company. "They're giving recruiters access to people they wouldn't normally be able to get to," said Charlene Li, an analyst with Forrester Research. "These are passive job seekers, people who aren't actively looking for jobs who are extremely valuable to the recruiter and the hiring manager." They are not the type of people posting their resumes on big online employment boards like Monster or HotJobs on Yahoo, she said. Monster recently added a social networking component, but Li said that LinkedIn catered to much more highly skilled job seekers than Monster.
More recently, the company introduced what it called LinkedIn Services, which invites users to find local lawyers, accountants and other professionals through one's social network. "People say you shouldn't use the Yellow Pages to find a lawyer, but that's exactly what most people end up doing," said LinkedIn's co-founder and marketing director, Konstantin Guericke. "This is a way of getting recommendations through trusted contacts." He said the company was on target to start turning a profit by the first quarter of 2006. "I would say LinkedIn has successfully made the transition from a novelty site into a model that has some sustainability," Sterling of Kelsey Group said.
But Sterling and Li said they were less sanguine about the success of other social networking companies. Another start-up company, Tribe.net, which is based in San Francisco and raised $6.3 million in venture funding in November 2003, is less focused on business contacts than LinkedIn. Members are encouraged to join "tribes" of mutual interest, whether mountain climbing or searching for low-priced ethnic restaurants, or to create their own. Tribe is a free service that charges for classified ads posted on its site. Ultimately, the company hopes to generate enough traffic to have a brisk business in selling classified ads aimed at specific audiences. A San Franciscan wanting to sell used climbing gear, say, would direct the ad to the "tribe" for Northern
California rock climbers.
Mark Pincus, the company's founder, would not disclose specific revenue figures but said help-wanted ads and apartment listings currently accounted for virtually all of Tribe's revenue. "I think Tribe's concept is sound, but they've had trouble executing," Sterling said. The problem is that Tribe does not yet have the kind of traffic needed to sustain a vibrant local marketplace, a point that Pincus concedes. Tribe had 243,000 unique visitors in March, according to comScore Media Metrix, which measures Internet traffic, compared with the 3.7 million people who turned to Craigslist, a Web site used to find apartments or jobs or sell used items.
And then there is Friendster, which helps people keep in touch online with their social set and was a sensation among teenagers and people in their 20s when it started in 2003. Friendster, which received roughly $13 million in venture funding in October 2003, most of it from Benchmark Capital and Kleiner Perkins Caufield & Byers, seemed rich with potential because it could deliver a golden demographic to advertisers. But early users soon started to complain that the company was slow to enliven its site, and Friendster found itself eclipsed by a pair of newer, more narrowly focused social networking companies, MySpace, specializing in music, and Thefacebook.com, geared to university students. Friendster had 975,000 unique visitors in March, according to comScore, while 11.3 million users visited MySpace that month, and 4.1 million people visited Thefacebook.
Brought to you by Guardian eCommerce.
Friday, May 27, 2005
Meet Your Organ Match Online?
The Internet can do more than help you find a date -- it can help you find a kidney. Since last October, MatchingDonors.com, a nonprofit Web site based in Canton, Mass., has been helping patients who desperately need a new liver or kidney find living donors who take altruism to a new level. The vast majority of organ transplants, from donors both living and dead, are managed by the federally sponsored United Network for Organ Sharing (UNOS). UNOS allocates organs according to medical urgency, time spent on the waiting list, and the proximity of the patient to the available organ.
But there aren't nearly enough available organs. There are currently some 88,000 people in need of an organ listed with UNOS, and the network says that only 4,373 transplants were performed in the U.S. between January and May 6 of this year. It's estimated that 17 people die every day while waiting for transplants. Patients seeking to jump the long waiting line can join MatchingDonors for fees starting at $295 for 30 days. There, some 2,000 potential donors are listed, all willing to donate an organ to complete strangers for nothing more than goodwill (since it's illegal to sell organs).
Once a patient and potential donor find each other, the patient's transplant coordinator schedules both a medical and psychiatric evaluation of the person seeking to give up a piece of his or her body. "We met with some resistance from some hospitals at the beginning but not so much any more," says MatchingDonors founder and medical director Dr. Jeremiah Lowney. "After all, we're doing a good thing here." So far, seven members have received transplants from donors they found on the site. One of the most recent was on May 4: Bill Gibby, a 24-year-old from Anchorage, Alaska, with a wife and year-old son, donated a kidney to 33-year-old Kathy Lee of San Diego, whom he met for the first time when he flew down for the operation. MatchingDonors arranged for an airline to donate the airfare, and Lee's insurance paid Gibby's health costs.
Gibby acknowledges that his friends thought he was crazy at first, and his family was worried about the health risks, but he was determined to go through with the procedure. "I figure the more people I can help, the better place the earth will be" says Gibby. He's facing a six-week recovery period, part of which will be spent at Lee's home. And he has no second thoughts. After his surgery Gibby says "the happiest part was when the doctor came in and said [Lee's] kidney is working really well. That made it all super."
Despite such altruism on the part of donors, some in the medical world are concerned about the idea of looking for organs online. To explore the issue, Harvard Medical School held a public forum on May 12 titled "Soliciting Organs over the Internet," bringing together Lowney with several medical ethicists and transplant surgeons. But given the very poor odds of finding an organ donor the traditional way, ethical concerns may hold little sway with desperate patients.
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But there aren't nearly enough available organs. There are currently some 88,000 people in need of an organ listed with UNOS, and the network says that only 4,373 transplants were performed in the U.S. between January and May 6 of this year. It's estimated that 17 people die every day while waiting for transplants. Patients seeking to jump the long waiting line can join MatchingDonors for fees starting at $295 for 30 days. There, some 2,000 potential donors are listed, all willing to donate an organ to complete strangers for nothing more than goodwill (since it's illegal to sell organs).
Once a patient and potential donor find each other, the patient's transplant coordinator schedules both a medical and psychiatric evaluation of the person seeking to give up a piece of his or her body. "We met with some resistance from some hospitals at the beginning but not so much any more," says MatchingDonors founder and medical director Dr. Jeremiah Lowney. "After all, we're doing a good thing here." So far, seven members have received transplants from donors they found on the site. One of the most recent was on May 4: Bill Gibby, a 24-year-old from Anchorage, Alaska, with a wife and year-old son, donated a kidney to 33-year-old Kathy Lee of San Diego, whom he met for the first time when he flew down for the operation. MatchingDonors arranged for an airline to donate the airfare, and Lee's insurance paid Gibby's health costs.
Gibby acknowledges that his friends thought he was crazy at first, and his family was worried about the health risks, but he was determined to go through with the procedure. "I figure the more people I can help, the better place the earth will be" says Gibby. He's facing a six-week recovery period, part of which will be spent at Lee's home. And he has no second thoughts. After his surgery Gibby says "the happiest part was when the doctor came in and said [Lee's] kidney is working really well. That made it all super."
Despite such altruism on the part of donors, some in the medical world are concerned about the idea of looking for organs online. To explore the issue, Harvard Medical School held a public forum on May 12 titled "Soliciting Organs over the Internet," bringing together Lowney with several medical ethicists and transplant surgeons. But given the very poor odds of finding an organ donor the traditional way, ethical concerns may hold little sway with desperate patients.
Brought to you by the Guardian eCommerce Safe Site Privacy Seal Program.
Thursday, May 26, 2005
Netscape 8.0 May Change Browser Wars
America Online may have hit on the perfect way to get the name Netscape back into the midst of the browser wars with Netscape 8.0, unveiled today. At least one analyst has said that Web users should seriously consider switching to the browser, which has been in public beta testing since March. "In some ways this is the most innovative thing to come out of Netscape in a long time, since the very early days," Joe Wilcox, senior analyst, Jupiter Media said.
Netscape's new security features and its dual rendering engines are its big innovations. One of the engines emulates the open-source Mozilla Firefox browser and the other emulates Microsoft's Internet Explorer. Users can seamlessly toggle between the two. "What that means for the user is they can have the best of both worlds," Wilcox said. Because IE has been hit with many security breaches , some people feel more comfortable with Firefox, which is more secure. But some sites run better in IE. Netscape solves that dilemma.
The browser also beefs up security, using the dual rendering as the basis for its protection. AOL will maintain a list of trusted sites and sites known to be scams of some kind, such as phishing sites or spyware creators. Netscape will automatically update that list. If a user attempts to go to one of the sites on the "black list," the browser will issue a warning, switch to the more secure Firefox and disable some function making it more difficult to download from the site or fill in personal information . If the site is on the "white list" or is a designated trusted site, the browser will render it in IE for higher compatibility.
The tradeoff is time. Checking the security of the sites slows down the load time for Web pages.
Netscape also includes tabbed browsing and does away with Netscape's trademark green, which beta users overwhelmingly gave the thumbs down to. The browser release plays into AOL's new strategy to move away from a subscription base and toward an ad-driven business model. "Why would anybody invest in a browser? You don't make any money from a browser. The answer is search," Wilcox said.
Getting users to the Netscape portal drives search-based advertising revenue. "There are new toolbars that connect to different information that you want. I promise you the ones that are preconfigured, there's some marketing message behind it," he said. "If you're driving traffic to Netscape, that's eyeballs looking at ads. In traffic and views, there's money to be made." The toolbars, dubbed "multibar," condense multiple toolbars into customizable buttons that can be accessed with one click.
For more information please visit Guardianecommerce.net.
Netscape's new security features and its dual rendering engines are its big innovations. One of the engines emulates the open-source Mozilla Firefox browser and the other emulates Microsoft's Internet Explorer. Users can seamlessly toggle between the two. "What that means for the user is they can have the best of both worlds," Wilcox said. Because IE has been hit with many security breaches , some people feel more comfortable with Firefox, which is more secure. But some sites run better in IE. Netscape solves that dilemma.
The browser also beefs up security, using the dual rendering as the basis for its protection. AOL will maintain a list of trusted sites and sites known to be scams of some kind, such as phishing sites or spyware creators. Netscape will automatically update that list. If a user attempts to go to one of the sites on the "black list," the browser will issue a warning, switch to the more secure Firefox and disable some function making it more difficult to download from the site or fill in personal information . If the site is on the "white list" or is a designated trusted site, the browser will render it in IE for higher compatibility.
The tradeoff is time. Checking the security of the sites slows down the load time for Web pages.
Netscape also includes tabbed browsing and does away with Netscape's trademark green, which beta users overwhelmingly gave the thumbs down to. The browser release plays into AOL's new strategy to move away from a subscription base and toward an ad-driven business model. "Why would anybody invest in a browser? You don't make any money from a browser. The answer is search," Wilcox said.
Getting users to the Netscape portal drives search-based advertising revenue. "There are new toolbars that connect to different information that you want. I promise you the ones that are preconfigured, there's some marketing message behind it," he said. "If you're driving traffic to Netscape, that's eyeballs looking at ads. In traffic and views, there's money to be made." The toolbars, dubbed "multibar," condense multiple toolbars into customizable buttons that can be accessed with one click.
For more information please visit Guardianecommerce.net.
Wednesday, May 25, 2005
Netflix Taking Over Wal-Mart's Online DVD Rental Business
Wal-Mart and Netflix have struck an agreement that calls for the retail giant to bow out of the online DVD rental business, a potentially huge victory for Netflix, but one that might only forestall the inevitable decline of the rental business amid the rise of video-on-demand. Under the agreement, Netflix will promote DVD sales at Wal-Mart. In exchange, the retail giant will end its less than 2-year-old online DVD rental experiment, suggest customers sign up for Netflix and promote its onetime rival as the preferred online rental alternative. Netflix will also take over Wal-Mart's current subscription service, keeping the current US$12.97 per month price for a year.
Wal-Mart said the move was a reflection of the fact that DVD sales are rapidly becoming a more important sector for it. The company did not disclose its subscription numbers, but analysts estimate it at around 300,000. Investors saw Netflix, which has about 1.3 million subscribers and is the clear category leader, as the big winner in the deal, sending the firm's shares higher by more than 14 percent to US$17.22 in midday trading today, just after the news was disclosed.
Since its core business is online DVD rentals -- customers get and return movies by mail -- Netflix might have been the company most threatened by Wal-Mart's push into the sector. Because of its size, buying power and agreements with movie distributors, Wal-Mart could have put significant pricing pressure on Netflix over time, analysts said. "We've experienced tremendous growth in our online movie sales, and are committed to enhancing our focus in this business," John Fleming, the CEO of WalMart.com, said. Netflix CEO Reed Hastings said the partnership would help extend Netflix' lead as the top online DVD rental destination. Terms of the deal were not disclosed.
In the short term, the alliance seems to create a spear aimed directly at Blockbuster. The brick-and-mortar movie rental giant now has its own online subscription-style rental offering, seen by many as a direct response to the rise of Netflix. That service reportedly has around 750,000 members today, making it the second largest such site behind Netflix. Blockbuster's ill-fated attempt to acquire Hollywood Video was likewise seen by many as a defensive move, a way to bulk up and use size and pricing power to thwart Netflix' insurgence. The rental company now finds itself in a battle over leadership, with a recent board meeting reportedly considering a range of options, including the idea of getting out of the online rental business to focus on DVD sales.
Analysts say a survey of the potential reactions in the competitive landscape should also include Amazon.com.
Late last year, Amazon launched a DVD rental service on its UK site, and it is widely believed the e-tailer is using that service to work out the bugs for a possible foray into the U.S. market. Netflix has even warned its investors that such a move was on the way from Amazon. Amazon's director of product public relations, Jani Baker, said that the business is one that Amazon is "well-positioned to do," in part because movie sales have long been a part of its business and because it has a massive base of customers that would make it unnecessary to invest heavily in promotion.
To date, many consumers still prefer the instant gratification of a trip to the movie store over the online subscription model, in which movies are sent out when an earlier rental title is returned. Blockbuster's recent moves to eliminate some late fees have been seen aiding store rentals as well. However, all that might change, with the current activity just a preview of the sea changes -- some might say even a tidal wave -- to come to the industry as video-on-demand continues to gain favor with both consumers and distributors.
Digital downloads combine the convenience of getting movies immediately, and, because they cut out several intermediate steps -- the production and distribution of DVDs, for instance -- could be served up at a lower cost, at least while customers are getting used to the idea. While serving up digital copies of movies over the Internet has gained traction among customers, the big hurdle might be in convincing studios and others who own the intellectual property behind the films to sign on to widespread use of Web sales.
However, there are already signs that's starting to change. Sony Pictures Digital Entertainment recently laid out plans to spread technology that would enable the legal downloading of full-length feature films while also protecting against illegal swapping or piracy. Phil Leigh, senior analyst at Inside Digital Media, said that the movie industry has the opportunity to avoid the pitfalls that the music business fell into by ignoring the digital medium for too long. "The best way for the industry to meet the challenge is to offer a viable legal alternative before piracy becomes mainstream," Leigh said. How to do that is another question, however, and any viable system will need to balance digital rights management with ease-of-use for consumers. "The devil will be in the details," he added.
Many analysts believe trusted partners such as Netflix, which has a history of effectively getting movies into consumer hands, will likely be a key part of the digital distribution strategy as it emerges. Netflix has made it clear it intends to be a player in the video-on-demand world, and recent published reports have suggested the Web site could unveil a test of such a service as soon as later this year. Netflix has long been something of an apple of the e-commerce sector's eye, in part because of the pure-play nature of the business model, which marries Web efficiencies with traditional postal delivery services, and in part because it managed to go public in early 2002, at a time when dot-com IPOs were more likely to be the punch-line of jokes than the object of investor attention.
However, even from its early days, analysts have wondered about the long-term viability of its business model given the potential for broadband delivery of movies to set the industry on its ear.
Brought to you by Guardian eCommerce.
Wal-Mart said the move was a reflection of the fact that DVD sales are rapidly becoming a more important sector for it. The company did not disclose its subscription numbers, but analysts estimate it at around 300,000. Investors saw Netflix, which has about 1.3 million subscribers and is the clear category leader, as the big winner in the deal, sending the firm's shares higher by more than 14 percent to US$17.22 in midday trading today, just after the news was disclosed.
Since its core business is online DVD rentals -- customers get and return movies by mail -- Netflix might have been the company most threatened by Wal-Mart's push into the sector. Because of its size, buying power and agreements with movie distributors, Wal-Mart could have put significant pricing pressure on Netflix over time, analysts said. "We've experienced tremendous growth in our online movie sales, and are committed to enhancing our focus in this business," John Fleming, the CEO of WalMart.com, said. Netflix CEO Reed Hastings said the partnership would help extend Netflix' lead as the top online DVD rental destination. Terms of the deal were not disclosed.
In the short term, the alliance seems to create a spear aimed directly at Blockbuster. The brick-and-mortar movie rental giant now has its own online subscription-style rental offering, seen by many as a direct response to the rise of Netflix. That service reportedly has around 750,000 members today, making it the second largest such site behind Netflix. Blockbuster's ill-fated attempt to acquire Hollywood Video was likewise seen by many as a defensive move, a way to bulk up and use size and pricing power to thwart Netflix' insurgence. The rental company now finds itself in a battle over leadership, with a recent board meeting reportedly considering a range of options, including the idea of getting out of the online rental business to focus on DVD sales.
Analysts say a survey of the potential reactions in the competitive landscape should also include Amazon.com.
Late last year, Amazon launched a DVD rental service on its UK site, and it is widely believed the e-tailer is using that service to work out the bugs for a possible foray into the U.S. market. Netflix has even warned its investors that such a move was on the way from Amazon. Amazon's director of product public relations, Jani Baker, said that the business is one that Amazon is "well-positioned to do," in part because movie sales have long been a part of its business and because it has a massive base of customers that would make it unnecessary to invest heavily in promotion.
To date, many consumers still prefer the instant gratification of a trip to the movie store over the online subscription model, in which movies are sent out when an earlier rental title is returned. Blockbuster's recent moves to eliminate some late fees have been seen aiding store rentals as well. However, all that might change, with the current activity just a preview of the sea changes -- some might say even a tidal wave -- to come to the industry as video-on-demand continues to gain favor with both consumers and distributors.
Digital downloads combine the convenience of getting movies immediately, and, because they cut out several intermediate steps -- the production and distribution of DVDs, for instance -- could be served up at a lower cost, at least while customers are getting used to the idea. While serving up digital copies of movies over the Internet has gained traction among customers, the big hurdle might be in convincing studios and others who own the intellectual property behind the films to sign on to widespread use of Web sales.
However, there are already signs that's starting to change. Sony Pictures Digital Entertainment recently laid out plans to spread technology that would enable the legal downloading of full-length feature films while also protecting against illegal swapping or piracy. Phil Leigh, senior analyst at Inside Digital Media, said that the movie industry has the opportunity to avoid the pitfalls that the music business fell into by ignoring the digital medium for too long. "The best way for the industry to meet the challenge is to offer a viable legal alternative before piracy becomes mainstream," Leigh said. How to do that is another question, however, and any viable system will need to balance digital rights management with ease-of-use for consumers. "The devil will be in the details," he added.
Many analysts believe trusted partners such as Netflix, which has a history of effectively getting movies into consumer hands, will likely be a key part of the digital distribution strategy as it emerges. Netflix has made it clear it intends to be a player in the video-on-demand world, and recent published reports have suggested the Web site could unveil a test of such a service as soon as later this year. Netflix has long been something of an apple of the e-commerce sector's eye, in part because of the pure-play nature of the business model, which marries Web efficiencies with traditional postal delivery services, and in part because it managed to go public in early 2002, at a time when dot-com IPOs were more likely to be the punch-line of jokes than the object of investor attention.
However, even from its early days, analysts have wondered about the long-term viability of its business model given the potential for broadband delivery of movies to set the industry on its ear.
Brought to you by Guardian eCommerce.
Monday, May 23, 2005
Yahoo Upgrades Messenger's IM Voice Capability
In a bid to beef up its instant messaging product and provide users with another reason to make it their Web portal of choice, Yahoo has rolled out an upgraded version of its Yahoo Messenger tool that features enhanced PC calling services. Yahoo launched what it's calling a "public beta" of its upgraded messaging platform, citing a number of enhancements that are led by free voice calling among personal computers using Voice over Internet Protocol (VoIP) technology. Other upgrades include spam and virus protection as well as better integration of photo-sharing and contact management tools.
Analysts say controlling instant messaging traffic will be a key to success in the emerging era of full connectivity by Web users, who will likely extend the use of their favorite instant messaging, or IM, product from the PC to their Web-ready mobile devices. Instant messaging, like e-mail and search, is seen as a key loyalty builder among users, and the portal that supplies users with their IM of choice is more likely to reap additional benefits by providing other services and e-commerce to the same users. Some analysts also see it becoming a broader platform, one that carries a range of services, including e-commerce, to users wherever they might be. "We are committed to providing a world-class IM experience for consumers, and we will continue to enhance and extend voice services as a core component of Yahoo Messenger," Brad Garlinghouse, vice president of communications products at the portal, said. The new version launched simultaneously in the U.S. and 17 other countries, each with its own located version. The new phone calling feature replaces a walkie-talkie style voice chat option with a more telephone-like approach that also includes a voice mail feature.
According to data from comScore Media Metrix, AOL is the leader in the free IM sweepstakes to date, with an estimated 22 million active users of its freeware product, as well as another 20 million AOL paid subscribers. Yahoo is second with just under 19 million, and MSN is third with 13.7 million users. However, the amount of resources being directed to boosting instant messaging use and features underscores its importance. Just last week, Microsoft's MSN portal purchased MessageCast, which provides alerts to users via instant message. That move was seen as a way of beefing up the features of Microsoft's IM entry.
At the same time, the longtime leader in IM usage, AOL, has made it clear that it intends to use its platform as a way to expand its once walled-community of Internet into a World Wide Web portal that everyone can access. The most recent innovation from AOL is AIM Mail, a Web-based e-mail product linked to the AOL Instant Messenger (AIM). AIM also can be used to make direct phone calls, and an integrated VoIP offering was recently rolled out, as well as a blogging feature that enables users to post to their Weblogs through IM.
Similarly, the Yahoo upgrade includes a number of new features that attempt to draw on other Yahoo products and services, including a community-building feature from the Yahoo 360 networking site, which will alert IM users when a friend has posted a new blog entry or updated a photo page. The upgrade also integrates Yahoo Search into the IM window. Yahoo did not specifically delineate the system requirements for the beta version, but it indicates on its Web site that the messenger product will work with most recent operating systems and all basic Internet connections. Analysts said complaints about the quality of the old voice chat service should be addressed by the direct telephone-like approach, even for users on dial-up connections.
Instant messaging is seen as key for several reasons. First, the medium is one of the most likely to translate smoothly from the desktop to hand-held, mobile devices, where text messaging is already seeing strong traction among younger users. Second, IM is a loyalty-building tool because users are often reluctant to juggle more than one account and more than one set of buddies, or contacts. Finally, some analysts see IM emerging as a delivery tool for a host of services, going well beyond the current social chatting uses. For instance, news alerts and entire news stories -- text or audio or video -- could be sent via AIM, as could music downloads and other e-commerce purchases.
Forrester Research analyst Charlene Li said AOL solidified its leadership position in recent weeks, with its AIM Mail feature likely to keep users of AOL Instant Messaging from straying to products offered by MSN, Yahoo or, one day, Google in order to take advantage of those competitors' Web-based mail offerings. Li said that AOL is the "comeback kid" of portals and is using its dominance in the messaging field to set the stage for a strong debut for its AOL.com portal when it is re-launched later this year. "AOL is going to continue to roll out improvement and it will challenge MSN, Yahoo and even search partner Google for portal users," she said. Competitors have recognized both the opportunities to position themselves for the future of IM as well as the threat of having AOL use its strength in the field to become more of a threat in other areas, especially control of online advertising spending, she added.
Brought to you by GuardianeCommerce.net
Analysts say controlling instant messaging traffic will be a key to success in the emerging era of full connectivity by Web users, who will likely extend the use of their favorite instant messaging, or IM, product from the PC to their Web-ready mobile devices. Instant messaging, like e-mail and search, is seen as a key loyalty builder among users, and the portal that supplies users with their IM of choice is more likely to reap additional benefits by providing other services and e-commerce to the same users. Some analysts also see it becoming a broader platform, one that carries a range of services, including e-commerce, to users wherever they might be. "We are committed to providing a world-class IM experience for consumers, and we will continue to enhance and extend voice services as a core component of Yahoo Messenger," Brad Garlinghouse, vice president of communications products at the portal, said. The new version launched simultaneously in the U.S. and 17 other countries, each with its own located version. The new phone calling feature replaces a walkie-talkie style voice chat option with a more telephone-like approach that also includes a voice mail feature.
According to data from comScore Media Metrix, AOL is the leader in the free IM sweepstakes to date, with an estimated 22 million active users of its freeware product, as well as another 20 million AOL paid subscribers. Yahoo is second with just under 19 million, and MSN is third with 13.7 million users. However, the amount of resources being directed to boosting instant messaging use and features underscores its importance. Just last week, Microsoft's MSN portal purchased MessageCast, which provides alerts to users via instant message. That move was seen as a way of beefing up the features of Microsoft's IM entry.
At the same time, the longtime leader in IM usage, AOL, has made it clear that it intends to use its platform as a way to expand its once walled-community of Internet into a World Wide Web portal that everyone can access. The most recent innovation from AOL is AIM Mail, a Web-based e-mail product linked to the AOL Instant Messenger (AIM). AIM also can be used to make direct phone calls, and an integrated VoIP offering was recently rolled out, as well as a blogging feature that enables users to post to their Weblogs through IM.
Similarly, the Yahoo upgrade includes a number of new features that attempt to draw on other Yahoo products and services, including a community-building feature from the Yahoo 360 networking site, which will alert IM users when a friend has posted a new blog entry or updated a photo page. The upgrade also integrates Yahoo Search into the IM window. Yahoo did not specifically delineate the system requirements for the beta version, but it indicates on its Web site that the messenger product will work with most recent operating systems and all basic Internet connections. Analysts said complaints about the quality of the old voice chat service should be addressed by the direct telephone-like approach, even for users on dial-up connections.
Instant messaging is seen as key for several reasons. First, the medium is one of the most likely to translate smoothly from the desktop to hand-held, mobile devices, where text messaging is already seeing strong traction among younger users. Second, IM is a loyalty-building tool because users are often reluctant to juggle more than one account and more than one set of buddies, or contacts. Finally, some analysts see IM emerging as a delivery tool for a host of services, going well beyond the current social chatting uses. For instance, news alerts and entire news stories -- text or audio or video -- could be sent via AIM, as could music downloads and other e-commerce purchases.
Forrester Research analyst Charlene Li said AOL solidified its leadership position in recent weeks, with its AIM Mail feature likely to keep users of AOL Instant Messaging from straying to products offered by MSN, Yahoo or, one day, Google in order to take advantage of those competitors' Web-based mail offerings. Li said that AOL is the "comeback kid" of portals and is using its dominance in the messaging field to set the stage for a strong debut for its AOL.com portal when it is re-launched later this year. "AOL is going to continue to roll out improvement and it will challenge MSN, Yahoo and even search partner Google for portal users," she said. Competitors have recognized both the opportunities to position themselves for the future of IM as well as the threat of having AOL use its strength in the field to become more of a threat in other areas, especially control of online advertising spending, she added.
Brought to you by GuardianeCommerce.net
Sunday, May 22, 2005
NY Times To Charge for Some Web Articles
The New York Times will begin charging for online access to Op-Ed and news columnists beginning in September, bucking a trend in which newspapers have offered their content on the Web for free. The annual US$49.95 subscription to TimesSelect also comes with an early look at some articles, including those in the Real Estate, Travel and The New York Times Magazine sections, as well as access to the Times' online archives, for which the site now charges up to $2.95 for each article older than a week.
Most of the news, features and multimedia items will remain free, and home-delivery subscribers will automatically get TimesSelect without additional charge, the company said today. Besides the archives, the Times already charges for crossword puzzles and an e-mail alert service for tracking specific issues or keywords. The e-mail alerts will come with the new TimesSelect subscription.
News sites have been struggling to reap revenues online for content they normally sell in print. Most sites are supported by advertising, but have avoided charging fees to read current articles. The Wall Street Journal is the exception among major news organizations, charging $39 a year for print subscribers and $79 for others. The Los Angeles Times has retreated from charging readers and recently restored free access to its theater and other event listings for Southern California.
Brought to you by Guardian eCommerce.
Most of the news, features and multimedia items will remain free, and home-delivery subscribers will automatically get TimesSelect without additional charge, the company said today. Besides the archives, the Times already charges for crossword puzzles and an e-mail alert service for tracking specific issues or keywords. The e-mail alerts will come with the new TimesSelect subscription.
News sites have been struggling to reap revenues online for content they normally sell in print. Most sites are supported by advertising, but have avoided charging fees to read current articles. The Wall Street Journal is the exception among major news organizations, charging $39 a year for print subscribers and $79 for others. The Los Angeles Times has retreated from charging readers and recently restored free access to its theater and other event listings for Southern California.
Brought to you by Guardian eCommerce.
Saturday, May 21, 2005
Cross-Border Internet Wine Sales Get High Court Blessing
In what could be a huge boost for some e-commerce players, the U.S. Supreme Court today struck down state laws barring consumers from buying wine and having the seller ship it across state borders. The 5-4 decision, handed down early today, dealt directly with state laws in Michigan and New York but it also clears the way for direct-to-consumer, cross-border wine sales to greatly expand into some two dozen additional states -- from Arizona and Arkansas to Massachusetts Ohio and Pennsylvania -- where it had previously been off-limits because of state regulations.
That in turn could provide a major boost to some niche players in the wine sales field, from small vineyards that have set up their own e-commerce sites to the largest online wine sales site, Wine.com.
Earlier this month, Wine.com struck a deal with e-tail giant Amazon.com to sell wine on the Amazon site, a sign that many analysts took as confidence that the Supreme Court would rule in a manner that would provide for expanded online wine sales. Because the Internet is borderless, the cross-border shipping issue is critical to online sales of wine. Wine.com CEO George Garrick said the fundamental nature of the wine sales industry -- with the vast majority of wine being sold through wholesalers and getting into the hands of consumers at retail outlets -- will not change because of the ruling.
Garrick said there won't be a "free-for-all for retailers to ship direct to consumers who order via phone or the Internet" and said that state laws regulating the sales of wine at the retail level will remain in effect. Those laws vary significantly from state to state, requiring diligence on the part of retailers who use the Web to cross borders. The court ruled that the existing laws were discriminatory and anti-competitive. Under the statutes, a state's residents could buy liquor directly from a winery within the state's borders, but the winery could not ship the product outside the state.
"States have broad power to regulate liquor," Justice Anthony Kennedy wrote for the majority. "This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers. If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms." The case pitted state's rights to limit access to alcohol versus free-trade provisions of the Constitution, with enormous stakes for the US$21.6 billion-per-year wine industry, one that's enjoying a surge in popularity in recent times.
While Wine.com, which traces its roots back to the early days of the dot-com era, is seen as a winner, small wineries might also get a boost for their sales, which have often relied heavily on direct sales to consumer who visit them.
Small winery owners were among those who pursued the case to the high court, with backing from the Institute for Justice and other groups. The cases were defended by the attorneys general in each state and largely argued that such restrictions were necessary to maintain limits on underage drinking and to preserve states' ability to tax liquor sales. Liquor wholesalers emerged as potential losers in the case, as did some state coffers that would lose out on tax revenue.
Clint Bolick, the strategic litigation counsel for the Institute for Justice, which represented plaintiffs in the cases, called the ruling "a victory for consumers and small businesses and a defeat for economic protectionism." Bolick said the case could be a sign that the court supports freedom for interstate commerce conducted over the Web, which could translate to the loosening of other regulations in the future. "It demonstrates that in the era of the Internet, the Court will vindicate the principles of free trade that made this country great," he added. Toronto-based lawyer and lawsof.com Managing Editor Javad Heydary recently told the E-Commerce Times that having clear rulings in cases, such as the state laws on wine sales, is an important ingredient for continued e-commerce growth and success.
The existing landscape of varying regulations complicates broad scale e-commerce, he added, especially as various cases and challenges have wended their way up the appeals ladder, often with different appeals courts making differing and conflicting rulings. In those cases, he said, the online solution is "either federal legislation or some guidance from the Supreme Court."
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That in turn could provide a major boost to some niche players in the wine sales field, from small vineyards that have set up their own e-commerce sites to the largest online wine sales site, Wine.com.
Earlier this month, Wine.com struck a deal with e-tail giant Amazon.com to sell wine on the Amazon site, a sign that many analysts took as confidence that the Supreme Court would rule in a manner that would provide for expanded online wine sales. Because the Internet is borderless, the cross-border shipping issue is critical to online sales of wine. Wine.com CEO George Garrick said the fundamental nature of the wine sales industry -- with the vast majority of wine being sold through wholesalers and getting into the hands of consumers at retail outlets -- will not change because of the ruling.
Garrick said there won't be a "free-for-all for retailers to ship direct to consumers who order via phone or the Internet" and said that state laws regulating the sales of wine at the retail level will remain in effect. Those laws vary significantly from state to state, requiring diligence on the part of retailers who use the Web to cross borders. The court ruled that the existing laws were discriminatory and anti-competitive. Under the statutes, a state's residents could buy liquor directly from a winery within the state's borders, but the winery could not ship the product outside the state.
"States have broad power to regulate liquor," Justice Anthony Kennedy wrote for the majority. "This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers. If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms." The case pitted state's rights to limit access to alcohol versus free-trade provisions of the Constitution, with enormous stakes for the US$21.6 billion-per-year wine industry, one that's enjoying a surge in popularity in recent times.
While Wine.com, which traces its roots back to the early days of the dot-com era, is seen as a winner, small wineries might also get a boost for their sales, which have often relied heavily on direct sales to consumer who visit them.
Small winery owners were among those who pursued the case to the high court, with backing from the Institute for Justice and other groups. The cases were defended by the attorneys general in each state and largely argued that such restrictions were necessary to maintain limits on underage drinking and to preserve states' ability to tax liquor sales. Liquor wholesalers emerged as potential losers in the case, as did some state coffers that would lose out on tax revenue.
Clint Bolick, the strategic litigation counsel for the Institute for Justice, which represented plaintiffs in the cases, called the ruling "a victory for consumers and small businesses and a defeat for economic protectionism." Bolick said the case could be a sign that the court supports freedom for interstate commerce conducted over the Web, which could translate to the loosening of other regulations in the future. "It demonstrates that in the era of the Internet, the Court will vindicate the principles of free trade that made this country great," he added. Toronto-based lawyer and lawsof.com Managing Editor Javad Heydary recently told the E-Commerce Times that having clear rulings in cases, such as the state laws on wine sales, is an important ingredient for continued e-commerce growth and success.
The existing landscape of varying regulations complicates broad scale e-commerce, he added, especially as various cases and challenges have wended their way up the appeals ladder, often with different appeals courts making differing and conflicting rulings. In those cases, he said, the online solution is "either federal legislation or some guidance from the Supreme Court."
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Friday, May 20, 2005
Projects Aim To Track Consumers' Online Moves
Marketers have always wanted to track their customers' every move. Now, new scanning technologies linked to the Internet, may enable them to do so. Earlier this month ratings service Arbitron, Inc. and advertising specialty producer VNU disclosed that they have agreed to deploy during the next nine months a pilot project to collect multi-media purchase data from consumers.
The pilot project, dubbed Project Apollo, will debut with a panel of more than 6,000 American households. It has been in the works for a year-and-a-half.
"This agreement reflects the continuing progress that our two companies have been making since October, 2004 toward developing and deploying an innovative national marketing research service based on a portfolio of technologies and other resources from multiple companies," said Susan Whiting, president and CEO of Nielsen Media Research, a division of VNU. Various other advertising agencies and online marketers have also been creating new tracking technologies, though the projects have not been as high-profile as the Arbitron and VNU deal.
An interactive travel agency called usdm.net, for example, monitors consumer exposure to ads "and can track and measure impressions," said project spokesperson Sara Jackson Zaval . "They can also track consumers behaviorally." Based in Corpus Christi, Texas, usdm.net, which stands for U.S. Destination Marketing, Inc., also owns its own travel portal, OfficialTravelGuide.com.
Marketers are also measuring consumers' receptivity to marketing messages sent by e-mail, not just their impressions of Web pages.
ExactTarget.com, an e-mail service provider, and WebTrends.com, a maker of tracking technology, partnered recently to enable users to send e-mail marketing messages and determine, in real-time, "when it was delivered, if it was opened, if the reader clicked on links, and how long they stayed on a particular Web page," said ExactTarget.com spokesperson Linda Muskin.
Based on what the consumers did when interacting with the e-mail, the technology tool could also trigger an automatic e-mail response. For example, if you got an e-mail, clicked through the site, but abandoned a shopping cart, that action could trigger an e-mail with an incentive, offering you free shipping, suggesting other colors and similar products. "This is all part of data driven, or left-brain, marketing," Muskin said.
Other plans in development include an initiative begun by Edmunds.com, Inc., a leading online source for consumers for information about automobiles. The company is implementing new tracking technology "and will soon be able to analyze the behavior of individuals who look at a specific ad on our site to see if people who see a specific ad will go to other, related areas of our site compared to people who did not see the ad," said Pam Krebs, director of communications strategy at the Santa Monica, Calif.-based firm. "For example, what is the likelihood that someone who sees a Toyota ad in our new car index pages will go to the Toyota vehicle pages v. someone who never saw the Toyota ad?" she said.
Krebs said that there are even more advanced technologies out there -- like cookies that track consumers from site to site. "If an advertiser is running creative on multiple sites where the pixels are placed, they get a clearer picture of exactly where and when they were exposed to, or interacted with, specific ads," said Krebs. The reason that the technologies are debuting in this niche -- including a new, emerging tool called call and proxy technology -- is that online marketing agencies are being asked to verify that their ads produce results. "We agency people are under increasing pressure to document results to justify programs," said Irv Hamilton, a publicist with the E-agency, based in Oakland, Calif. "Monitoring technology is expanding quickly and provides us with new tools."
Project Apollo, which is among the largest current projects of its kind, will track with its pilot panel launching later this year the exposure of individuals to ads on the 'Net, as well as on traditional media. A tracking technology called a Portable People Meter, similar to a mobile phone , has been adapted for the project, and, combined with other, networked technologies, will enable Nielsen to track every purchase by consumers, both online and offline. "The Project Apollo pilot panel will provide advertisers what they have been asking for -- a means to magnify the effectiveness of their marketing," said Steve Morris, president and CEO of Arbitron, Inc. Some aren't convinced quite yet that the effort will be successful. Dave Stanton, a spokesman for
Knowledge Networks, developer of media measurement technology, said the Arbitron project will not be pervasive because "Project Apollo can only measure someone's media activity if they agree to be part of the survey."
For more information, please visit Guardian eCommerce.
The pilot project, dubbed Project Apollo, will debut with a panel of more than 6,000 American households. It has been in the works for a year-and-a-half.
"This agreement reflects the continuing progress that our two companies have been making since October, 2004 toward developing and deploying an innovative national marketing research service based on a portfolio of technologies and other resources from multiple companies," said Susan Whiting, president and CEO of Nielsen Media Research, a division of VNU. Various other advertising agencies and online marketers have also been creating new tracking technologies, though the projects have not been as high-profile as the Arbitron and VNU deal.
An interactive travel agency called usdm.net, for example, monitors consumer exposure to ads "and can track and measure impressions," said project spokesperson Sara Jackson Zaval . "They can also track consumers behaviorally." Based in Corpus Christi, Texas, usdm.net, which stands for U.S. Destination Marketing, Inc., also owns its own travel portal, OfficialTravelGuide.com.
Marketers are also measuring consumers' receptivity to marketing messages sent by e-mail, not just their impressions of Web pages.
ExactTarget.com, an e-mail service provider, and WebTrends.com, a maker of tracking technology, partnered recently to enable users to send e-mail marketing messages and determine, in real-time, "when it was delivered, if it was opened, if the reader clicked on links, and how long they stayed on a particular Web page," said ExactTarget.com spokesperson Linda Muskin.
Based on what the consumers did when interacting with the e-mail, the technology tool could also trigger an automatic e-mail response. For example, if you got an e-mail, clicked through the site, but abandoned a shopping cart, that action could trigger an e-mail with an incentive, offering you free shipping, suggesting other colors and similar products. "This is all part of data driven, or left-brain, marketing," Muskin said.
Other plans in development include an initiative begun by Edmunds.com, Inc., a leading online source for consumers for information about automobiles. The company is implementing new tracking technology "and will soon be able to analyze the behavior of individuals who look at a specific ad on our site to see if people who see a specific ad will go to other, related areas of our site compared to people who did not see the ad," said Pam Krebs, director of communications strategy at the Santa Monica, Calif.-based firm. "For example, what is the likelihood that someone who sees a Toyota ad in our new car index pages will go to the Toyota vehicle pages v. someone who never saw the Toyota ad?" she said.
Krebs said that there are even more advanced technologies out there -- like cookies that track consumers from site to site. "If an advertiser is running creative on multiple sites where the pixels are placed, they get a clearer picture of exactly where and when they were exposed to, or interacted with, specific ads," said Krebs. The reason that the technologies are debuting in this niche -- including a new, emerging tool called call and proxy technology -- is that online marketing agencies are being asked to verify that their ads produce results. "We agency people are under increasing pressure to document results to justify programs," said Irv Hamilton, a publicist with the E-agency, based in Oakland, Calif. "Monitoring technology is expanding quickly and provides us with new tools."
Project Apollo, which is among the largest current projects of its kind, will track with its pilot panel launching later this year the exposure of individuals to ads on the 'Net, as well as on traditional media. A tracking technology called a Portable People Meter, similar to a mobile phone , has been adapted for the project, and, combined with other, networked technologies, will enable Nielsen to track every purchase by consumers, both online and offline. "The Project Apollo pilot panel will provide advertisers what they have been asking for -- a means to magnify the effectiveness of their marketing," said Steve Morris, president and CEO of Arbitron, Inc. Some aren't convinced quite yet that the effort will be successful. Dave Stanton, a spokesman for
Knowledge Networks, developer of media measurement technology, said the Arbitron project will not be pervasive because "Project Apollo can only measure someone's media activity if they agree to be part of the survey."
For more information, please visit Guardian eCommerce.
Wednesday, May 18, 2005
Microsoft pulled back the curtain on its next generation console, Xbox 360, and announced some impressive features, but that and the fact that it beat its rivals to the public's eye, may not give it an edge in the market, one analyst said. "The market is going to be more evenly split this round -- regardless of when the players launch," Jay Horwitz, senior analyst, Jupiter Media, said. The preview was timed to beat Sony and Nintendo, which are both expected to announce their next-generation consoles at the Electronic Entertainment Expo (E3) in Los Angeles next week.
Microsoft is likely to release more details about Xbox 360, which is expected to hit the stores by
the holiday shopping season, during the show. Long Way To Go The 360, introduced on the show "MTV Presents: Xbox, The Next Generation Revealed," which was hosted by self-described gaming geek Elijah Wood, who played Frodo in the "Lord of the Rings" trilogy, and the band The Killers, is far from ready for prime time. The big issue of backward compatibility has yet to be broached and the games previewed were nowhere near complete. Without the games, it's hard to say whether the Xbox 360 will live up to the hype.
The Xbox 360 will be significantly beefed up, with 512 MB of fast RAM (the Xbox has 64 MB), a 500 MHz graphics chip designed by ATI Technologies, and containing three IBM 3.2 GHz PowerPC chips. The 360 also supports HDTV. Microsoft is still trying to push Xbox Live, its online gaming site, and the 360 might just help that along. "Enhancements to the Xbox Live site add significant additional value to the Xbox 360, including the ability for online commerce to effectively increase the revenue per title," said Van Baker, vice president and research director,
Gartner.
The Xbox is intentionally designed to look like an Apple product, J. Allard, founding member of the Xbox development team, said, adding that Apple is the aesthetic to reach for. But it's also designed to be much more than a game console. The box will come with free online access and can act as a go-between from a digital camera or MP3 player and a television. Microsoft has not announced its price yet.
Although predicting only 2 percent growth in the next-generation market, Jupiter Media said the business will still generate big bucks, with the U.S. console market growing from $8.7 billion for 2004 to $11.7 billion in 2010. "The game console industry is becoming adept at diversifying its products to meet the multiplicity of tastes. The mix of mass appeal content, blockbuster hits, niche titles, enhanced functionality and most importantly value opportunities is keeping the market vibrant," Horwitz said.
For more information, please visit Guardian eCommerce.
Microsoft is likely to release more details about Xbox 360, which is expected to hit the stores by
the holiday shopping season, during the show. Long Way To Go The 360, introduced on the show "MTV Presents: Xbox, The Next Generation Revealed," which was hosted by self-described gaming geek Elijah Wood, who played Frodo in the "Lord of the Rings" trilogy, and the band The Killers, is far from ready for prime time. The big issue of backward compatibility has yet to be broached and the games previewed were nowhere near complete. Without the games, it's hard to say whether the Xbox 360 will live up to the hype.
The Xbox 360 will be significantly beefed up, with 512 MB of fast RAM (the Xbox has 64 MB), a 500 MHz graphics chip designed by ATI Technologies, and containing three IBM 3.2 GHz PowerPC chips. The 360 also supports HDTV. Microsoft is still trying to push Xbox Live, its online gaming site, and the 360 might just help that along. "Enhancements to the Xbox Live site add significant additional value to the Xbox 360, including the ability for online commerce to effectively increase the revenue per title," said Van Baker, vice president and research director,
Gartner.
The Xbox is intentionally designed to look like an Apple product, J. Allard, founding member of the Xbox development team, said, adding that Apple is the aesthetic to reach for. But it's also designed to be much more than a game console. The box will come with free online access and can act as a go-between from a digital camera or MP3 player and a television. Microsoft has not announced its price yet.
Although predicting only 2 percent growth in the next-generation market, Jupiter Media said the business will still generate big bucks, with the U.S. console market growing from $8.7 billion for 2004 to $11.7 billion in 2010. "The game console industry is becoming adept at diversifying its products to meet the multiplicity of tastes. The mix of mass appeal content, blockbuster hits, niche titles, enhanced functionality and most importantly value opportunities is keeping the market vibrant," Horwitz said.
For more information, please visit Guardian eCommerce.
Monday, May 16, 2005
Microsoft Targets Viruses, Spyware
In a bid to redefine the computer security business , Microsoft said yesterday that it will market a consumer PC-tuneup subscription service with virus and spyware protection. "We believe this is a new ubercategory called 'PC help,'" Microsoft spokesman Ryan Hamlin says. Microsoft's new service will put it in direct competition with security software giants Symantec, McAfee and Computer Associates. The company plans to test its Windows OneCare service this summer. It hasn't said when the final version will be ready or how much it will cost. But security experts project a fee of US$80 per year or less for:
-Basic protection. Anti-virus and anti-spyware filtering tools derived from technology Microsoft acquired via its 2003 purchase of anti-virus vendor GeCad and last December's acquisition of anti-spyware maker Giant Company Software.
-Backup and storage. Microsoft will remind subscribers to back up files to CDs or external hard drives. Eventually it may offer file storage on Microsoft servers, similar to a subscription storage service Apple (Nasdaq
-Basic protection. Anti-virus and anti-spyware filtering tools derived from technology Microsoft acquired via its 2003 purchase of anti-virus vendor GeCad and last December's acquisition of anti-spyware maker Giant Company Software.
-Backup and storage. Microsoft will remind subscribers to back up files to CDs or external hard drives. Eventually it may offer file storage on Microsoft servers, similar to a subscription storage service Apple (Nasdaq
Saturday, May 14, 2005
Boom in Online Ads this Year Even More than Expected
Spending on Internet advertising in 2005 will grow even faster than previously believed, a market research firm said, although it also predicted a slowdown in growth rates starting next year.
EMarketer cited the booming first-quarter earnings results for the likes of Google and Yahoo as reason to revise its already robust forecast even higher. EMarketer now says that online ad sales will grow to US$12.9 billion this year, a 34 percent increase over 2004 levels. The firm had previously forecast growth of 21 percent from last year, with total spending remaining below $10 billion for this year.
The same forecast predicts that growth rates will begin to taper off next year, though still expand at a double-digit rate, with ad spend growing 21 percent in 2006, 14 percent in 2007 and tapering to just 10.4 percent in 2009. Interactive Advertising Bureau CEO Greg Stuart said the numbers show that "interactive advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix."
Other market analysis firms have suggested that marketers are still not taking full advantage of the Web. Forrester Research analyst Charlene Li said that a gap remains between how much time consumers spend online and how much of their marketing budgets most companies dedicate to the medium. "A lot of companies are still building up what they do online," Li said.
Part of the lag has been the relatively limited range of choices for marketers, with banner ads and other display ads augmented first by text ads such as those peddled by Google's search product and more recently the advent of rich media ads. "The menu of choices is growing and spending will follow," Li said. Still, a raft of evidence has emerged showing increasing advertising spending on the Web, with search companies, media companies and portals all attempting new products and techniques to attract the new spending.
Yahoo saw its first-quarter profit nearly double, while the more nascent Google saw its net income grow six-fold during the first three months of the year. Both cited the strength of paid search and other emerging advertising opportunities for their strong performances. EMarketer senior analyst David Hallerman said early returns from the likes of Google and Yahoo showed that previous forecasts were "a little too conservative about the Web-search advertising those companies have popularized."
The revised forecast builds in an astonishing 40 percent growth rate for paid search, with that market, which is dominated by Yahoo and Google, growing to $5.4 billion in 2005. Other increases will come as more advertisers dole out for rich-media ads, knowing the Web audience is increasingly viewing sites on high-speed connections. PricewaterhouseCoopers analyst Tom Hyland said that the fact that the so-called tipping point of broadband adoption has now passed, with more than half of all American Internet users now accessing the Web with high-speed connections either at home or work, will bring about significant changes to Web advertising.
"Broadband will continue to evolve the face of interactive advertising as more compelling media ads and video formats are created," Hyland said in the eMarketer report. "More and more, brand marketers will look to interactive as an integral platform to deliver rich experiences for brand building and enhancement."
Web companies have recognized that opportunity, with Yahoo unveiling its upgraded and expanded video search product today, a service analysts say is a natural place for video-style ads to be positioned. The research firm said e-mail marketing revenue dropped slightly in 2004 compared to the year before, but is likely to recover. Otherwise, nearly all formats, including search, classified-style ads and display advertising, notched growth in 2004 and will again this year.
Brought to you by Guardian eCommerce.
EMarketer cited the booming first-quarter earnings results for the likes of Google and Yahoo as reason to revise its already robust forecast even higher. EMarketer now says that online ad sales will grow to US$12.9 billion this year, a 34 percent increase over 2004 levels. The firm had previously forecast growth of 21 percent from last year, with total spending remaining below $10 billion for this year.
The same forecast predicts that growth rates will begin to taper off next year, though still expand at a double-digit rate, with ad spend growing 21 percent in 2006, 14 percent in 2007 and tapering to just 10.4 percent in 2009. Interactive Advertising Bureau CEO Greg Stuart said the numbers show that "interactive advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix."
Other market analysis firms have suggested that marketers are still not taking full advantage of the Web. Forrester Research analyst Charlene Li said that a gap remains between how much time consumers spend online and how much of their marketing budgets most companies dedicate to the medium. "A lot of companies are still building up what they do online," Li said.
Part of the lag has been the relatively limited range of choices for marketers, with banner ads and other display ads augmented first by text ads such as those peddled by Google's search product and more recently the advent of rich media ads. "The menu of choices is growing and spending will follow," Li said. Still, a raft of evidence has emerged showing increasing advertising spending on the Web, with search companies, media companies and portals all attempting new products and techniques to attract the new spending.
Yahoo saw its first-quarter profit nearly double, while the more nascent Google saw its net income grow six-fold during the first three months of the year. Both cited the strength of paid search and other emerging advertising opportunities for their strong performances. EMarketer senior analyst David Hallerman said early returns from the likes of Google and Yahoo showed that previous forecasts were "a little too conservative about the Web-search advertising those companies have popularized."
The revised forecast builds in an astonishing 40 percent growth rate for paid search, with that market, which is dominated by Yahoo and Google, growing to $5.4 billion in 2005. Other increases will come as more advertisers dole out for rich-media ads, knowing the Web audience is increasingly viewing sites on high-speed connections. PricewaterhouseCoopers analyst Tom Hyland said that the fact that the so-called tipping point of broadband adoption has now passed, with more than half of all American Internet users now accessing the Web with high-speed connections either at home or work, will bring about significant changes to Web advertising.
"Broadband will continue to evolve the face of interactive advertising as more compelling media ads and video formats are created," Hyland said in the eMarketer report. "More and more, brand marketers will look to interactive as an integral platform to deliver rich experiences for brand building and enhancement."
Web companies have recognized that opportunity, with Yahoo unveiling its upgraded and expanded video search product today, a service analysts say is a natural place for video-style ads to be positioned. The research firm said e-mail marketing revenue dropped slightly in 2004 compared to the year before, but is likely to recover. Otherwise, nearly all formats, including search, classified-style ads and display advertising, notched growth in 2004 and will again this year.
Brought to you by Guardian eCommerce.
Thursday, May 12, 2005
Lotteries Might Gamble on Internet
Several states are considering selling lottery tickets on the Internet, a change that could usher in a new era in how such tickets are purchased. Online lottery sales would be limited to residents within the state. But Internet lottery sales are expected to spread quickly to other states if the practice proves popular, advocates of the idea say. "Every state is looking at it," says Georgia state Rep. Terry Barnard, a Republican whose bill authorizing Internet sales passed the Georgia House of Representatives in March. The Senate adjourned before taking action.
State officials hope the Internet will boost lottery sales, which have been sluggish in some states because of competition from casinos and Internet gambling. "The bottom line is: It will make more money and help school funding," says Illinois state Sen. John Cullerton, a Democrat. The Illinois Senate approved online sales April 14 and sent the bill to the House. "I've said for 10 years that Internet lottery sales are just around the corner, and I may finally be proved right," says Charles Strutt, executive director of the Multi-State Lottery Association, which runs the Powerball lottery.
Internet sales are "the next logical step to make life easier for our players," says Rick Wiser, executive director of New Hampshire lottery, which was the nation's first when it began in 1964.
Forty states and Washington, D.C., have lotteries. Oklahoma will start one in October and is looking at online sales. North Carolina also is considering a lottery.
Lottery sales were US$49.4 billion in 2004, according to the North American Association of State and Provincial Lotteries. Once prizes and administrative costs were paid, $15.1 billion was left in revenue for states. Throughout the U.S., 64 percent of lottery profits go to education funding, the association says. Internet sales have drawn opposition from gambling opponents. "My biggest concern is that teens could get lottery tickets and start gambling online," says Guy Clark, chairman of the National Coalition Against Legalized Gambling.
Internet lottery sales will expand a bad public policy that hits hardest on the poor, who spend a greater portion of their income on tickets than the affluent, says Alicia Hansen of the Tax Foundation, which studies tax policy. "If one state starts, other states will follow because legislators feel they have to compete to get all the revenue they can," she says. Cullerton says Internet sales would bring more affluent families to the lottery, reducing states' dependence on the poor to drive sales. "This is no more an expansion of gambling than putting a new lottery terminal in a convenience store," he says.
Legislators are placing tight restrictions on Internet lottery sales. Georgia would limit sales to $5 per day and not allow credit card purchases. Debit cards could be used. A buyer would have to open an account and show identification in a convenience store before purchasing tickets online.
Cullerton says teenagers and out-of-state residents can be kept from playing the lottery by requiring identification to open an account.
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State officials hope the Internet will boost lottery sales, which have been sluggish in some states because of competition from casinos and Internet gambling. "The bottom line is: It will make more money and help school funding," says Illinois state Sen. John Cullerton, a Democrat. The Illinois Senate approved online sales April 14 and sent the bill to the House. "I've said for 10 years that Internet lottery sales are just around the corner, and I may finally be proved right," says Charles Strutt, executive director of the Multi-State Lottery Association, which runs the Powerball lottery.
Internet sales are "the next logical step to make life easier for our players," says Rick Wiser, executive director of New Hampshire lottery, which was the nation's first when it began in 1964.
Forty states and Washington, D.C., have lotteries. Oklahoma will start one in October and is looking at online sales. North Carolina also is considering a lottery.
Lottery sales were US$49.4 billion in 2004, according to the North American Association of State and Provincial Lotteries. Once prizes and administrative costs were paid, $15.1 billion was left in revenue for states. Throughout the U.S., 64 percent of lottery profits go to education funding, the association says. Internet sales have drawn opposition from gambling opponents. "My biggest concern is that teens could get lottery tickets and start gambling online," says Guy Clark, chairman of the National Coalition Against Legalized Gambling.
Internet lottery sales will expand a bad public policy that hits hardest on the poor, who spend a greater portion of their income on tickets than the affluent, says Alicia Hansen of the Tax Foundation, which studies tax policy. "If one state starts, other states will follow because legislators feel they have to compete to get all the revenue they can," she says. Cullerton says Internet sales would bring more affluent families to the lottery, reducing states' dependence on the poor to drive sales. "This is no more an expansion of gambling than putting a new lottery terminal in a convenience store," he says.
Legislators are placing tight restrictions on Internet lottery sales. Georgia would limit sales to $5 per day and not allow credit card purchases. Debit cards could be used. A buyer would have to open an account and show identification in a convenience store before purchasing tickets online.
Cullerton says teenagers and out-of-state residents can be kept from playing the lottery by requiring identification to open an account.
Brought to you by Guardian eCommerce.
Tuesday, May 10, 2005
A Second Wind for E-Finance Startups
Electronic trading may not be the first place you would expect to find a lot of innovation. After all, haven't online brokerages such as E*Trade and electronic exchanges such as Instinet, which Nasdaq plans to buy for US$1.88 billion, done it all?
Not quite. The past five years have seen a renaissance in financial-services startups, most of which are targeting specialized markets that established players ignore or barely address. Several of them have recently gone public or are on the road to an initial public offering. Sweeping changes in the financial markets have created opportunities for these companies. "You're dealing with more volatile capital markets than before," says Joel Gomberg, an analyst at William Blair.
The Federal Reserve's interest rate hikes, soaring oil prices, terrorism, and the weakening U.S. dollar have injected risk into the markets. That has boosted the popularity of derivatives -- securities whose value depends on the performance of underlying securities -- as tools for hedging risk. Trading volume of options, a common derivative, grew 30 percent last year, to 1.2 billion trades, according to the clearinghouse Options Clearing Corp.
Many investors often use these options to offset risk in their portfolios. For example, if you own shares of Microsoft but can't decide how they'll perform, you can hold them and buy put options on Microsoft stock, which gain value as the price of the stock falls. Though you'll diminish the gains realized if the stock soars, you'll also mitigate the risk of a big loss if it tanks. Individual investors often rely on options-trading specialists such as online brokerage OptionsXpress Holdings, which was founded in 2000 to bring options trading to the masses. "My partners and I came together with a common vision that the online investor using options was treated like a second-class citizen at other online brokerages," says David Kalt, CEO and co-founder.
The Chicago-based company offers tools like Strategy Scan, which turns an opinion about a stock or stock index into an easy-to-understand options strategy. Its Virtual Trading feature lets investors run simulations of strategies before they invest real money, which they can do on OptionsXpress.
The company went public in January at $16.50 a share on strong 2004 results. Net income grew 91 percent last year, to $31 million, on revenue of $93 million.
Brokerages need exchanges to execute their orders. Not surprisingly, the first all-electronic options exchange, International Securities Exchange in New York, was founded the same year as OptionsXpress. Before ISE, options trading was conducted in the time-honored manner still used at exchanges like the Chicago Board Options Exchange, where traders shout out bids and offers on a floor.
ISE co-founder Bill Porter, who previously founded E*Trade, sought to bring the efficiency of electronic trading to the options market. "As a result of options trading electronically, the markets have improved," says CEO David Krell, who explains that options can now be traded faster and with narrower gaps between bid and offer prices than before. In just five years, ISE has grown into the largest equity-options exchange in the U.S. as measured by volume. Last year, customers traded an average of 1.4 million options contracts a day, and ISE commanded 33.3 percent of the U.S. equity options market. Net income grew 30 percent in 2004, to $26 million, on revenue of $125 million. ISE went public in March at $18 a share, and the stock closed at $30 on its first day of trading.
Like options trading, corporate bond trading has historically been a manual process. To place an order, institutional investors phone multiple dealers and then wait for responses -- a process that can take hours. Enter New York-based MarketAxess Holdings, a 5-year-old company that automates corporate bond trading through an electronic marketplace. An investor can submit one inquiry for multiple bonds through an electronic form, which goes to multiple dealers. Then he or she quickly gets responses, ranked by price. Investors can see prices in dealers' inventory, get real-time price quotes, and use tools to compare and analyze prices. Revenues at MarketAxess grew 30 percent last year, to $75 million. It went public last November at $11 a share.
Some of the most interesting up-and-comers in financial services aren't public yet. Consider LiquidNet Holdings, a 6-year-old online marketplace that lets institutional investors trade large blocks of stock without revealing their activity to the entire stock market. Traditionally, an institution places a large buy or sell order for a stock with brokers, who broadcast the order to all market participants.
As news of the order disseminates, the stock price falls if the institution is selling or rises if it's buying. With LiquidNet, institutions trade with each other directly and anonymously over the Internet, preventing the stock price from moving against them. "We cut out the day traders, the hedge funds," says founder and CEO Seth Merrin. LiquidNet is one of the fastest growing private companies in the U.S. It says revenues have doubled every year since 2001. Last year, it was profitable on $107 million in revenue. In February, LiquidNet's founders and early investors sold 13 percent of the company to private-equity investors in a $250 million transaction that valued LiquidNet at $1.8 billion. With revenues expected to double again this year, LiquidNet won't even consider a distracting IPO for at least two years, Merrin says. Note to IPO investors: Mark your 2007 calendars.
Brought to you by Guardian eCommerce.
Not quite. The past five years have seen a renaissance in financial-services startups, most of which are targeting specialized markets that established players ignore or barely address. Several of them have recently gone public or are on the road to an initial public offering. Sweeping changes in the financial markets have created opportunities for these companies. "You're dealing with more volatile capital markets than before," says Joel Gomberg, an analyst at William Blair.
The Federal Reserve's interest rate hikes, soaring oil prices, terrorism, and the weakening U.S. dollar have injected risk into the markets. That has boosted the popularity of derivatives -- securities whose value depends on the performance of underlying securities -- as tools for hedging risk. Trading volume of options, a common derivative, grew 30 percent last year, to 1.2 billion trades, according to the clearinghouse Options Clearing Corp.
Many investors often use these options to offset risk in their portfolios. For example, if you own shares of Microsoft but can't decide how they'll perform, you can hold them and buy put options on Microsoft stock, which gain value as the price of the stock falls. Though you'll diminish the gains realized if the stock soars, you'll also mitigate the risk of a big loss if it tanks. Individual investors often rely on options-trading specialists such as online brokerage OptionsXpress Holdings, which was founded in 2000 to bring options trading to the masses. "My partners and I came together with a common vision that the online investor using options was treated like a second-class citizen at other online brokerages," says David Kalt, CEO and co-founder.
The Chicago-based company offers tools like Strategy Scan, which turns an opinion about a stock or stock index into an easy-to-understand options strategy. Its Virtual Trading feature lets investors run simulations of strategies before they invest real money, which they can do on OptionsXpress.
The company went public in January at $16.50 a share on strong 2004 results. Net income grew 91 percent last year, to $31 million, on revenue of $93 million.
Brokerages need exchanges to execute their orders. Not surprisingly, the first all-electronic options exchange, International Securities Exchange in New York, was founded the same year as OptionsXpress. Before ISE, options trading was conducted in the time-honored manner still used at exchanges like the Chicago Board Options Exchange, where traders shout out bids and offers on a floor.
ISE co-founder Bill Porter, who previously founded E*Trade, sought to bring the efficiency of electronic trading to the options market. "As a result of options trading electronically, the markets have improved," says CEO David Krell, who explains that options can now be traded faster and with narrower gaps between bid and offer prices than before. In just five years, ISE has grown into the largest equity-options exchange in the U.S. as measured by volume. Last year, customers traded an average of 1.4 million options contracts a day, and ISE commanded 33.3 percent of the U.S. equity options market. Net income grew 30 percent in 2004, to $26 million, on revenue of $125 million. ISE went public in March at $18 a share, and the stock closed at $30 on its first day of trading.
Like options trading, corporate bond trading has historically been a manual process. To place an order, institutional investors phone multiple dealers and then wait for responses -- a process that can take hours. Enter New York-based MarketAxess Holdings, a 5-year-old company that automates corporate bond trading through an electronic marketplace. An investor can submit one inquiry for multiple bonds through an electronic form, which goes to multiple dealers. Then he or she quickly gets responses, ranked by price. Investors can see prices in dealers' inventory, get real-time price quotes, and use tools to compare and analyze prices. Revenues at MarketAxess grew 30 percent last year, to $75 million. It went public last November at $11 a share.
Some of the most interesting up-and-comers in financial services aren't public yet. Consider LiquidNet Holdings, a 6-year-old online marketplace that lets institutional investors trade large blocks of stock without revealing their activity to the entire stock market. Traditionally, an institution places a large buy or sell order for a stock with brokers, who broadcast the order to all market participants.
As news of the order disseminates, the stock price falls if the institution is selling or rises if it's buying. With LiquidNet, institutions trade with each other directly and anonymously over the Internet, preventing the stock price from moving against them. "We cut out the day traders, the hedge funds," says founder and CEO Seth Merrin. LiquidNet is one of the fastest growing private companies in the U.S. It says revenues have doubled every year since 2001. Last year, it was profitable on $107 million in revenue. In February, LiquidNet's founders and early investors sold 13 percent of the company to private-equity investors in a $250 million transaction that valued LiquidNet at $1.8 billion. With revenues expected to double again this year, LiquidNet won't even consider a distracting IPO for at least two years, Merrin says. Note to IPO investors: Mark your 2007 calendars.
Brought to you by Guardian eCommerce.
Sunday, May 08, 2005
Online Consumers Window Shop More than Impulse Buy
The Internet might be turning into the ultimate window shopping experience for online shoppers. Greater sophistication with browsing is making consumers more prone to comparison shop online before actually buying.
Internet shoppers are more prone to visiting 10 or more Web sites before returning to a favored location hours or days later to make a purchase. This new trend of leaving a Web site before completing a sale suggests that Internet merchants need to rethink their marketing strategy and Web site design, says the author of an exhaustive study. According to the report on Internet shopping habits, online merchants need to shift their focus from why shoppers abort shopping carts to why they leave Web sites without buying.
This digital window shopping activity is clearly revealed in sales data gathered by ScanAlert between June 2004 and March 2005 from retailers such as GSI Commerce, Ritz Camera, Tiger Direct and other online merchants. Titled "A New Era of Digital Window Shopping: From Shopping Cart Abandonment to Purchase," the report was scheduled for release yesterday.
The participating companies use security firm ScanAlert's Hacker Safe certification, a system that certifies Web sites as secure from hackers. It audits e-commerce Web sites and maintains daily remote security sweeps to make sure hackers and other Internet intrusions are locked out. ScanAlert tracks the relationship of sales from Web sites that display the Hacker Safe seal and those that do not. The security firm conducted its study of buying habits by using persistent cookies to track Web visitors.
A permanent cookie is a text file containing an expiration date stored on a Web site visitor's hard drive until it expires or until the user deletes it. Online consumers are no longer rushing to click the shopping cart button on Web sites. Instead, they spend days digitally window-shopping before buying, abandoning shopping carts with an ease that frustrates and often confuses online retailers.
"The shopping cart abandonment issue is the most important thing that we uncovered," said Ken Leonard, CEO of ScanAlert. "Most merchants think that shopping cart abandonment is just part of the online shopping process." His study showed the average time delay between a consumer's first visit to a Web site and the first purchase was just over 19 hours. About 35 percent of all tracked shoppers took more than 12 hours to make a buy decision, while 21 percent took more than three days, with 14 percent taking more than one week to decide where to buy. According to Leonard, the abandonment issue and the delay in completing the shopping cart purchase shows behavior that is radically different from two years ago.
"The implication to merchants is that the shopping cart is not just a convenience factor. It must be a comfort zone to shoppers," Leonard said. "These results were not expected." The length of time from initial visit to actual purchase varies from site to site depending on customer demographics, brand recognition, the number of competitors online and average product price. The data suggests that shopping cart abandonment is actually an habitual part of many consumers' shopping behavior prior to purchasing.
Even more telling, noted the study, is that the shoppers spending the longest time shopping are also the most concerned about the safety of the sites where they shop. The trust factor can become both a strong motivator and a strong barrier to completing a sale. The report offers two recommendations for converting shoppers into buyers. One is for merchants to create a comfort zone for comparison shoppers. The other is for merchants to move the focus of the Web site from shopping cart abandonment to Web site abandonment.
Thus, site designers must make the shopping experience more informative and the sense of safety more memorable. Otherwise, those who abandon their shopping carts will also abandon the Web site later when it comes to deciding where to buy. According to the report, much of the observed increase in shopping cart abandonment over the past two years results from an increase in comparison shopping. As consumers learned to use the shopping cart as a comparison shopping tool, they also learned to leave the Web site as a natural characteristic of electronic window shopping.
"It is very easier to comparison shop online today. Consumers have many new tools," Leonard said. "There is also a connection with the change in shopping patterns and the more widespread use of broadband." The consumer's ability to make product comparisons online is a factor in site abandonment as well. The study shows that the shortest buying delays involve shopping for the most unique products, while the longest delays occur for more common items. Web shoppers are now using the Internet as a "catalog of catalogs." This means that Web site operators need new Web site designs to better accommodate digital window shopping and to encourage visitors to return.
A common thread is present in all of the consumer tracking observed by the ScanAlert study. Consumers are using the Web tools differently than merchants planned in designing them.
For instance, merchants built trust and security into the concept of the shopping cart. However, consumers want to see trust in the Web site itself. Consumers assess an Internet storefront in much the same way as they view brick and mortar stores. Site appearance, convenience and service all matter.
Shopping cart use is different as well. At each site, shoppers typically load the same or similar items into the shopping cart as a convenient way to compare total costs, including shipping charges. The shoppers' intent is not to complete a purchase unless they have returned to the site to buy. However, price is not the ultimate determiner. ScanAlert's data shows that safety and trust often trump price and availability in the online consumers' value calculation.
John Halliburton, e-commerce marketing manager for Martel Brother Performance, didn't expect to learn that his customers often take 18 hours to make a purchase from his company's Web site.
In business for 17 years, Martel Brothers Performance sells racing and high-performance parts through both its brick-and-mortar and online stores. Halliburton uses pay-per-click keyword purchases at the major search engines to acquire new customers and uses a mailing list to market to the existing customer base. He also runs co-op print ads in a few national magazines from time to time. "Our online business now accounts for about 75 percent of total sales. We learned from the tracking report that the average time to conversion for our site was about 18 hours. That surprised us," Halliburton said. "We expected much lower, and frankly it raises more questions than provides answers."
Halliburton is concerned about the implications of the trend report. Prior to the release of the trend report, he was experimenting with loading his pay-per-click campaigns for certain hours when customers are actively researching and price shopping. "In the short term, we're testing methods that make it easier for the customer to come back and buy from us after the initial visit. We're also tweaking our pay-per-click landing pages in an effort to close the sale on the initial visit," Halliburton said. "It is critical that we nail this. We know the waiting times will vary depending on the cost and complexity of the product, but we'd like to reduce the average," he said. "I'm fairly certain there isn't a one-size-fits-all solution for us."
For Kevin Beresford, president and CEO of Sharis Berries, the shopping trend results left him looking for more information. Shari's Berries sells gourmet chocolate-dipped strawberries in a variety of designs. Beresford learned from the trend report that the average waiting time for customers to return for a purchase is 15 hours. "The report certainly piqued my curiosity as it was not what I expected," said. "I have to dig deeper. I want more data on how many people are buying on first visit. I need to understand why they come back and why they didn't buy the first time."
During peak buying seasons, 88 percent of Shari's sales volume comes through the Internet. The non-holiday traffic is about 70 percent. Beresford said he was particularly interested in the report's implications. He will focus on seeing where changes are needed on the Web site. "Knowing how to serve up the information better would increase our sales. This would very much determine how we do business," he said.
Brought to you by Guardian eCommerce.
Internet shoppers are more prone to visiting 10 or more Web sites before returning to a favored location hours or days later to make a purchase. This new trend of leaving a Web site before completing a sale suggests that Internet merchants need to rethink their marketing strategy and Web site design, says the author of an exhaustive study. According to the report on Internet shopping habits, online merchants need to shift their focus from why shoppers abort shopping carts to why they leave Web sites without buying.
This digital window shopping activity is clearly revealed in sales data gathered by ScanAlert between June 2004 and March 2005 from retailers such as GSI Commerce, Ritz Camera, Tiger Direct and other online merchants. Titled "A New Era of Digital Window Shopping: From Shopping Cart Abandonment to Purchase," the report was scheduled for release yesterday.
The participating companies use security firm ScanAlert's Hacker Safe certification, a system that certifies Web sites as secure from hackers. It audits e-commerce Web sites and maintains daily remote security sweeps to make sure hackers and other Internet intrusions are locked out. ScanAlert tracks the relationship of sales from Web sites that display the Hacker Safe seal and those that do not. The security firm conducted its study of buying habits by using persistent cookies to track Web visitors.
A permanent cookie is a text file containing an expiration date stored on a Web site visitor's hard drive until it expires or until the user deletes it. Online consumers are no longer rushing to click the shopping cart button on Web sites. Instead, they spend days digitally window-shopping before buying, abandoning shopping carts with an ease that frustrates and often confuses online retailers.
"The shopping cart abandonment issue is the most important thing that we uncovered," said Ken Leonard, CEO of ScanAlert. "Most merchants think that shopping cart abandonment is just part of the online shopping process." His study showed the average time delay between a consumer's first visit to a Web site and the first purchase was just over 19 hours. About 35 percent of all tracked shoppers took more than 12 hours to make a buy decision, while 21 percent took more than three days, with 14 percent taking more than one week to decide where to buy. According to Leonard, the abandonment issue and the delay in completing the shopping cart purchase shows behavior that is radically different from two years ago.
"The implication to merchants is that the shopping cart is not just a convenience factor. It must be a comfort zone to shoppers," Leonard said. "These results were not expected." The length of time from initial visit to actual purchase varies from site to site depending on customer demographics, brand recognition, the number of competitors online and average product price. The data suggests that shopping cart abandonment is actually an habitual part of many consumers' shopping behavior prior to purchasing.
Even more telling, noted the study, is that the shoppers spending the longest time shopping are also the most concerned about the safety of the sites where they shop. The trust factor can become both a strong motivator and a strong barrier to completing a sale. The report offers two recommendations for converting shoppers into buyers. One is for merchants to create a comfort zone for comparison shoppers. The other is for merchants to move the focus of the Web site from shopping cart abandonment to Web site abandonment.
Thus, site designers must make the shopping experience more informative and the sense of safety more memorable. Otherwise, those who abandon their shopping carts will also abandon the Web site later when it comes to deciding where to buy. According to the report, much of the observed increase in shopping cart abandonment over the past two years results from an increase in comparison shopping. As consumers learned to use the shopping cart as a comparison shopping tool, they also learned to leave the Web site as a natural characteristic of electronic window shopping.
"It is very easier to comparison shop online today. Consumers have many new tools," Leonard said. "There is also a connection with the change in shopping patterns and the more widespread use of broadband." The consumer's ability to make product comparisons online is a factor in site abandonment as well. The study shows that the shortest buying delays involve shopping for the most unique products, while the longest delays occur for more common items. Web shoppers are now using the Internet as a "catalog of catalogs." This means that Web site operators need new Web site designs to better accommodate digital window shopping and to encourage visitors to return.
A common thread is present in all of the consumer tracking observed by the ScanAlert study. Consumers are using the Web tools differently than merchants planned in designing them.
For instance, merchants built trust and security into the concept of the shopping cart. However, consumers want to see trust in the Web site itself. Consumers assess an Internet storefront in much the same way as they view brick and mortar stores. Site appearance, convenience and service all matter.
Shopping cart use is different as well. At each site, shoppers typically load the same or similar items into the shopping cart as a convenient way to compare total costs, including shipping charges. The shoppers' intent is not to complete a purchase unless they have returned to the site to buy. However, price is not the ultimate determiner. ScanAlert's data shows that safety and trust often trump price and availability in the online consumers' value calculation.
John Halliburton, e-commerce marketing manager for Martel Brother Performance, didn't expect to learn that his customers often take 18 hours to make a purchase from his company's Web site.
In business for 17 years, Martel Brothers Performance sells racing and high-performance parts through both its brick-and-mortar and online stores. Halliburton uses pay-per-click keyword purchases at the major search engines to acquire new customers and uses a mailing list to market to the existing customer base. He also runs co-op print ads in a few national magazines from time to time. "Our online business now accounts for about 75 percent of total sales. We learned from the tracking report that the average time to conversion for our site was about 18 hours. That surprised us," Halliburton said. "We expected much lower, and frankly it raises more questions than provides answers."
Halliburton is concerned about the implications of the trend report. Prior to the release of the trend report, he was experimenting with loading his pay-per-click campaigns for certain hours when customers are actively researching and price shopping. "In the short term, we're testing methods that make it easier for the customer to come back and buy from us after the initial visit. We're also tweaking our pay-per-click landing pages in an effort to close the sale on the initial visit," Halliburton said. "It is critical that we nail this. We know the waiting times will vary depending on the cost and complexity of the product, but we'd like to reduce the average," he said. "I'm fairly certain there isn't a one-size-fits-all solution for us."
For Kevin Beresford, president and CEO of Sharis Berries, the shopping trend results left him looking for more information. Shari's Berries sells gourmet chocolate-dipped strawberries in a variety of designs. Beresford learned from the trend report that the average waiting time for customers to return for a purchase is 15 hours. "The report certainly piqued my curiosity as it was not what I expected," said. "I have to dig deeper. I want more data on how many people are buying on first visit. I need to understand why they come back and why they didn't buy the first time."
During peak buying seasons, 88 percent of Shari's sales volume comes through the Internet. The non-holiday traffic is about 70 percent. Beresford said he was particularly interested in the report's implications. He will focus on seeing where changes are needed on the Web site. "Knowing how to serve up the information better would increase our sales. This would very much determine how we do business," he said.
Brought to you by Guardian eCommerce.
Saturday, May 07, 2005
Advertising for Online Gambling, Is It Legal?
One of the fastest growing online businesses is online gambling. The scope of this business is so enormous that some have even claimed it is the single most important factor in the growth of e-commerce. Despite this, there is much controversy and uncertainty surrounding the legality of online gaming in both the U.S. and Canada. The U.S. Justice Department's (DOJ) position with regards to Internet gambling, and by extension, advertising of Internet gambling, is that it is an illegal activity.
U.S. authorities claim that a recent ruling by the World Trade Organization (WTO) has effectively upheld this stance in that the decision partially reverses key aspects of an earlier ruling of the WTO that had resulted in overseas gambling firms having a claim that they should be allowed access to the U.S. Internet gambling market. Conversely, Antigua, the tiny Caribbean country that licenses the gambling firms in question, is equally adamant that the decision will still allow its online gaming operators to enter the U.S. market.
As to the background of the WTO ruling earlier this month, in 2003, Antigua complained to the WTO that its Internet gambling companies were not able to properly access U.S. customers because federal laws barred the placing of bets across state lines by electronic means. It also argued that the U.S. was reneging on agreements undertaken with the WTO to make its services markets more accessible to other countries. Antigua initially prevailed in that it was able to persuade a WTO panel "that it is inappropriate to treat businesses conducting transactions online as unequal to or somehow worse than traditional brick-and-mortar operations, or for the U.S. government to assume lack of industry integrity without any objective evidence."
The U.S. government's argument was that it had never intended for the services' liberalization to include gambling and that, regardless, WTO rules allow states to limit trade to "protect public morals or maintain public order." The WTO panel found in favor of Antigua, but the U.S. appealed that decision to an appellate body of the WTO, which agreed with much of the U.S.'s argument, and the U.S. declared that it would be able to adjust its existing laws to meet the WTO rules while still maintaining restrictions on Internet gambling.
Antigua, on the other hand, maintains that the WTO ruling would "pave the way for new ... opportunities for Antiguan gaming operators." In short, the decision by the appellate body is being hailed as a success by both sides based on differing interpretations. Much of the controversy surrounding the legality of Internet gambling in the U.S. concerns the fact that although online gambling is presently illegal, it has been virtually impossible for U.S. regulators to enforce the prohibition because major Internet gambling sites operate from locations outside of the U.S. in countries where Internet gaming is legal (as it is in Antigua) or unregulated. Even though it is nearly impossible to enforce the prohibition against Internet gambling overseas, it is not systematically enforced within the U.S. as well.
A case in point is the situation in Nevada where, even at the state level, the law prohibits both players and Internet operators from engaging in online betting. Yet, little is done to enforce the prohibition in the state, which is among the top 10 states in terms of online players. In fact, the world's largest poker site, PartyPoker.com, now runs radio and television advertisements in Las Vegas and local billboards advertise Internet poker sites.
This leads us to the issue of advertising for online gambling. Online gambling firms have been filling the void for many well-known media outlets that have been struggling to keep up with advertising revenue over the past few years. Thus, online gambling ads have been appearing on more mainstream Web sites and competing with the most popular industries, including retail, financial services and travel, for advertising space on such well-known portals as Yahoo and Excite.
Even so, the DOJ has maintained that Internet gaming advertisements, like online gaming itself, are illegal and that "anyone carrying them could be charged with aiding and abetting." Specifically, the department states that such advertisements are in violation of the Interstate Telephone Act of 1964 and that online gambling operators are violating the federal Wire Wager Act of 1961.
The DOJ has made good on its claims of illegality by issuing subpoenas to many well-known media outlets to stop them from running ads for online gaming. The most recent group of subpoenas were handed out on April 12 to Esquire magazine in regards to an eight-page insert billed as the "Gentleman's Guide to Poker" and sponsored by BoDog Poker.
The insert includes a photo of BoDog's CEO, Calvin Ayre, along with an exhortation to join him online at the tables to see "why the world is playing poker at Bodog.com." A similar insert appears in the May issue and another was planned for the June issue; however, reports say that Hearst Publishing, which publishes the magazine, is considering pulling the ads. The subpoenas are the first reported legal action of this nature since the U.S. Attorney's office in the Eastern District of Missouri carried out a grand jury investigation into the advertising practices of the online gambling industry starting in mid-2003 and lasting well into 2004.
The subpoenas issued in the original investigation, resulted in such media outlets as Clear Channel, Infinity Broadcasting and Discovery Networks having to end longstanding relationships with Internet gaming advertisers for fear of being subjected to indictments by the DOJ. Despite the DOJ crackdown on advertising of online gambling, and its contention that it will be able to maintain restrictions on Internet gambling following the WTO ruling, the irony remains that 60 percent of all offshore gambling dollars comes from Americans. Similarly, about 70 to 85 percent of online poker players are believed to be Americans. Internet poker alone generated global revenues of $1 billion in 2004 and is projected to top $2.4 billion this year.
Few Clear-Cut Guidelines: Therefore, despite the illegality of Internet gambling and advertising of Internet gambling in the U.S., there is an obvious homegrown market for the activity. The situation in Canada is similarly unclear as there are few gaming cases that provide clear-cut guidelines regarding online gaming and advertising. Generally, and subject to a number of restrictions, Canadian laws allow provincial governments to conduct and manage lotteries and games of chance that are operated on or through a computer, such as Internet casinos; however, in most circumstances, there is criminal liability in Canada for anyone running an online gaming operation.
As for advertising of online gaming services, the position taken by Canadian authorities has been that it is illegal. However, there are some who dispute this position, but needless to say there are not many media outlets who would risk criminal prosecution to test the validity of this position.
Studies show that Internet gambling will continue to grow exponentially in the future. One estimate states that the global Internet gaming market will grow from $10 billion in 2002 to $14.5 billion in 2006. In fact, according to industry research, in 2005, online gambling will be the largest industry in Europe in terms of online entertainment.
Regulation Could Be Only Choice: Such strong growth data has convinced many, including some U.S. legislators, that regulation is the best method to deal with the widespread phenomenon of Internet gambling, since prohibition is not being enforced and many countries outside the U.S. already have legalized Internet gambling.
For example, early this month, the British Parliament passed new legislation to regulate online gambling. Under this new legislation, online casinos will be allowed to operate from Britain for the first time while a new commission, and a body of some 100 investigators, will be established to regulate the industry. The British move to regulate is a precedent that should be followed by both U.S. and Canadian authorities. The simple reality is that online gaming is here to stay -- the only question is whether governments such as that of the U.S. will choose to ignore this reality or will decide to share in the benefits of regulation, such as taxes or licensing fees to offset the social costs that generally accompany any form of gambling.
Brought to you by Guardian eCommerce.
U.S. authorities claim that a recent ruling by the World Trade Organization (WTO) has effectively upheld this stance in that the decision partially reverses key aspects of an earlier ruling of the WTO that had resulted in overseas gambling firms having a claim that they should be allowed access to the U.S. Internet gambling market. Conversely, Antigua, the tiny Caribbean country that licenses the gambling firms in question, is equally adamant that the decision will still allow its online gaming operators to enter the U.S. market.
As to the background of the WTO ruling earlier this month, in 2003, Antigua complained to the WTO that its Internet gambling companies were not able to properly access U.S. customers because federal laws barred the placing of bets across state lines by electronic means. It also argued that the U.S. was reneging on agreements undertaken with the WTO to make its services markets more accessible to other countries. Antigua initially prevailed in that it was able to persuade a WTO panel "that it is inappropriate to treat businesses conducting transactions online as unequal to or somehow worse than traditional brick-and-mortar operations, or for the U.S. government to assume lack of industry integrity without any objective evidence."
The U.S. government's argument was that it had never intended for the services' liberalization to include gambling and that, regardless, WTO rules allow states to limit trade to "protect public morals or maintain public order." The WTO panel found in favor of Antigua, but the U.S. appealed that decision to an appellate body of the WTO, which agreed with much of the U.S.'s argument, and the U.S. declared that it would be able to adjust its existing laws to meet the WTO rules while still maintaining restrictions on Internet gambling.
Antigua, on the other hand, maintains that the WTO ruling would "pave the way for new ... opportunities for Antiguan gaming operators." In short, the decision by the appellate body is being hailed as a success by both sides based on differing interpretations. Much of the controversy surrounding the legality of Internet gambling in the U.S. concerns the fact that although online gambling is presently illegal, it has been virtually impossible for U.S. regulators to enforce the prohibition because major Internet gambling sites operate from locations outside of the U.S. in countries where Internet gaming is legal (as it is in Antigua) or unregulated. Even though it is nearly impossible to enforce the prohibition against Internet gambling overseas, it is not systematically enforced within the U.S. as well.
A case in point is the situation in Nevada where, even at the state level, the law prohibits both players and Internet operators from engaging in online betting. Yet, little is done to enforce the prohibition in the state, which is among the top 10 states in terms of online players. In fact, the world's largest poker site, PartyPoker.com, now runs radio and television advertisements in Las Vegas and local billboards advertise Internet poker sites.
This leads us to the issue of advertising for online gambling. Online gambling firms have been filling the void for many well-known media outlets that have been struggling to keep up with advertising revenue over the past few years. Thus, online gambling ads have been appearing on more mainstream Web sites and competing with the most popular industries, including retail, financial services and travel, for advertising space on such well-known portals as Yahoo and Excite.
Even so, the DOJ has maintained that Internet gaming advertisements, like online gaming itself, are illegal and that "anyone carrying them could be charged with aiding and abetting." Specifically, the department states that such advertisements are in violation of the Interstate Telephone Act of 1964 and that online gambling operators are violating the federal Wire Wager Act of 1961.
The DOJ has made good on its claims of illegality by issuing subpoenas to many well-known media outlets to stop them from running ads for online gaming. The most recent group of subpoenas were handed out on April 12 to Esquire magazine in regards to an eight-page insert billed as the "Gentleman's Guide to Poker" and sponsored by BoDog Poker.
The insert includes a photo of BoDog's CEO, Calvin Ayre, along with an exhortation to join him online at the tables to see "why the world is playing poker at Bodog.com." A similar insert appears in the May issue and another was planned for the June issue; however, reports say that Hearst Publishing, which publishes the magazine, is considering pulling the ads. The subpoenas are the first reported legal action of this nature since the U.S. Attorney's office in the Eastern District of Missouri carried out a grand jury investigation into the advertising practices of the online gambling industry starting in mid-2003 and lasting well into 2004.
The subpoenas issued in the original investigation, resulted in such media outlets as Clear Channel, Infinity Broadcasting and Discovery Networks having to end longstanding relationships with Internet gaming advertisers for fear of being subjected to indictments by the DOJ. Despite the DOJ crackdown on advertising of online gambling, and its contention that it will be able to maintain restrictions on Internet gambling following the WTO ruling, the irony remains that 60 percent of all offshore gambling dollars comes from Americans. Similarly, about 70 to 85 percent of online poker players are believed to be Americans. Internet poker alone generated global revenues of $1 billion in 2004 and is projected to top $2.4 billion this year.
Few Clear-Cut Guidelines: Therefore, despite the illegality of Internet gambling and advertising of Internet gambling in the U.S., there is an obvious homegrown market for the activity. The situation in Canada is similarly unclear as there are few gaming cases that provide clear-cut guidelines regarding online gaming and advertising. Generally, and subject to a number of restrictions, Canadian laws allow provincial governments to conduct and manage lotteries and games of chance that are operated on or through a computer, such as Internet casinos; however, in most circumstances, there is criminal liability in Canada for anyone running an online gaming operation.
As for advertising of online gaming services, the position taken by Canadian authorities has been that it is illegal. However, there are some who dispute this position, but needless to say there are not many media outlets who would risk criminal prosecution to test the validity of this position.
Studies show that Internet gambling will continue to grow exponentially in the future. One estimate states that the global Internet gaming market will grow from $10 billion in 2002 to $14.5 billion in 2006. In fact, according to industry research, in 2005, online gambling will be the largest industry in Europe in terms of online entertainment.
Regulation Could Be Only Choice: Such strong growth data has convinced many, including some U.S. legislators, that regulation is the best method to deal with the widespread phenomenon of Internet gambling, since prohibition is not being enforced and many countries outside the U.S. already have legalized Internet gambling.
For example, early this month, the British Parliament passed new legislation to regulate online gambling. Under this new legislation, online casinos will be allowed to operate from Britain for the first time while a new commission, and a body of some 100 investigators, will be established to regulate the industry. The British move to regulate is a precedent that should be followed by both U.S. and Canadian authorities. The simple reality is that online gaming is here to stay -- the only question is whether governments such as that of the U.S. will choose to ignore this reality or will decide to share in the benefits of regulation, such as taxes or licensing fees to offset the social costs that generally accompany any form of gambling.
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