BUSINESS WEEK ONLINE Transcript of Oct. 28, 1996, BW Enterprise chat PROFITING FROM THE NET Jill Ellsworth, senior partner with Oak Ridge Research and author of, among many other things, "The Internet Business Book," was the Oct. 28 guest in the Business Week Enterprise chat series, part of America Online's Your Business Dinner program for small business and entrepreneurs. Jill is familiar to AOL users for her participation in the InBiz area. She was online with Jeanne Dugan, small business editor of BW. Copyright 1996 America Online, Inc. Material entered into AOL by persons other than those identified as Business Week's employees or authorized representatives, acting on behalf of Business Week, is material for which Business Week assumes no responsibility. JackBW: Welcome to tonight's Business Week Enterprise chat, presented as part of America Online's Your Business Dinner series. Your host is the Enterprise edition of Business Week, published seven times a year especially for small business and entrepreneurs. The guest tonight is Jill Ellsworth, noted consultant and author on how business can profit from the Internet. She's here with Jeanne Dugan, small business editor of Business Week. JackBW: I'm Jack Dierdorff of BW Online, your moderator for this chat. Jeanne Dugan seems to be having trouble signing on to AOL. But let's plow right ahead. Jill Ellsworth, does a small business need a Web page? Everybody seems to be doing it. Internetbz: Hi, Jack, thanks for the intro, nice to be here. No, not everybody needs a Web page. Web pages are very useful marketing and informational devices, but they are not right for every single business -- now. I think they are useful for many businesses, of course. BobABW: Jill, what's it gonna cost a small biz, in time and money, for a decent Web page? On the order of the salami.com guys? Internetbz: Hi, Bob. Good question. Costs can range from dirt cheap like here on AOL, where they are free with your account, upward to a cool million. Realistically, small businesses can get started on a couple of thousand, which can get them a domain name and some good graphics and design. BobABW: What would you say are some of the most successful small biz sites? Internetbz: Bob, I like some of the wine and food sites -- Virtual Vineyards is great, and some of the music sites like CDNow. Also some really small sites like Starving Shirley are great, too. They all have good solid information, and good visibility on the Net -- good marketing ideas. JackBW: Jeanne Dugan has arrived. Hi, Jeanne. Internetbz: Hiya, Jeanne! IJDugan: Hi, Jack. Welcome, Jill. Thanks for coming. BobABW: Hey, guys! Speak up! Jill, you look like a small biz yourself, with all the books you've written, work here on AOL, etc. Does it pay? Internetbz: Bob, well I sure feel like one -- and yes, it sure does. Being a small business person means tons of long hours and hard work, but the ultimate payoff is there, too. What I invest gets returned to me every day. Ckell39: I agree with Jill. What you put in is returned. Internetbz: CKell, very true -- and the best boss in the world. GOD9978438: Where do I go on AOL to make my free Web page? Internetbz: GOD, hi. Some good starting points are the following keywords: Web Diner, Web U, and, of course, PP2 and my place. In our forum (inbiz) we have the "whys" about doing a page, but Web Diner has the nitty gritty on HOW to do it. IJDugan: Jill, there's a barrage of small businesses setting up Web sites, and many complain that they're not getting a return on their investment. What's wrong? Is it too early, or is there some recipe for success? Internetbz: Jeanne, thanks. It's usually a combination of a couple of things. What I see are some kind of "average" sites put together -- no "hook," nothing special -- that are also not promoted on and off line. They just sit there. This means no return on investment at all. Another problem I see is the desire for instant gratification -- a really fast return on investment, which is unrealistic. HHowdy: I have an Italian restaurant. Could I use the Net for it and really get a return? Internetbz: HHowdy, interestingly, yes. I talked with a fellow in Arizona recently who has a restaurant with a Web page. He thinks it is great -- he did the page himself and so it's farily cheap, and he uses it to keep in touch with customers and give coupons, etc. It's Monte's restaurant in Tempe, Ariz. -- have a look at his page. YBizTerry: I have eaten at Monte's in Tempe -- it is great. GSM320: Can the Internet be used successfuly in MLM business? Internetbz: Yes, many MLM marketers are using the Web and other online activities quite successfully. Ckell39: A Web page is an excellent interactive tool for biz, but you must promote it. And my question is for Jill: How is the best way to promote a Web site? Internetbz: Ckell, O.K., the best ways to promote a Web site revolve around site registration with the catalogs and search engines, and with affinity marketing. This means if you are selling golf items, you would seek cross listings with other golf sites, and with sites that also appeal to golfers (physicians' pages, for example). InternetDx: I got this offer for some software that lets me send my promotional message by E-mail to millions on the Internet. Is that a good idea? Internetbz: Hiya, Dx.... aaaaaaaccckkkk NO! JackBW: Glad you said that! Internetbz: Spamming or sending unsolicited E-mail is never a good idea -- two reasons for that. First, Net culture says thou shall not spam, but really from a business perspective it makes no sense. This kind of mail just annoys your potential customers -- much better to appeal to the right audience. Leechart: I am an attorney and get lots of solicitations from Web page creators. Is the Net useful? Internetbz: Leechart, many lawyers use the Net, of course, for research, etc. It can be useful to some lawyers, especially those that have some specializations that touch on the Net, like advertising and trademark law, copyright law, telecom law, etc. My sense is that if your clients are "wired," it makes sense -- if not, maybe waiting a while would be good. SellRugs: What is the best software to get started on creating a Web site for my company? Internetbz: Hi, SellRugs, welcome. The best software depends a great deal on where you are. SellRugs: New Jersey. Internetbz: And on your own html skills. If you are really new, something like MS Publisher or PageMill might be good. If you have some knowledge, HotDog works, as does Front Page. My advice is to take a look at how much time you have to spend, think about your skills, and decide if you want to do the design and coding yourself, or if you want to hire someone to do it for you -- the old in-house/outsourcing issue. DrMyra: Is there a way of finding out how sites are doing? How many hits per day? Internetbz: DrMyra, good question. Most sites can provide you with logging data -- for example, my site logs can tell me how many hits, on which pages, where the referrals came from, etc. DrMyra: What about checking out competitors? Internetbz: DrMyra, O.K., that information is confidential to the site owner, and most likely will not be available to you. Ckell39: So Jill, in other words, a new breed of business people has to evolve -- like the people who are successful with MLM: very friendly, family members, word of mouth. Internetbz: Ckell, yes, indeed. KHG256: I understand that spamming is a no-no. But how about specific profiling and targeting specific people or companies who may want to do business with you? Internetbz: KHG, hi. Well, unsolicited commercial E-mail so far tends to get you nowhere. Now if you can get them to your page, and get them to join an E-mail list, or request a newsletter, you are fine. KHG256: Why do you think unsolicited commercial E-mail is ineffective, and what is MLM? Thanks. Internetbz: KHG, it's not that I think UCE is ineffective -- the data show that it's ineffective. People lose their reputation and accounts doing it. MLM is multi-level marketing. KHG256: Thanks for the info. RBedel1002: I am just starting as a consultant -- I am a maintenance manager -- and want to know if the Web is for me. How do I start? Internetbz: RB, consultants often find referrals from a Web page. A Web page lets you show your expertise by providing high-quality information on site, and lets you put up testimonials as well. The first place to start is to look at other consultant pages, and then talk with a provider about setting up. RBedel1002: What about a newsletter with a Q&A? Internetbz: RB, great idea. RBedel1002: I am starting blind -- new, you know. Looked but can't find anyone in the business. BobABW: Jill, what's a good dollar figure for a small biz to spend on Web hosting? What'll that get you in terms of bandwidth and disk space? And are there any companies that specialize in hosting small businesses? Internetbz: Bob, you can get started for about $100 a month with hosting -- a bit more for a domain name maintenance. That will get you usualy something like 5 meg with moderate traffic. More info and higher traffic will cost you more, as will any kind of secure transactions. There are spots that specialize in small businesses, and one is called BudgetWeb -- they have listings of inexpensive servers. JackBW: Jeanne Dugan of BW? IJDugan: First, I wanted to say that I recently called a Japanese restaurant in San Francisco (I live in New York) that was advertising on the Internet with a 20%-off coupon. He said the site had been up for six months and that I was his first caller. How did the restaurant in Tempe draw attention, and do you think this geographically limited approach is really best, or is there something more broad -- some product or service -- that tends to do best? Internetbz: Jeanne, the Tempe restaurant is targeted only at the locals -- local info and local personalities -- and so has that working for it. I do think that products that focus on the "techno-savvy," the computer user, the catalog-like purchases, do best. When you can buy, using information, you will do much better than, say, a barber or car mechanic, it seems to me. That restaurant experience does not seem odd really. LyndaAL: Hi, Jill. Where should I look to find market trends on the Net? Internetbz: Lynda, marketing trends on the Net are hard to spot -- at least I think so. I get my best information from discussion lists like MARCOM, online-ads, market-l, and others. This is where folks in the trenches talk about what is happening. Also, I find that purposeful surfing -- really looking at sites -- is very important, plus, of course, reading Business Week regularly does not hurt either. LyndaAL: Thanks. JackBW: Thanks for the plug, Jill! Ckell39 from Oklahoma City is back with another comment. Ckell39: Sorry for the self promotion, but check out http://www.icon.net/~ckell/sbi.html. IJDugan: Jill, the demographics of the Internet are changing. If you put up a Web site, what's the profile of the person most likely to see it? Internetbz: Jeanne, are they ever! It used to be that the average surfer was in his 20s, employed, likely to be well educated. All of those parameters are changing. Women and seniors are the fastest growing groups, and we are seeing big changes in who is out there. Still, the Web is more male than female, more young than old, so Net marketers have to pay attention to those issues. But the Web is diversifying and will not look tomorrow as it does today. JackBW: Let's take someone we haven't heard from before next -- SLane38271. SLane38271: I'm in mail order. Do you think an autoresponder would get a better response than a Web site, or would you recommend both? Internetbz: SLane, hi. Well, mail order in general translates very well to the Net and the Web. Mail-order customers are used to buying "remotely" and from descriptions of merchandise -- I personally would go with both. They support each other well. SLane38271: Thank you. Ckell39: So, Jill, what about the so-called WebTV or Net PCs? How are these going to affect the dynamics of Internet marketing? Internetbz: Ckell, well, the Net has never stood still, and it's not going to start anytime soon. The line between TV and the Web or webutainment is already blurring, and I think that will continue with sites like MSNBC, etc. BobABW: Jill, will there come a time when the Web is so crowded that small businesses will have to band together -- the physicians, morticians, and dry-cleaners Super Web site -- to afford to play on the Web? Or will it devolve into electronic yellow pages? Internetbz: Bob, I guess not (my Psychic Hotline subscription just ran out), but the evidence is that vertical malls (amalgams) work well -- products that all are related somehow -- and horizontal malls (unrelated biz) do not. I think that some amount of working together can work well. IJDugan: Just to follow up on the question of malls: Do you know anything about the history of the realtors' site? They spent more than $10 million setting it up, and it seemed they didn't get what they bargained for. Also, before we're through, I wanted to try to pin down some paramaters of cost for a Web site. Obviously, small biz isn't going to be paying $10 million. Is there some reasonable range or parameters? Internetbz: Jeanne, I don't know which specific site you mean. But to me, spending $10 million on a site is nuts. I see several modest sites like Arnold Kling's for real estate that are doing well -- Arnold, I think, put around $10,000 into it. A reasonable range for a single proprietor or very small business would be $1,000 to $3,000, then moving up to, say, $20,000 for a medium-sized business. The key is what are the business goals? Secure transactions will cost a bundle under certain circumstances, whereas a site with an 800 number for purchases costs considerably less. RBedel1002: Do plant managers and building managers use the Net when thay need help or problem-solvers? Internetbz: RBedel, for seeking employees? Absolutely. Many do postings on such sites as http://www.monster.com or http://www.careermosaic.com -- also many post on city-related usenet groups like austin.jobs, etc. Many use the listings at Yahoo for constultants. Zmosh: What is the average transaction (in dollars) done via computer of a typical consumer using the Internet? Less than $20? Internetbz: Zmosh, hi! I do not have that information at all. The data suggest that smaller transactions (less than $40) are much more common than transactions over $40. Further, the data suggest that even smaller ones, of as you say less than $20, are more popular right now. I think that will change a bit as people get more used to online transactions as well, but that is speculation on my part. Zmosh: What percentage of all Net users actually purchase over the Net? Internetbz: Zmosh, they say it's currently at 15%. Zmosh: Thank you. Ckell39: Getting back to the new breed of businessman, do you agree that promotion [is better] than direct advertising? Internetbz: Ckell, well, my research suggests that any time you can promote using content and information, you will do well on the Net. Slogans and "in-your-face" ads don't cut it. JackBW: Jeanne Dugan has a final question now. IJDugan: Jill, all these Web developers talk about making extra money from advertisers on your site. How do you draw people to place banner ads at your site, and what should you charge? JackBW: That's a big subject. Internetbz: Jeanne, well, it's a tough crowd out there now vis-a-vis banner ads. The talk on the street is that they are going for $20 to $200 per thousand, but I also know of lots of deals off the rate cards. The best way to get advertisers is to have a very effective, very clever, very well designed site with high traffic. The rest of us have to do a lot more deal-making and convincing. JackBW: Thanks for being with us, Jill Ellsworth. That's it for tonight's BW Enterprise chat -- but join us here every Monday at 8 pm ET for another program for small biz and entrepreneurs. Internetbz: Thanks, Jack, and Jeanne. RBedel1002: Thanks. Ckell39: Thanks to all. Bye. YBizTerry: Goodnight, Jack. IJDugan: Thank you, Jill. JackBW: Thanks to you, too, Jeanne Dugan. IJDugan: And thanks to YOU, Jack. Goodnight. JackBW: Be sure to check out BW Online's Enterprise/Small Business Center. It's full of helpful information, including the entire contents of all the Enterprise editions. Transcripts of this and all BW Online conferences and chats are available soon after the event. Goodnight to all! Copyright 1996 by The McGraw-Hill Companies, Inc. All rights reserved.