All right, so Gene de Rose, despite his aristocratic name, wasn't exactly born with a silicon spoon in his mouth. But the fact is that the 35-year-old nerd gets paid to surf the Net, and to hyperlink to conclusions that elude other people. In fact, the CEO of the New York-based Jupiter Communications worked his way up to head the world(Wide Web)'s No. 1 marketspace research company by mixing cocktails for a living. Now, the Evian-sipping virtual visionary brews a different, but equally heady, concoction: a mixture of information and insights into the way companies and customers use the Net. When he recently visited India to participate in a seminar on the future of the Web, de Rose interfaced with BT's R. Sukumar for a heady 60 minutes on e-commerce today and tomorrow. Excerpts from the exclusive chat session:

Hi, Gene. Welcome to the land of 2.50 million Net-surfers. Let's chat about the latest of the Big Bang businesses on the Net: portals, which are Websites that put together a range of content and offer a sweep of services so as to be the homepage of as many users as possible. Earlier, people looked at the Net as a medium that could deliver customised information. You had airwave-broadcasting at one end, and narrow Netcasting at the other. But portals seem to be combining the two, creating new media behemoths...

Actually, I don't think it is exactly like that although conventional wisdom does point that way. Something more complex is going on. I'd like to call it the and-ness of the Net. It is never one or the other; it is always both-narrowcasting and broadcasting. If you were thinking of any either-or scenario, it's bull. I believe that 30 per cent of the resources, the revenues, and the traffic on the Net are going to be owned by a handful of people, and the rest by millions of separate entities, indicating that there is enough space in this humungous market for everyone to co-exist. If you look at the Net's food-chain, it is true that people have to go through portals. But, in any case, people do not get to spend a lot of time in these portals. They go to Point 2. The role of the portals is to keep sending you to thousands of places-not keep you in the portal. You're just passing through.

The smallest, most focused site on the most arcane subject you can think of can do well. And, actually, do very well from a commercial point of view because it will be able to sell a targeted end-user to whoever its partners are. It is a real food-chain. We have even developed this concept called affinity portals, which are category portals. Sports, travel, financial services-everything fits right into this food-chain that goes on forever on the Net. Yahoo! has a deal with Intuit to be one of its partners. And Intuit has developed a financial services portal, where it has done 20 deals with an insurance firm, a mortgage firm, a real estate firm, an investment research firm...

What does this do to the traditional view that 80 per cent of companies account for 20 per cent of the revenues on the Net?

It will really be 3-5 players, who represent less than 1 per cent of the players, holding 30 per cent of the revenues and traffic. The rest will be evenly split up between the other 70 per cent. The Net is a better-aggregating media portal player than has ever been invented, and it is the most diverse diaspora of very niche content options. So, it is back to its inherent and-ness again.

The problem is with media companies that are old-fashioned, and do not understand this and-ness. Like Time Warner, which controls 30 per cent of the magazine advertising business and 8 of the top 20 magazines in the US. And they just put their magazines on the Pathfinder site! Pathfinder does not portal you into 50 different financial services solutions; you just get Money magazine. My version of a portal is something with access, navigation, and content...

But can't you start with some content, like Pathfinder, and go on to become a portal?

Only when you have extraordinary value propositions, like Hotmail. It's not driven by content; it's driven by real, focused utility; in Hotmail's case, e-mail. If you become the new device player, or the new bandwidth player, you can actually break the ice. Not otherwise.

One assumption behind the viability of portals as a medium is their ability to reach a large number of homogeneous customers albeit with heterogeneous clusters. What happens if customers bypass portals, and go straight to their chosen niches?

I do not see that happening. And if it does, it means that portals are being rendered invisible, and they are going from there to Yahoo!, or elsewhere. A significant portion of the audience will resist that. In fact, as we go more mainstream, there will be more people that get brainwashed, and will go with the flow. People want community. They want to have a home where there are lots of people like them around them. There are exceptions, but they'd be more in the content direction.

You described the portal food-chain. Isn't that the same as the e-commerce food chain?

That's right. It is, in fact, portals around affinity subjects that have all the commerce. So, the most important, or interesting, portals that you can think of all have a commerce aspect. One of the most compelling, and successful, parts of e-commerce right now is personal investing. In the US, that market is being recreated because of the ability to do on-line trading. America Online (AOL) has the potential to be a major player in that area. It is changing the dynamics of competition in the investing business.

You have Ameritrade and E-Trade, and these start-ups do not charge any money, allow anyone to trade, and are spending a lot of money marketing themselves through TV. They are causing the traditional investment houses, like Schwab and Merrill Lynch, to just freak out. They're beside themselves with paranoia, and are starting their own ventures. In the meantime, the start-ups are trying to convince AOL to let them be the investment affinity portals on it. But AOL is not letting anyone do that just yet because it is such a rich area.

Most e-commerce companies try to grow through customer-acquisition. Do you see these models changing to customer-retention as the marketspace evolves?

Today, it is just a land-grab. Everything is driven by customer-acquisition, with everyone spending all their money on it. The shift is going to take place when 50 per cent of the on-line audience does some form of transactions on a regular basis. That will be around 2000 in the US. Then, the balance of power will shift from customer-acquisition to customer-retention. It will mean that there is enough of a critical mass, and the game is all about keeping them, holding on to them, retaining them.

So, we are doing a lot of work around things like loyalty-programmes and incentives. And you can take the whole model of what some direct marketers have done with catalogues, or some airlines have done with their frequent-flier programmers. From the marketing and brand-building point of view, we are big believers that the Net will be a branding medium; it isn't just a direct marketing medium.

Is the movement of control through the e-commerce chain a linear one, increasing as you move from individual sites to a portal, which is at the top of the chain?

It isn't linear. It's like nuclear fission. There are these portals that, in a way, stand between the consumer and the content-provider. But any individual player has 8 or 10 partnerships shooting out from it. They do not necessarily go to one portal, they do not even go to a bunch of competing portals, they can go sideways and, sometimes, straight to the customer. I find Intuit a fascinating example. It is a company that made its mark by inventing a whole class of software and services around managing your finances. They had 8-10 million floppy-disks and software-users that were originally unconnected. That was the inspiration for the company to create a site on the Web.

Today, Intuit has links through the traditional media, a distribution system that is totally outside the on-line space, and it has a Website that people can go to directly. It knows how important it is to be associated with Excite and AOL. And because there are different kinds of portals-access, navigation, content-Intuit is partnering different kinds of companies. For instance, it has a partnership with Sprint as well-in the telecom space-which is, arguably, a portal too. It is very complicated. And it is not linear even though there is a linear way to look at it. But if you take any individual player, it becomes non-linear.

Everyone says companies doing business the traditional way cannot ignore e-commerce. But what impact can Web-retailing possibly have on companies that sell, say, soaps and detergents?

It may not make sense to try and sell gum on the Web, but we still believe there is a reason: branding. You may never be able to deliver gum through the Net, nor get people to order it and have it mailed to them. But that doesn't mean that there aren't any benefits. I have this concept called brand action marketing. It's like Wrigley's thinking that they have enough loyal customers who might want to click on something interesting if it were to put it up on the Net. But it wouldn't want to necessarily send them to a Wrigley's site which talks about the history of gum; it would want to send them to the K-Mart site, where they might buy some gum, or allow them to download a coupon that entitles them to a discount the next time they buy gum. It's all about driving action in ways that matter.

The biggest fear that packaged goods companies have is that they are going to get Amazoned. If you look at what Richard Branson is doing with Virgin Cola, he should be all over the Net because he can Trojan Horse his way into the mind of the consumer. There is coincidence, luck of timing, and poetic value of the name behind successes like Yahoo!, Excite, and Hotmail. Things clicked-and they became brands overnight.

How is the Net impacting consumer research? Since Websites can build databases of e-customers, are on-line audits becoming popular?

In theory, the Net is a Utopian market, where you will be able to do one-to-one marketing as well as track every element of every thing of every consumer. It is just not being done very well. You should just be able to enter registration information in your computer in a universal format so that there is uniformity, and then, you just press a button when you want to send the information to someone. Instead, you go to any site, and you have to re-enter information you feel you have entered 100 times before.

Three years ago, every Website thought people were just waiting to register, and a whole bunch of sites tried to get them to do that right away. Now, 90 per cent of the sites have dropped the idea entirely. More specifically, the search-engines dropped it. The whole thing is about scale versus focus-although, actually, they have good focus too. When someone looks up travel, Italy, and Rome, it is a good bet that a tour company should send some ads for senior citizen tours to that person. So, they have their own targeting mechanism.

But that information is of a different kind from registration information. The registration and tracking of users is something that a company like the New York Times has decided to do. Service is free, but everyone has to register. Their advertisers love them for it since they get really targeted information. So, there are user-interface issues and technical issues as well as social and security issues.

We hear so much about e-commerce and on-line transactions. What we haven't heard is what the credit card companies are doing. Do they like what is going on?

They haven't really been active. Most of the transactions that are happening are credit card transactions, but it doesn't technically mean that they are involved in any part of it. They are supporters; they secure our transaction standards. I am disappointed that they are not more aggressive and creative because a time is going to come when things like smart cards and portable information systems are going to get a piece of this business. And the card companies should be driving those shifts instead of just coming along for the ride. They have been remarkably quiet. They are big brands. They spend money on-line. That is very different from them being solution-providers. We see them as partners. But they should be doing much, much more.

Thanks for the ride, Gene.

Issue Contents  Write to us   Subscriptions   Syndication 

INDIA TODAY |  INDIA TODAY PLUS | COMPUTERS TODAY
TEENS TODAY | NEWS TODAY | MUSIC TODAY | ART TODAY

© Living Media India Ltd