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Date: Fri, 16 Jan 1998 17:01:02 -0800
From: Sid Shniad <[EMAIL PROTECTED]>
Reply-To: Universal Access Canada <[EMAIL PROTECTED]>
To: [EMAIL PROTECTED]
Subject: Demystifying the Internet
LE MONDE DIPLOMATIQUE November 1997
A PLAYGROUND FOR THE ADVERTISING INDUSTRY
Marketing on the Net
New developments in information technology are always fiercely coveted
by commercial firms, since huge profits are potentially involved. The
Internet, in particular, is increasingly infiltrated by advertising and bei˙
ng
used for commercial rather than cultural or scientific ends. Devotees of th˙
e
American model and its supposed contribution to employment figures,
endlessly sing the praises of one firm, Microsoft, and its owner, Bill Gate˙
s.
Microsoft"s performance on the stock exchange has undoubtedly been
stunning. In the last year alone, the company"s value rose from twelfth to
sixth highest in the world. But, when it comes to its contribution to
employment, Microsoft"s results have been thinner on the ground, with
staff numbers totalling only a little over 20,000. How does it score on
innovation? Microsoft"s greatest talent is as old as capitalism itself. It ˙
first
secures a foothold on the market, then appropriates discoveries made by
competitors, and finally, using techniques akin to forced sale, squeezes th˙
e
competition out of the market.
by DAN SCHILLER
*Following the defeat of world chess champion Garry Kasparov on May 11
1997 by "Deep Blue" (IBM's supercomputer-powered chess system),
broadcasters and journalists enjoyed speculating about human intelligence
being taken over by electronic machinery. But we can be sure that it was
no sudden hankering for a philosophical challenge that motivated IBM to
sponsor this match.
Rather, in its ongoing pursuit of marketable forms of information
technology, IBM viewed the contest as an opportunity to demonstrate its
capacity for arranging a complex, high-volume Internet event (1). "IBM
blanketed the Web with what may have been the biggest single-event ad
campaign ever conducted on the Internet", according to one account.
"Clickable" banner ads, leading the viewer directly to the chess match site˙
,
were set up at 50 Websites. For the event itself, IBM used a graphical
chessboard on which the pieces moved in accordance with the progress of
the match.
In anticipation of a heavy volume of traffic, the event was set up on a
supercomputer of the same kind that powered Deep Blue. Over four
million viewers from 106 countries visited the site during the course of th˙
e
match. During the final game alone the site registered some 420,000 visits:
enough to "compare...favourably with the viewership of some cable
television programs" (2).
IBM's display of media programming power was primarily intended to
impress the advertisers. The majority of the industry's investment in the
Internet goes on designing games. Precursors include Microsoft's Internet
Gaming Zone, which attracted 200,000 regular players; and the AudioNet
radio station, broadcast on the Internet, which offered complete coverage
of the Super Bowl (the final of the American Football Championship) in
three languages, to 500,000 listeners. Not surprisingly, market researchers
immediately launched into an analysis of IBM's chess match as a prototype
for advertiser-supported Internet services.
These innovations were all the more attractive for the fact that, although
spending on classic on-line advertisements and supporting Websites has
grown steadily during preceding months, it has failed to follow the
expected exponential curve, reaching only $300m in 1996. The press
speculated that perhaps Internet advertising was too narrowly focused on
IT companies; or that the lack of a standardised system for audience
measurement was the problem. It was also suggested that the low "click-
through" rate on banner ads was proof that netsurfers preferred to steer
away from advertising sites. In any case, trying to do business on the
Internet is like "dropping your business card on a Manhattan sidewalk
during rush hour. Almost no one knows you exist, and the few who
stumble upon your card are unlikely to be the kind of business prospects
you were looking for" (3). Such suggestions were helpful but they did not
prepare companies for the eventual collapse of advertiser support as the
leading means of financing the Web.
Brokered space comprises only the tip of the Internet's advertising iceberg˙
.
Thousands of companies have recognised that they "cannot ultimately
succeed on the Web by planting themselves between another site's content
and its audience". Over the last three years, they have spent billions of
dollars on "creating themselves as a destination in their own right" (4).
Corporate sites themselves have become an important category of
advertising on the Net. Companies' reluctance to purchase Web space
reflects not so much advertisers' indifference than their newly-acquired
freedom to mediate the Web experience for users.
"The whole purpose of a brand" declares the chairman of Unilever, "is to
create a long-term relationship with the consumer, and advertising is simpl˙
y
one way - the most efficient way we've yet devised - to conduct a dialogue
with that consumer" (5). That efficiency may yet be surpassed by the
impressive expansion of direct marketing promised by the Internet. That is,
by targeting the consumer through registering their purchasing and media
preferences. Manufacturers of consumer products are consciously
designing their sites in such a way as to establish links with consumers, t˙
o
engage in an "ongoing conversation with every desirable customer" (6).
A first important effect of these new "brand platforms" (7) has been to
relax current ties between brands and individual media. In turn, cyberspace
has come to host practices which have long been used by traditional media.
Advertisers cluster at the most heavily visited sites on the Net, forcing l˙
ess
popular sites to close. And just as marketers have always availed
themselves of museums, orchestras, public radio, and almost every means
of attracting a target audience, new entrepreneurs are enrolling non-
commercial sites in their attempts to boost sales. The bookshop
Amazon.com, for example, has linked up to more than 8,000 formerly
independent sites, to which it pays a commission based on the sales they
bring in.
While advertisers have been busy getting their hooks into the Internet, the˙
y
have not forgotten the imperative of targeting a specific audience. This is
reflected in the growing fashion for "Internet communities": virtual
neighbourhoods populated by regular "Netizens", rather than by
"cybertransients" whose unfocused forays are less easily exploited.
Nabisco, Pepsi-Co and Kellogg's, amongst others, are developing games to
encourage surfers to stick with their sites. High-tech developments offer
new ways of selling, such as "robot" programmes designed to deliver a
sales pitch in discussion fora, or full-screen advertisements which the
viewer must download in order to access the contents.
But the uses of the Internet as a tool for "relationship marketing" go
beyond even this. We constantly hear it repeated that the Internet is
potentially a universal mass medium, in which "everyone" will soon
participate. Nothing could be further from the truth. In remodelling the
entire media system, the Internet will overturn the concept of "mass" media
and replace it with "class-based" media.
Paradoxically, alongside this transnational expansion of the Internet, the
"mediascape" is actually contracting. In the United States for example,
unbilled (free) television networks, which a generation ago achieved almost
universal coverage, have experienced audience shrinkage. Four network
broadcasters today command only 60% of the prime-time television
audience, while cable channels and other new media are cashing in on a
rising share. This is not due simply to an audience preference for VCRs, th˙
e
Internet and fee-based cable channels: it is also a response to advertisers˙
'
needs.
Leading manufacturers of consumer products moved on long ago from
marketing a "one-size-fits-all" product to an undifferentiated mass market.
Over the last few decades, they have directed their marketing strategies at
new media channels which target specific segments of a carefully
fragmented market. For example, owners of Japanese cars less than four
years-old, who subscribe to Time, Sports Illustrated, Money or Life (8).
Access to a relatively large audience still commands a premium. This
enabled spending on over-the-air network television advertising to grow by
a healthy 12.8% between 1995 and 1996, to $13 billion. However, in this
same period, spending on cable television advertising rose by twice this
amount (26.7%, reaching$ 4.5 billion); and direct mail media have also
enjoyed unparalleled growth. Even manufacturers of the most
commonplace products, such as soap and over-the-counter medicines, have
begun to act as if the era of undifferentiated distribution channels to a
heterogeneous audience were well and truly over.
The term "demographics", which expresses this dual trend towards media
targeting and market segmentation, might suggest that equal representation
has finally entered the consumer world. But this is deeply misleading. Just
as the market cannot satisfy all of one person's tastes, "demographic"
marketing is not pluralistic. Only select members of society are sought out˙
.
On the one hand, advertisers select and lavish attention on media contents
that they hope will gain them disproportionate access to favoured
audiences. On the other, as the essayist Josef Turow has pointed out, the
greater the income possessed by a social grouping, the more extensive the
segmentation to which it will be subjected. In this way, the uneven
distribution of wealth in American society is actually ratified by media-
based advertising practices. Even apparently disparate axes of market
segmentation, such as gender, ethnic origin and age, frequently lead
circuitously back to this uneven capacity for expenditure. In an age of
increasing class inequality, this fact has recently encouraged companies
from AT&T through Disney to General Motors to openly embrace "two-
tier marketing" strategies which deliberately polarise products and sales
pitches so as to reach "two different Americas" - rich and poor.
In its present form, the Internet plays only to one side of this social div˙
ide.
American society has not so far committed itself to developing universal
access to the Internet, and the gulf is set to widen with the next generati˙
on
of multimedia offerings, requiring a large outlay to connect. The US home-
PC market, on which residential access to the Internet clearly relies, has ˙
not
been able to gain more than about 37% of the market, up by a bare 2% on
last year. A "digital divide" has opened up between Internet users - who ar˙
e
mainly white, wealthy, educated males - and poor, disproportionately non-
white non-users. Far from being a liability in the eyes of marketers,
however, the Internet's social exclusivity merely implies that a
complementary medium will have to be developed alongside it to reach
other segments of the market.
Indeed, the Net's evolving multimedia services provide further incentives t˙
o
marketers to incorporate the Internet as a new weapon in the their arsenal.
Companies are taking advantage of the Net's unparalleled ability to target
the interests and tastes of well-heeled consumers, "give depth" to brand-
related interactions and analyse audience behaviour. In this way, they are
hopeful of reaching an altogether new level of interaction with their most
desirable customers - and on an international scale.
*Communication Department, University of California, San Diego
(1) In order to demonstrate the power of its machines and programmes: the
system used to power Deep Blue was rapidly adopted for financial systems
(Investor's Business Daily, 18 June 1997).
(2) Los Angeles Times, 15 May 1997.
(3) New York Times, "Architects of the Web", New York, John Wiley,
1997.
(5) International Advertising Association Perspectives, February 1996.
(6) Josef Turow, "Breaking Up America: Advertisers and the New Media
World", Chicago, University of Chicago Press, 1997.
(7) See Dan Schiller "Les marchands … l'assaut d'Internet", (available in
English, "Big business takes on the Internet"), Le Monde Diplomatique,
March 1997.
(8) Josef Turow, op cit.
