First reader up this week:
“Your assertion that Pay Per Lead will eventually overtake Cost Per
Thousand (CPM) as the pricing mechanism for Web advertising is true. As
the Net becomes more of a customized, targeted medium, advertisers will
have at their disposal more profile information on the prospective customer
than they ever thought possible in the old schools of broadcast, billboard,
and print.
“When you can track the individual all the way from clicking on a banner ad
to making a purchase, why not pay a premium to sites that actually deliver
a paying customer? PPL is here to stay. Perhaps now would be a good time
to start looking
at companies like Firefly and Net Perceptions, which understand the value
of profiling Web visitors. Who else is working in this space?”
Reply: We think profiling could be a commodity in the future and one
that may permeate the Web, help separate it from its sloppy cousins
broadcasting, cable, and newspapers that boil the ocean to find gold dust
(toss an ad out there hoping somebody will respond, but don’t know for sure
if anyone does).
As for Firefly and Net Perceptions, they’re on the radar but from what
we’ve seen they’re not yet ready for prime time. Prime time is invisibots,
youbots, boughtbots–not filling out long questionaires only to get
suggestions about your favorite music. Today’s “agent” is about as
intuitive as “Get Smart” meets “Austin Powers,” but 100 times as inept.
Eggheaded
“In addition to brand name recognition to which you allude, Egghead has the
strongest cash position of any other e-commerce company. This is most
important for two reasons.
“The first is that the winners are those that capture a major market share,
which requires money to advertise on other Web sites. Second, to be
successful a company must not only have an excellent relationship with the
equipment providers, but also have the cash to take advantage of buying
opportunities as soon as they occur. (Egghead has both the relationships
and the cash–$50 million after the write-offs for exiting the retail
business.)
“Finally, from an investment point of view, Egghead currently has a third
of the valuation-based price/revenue of its closest competitor. We believe
that as the investment community begins to understand the new Egghead
story, its valuation will begin to approach that of the rest of the industry.”
Reply: From where the rubber meets the road we tried to buy a piece
of software from Egghead.com, but it kept popping us into an error page
that said it couldn’t find the URL. Over and over again. Now, if you bet
the ranch on being an Internet-based e-tailer, don’t you think the Web
site–your only store left, your only means to revenue and earnings–should
actually allow someone to buy an item?
Imagine walking into any retailer and the clerk saying, sorry we have the
item in stock but I can’t find the store room. Yes, broken URLs happen, and
lost sales do also.
Acronym Soup: DSL & AOL
“I have heard that DSL (digital subscriber line) is many times faster than
ISDN and permits voice calls to be made over the same copper wires while
simultaneously being connected to the Internet, which certainly sounds like
a plus for the
consumer–not needing a second phone line or tying up the first line.
“But I have also heard that simultaneous voice and Internet connection over
the same copper wire only will work if the customer’s ISP is a phone
company. Is this correct, and if so, how will non-phone-based ISPs–like
AOL–deal with this? Could this have been one of the reasons for the
Earthlink/Sprint deal?”
Reply: First of all, DSL is not available everywhere, and it may not
be as deployable as the proponent, telephone companies would have you
believe. A weak link in the network (the plain old telephone wires)
compromises the experience.
Where does AOL fit in a DSL or broadband environ is one of the underlying
questions we hear you asking. If DSL becomes widespread, then AOL will have
to ride that tide as it did the 56 kbps modem wave. Why did Sprint team up
with Earthlink (NASDAQ:ELNK)? Because customer service and brand are
important, especially on the Web where that’s almost all you get.
An Apple Rant A Day . . .
“Steve, I just got through reading your article (ISR,
February 13) on Apple’s present-day transition (hopefully back to
greatness), and I believe that you have eloquently summarized the feelings
of many of Apple’s customers and employees.
“I have been an Apple user since 1980, when I bought my Apple II, and I
agree with you 100%. Apple needs to once again become ENTREPRENURIAL! It
needs to become more maneuverable. It needs to think more like a small
business again. You’ve got my vote for that open CEO slot . . .”
Reply: Well, it looks like Larry, Moe, and Curly have all filled
that position for the past 10 years.
