Financial Times FT.com

How is the web changing commerce?

Published: January 2 2008 15:24 | Last updated: January 8 2008 16:00

Q&A Seth Godin

How are new web technologies changing the way businesses sell to their customers? Badly in many cases, is the answer given by Seth Godin, in his new book Meatball Sundae, reviewed here.

The arresting concept is used as an analogy to describe companies that are plopping a bit of ice cream sundae topping - an ounce of social networking here, a dollop of blogging there - on top of stubbornly humdrum meatball businesses.

So how can web tools be used successfully by businesses? What are the best examples of the use and abuse of web tools? Can any business adapt to what Mr Godin calls the “after advertising” era, in which products and communications are more personalised?

Mr Godin, who has earned a reputation for simple, clear messages, well told, from his books Permission Marketing, Purple Cow and The Dip, has answered FT.com readers’ questions.

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Do you think all of the new web trends can be used for business purposes, or are some best left alone? Twitter for example seems very popular but rather brief as a communications medium. Please let me know what you think.
T. P. Patel, Mumbai

Seth Godin: I think very few of the web trends lend themselves to business purposes! I think the web wants you to be a person, not a company, and to interact with people, not to assault them with ads.

So, Twitter is a perfect example. If you’re a rock star or a fashion house and you have fans, then YES, it’s perfect to let the people who follow you know what you’re up to.

But, if it’s not anticipated, personal and relevant, I don’t want to hear it, not on Twitter or anywhere else.

So, the opportunity is NOT in creating ways to rationalise using these tools to promote your existing gig. It’s in creating products and services and organisations that people WANT to read about on your blog or hear about via Twitter.

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Hello. I run a small chain of hairdressers. As an example, how could I use the web to successfully advertise my business and what would the pitfalls be? Thank you.
Helen Oates, Bristol England

Seth Godin: Thanks, Helen, great question!

My point is that the new marketing is a lousy way to advertise your chain of hairdressers. BUT, it creates a huge opportunity to change what you do in your shops.

What if the haircut was a byproduct of what the shop really delivers, which is a chance to connect to those in the community that you like? What if you combine the best of meetup.com with the friendly connections of facebook to create a place where people go to see and be seen, to meet and talk... and get a haircut and a facial while they’re there?

That’s what a hairdresser was in my mom’s day, and it could be again.

It means rethinking what you do, how long you want people to stay, how you lay out the shop... it means not slapping new marketing on top of your existing business, but instead inventing a new kind of business that thrives on the new marketing.

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How can the Internet change the way of business is conducted in 2008 and beyond? Will we see the i-Boards and i-CEOs managing a new generation of the i-banking, i-shops and other i-businesses? Do you believe in the e-commerce or even e-Government future?
Viktor O. Ledenyov, Ukraine

Seth Godin: I think the “i” part is overrated, but the reality is that this is an era of connecting. Connecting people to each other and connecting users and customers to organisations. The future is clearly going to belong to organisations that are good at this. We’ll see investment banks that profit because of their ability to connect (Goldman already knows this) as well as managers that realise that the level of communication between and among their staff (and the people they serve) can be radically transformed.

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I’m sick of the web evangelism that tells us the rest of us are dumb and out of touch. Why should regular businesses worry about the web and marketing, when the existing ways of getting customers work fine for your so-called meatball products?
Rube Rollington, NYC

Seth Godin: Hi Rube.

Nobody who reads my book is dumb or out of touch. When you get a chance to read a copy, you’ll see that it says that people need to make a choice. Meatball products aren’t going away. They’re not going to stop being profitable. We need them and we’ll buy them.

My point is that the new marketing doesn’t work so well for meatball products. That I’m in no hurry to visit the website for a furniture store or to stop by the blog of an accountant. Which is fine. Just don’t count on the new marketing to fuel your growth. Don’t count on MySpace leading to huge market share gains for your fuel oil company.

It’s about making a choice. You can choose to build an organisation that thrives on the rules of the new marketing, which means you’ll have the wind at your back as you grow, but it requires a different sort of organisation.

I was disappointed in Alan Mitchell’s closing riff in his review, because he didn’t seem to understand the point of my book. I’m not talented enough to tell you how to transition your company from point A and point B. Only someone with a lot of hands on experience at your organisation can do that. What I’m trying to point out is that there’s a choice to be made.

Henry Ford embraced the assembly line and built Ford. Rolls Royce, on the other hand, kept making cars the hand made way. Neither was wrong. They were just different strategies.

If this is a new industrial revolution, and I believe it is, then I’m betting there are more growth opportunities for people who pick the sundae.

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So what are the best and worst examples of Web 2.0 abuse that you have seen from marketers?
Abe Bington

Seth Godin: It’s always the same. Marketers are selfish. We’re shortsighted too. So when a selfish, short-sighted organisation (with deniability, because it’s not a person, it’s a job!) starts using the web, bad things happen.

Privacy violations. Spam. Lying. Non-transparency. Over promising. Most of all, not treating people the way we’d want to be treated.

The next time you consider a popup ad or the idea of renting an email list, realise that the power has shifted, and just because it’s important to you doesn’t mean it’s important to me!

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There seems to be a trend towards increasing personalisation of marketing messages. Obviously that’s good for the sender of the messages and perhaps for the recipient. But what about data privacy? To personalise something, you need data on the person. And after high profile losses or abuses of personal information, people are wary on sharing this. Could these fears derail efforts to personalise marketing?
FT.com

Seth Godin: Privacy is a red herring. What people don’t want is to be surprised. They don’t want information used in a way that they don’t expect. And most of all, they don’t want to give you something and get nothing.

Why should I tell you my address or birthdate or favourite car? So you can harass me more? No thanks.

Personalised marketing works great when it is consensual. I WANT Amazon to personalise recommendations because they help ME. I want a birthday card with a gift certificate in it because it’s good for me.

The mistake marketers make is that just because they can do something, they think they should. It’s a common trap, and one worth avoiding.

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Isn’t your term “after advertising” a bit grandiose? The channels of communication may be changing but it’s still advertising. Or do you disagree? I’d be interested to hear your defense.
Sev Blanco

Seth Godin: Defense? Hey Sev, it’s just a book, I’m not running for anything. If you talk to the folks at Zara or Procter & Gamble or even a presidential candidate in the US, you will hear the same thing: Ads cost more and deliver less every single year.

You will discover that the number of big brands that have been built on the back of traditional advertising is shrinking to zero. You just don’t have the money or the time to do it that way any more.

Interactivity trumps interruption.

People have too many choices.

There’s too much clutter.

So, yes, I do mean, “after advertising.” The idea of advertising was powerful and simple. From 1940 to 1990, the equation was: Whoever spends the most on ads, wins. Simple. It gave us Coke and Pepsi and Ford.

Now, that formula clearly doesn’t work.

So, will there still be ads? Sure. Ads are great at maintaining prebuilt brands. Ads are great at reminding people.

But they’re being replaced by targeted, permission-based media, by interactivity, by viral noise.

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Hello sir, do you think e-commerce will be a threat for the normal shops in the next years?
Mikal, Spain

Seth Godin: Well, here in the US, the number of marginal independent bookstores has plummeted. That’s because it doesn’t pay to drive to a dark, dingy shop that doesn’t have what I want in stock and then pay extra and wait for delivery... Amazon solved that problem.

Taking it a step further, we see that price isn’t the key factor. Price matters when everything is a commodity, when there’s no difference but the cost. Most of the time, growth happens in industries where price is secondary to experience. So, Starbucks or Apple or some other overhyped brand can thrive because people talk about them, not because they’re cheaper. As a result, the “normal” shops that insist on being in the commodity business are going to get creamed by the supermarche and the big box store and mostly by the internet. If it’s NORMAL, then why on earth should I pay extra in time or money?

On the other hand, if the shop is abnormal, above normal, extraordinary or, yes, remarkable, then I’ll gladly pay extra.

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