Web 2.0: the new divide

Savvy SMEs are harnessing Web 2.0 to attract and interact with customers. It is technology other firms are ignoring at their peril. By BRAD HOWARTH.

By Brad Howarth

The business world is fast dividing between those who “get” Web 2.0 and internet marketing and those who do not. While many businesses are embracing new technology and consumer empowerment, some are being completely left behind, with their heads in the sand.

But most businesses whether web-savvy or not, know Web 2.0 is here to stay: the SmartCompany poll (in conjunction with Roy Morgan Research and Dun & Bradstreet) on Web 2.0 shows that 49% of respondents believe that Web 2.0 will affect the way they do business in the next year and 88% in the next five years. (For more results, click here.)

Web 2.0 refers to a second generation of internet services that basically give power to the people: it lets people collaborate and share information online through the use of communities, wikis and better communication tools. About 28% of respondents to the poll say it has already affected the way they communicate with customers and 17% say it has changed the way they communicate with suppliers.

Web 2.0 is also changing the way savvy SMEs approach marketing and their marketing spend as the internet becomes the fastest-growing marketing medium in the world today, surpassing traditional forms such as outdoor advertising, magazines and even radio in terms of the number of advertising dollars it receives.

Building communities of interest

One of the main ways Web 2.0 allows people to connect with potential customers online and slowly build a relationship is through building communities of interest.

John Allsopp, founder of Western Civilisation (Westciv), a Sydney-based web design and development agency, says he has been able to build his business by effectively using web-based techniques, eschewing traditional marketing practices.

“The strategy we developed was to think of how you can position your website as a valuable part of a community,” Allsopp says. “Think about the people who use your product as a community, and then think about the things that you are passionate about and you can contribute.

“And then provide resources or experiences through your site that bring people in that community of interest together.”

One example is the website of the travel company Intrepid Travel. As a business that specialises in organising tours to some unusual and out-of-the-way places, its website helps draw users by publishing articles and newsletters, often written by travellers, detailing their experience. In this way the website becomes a resource for other would-be travellers, as well as an interesting website for anyone interested in destinations that are off the beaten path. Other travel companies including Lonely Planet and Peregrine have developed forums where travellers can swap tips and compare experiences.

Allsopp says that connecting with people’s passions and interests will keep them coming back regularly, even if they are not planning on buying anything from you immediately.

“So the purpose of the site is not to sell products – that is something that happens as a result of building a place where people visit and return to,” Allsopp says. “If you can translate your passion to the people that may want your services and products, the value of that passion will create a tremendous relationship with potential customers.”

Another strong example of building a community online is the US T-shirt company Threadless. By allowing consumers to design their own T-shirts and then post their designs online, and then have them rated by other site visitors, Threadless has drawn large volumes of traffic to its site and attracted more than 300,000 users. The company is now receiving more than 600 submissions each week, with the winning four designers rewarded with $US2000 in cash.

Another common method of building a community interest is to start a company blog. By maintaining an active blog related to their field of interest, many companies are able to attract and retain the attention of their potential customer base.

But there are numerous other tools that can be used to attract and retain attention. Another example is to create a wiki, which is a web-based software tool for organising data that can be edited by users. The most popular example of a wiki is Wikipedia, an online encyclopaedia whose entries are created and edited by its users. Wikis can be easily created about specific topics, and can become a reason for people to visit your company’s website.

Search engine marketing

But while these tools are beneficial in building interest around a company’s products and services, it is also important that people be able to find that site in the first place. The most effective form of making a site visible on the web is search engine marketing. This refers to techniques for improving the chances that people using search engines such as Google and Yahoo will find that site when looking for information relating to the business’s activities.

“Search is proving to be the most cost effective new acquisition strategy available to advertisers today,” says Stephen Murphy, a director of the search marketing company Payperclick. “Banner campaigns and other activities have wonderful reach, but search guarantees you a user.”

Search marketing is also highly tailored, in that someone will only find a specific site if they were actually looking for something that it offers. For instance, a shoe repair service will only appear in a search engine listing if someone types in terms related to that service. This means that should the person click through to the company’s website, they are already a qualified lead.

There are two ways that a company can increase the likelihood that a searcher will click on its link in the search results.

Paid search

So-called paid search enables companies to you buy the rights to certain keywords, so that when these are entered into the search engine a link to that company’s page will appear at the top of the rankings, in the “sponsored links” area. The cost of these keywords can vary widely depending on the popularity of the term, but buyers only pay for the number of times that someone clicks that link, making it easy to keep spending within a budget.

Murphy says the immediate benefit is that the activity is performance-based; that is, a company pays purely on the basis of how well the medium performs in terms of delivering leads.

The other method is to ensure that the site ranks well in the so-called natural listings of the search engine results. Known as search engine optimisation, there are numerous ways of achieving this, such as ensuring that the home page for the company contains words and phrases that are likely to be searched for by consumers. (To see Fred Schebesta’s blogs on search engine optimisation, click here.)

There are numerous organisations that provide this service on a consulting basis. The cost can be as little as a few thousand dollars for an audit of a site, but will rise depending on the amount of remediation work that needs to be done.

Murphy says that most companies will begin by using paid search, then over time realise they are losing 80–90% of search engine users who click on the natural results.

“Even if your paid search campaigns are running at a great yield, you might be missing out on a huge amount of additional volume,” Murphy says.

Online virtual environments

Another, more left-field, option is to look at some of the online virtual environments that have been created, and setting up a presence there. The most popular is Second Life, from the San Francisco-based company Linden Lab, which is an online three-dimensional world where participants interact in through virtual representations of themselves known as avatars. Participants are allowed to conduct commerce within the environment, using a currency that can be exchanged for real-world dollars.

Numerous businesses have been started within Second Life, and it has produced at least one millionaire. Many existing businesses have a presence, including the Australian companies Telstra and the ABC. The Sydney-based web development company Hyro has also created a presence in Second Life to act as a showcase for its work, and to act as a recruiting point for international talent.

According to Second Life watcher David Holloway, there are currently about 10,000 to 12,000 Australians using the environment, representing just over 2% of total users worldwide. Holloway says a basic presence within Second Life – a virtual shopfront business – costs as little as $1000 to $1500.