Internet Industry Must Look at How to Generate Value

Article excerpt

There is Still too great a focus on the net as a sales and marketing channel

I was sad to read that Martha Lane-Fox's brother is leaving Lastminute.com. Or rather, I was sad to have to read that he's leaving, because, despite the constant industry and media browbeating over the bursting of the dotcom bubble in recent months, the acres of column inches still devoted to Lastminute suggests that the key issues facing our industry remain ignored.

The truth is that Lastminute.com is an irrelevance -- unlikely to survive in its current form and a poor barometer of the future of our industry. The reality is much more prosaic; some companies have sound business models, based on real strategies and achievable profits, and others don't.

There are the good, the bad and the ugly. The good are profitable, the bad unlikely ever to be profitable and the ugly never had any hope at all. Far too often the industry triumphs the case of the bad and the ugly. It analyses all too infrequently why the good succeed.

So how should we be looking at our industry? Profitability should clearly be the key success criterion. Focusing on page views or the numbers of unique visitors is interesting, but not particularly helpful. More critical is the ability to value individual visitors. If companies cannot understand and measure the value of their unique customers, then they clearly have no real ability to focus on their most important customers and so have no control over their potential to be profitable in the future. Similarly, it is as absurd to view visitor or page view numbers in isolation from your competitors' performance, as it is to analyse ACNielsen data on one company alone.

But beyond this, there is still too great a focus on the internet as a sales and marketing channel and not as a tool to root out inefficiencies and increase productivity. As everyone knows, but few appear to follow, the internet impacts the whole value chain. …