Magazine article Information Today

The New Investment Cycle in Internet Commerce: Web 2.0 Goes Mainstream

Magazine article Information Today

The New Investment Cycle in Internet Commerce: Web 2.0 Goes Mainstream

Article excerpt

[Insider's Perspective is a column written by an expert in the information industry who shares his or her insights about a specific corner of the industry. --Ed.]

After 5 or 6 years of anemic web investments, mainstream organizations are renewing their spending and focusing on partner-facing and consumer-facing web initiatives. After 2001, many companies stopped investing in their web platforms. The bubble had burst, and executives tried to cut costs, shrink staff, and focus on business initiatives external to the internet.

In many large companies, central budgets were cut or eliminated. While Web 2.0 has been hyped in the media for the last several years, most major innovations have been limited to social networking startups or web behemoths such as Google and Amazon. In 2008, the Web 2.0 investment cycle hit the mainstream.

Now, a wide range of organizations, particularly those that sell information-intensive products or services in industries, are making large investments in internet commerce. The following four main trends are driving this new investment cycle:

1. Consumers and business users are demanding new and sophisticated features and services.

2. Internet commerce initiatives have become reliable engines for growth.

3. New web technologies enable additional capabilities.

4. Marketing budgets are increasingly shifting to the internet.

Demand for Sophisticated Features and Services

Web 2.0 hype has become a reality on many leading websites. As consumers have become accustomed to easy-to-use, sophisticated features like those available from Google, Fidelity, and Amazon, they have begun to expect them no matter where they go on the internet. For B2C organizations, this demand is a direct call to upgrade their web presence, as those companies that fail to offer a compelling user experience will quickly lose out to market leaders. For B2B organizations, the pressure is indirect. Companies have heard from their partners and clients that they are dissatisfied with current web offerings. They don't understand why the web experience on B2B sites lags so far behind what they experience when visiting consumer sites. This phenomenon is particularly strong in the information, media, insurance, and financial services industries. However, most websites cannot be improved with a simple facelift. When companies want to upgrade their client-facing features, they need to make considerable infrastructure investments and application upgrades first.

Reliable Engines for Growth

Mainstream organizations have seen web-related revenues grow steadily even as they have failed to aggressively invest in them. Five years of pent-up demand have generated huge rosters of compelling ideas that have the potential to further fuel growth. While the mainstream press continuously laments the future of traditional media companies, leaders within those companies are aggressively developing new products and services that add value to their content and services. Google and user-generated content may wipe out the value proposition for commodity content owners, but those with truly proprietary assets are emboldened by the opportunities they see in the next 12 to 36 months. They are also shifting channel strategies, eliminating direct sales channels and dependencies on legacy channel partners to sell directly to consumers and business partners via the web. …

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