Report: Executives Give the Web a ‘Thumbs Down’

Although their companies continue to spend money on many different aspects of e-business, corporate managers see less promise in the Internet than they did a year ago, according to a report released Wednesday by the Yankee Group.

“Over the past year, the perception of Internet business has swung from oneextreme to another, from the extremely positive to the extremely negative,”said the report, which stems from an annual survey of companies that dobusiness on the Internet.

The report, which blames “the economic downturn and media negativity” about the Web for causing the Internet to fall from favor, said that the number ofInternet strategists who believe their bosses do not consider the Webimportant to business strategy has doubled over the past year.

The main reason for executive antipathy towards the Web, the strategistssaid, is that businesses find it difficult to measure the success of their Web sites.

“Today, corporate executives want proof that online investments pay off and Web site ROI (return on investment) is not just a fantasy,” said Yankee analyst Lisa Melsted.

That means companies need to “incorporate measurement” into Internet strategies, tracking statistics such as site traffic and use, marketing campaigns and “internal efficiencies” achieved as a result of using the Web, Melsted said.

The Real Driver

The report, based on a survey of Internet strategists at some 200 large and medium-size U.S. companies, also found that site traffic remains “driven by primarily offline methods.”

Melsted told the E-Commerce Times that companies, rather than putting in place “integrated marketing campaigns” using a combination of Web ads and offline advertising, are merely listing their Web addresses in traditional marketing material.

Still Spending

Concerns about the effectiveness of the Web notwithstanding, companies are continuing to spend money on Web design, site strategy and other aspects of e-business, according to Yankee.

Many companies prefer to outsource at least some of thesefunctions, Yankee said, showing “there is still significant opportunity” for companiesthat offer Web design, systems integration and hosting services.

The average corporate budget for online business strategies among the companies surveyed was US$478,000 per year, or about $40,000 a month, Yankee said. The median number for all companies is probably about $38,000 a year, or $3,200 a month.

Bad Reputation

E-commerce in general “has gotten a bad reputation over the past year,” Yankee said. Nevertheless, most of the Web executives surveyed are expectingonline sales to grow over the next year.

Overall, survey respondents said that about 13 percent of their companies’ total sales came from e-commerce transactions last year, and they expect the number to grow to 21 percent this year.

According to Yankee, companies that use online commerce are saving money and getting more business. The report cited Hilton Hotels (NYSE: HLT) as an example of a company that is “having success in both the business-to-business (B2B) and business-to-consumer (B2C) arenas.”

Hilton is using an online marketplace to buy supplies for its hotels, which saves the hotel chain money on purchasing. In addition, the online reservations system has proved popular with guests, Yankee said.

6 Comments

  • I think it’s important to look at the title of this article and see that “executives” give the web a thumbs down. Well, if the web doesn’t produce the right profits within the right frame of time it’s going to get a thumbs down. That’s all an executive is going to care about. If all the changes everyone talks about are made properly I guarantee executives will give the web a thumbs up. The web is too dynamic right now for anyone who can only communicate in terms of dollar signs.

    • Why is business not that good on the net? Poorly designed websites. Designed by tekkis rather than sales people. Not designed with a logical sequence, clever misleading copy that is incomplete. Unwillingness to take checks. Company’s real name and address hidden and difficulty in calling them. It will all change as time goes on. Brooks Alden

  • The previous post is right on the money…too many e-commerce sites just don’t get it. Most folks could give a rip about all the bells and whistles; they just want to find what they’re looking for, get some info, and get on with it. If the site is poorly laid out, difficult to navigate, and/or badly maintained, the customer is going to look elsewhere. Web pages are like rooms, and who’s going to shop where they have to wander around through five or ten rooms to find what they want? Leave the flash for the entertainment sites and get down to business.

  • I feel that as a normal human instinct, people do want to touch and feel the goods/services before they buy anything online they haven’t come across before. As a result, strong advertising and brand image helps a lot to online sellers compared to unbranded items.

  • I have used the web many times to read information on a particular product, shop for prices and compare it to other similar products. Once I made a decision I go to the store and buy it. The success of a web site can not be measured just by the number of sales you make on-line.

  • Retailers need to understand that the people who shop online value time. I recently tried to purchase a small kitchen table online. Unfortunately, the furnishing sites all told me to go into the store to see more selection. On my way to the first, I passed a furniture outlet store. They got my business.

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