Vol.2: How Companies are Benefiting from Web 2.0?

This article is vol.2 of the “Future Direction of Web 2.0 and Internet Marketing“.

To follow vol.1 which was the introduction, how Web 2.0 is currently used by companies and how companies are benefiting from Web 2.0 is clarified first from the author’s viewpoint, from recent survey results of “How companies are benefiting from Web 2.0: McKinsey Global Survey Results” and “Social Media’s Primary Use: Marketing” which was conducted by Bobson Executive Education & Mzinga, both issued in September, 2009.

1. Who Benefits From Web 2.0 Technologies?

It can be concluded from the survey results that it is IT executives in high tech/telecom industry of large companies in India or North America who benefit the most from using Web 2.0 technologies. The author feels that such people are probably what many of us imagine as someone who utilizes Web 2.0 the most.

1) Industry

The survey result concludes that high tech/telecom users benefit the most, followed by business/legal/ professional services, manufacturing and financial. Manufacturing and financial are about the same. To the author, the fact that high tech/telecom is the top industry is not surprising because they develop leading-edge IT and communication technology and services to lead the use of such technology and services to grow their own business.

The author find it logical that professional service comes next according to the survey because in general, services (e.g. convenience, cost competitiveness) are drastically improved with the use of IT, often to create a new business model and therefore is said to be of good affinity with Internet and web. IT and web cannot be used in the isolated virtual world but online & offline synergy concept needs to be applied even for Internet-oriented businesses. For example, Amazon’s business can be achieved by collaboration with transportation companies etc. The author feels this is one good reason why “clicks & mortar” (vs. “bricks & mortar” of old economy symbolized by manufacturing companies) concept of Charles Schwab was defined, and therefore finance is expected to benefit more.

2) Company Size

According to the survey results, companies with revenues exceeding $1 billion are likely to benefit than smaller companies. This is because big companies are likely to have more staff to manage Web 2.0 and the technology spreads very quickly among the social networks of these individuals. Also they tend to have more customers, in number and diversity, so they have more chance to gain benefits from using Web 2.0 technology.

The author strongly feels that very small companies should benefit from Web 2.0 as well because they are usually more flexible, and Web 2.0 can cost very little according to how they use. Small companies with little resources, for example, could decide to leverage technologies and services that cost very little such as blog, micro blogging (e.g. Facebook and Twitter) and video services (e.g. YouTube), instead of developing a new system/software/programme from scratch that needs much investment. This is one reason why we find quite a few Internet venture business and (SOHO) individuals that are capable of generating revenue to be successful in business, which was not thought to be realistic in the old economy.

3) Region

From the survey results, India and North America enjoy customer benefit the most, and India and China enjoy benefits flowing from their interactions with customer and partners. This is logical for the author considering the mechanism of the global economy and how global companies operate in such an environment.

This is also in conformity with what is depicted in “The World Is Flat” by Thomas L. Friedman. The author would explain this from the fact that North America was the starter of the IT innovation and Internet business, and now India has abundant IT professionals and therefore many of IT services are outsourced to India. China has been said to be “the factory of the world” since the 1990s and in many cases, China is responsible for manufacturing part of a value chain of manufacturing companies, whether it is of a single company or a “networked company” consisting of multiple-companies of business partners.

2. In What Way Companies Are Benefiting Web 2.0?

The survey results draw conclusion that companies seem to gain measurable gains the most from customer-related purposes, especially in marketing. They also benefit from internal purposes and working with external partners/suppliers, especially in increasing speed of access to knowledge. The author would say that this is attributed to the characteristics of Internet and Web 2.0 in comparison to other traditional platform/media/tool, summarized with such key words as ubiquitous, 365 days/24 days, speed, connectivity and interactivity.

1) Internal Purpose

From the survey results, the author conclude that in short, benefit of internal purpose is increase in productivity and cost by internal collaboration and learning, and this is the objective of many internal IT projects in many companies. In addition, companies benefit the most from increasing speed of access to knowledge, followed by reducing communication costs, increasing speed of access to internal experts, and decreasing travel costs.

Moreover, from the survey results, the benefits are ensured if Web 2.0 is integrated into employees’ day-to-day work activities, senior leaders be the role modeling/championing use of technology, and informal incentives are provided.

2) Customer-Related Purpose

From the survey results the author feels that companies benefit from customer-related purpose the most, primarily in effectiveness and efficiency of marketing, i.e. activities engaged in the touch point with customers. Also, the author concluds that the benefits include increasing effectiveness of marketing (awareness which presumably include PR and advertising, consideration, conversion and loyalty), reducing marketing costs, reducing time to market for products/services, and increasing customer satisfaction. Furthermore, it can be said that reduce in marketing cost is presumably to include factors mentioned in internal purposes such as reducing communication costs, travel costs and operational costs.

In addition, it can be said from the survey results that the benefits are ensured, similarly to internal purposes, if Web 2.0 is integrated with other modes of customer interaction, Web 2.0 initiatives to customers is marketed, and informal incentives are provided.

3) Working With External Partners/Suppliers

According to the survey results, benefits from working with external partners/suppliers are basically the same with internal purpose. To the author, this is not surprising because external partners/suppliers can be said as members of networked company, all collaborating to create and provide value proposition to customers.

The survey results also indicates that the benefits are ensured, similarly to customer-related purposes, if Web 2.0 is integrated with other modes of partner/supplier interaction, participation of leading partners/suppliers/external experts to gain critical mass is ensured, Web 2.0 initiatives to partners/suppliers/suppliers/external partners is marketed, and informal incentives are provided.

3. How Companies Use Web 2.0 Technologies?

The author concludes from the survey results that companies usually use a mix of variety of Web 2.0 vehicles to multiply the opportunities for collaboration and to allow knowledge and information to spread quickly and effectively, for internal purposes, customer-related purposes and working with external partners/suppliers.

The author also concludes that for all three purposes, blogs, social networking, automatic information feeds of RSS, video sharing and wikis are widely used, which are the same tools that are popular among consumers. Also, web videos are becoming more frequently used with the technology improvements, enabling companies to produce and disseminate within organizations.


Now that the total picture of how companies currently use Web 2.0 is clarified, factors distinguishing Web 2.0 from Web 1.0 will be studied next.


References:-

How companies are benefiting from Web 2.0: McKinsey Global Survey Results
http://www.mckinseyquarterly.com/Business_Technology/BT_Strategy/How_companies_are_benefiting_from_Web_20_McKinsey_Global_Survey_Results_2432

Social Media’s Primary Use: Marketing
http://www.marketingprofs.com/charts/2009/161/social-medias-primary-use-marketing


The web users who have read this article may be interested to read:-
http://megumioyanagi.blogspot.com/2009/09/future-direction-of-web-20-and-internet.html