Marketing guru Jim Sterne expounds on the past, present and future of the art of selling on the ‘Net.

By Jack Gordon

Officially, Jim Sterne is president of Target Marketing, a Santa Barbara, Calif.-based consulting firm specializing in online marketing. The firm, however, is a one-man operation. “What I really am,” says Sterne, “is a professional explainer.”

In the early 1980s, when personal computers were mysterious new devices and Sterne was just a few years out of college, he got a job at a California retail store that sold the Apple IIe and assorted software. In a backroom at the store, he explained VisiCalc, an early spreadsheet program, to people who had no idea what a spreadsheet was. He later took a job selling IBM minicomputers (remember mainframes vs. minis vs. micros?) to businesses. Then he sold Computer-Aided Software Engineering (CASE) programs. A lot of explaining was required.

In 1993, the Mosaic browser introduced colors and graphics to the Internet, spawning the World Wide Web. Soon afterward, Sterne co-founded an Internet service provider called Silicon Beach, which served businesses in the Santa Barbara area. And in September 1994–a year to the day after Mosaic’s initial public release–he embarked on an eight-city seminar tour called “Marketing on the Internet.” The task he set for himself: Explain how to use this newfangled web thing to sell stuff.

Sterne has been explaining online marketing ever since–as a consultant, a frequent public speaker, the author of five books on the topic and the founder, in 2002, of the Emetrics Marketing Optimization Summit. The summit is a conference held several times annually in the United States and abroad.

Here is a guy, Electronic Retailer figured, who could put online marketing into perspective. So we asked him to explain a few things.

Electronic Retailer: What were the first questions people had back in 1994 about using the web as a marketing medium?

Jim Sterne: The first question was, “Can you make money on the Internet?” And the answer was, “Sure, just like you can make money on the telephone. It’s a communication medium.” People didn’t quite get that.

The next question was, “Who is the audience?” Well, primarily it was highly educated, male early adopters. If you were selling car insurance in the mid-’90s, the Internet was a tough place to be. My job was to convince people that online commerce would really happen. I said, “In two years or five years, everyone is going to be online. So get in there. Make your mistakes now, before everybody is looking.”

It took awhile for people to think seriously about marketing at all. I remember going to an early Internet World conference and thinking, “Wow, everything here is about technology. How about marketing? How come I’m the only one wearing a necktie? Why is nobody asking about how to get people to come to your site or how to handle customer service online?” I became kind of a poster boy for online marketing.

ER: What was the hardest thing for marketers to understand about the online environment?

Sterne: Initially, the hardest thing to get was that the web is interactive. It’s not a storage place for electronic brochures, it’s a conversation. The book “The Cluetrain Manifesto” helped get the point across, but it wasn’t published until 2000.

The way humans sold and traded for millennia was by conversation. The price tag was invented only in the late 1800s; before that, the marketplace was always a conversation. The Internet brought it back. Online, people can talk to vendors, and they expect the vendors to talk back. “No, I don’t want to download your brochure. I want to interact with you. I want to reach into your site and pull out what I want, not just the information you want to give me. I want to configure the laptop. I want to color the car.”

ER: Has online marketing gotten easier since the ’90s or harder?

Sterne: On balance, I’d say harder. The expectations now are so high. Amazon has taught everyone what’s possible, and if they can do it, why can’t you? “Why don’t you have a button that says, ‘Where’s my stuff?’ Why can’t I look at everything I’ve ever purchased from you? Why don’t you recommend products I’d actually like? Why don’t you send me e-mails that tell me when something I’ll like will be available? I want you to know who I am and what I care about.” Those expectations are hard to live up to.

ER: Were there certain early successes or failures that taught lasting lessons about how to market online?

Sterne: One lesson was about glitz for its own sake–using Flash animation to spin your logo, and so on. At the height of tech glitz hubris, some shopping sites were so heavy with animations and whatnot that they took forever to load. There was a fashion-clothing website site called Boo, out of the United Kingdom. They got millions in investment, built this incredibly rich site, and it crashed everyone’s browsers. Nobody could shop there.

Probably the biggest mistake, though, was the idea that all you needed was traffic: “Look at all the sticky eyeballs on my site!” But there was no business plan and no way to make money. That’s what created the dot.com bubble that burst in 2000 and 2001. Everybody was investing in stuff that had no value; there was no way to sell it.

ER: Did the bubble have to burst before people took online metrics seriously?

Sterne: People coming out of places like MIT had been trying to sell web analytics since 1994. But when venture capitalists were throwing money at you, what did you need an accountant for? Then the bust came. And then it was: “Say, that little toy that measures where my money is going? Tell me more about that.”

Web analytics started by measuring what people do on your website: what they click on, page views, click throughs. My interest is now broader. Let’s measure the actual success of your site. What are the outcomes? Did they buy anything? And let’s survey users for opinions. And how good is your e-mail campaign? That’s why we changed the name of our events from “Emetrics Summit: The Web Analytics Conference” to the “Emetrics Marketing Optimization Summit.”

The real value of measuring is that when we make a change, we can isolate it and see if it improved anything. That’s what optimization is about. Take, for example, two “buy now” buttons–one yellow and another that’s green. Which one works better? If I continually test things like that over a few years, I get not just incremental improvements, but also exponential ones, because optimizing my website allows me to optimize my entire marketing effort. Now I know what to do with my TV advertising, my tradeshow booth, and the brochures I put in the mail. I want the tag line to be “tastes great,” not “less filling,” and I want it on a white background with a green button, or whatever.

ER: Are there things that online marketers should have understood years ago, but still don’t get?

Sterne: Sure. Some really basic stuff, like designing a site that’s about your customers and not about your company. It’s Marketing 101, but people still manage to not get it. Instead of, “our products, our services and how wonderful we are,” it should be about, “How can we help you?” When a site is really customer-centric, you don’t even have to think about how to navigate around. You go there and immediately know what to click on.

ER: What do you tell clients today about how to improve their sites?

Sterne: The first priority is to understand your own goals. When people ask how to make their sites better, my answer is, “Better at what? What are you trying to accomplish?”

Then they ask, “What should we measure?” Same answer: “What are you trying to accomplish?” Put that together with customer-centricity, and it becomes: “Who comes to your site, what are they trying to accomplish, and can you measure how well you’re helping them?” That’s sort of the secret sauce. Figure out the motivations of people who come to your site, then create things that make your site valuable to them. Do that over and over again, and eventually your site no longer sucks.

ER: What is the most important trend or factor that will shape online marketing for, say, the next five years?

Sterne: Video. I mean, marketing is marketing, and customer service is customer service, so it isn’t as if any classic principles are going to change. What does change are the technologies you need to know about.
Online video is right around the corner–not just on computers but on cell phones. As a medium, video is compelling and persuasive. YouTube is a clear and present indication of how much people love video. Advertisers love it too, and have built a large industry around it.

But the question for online marketers will be the same: “How do we use this to help our customers?” It isn’t a matter of creating video ads for yourself. If your ads are really great, people may watch them and even seek them out–like Sony’s Bravia ads, with bouncing balls and exploding paint, which you can find on YouTube. But that’s rare. And unless your ads are amazing, who cares?

So how can you use video to give your customers what they want online? I expect that a lot of marketers will have to learn all over again the same lesson of Flash animation. If you use it to spin your logo, I don’t care. But show me how to do something I want to do. Show me how your product works and what it means to me. Then I’m interested.