Strategic Internet Business Study - December, 1997
Table of Contents
Internet Business Models used by Australian Organisations
Chart A: Internet Business Models Used by Australian Organisations
The Emergence of the Virtual Community
1997 Actual Revenue for Australian Websites
Chart B: 1997 Actual and 1998 Forecasted Revenue for Australian Organisations via Website Establishing Relationships is Essential for E-Commerce Success
1998 Forecasted Revenue for Australian Websites Australian Organisations Uptake of Secure Electronic Transaction Trials
Chart C: Likelihood of Australian Organisations participating in a SET Trial in 1998
Chart D: Likelihood of Australian Organisations participating in a SET Trial in 1998 by Sector
Allocation of Expenditure on Australian Websites
Table A: 1997 Actual and 1998 Budget Expenditure Table
Chart E: Allocation of Expenditure on Australian Organisation websites
Chart F: Development, Maintenance and Advertising Expenditure on Australian Organisation websites (1997 - 1998)
Preference Ranking of Australian Website Features
Chart G: Importance of Website features for Australian organisations
Average Time Spent Viewing on Australian Websites
Chart H: Average Time Spent Viewing Australian organisation websites
Chart I: Average Time Spent Viewing Australian organisation websites by Sector
Table B: List of 40 Australian Websites Time Spent Viewing
Employment Status of Australian Organisations with Websites
Chart J: Status of Australian workforce directly involved in organisation websites
Table C: Status of Australian Workforce Directly Involved in Websites
Management of Australian Websites
Chart K: Management of Australian organisations Websites
Chart L: Toyota Online Management and Content Services
Forecasts for Employment in Australian Organisations with Websites
Chart M: 1998 Forecast of the Australian workforce directly involved in organisation websites
1998 Forecasted Size for Websites
Chart N: 1998 Forecast of the number of webpages on Australian organisation websites
Chart O: Forecasted Increase in Australian organisation websites by sector in 1998
Executive Summary of The Australian Strategic Internet Business Report December, 1997.
by: Marc Phillips
With a myriad of quantitative research data available on hardware, software, industry stakeholders, demographic penetration and usage patterns of Internet users, the Australian macro Internet environment is reasonably well defined.
Yet there remains a nexus between quantitative data and the strategic business analysis of the Australian Internet industry.
In order for Australian organisations involved with the Internet to compare their business with other organisations and provide forecasts to assist the strategic planning of their Internet businesses in 1998, APT Strategies prepared the first Australian Strategic Internet Business Report in December, 1997.
The objectives of the first Australian Strategic Internet Business Report are:
1. Review the 1997 year with eight benchmarks detailed below to allow Australian businesses to measure their own Internet business in comparison to others.
2. Provide Australian business with strategic insights about Internet business in 1997.
3. Provide strategy recommendations for Internet business in 1998.
4. Forecast the developments amongst Australian organisations with websites to assist business manage and plan their resources needed to ensure they have a successful website and Internet business.
5. Explore some of the critical issues that confront Internet developers, project managers, Internet regulators and business proprietors that have invested in Internet technologies.
Benchmarks for Analysing Australian Organisations with Websites
The analysis of the following eight benchmarks for organisations with websites highlights the critical issues that management should understand when analysing the success of their website and the Australian Internet business sector.
1. The Internet Business Models.
2. Revenue derived from organisation websites.
3. Preparedness to be involved in Secure Electronic Transaction trials.
4. The allocation of expenditure on a website.
5. Preference ranking of website features.
6. The average Time Spent Viewing websites.
7. The status and number of employees involved in websites.
8. The number of webpages on websites.
Internet Business Models used by Australian Organisations
There are at least six Internet business models which Australian organisations are using in the following order:
1. Distribution of Information
2. Branding Products or Services
3. Customer Satisfaction
4. Sales via the Internet
Australian organisations are using their website for multiple business applications. Of all the 90 organisations surveyed, an average of 2.7 Internet business models were selected by each organisation.
A significant majority of Australian organisations surveyed with a website use the Internet as a method of 'Distribution of Information', the most popular Internet business model.
More than half the Australian organisations surveyed (53 per cent) engaged the Internet for 'Branding a Product or Service'.
With one in every two Australian organisations using the Internet to support their customer satisfaction strategies, new opportunities are presented for business strategists for interactive relationship marketing.
The Internet is providing organisations with a tremendous benefit by ensuring that customers are receiving prompt replies to their email queries. In an increasing trend, formal email response policies are being written into Quality procedures in response to the Internet consumer developing cyber-personalities. These people are beginning to value intangible and digital assets, particularly if they are asset rich - time poor professionals.
Almost one in five of Australian organisations surveyed stated they were using the Internet to sell goods and services.
1998 will see an increase in the competitiveness of the Australian online advertising market with a general averaging down of Cost Per thousand Impressions (CPM). Consequently, it is strongly recommended that the Internet advertising participants focus on the relationship between inventory and costs.
Increasingly, website proprietors are finding it difficult to substantiate subscription business models due to various factors including the proliferation of websites and higher transaction costs.
We are also beginning to see chat groups emerge as the foundations of the Virtual Community business model. Chat groups are a stimulus for products or services as they provide a constant flow of personal referrals and testimonial recommendations.
Actual and Forecasted Revenue on Australian websites
Organisations who sold goods and services to consumers via their website in 1997 achieved an average of over $8,000 in revenue. Forecasts for sales to consumers via Australian organisation website in 1998 is more than $2.5 million, a massive increase over the 1997 revenue year. Actual sales for 1997 in the business to business market were far stronger than the consumer market which is forecasted to increase by 54 per cent in 1998.
Uptake of Secure Electronic Transaction Trials
There is overwhelming support and willingness for Australian organisations to become involved in a SET trial if approached by a financial institution with a majority of organisations expressing they were likely to participate. One of the more likely sectors to participate is the Communications industry with the Manufacturing industry the least likely sector to participate in SET trials in 1998. Many Australian organisations with websites are eagerly awaiting the outcomes of the SET trials in Quarter 1 and 2 in 1998.
Allocation of Expenditure on Australian Websites
With the average expenditure allocated to each Australian website in 1997 below $25,000 this amount is expected to more than double in 1998 as Australian organisations spend an average of $58,239 on their website.
It appears that the 'Senior Management Hijacking Syndrome' is largely responsible for a blowout in website maintenance costs in 1997. 1998 will see increased investment in backend technological systems for Australian organisation websites as they demanding to bring resources inhouse to maintain the website.
Preferences of Australian Website Features 'Quality of Content' was considered to be the most important feature for Australian organisations websites with a very high 85 per cent preference rating. This confirms the very real concentration by Australian organisations to ensure that their website content is factually correct and compelling.
With 'Design' and 'Including the Latest Technology' receiving the two least preferred rankings, Australian organisations are showing a lack of commitment to the "build it and they will come philosophy" that has been dictated in the past by the software industry.
An Industry Performance Benchmark: Time Spent Viewing (TSV)
The highest time spent viewing category was 11-15 minutes followed by those organisations who received an average of 6-10 minutes viewing per user. A list of the Top 40 Australian organisations TSV is included in the full copy of the report.
43 per cent of Australian organisations did not know the time spent viewing period on their website with the government and retail sectors being the worst offenders.
With Australian organisations demanding greater accountability from their website investments, marketing departments, webmasters and IT Managers will be closely scrutinised in 1998 to monitor the average time spent viewing statistics.
Time Spent Viewing will increasingly be recognised as a standard benchmark of performance, particularly amongst search engines, aggregated content and media websites who sell advertising as well as websites that focus upon branding their goods and services.
Status of Employment
Of the 90 organisations surveyed, slightly more people were employed in a 'Full Time' capacity compared to those who were either 'Outside Contractors' or 'Part Time'. The average of 10 personnel working on the website in various capacities was consistent across small, medium and large organisations. The high number of personnel involved in a typical Australian organisation website points to the trends that specialists are being used and organisations are recruiting the best and smartest Internet savvy personnel they can find.
Strategy is becoming more important for clients, many of whom are now taking a very strategic approach before producing a website with various Internet and multimedia organisations ensuring 25-50 per cent of the Internet project cost being in the strategy planning and the pre-production stage. This is leading to Internet employment increasing in three main areas, one of which is Internet business strategists.
Lastly, it is forecasted that of the 90 organisations surveyed, more than 200 pages will be added to the average Australian organisation website in 1998 with the vast majority of companies indicating that the number of pages on their websites will grow substantially.
200 leading Australian organisations with a website were emailed and invited to answer a 12 question survey, located at the website http://www.aptstrategies.com.au/survey/survey1.htm
The survey was available to be answered from to 20th November to 5th December, 1997. The survey was not open to the general business community to be answered to avoid unsolicited responses that were not qualified as responsible organisations.
A total of 90 respondents completed the survey, representing a response rate of 45 per cent - a high number for self completion questionnaires:
Organisational Sample Size
Small ( 0-19 Employees) 14 Medium ( 20-99 Employees) 16 Large ( 100+ Employees) 60 Respondents 90
Two thirds of respondents were employed in `Large' organisations that were classifieds as having more than 100 employees.
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