PW ONLINE DAILY BRIEFING

NEWS FLASH	July 12, 1999

MINORITY OF VISITORS. The research on these efforts raises nearly as many questions as it provides answers. One of the few studies on personalization, released in early June by Nielsen/Net Ratings, seems to validate the hunch that personalization increases visitor loyalty. Nielsen found, for instance, that visitors who set up personal pages on Yahoo! and on Netscape's Netcenter Web site viewed three to six times as many pages as other visitors to the sites, and stayed on the sites three to five times as long. This helps explain another Nielsen/Net Ratings conclusion: That visitors with personalized pages spend a greater share of their total Net time on those pages than elsewhere -- and that they're less likely to jump to a competing site.

What the study doesn't answer, however, is why the share of visitors who set up personalized pages is so small: 10% (or 2.2 million) in Yahoo!'s case, 12% (or 1.2 million) on Netscape's Netcenter site. "There are so many factors that need to be considered," Hagen says. "For instance, the more sophisticated and loyal users register first, and they don't require the same kind of marketing effort as ambivalent users. Some people also do it just for one feature, such as free E-mail. It's a remarkably confusing concept..." Simply trying to arrive at a definition is confusing, Hagen adds. "Is customization the same as personalization? Are targeted E-mails a form of personalization, or direct marketing? Is my account history on an E-commerce site personalization, or bookkeeping? Everyone has a different answer."

However those questions are answered, "personalization is the strongest way to deepen a [user] relationship," declares Ray McFadden, director of product marketing for Excite@Home. "We think it's the integral strategy for everything we do, so we focus on how important it is to the whole experience."

Bell defines a registered user as anyone who has used at least one customized feature. Representing 43% of Excite@Home's total audience, such visitors show up six times as often as unregistered users and click on 2.5 times as many ads. Bell notes that Excite's number of registered users has grown 40% quarter over quarter for the past two years.

PROCESS VS. CONTENT. So far, the personalized home pages on the major portals are disappointingly similar. Most of the content, be it news, sports, weather, entertainment listings, or stock quotes, comes from the same sources. The few exclusive partnerships appear to be with astrologers and a few retail sites. On the portals, personalization also tends to include free E-mail and access to discussion groups, as well as the option to reorder the presentation of site sections, or channels. Once you've gone through the personalization process on one site, there's not much incentive to do the same thing on another, in other words. So what the sites call stickiness may instead be visitor laziness, or at least the avoidance of repetition.

The primary distinguishing characteristic between personalized sites, in fact, may be the process visitors go through to set up their semi-unique page. McFadden argues that this series of steps is so important in hooking a customer that Excite@Home considers it to be content just as much as a movie review, weather report, or news item. "The most important thing is to provide relevant content to a user, and since the staples of content are basically the same, we find the most effective way to do that is to focus on the experience," he says.

Portals such as Yahoo! or Lycos require visitors to register and choose a password before they can use personalized features. By contrast, Excite@Home uses what it calls "creeping personalization," which lets Web surfers personalize parts of the site without leaving the page they're on or having to create a password-protected identity.

"Rather than making people register first, we let them experience the result immediately," McFadden says. "The trick is to make it easy and leave it up to the users to do as much or as little customizing as they want." So rather than registering and logging onto My Excite, for example, a user can just put a zip code into the weather module on the start page to get an area forecast. The latest forecast for that zip code would be there every time the person comes back.

SHORT-LIVED LEAD. Another ease-of-use feature Excite stresses "is not to ask for the same information twice," McFadden says. "What you do in one channel carries over to the others." Such personalization is unique to a computer, however, not to an individual, which is why Excite@Home also lets visitors create a password-protected profile via the same kind of registration form as the other portals. Having such an identity makes it possible to use different computers to reach customized content without having to re-register.

What one portal does, however, is soon aped by another, and Excite@Home's lead in deep personalization won't last long. Registered users of My Lycos, for instance, can edit or hide content categories such as news, sports, stocks, and weather without leaving the front page in the same way Excite@Home visitors can. And the site features helpful examples of personalized pages. Both sites also provide a personalization manager tool that makes it easy to reorder content and layout, page style, and even colors. Yahoo! users only need enter a zip code to view city pages that feature weather, headlines, TV, movie, and restaurant listings, and a local Web directory.

The personalization race will focus next on offering customizable tools, such as address books and appointment reminders, plus recommendations just for you on everything from vacation travel to investment opportunities. In fact Excite@Home announced the addition of its address book last week. As portals use personalization to differentiate themselves, Hagen predicts, the challenge will be to keep an increasingly complex site easy to use. "User simplicity is paramount to everything -- even cool functionality. Too many features on the front page can be confusing, and at the same time, most people want to view as few pages as possible."

Moreover, what works for a portal site such as Yahoo! or Excite may not work as well for a content site such as the Wall Street Journal Interactive or a commerce site such as Amazon.com. "It doesn't make sense to try to apply a Yahoo! model of personalization to a commerce site," Hagen says. "The goal of making a site as easy as possible to customize is the same but the way to go about it is different."

"BIG INVESTMENT." CDNOW's Olim agrees. When the online music retailer was developing My CDNOW, he says, he looked at the portals and found their approach cumbersome. "The way you do [personalization] is you make it so easy a person doesn't have to 'set it up,'" he says. For instance, My CDNOW lets customers opt for an automatic log-in that returns purchase recommendations based on prior purchases. Three out of four of CDNOW's two million customers have used at least one feature of My CDNOW, Olim says, and more than half use the auto log-in feature.

Hagen says commerce sites should follow CDNOW's example and focus on what he calls "user-controlled productivity services" and "site-controlled hyper marketing." The former includes customized features chosen by the consumer, such as express shopping, wish lists, and registries while the latter emphasizes E-mail promotions and product recommendations.

One advantage commerce sites have over information sites is that user registration usually occurs with a consumer's first purchase. "It's very important that a customer only has to enter information once," says Paul Capelli, a spokesman for Amazon. "It's key to our ability to provide as rich a shopping experience as possible." Capelli notes that Amazon also delivers purchase recommendations each time a consumer returns to the site. "We spend a lot of time on the recommendations," Capelli says, "because it's one thing our customers tell us they want most."

It's no surprise that some of the biggest Net companies have the most aggressive personalization strategies, Hagen says, because the functionality doesn't come cheap. On average, he says, sites spend about 10% of their total budgets on personalization. "But it isn't uncommon for some companies to spend as much as half of their budgets adding personalization features, and when you're looking at an average of $18 million spent to create a Web presence, that's a big investment in customization."

It's an investment, though, that more and more sites are making to some degree. "It's a utopian ideal -- to be everything to everybody if you're a site, or to find exactly what you what when you want it as a user," Hagen says. "It's what the Web was built on and what most people believe it can deliver. As long as that kind of thinking exists, someone will work to make [Web sites] as uniquely personal as possible."

By Stefani Eads in New York

EDITED BY DOUGLAS HARBRECHT _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

BACK TO TOP