Dear Readers,

The Internet is a wonderful and amazing tool that has the potential to reshape the entire business landscape. Everything I have read indicates the Internet is the greatest technological breakthrough in computing in the past decade.

However, I believe that most companies today must exercise some restraint when it comes to investing in this new technology. There are some companies that have taken all of their marketing to the Web because of the tremendous cost savings provided by this medium. Excluding other marketing avenues and pursuing only a Web channel is frivolous and potentially fatal.

For example, Amazon.com has an annual ad budget of $130 million and is considered one of the leaders in the Internet revolution. How much do you think they spend on Web advertising? Most would expect that a majority would be spent on the Web, right? The reality is that they spend less than two percent of their ad budget on the Web. The remainder is spent on traditional marketing avenues which include print, radio and television.

Before launching a Web initiative, be sure you have a complete understanding of the problem you are trying to solve and the corresponding benefits that will be achieved. Also, determine the resulting ROI from such an effort if possible. Too many projects are done for technology's sake without a clear understanding of the business benefits.

The Internet has also created the need for highly skilled Web-savvy professionals who understand and develop Web sites and applications. It is important that you focus these resources on areas which will either provide significant revenue opportunities or cost reductions. The skills required by these professionals include an understanding of Web design and development, visitor psychology, bandwidth, hosting, etc. These are all new skills which must be acquired at a significant cost. The Web has mirrored the history of how we have developed previous applications, and there are now application development environments such as Cold Fusion from Allaire which can give companies greater productivity and help to reduce personnel costs. The next major wave after development environments will be components and then prepackaged applications. It is amazing how history keeps repeating itself.

As always, thanks for reading DM Review. Please feel free to contact me (rpowell@dmreview.com) with any questions or comments.

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