Oh, How Far We've Come
By Ken Magill
Flipping through the pages of the January 10, 2000 edition of defunct Internet marketing trade newspaper, iMarketing News, shows how far e-commerce has come in the last 15 years.
And it’s good for some chuckles.
I was editor of iMarketing News for its shooting-star-like lifespan from 1999 until 2001.
In 2004, I wrote about my dot-com-boom reporting experience in an editorial for the New York Sun:
“Day after day during those years, entrepreneurs flush with venture capitalist cash would truck through my office in an effort to get stories written about them.
“The ideas ran the gamut from sound to totally off the wall. But what struck me most during those years were the answers—nonanswers mostly—to three fundamental questions:
“How much does it cost you to acquire a customer? What’s your customer’s average order size? And what is their average lifetime value? Today we know—and before dot-com insanity struck, we knew—that the answer to the first question had better be significantly lower than the answer to the third question with the help of the answer to the second question.
“Urban delivery service Kozmo.com was a typical example of the bizarro-world numbers dot-coms posted on their way to oblivion. In 1999, it burned through a $40 million advertising budget, spending $175 each to acquire customers who spent an average of $9 an order, according to senior vice president of marketing who at the time had just come on board to turn Kozmo around, Andrew Resnick.
“Before Mr. Resnick arrived, Kozmo was blowing through $20 million a month, he said.
“Mr. Resnick said he and his colleagues were ultimately able to cut the company’s burn rate to $1 million a month, by among other things, slashing the ad budget to $10 million.
“He also said he was able to drive customer acquisition costs down to $50 each and their average order sizes up to $25 but too late. The company folded in March 2001.
“Then there were the just-plain wacky ideas. A company called DotJunction in late 2000 planned to open 500 mall locations with computer screens on which consumers could place orders from unnamed catalog companies. It apparently hadn’t occurred to the start-up’s founders that people don’t generally drive to malls to make mail-order purchases. DotJunction never got off the ground.”
Why I Shy Away from Making Predictions
As I said, iMarketing News’s Jan. 10, 2000 edition offered some chuckles, one of which came from a decidedly non-prescient observation made by yours truly. During the dot-com boom, Internet start-ups were spending much of their insanely inflated advertising budgets on print advertising.
iMarketing News peaked at 76 pages. Some tech magazines were temporarily the size of big-city phone books—pigs fattened up just before the slaughter.
So I wrote: “It’s gratifying to see traditional media benefit from e-business’ ad spending rather than suffer the way many predicted they would. The zero-sum-game thinkers always get more credibility than their dire predictions deserve. Anyone who thinks print is going away doesn’t understand male reading habits.”
I was, of course, referring to reading on the toilet and utterly failing to see the possibility of the Amazon Kindle, of which I have owned three, all of which have spent most of their time on a table by the throne.
And then there’s my favorite story from the Jan. 10, 2000 issue of iMarketing News: The one about DotComGuy:
“While most people were partying on New Year’s Eve, Mitch Maddox, a.k.a. DotComGuy, was preparing for a new way of life. As 1999 turned to 2000, Maddox embarked on a year of voluntary confinement in his Dallas townhouse where he will survive solely through the use of e-commerce.
“The goal f this publicity stunt is to educate people about e-commerce as well as create a community forum where people can discuss the Internet. ‘It’s going to show the extreme possibilities of e-commerce and create an open sharing of ideas in the spirit of why the Internet was created,’ said Maddox, who legally changed his name to DotComGuy.
“Before the site went live, a Flash teaser generated more than 100,000 unique visitors a day in December. By the third day of the site’s broadcast, more than 5,000 people registered to use future features… Maddox also received more than 5,000 emails…
“The site is not sugarcoating the cons of e-commerce as Maddox’s first food delivery never showed up. The restaurant he was ordering from was having problems with its credit-card machine. Being that Maddox has no phone and the restaurant had no email, DotComGuy waited three hours before successfully ordering from another restaurant.”
According to various reports, he lasted out the year. DotComGuy.com is now some sort of business-services site.