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Catalog Delivery: Federal Express or the Internet

by Glen Emerson Morris

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1998 promises to be an interesting year for the advertising and marketing industries. The erosion of traditional media by the Internet and other digital based technology will continue to make life difficult, especially for media buyers, but if advertisers can exploit the opportunities offered by new digital technology they can more than offset the erosion.

One of the greatest opportunities facing advertisers in 1998 will come from the combination of two new technologies; significant improvements of the effective carrying capacity of the Internet, and affordable CD-ROM recorders. Combined these two technologies will allow advertisers to send high quality digital catalogs to consumers over the Internet, with major savings of time and money.

The potential of the Internet for catalog distribution has long been recognized, but two technical issues have prevented it from becoming a reality. The first issue is that the Internet is already being choked by too much traffic for its limited capacity, and any significant increase in traffic will likely slow the system down beyond acceptability. The second issue is that even if the Internet had the capacity to send consumers 100+ megabyte digital catalogs, consumers don't have any cost effective way to store them.

Fortunately for advertisers, millions of dollars is being spent on ways to increase the volume of data the Internet can deliver in an acceptable time frame. One technique likely to have a major impact in 1998 is the practice of storing copies of large data files, like catalogs, on the local servers of Internet service providers. This approach keeps much of the traffic off the major Internet backbone by allowing consumers to get the information locally, and the time savings are significant. National services are planned and local implementation is already possible.

In most cities, just a few Internet service providers own a majority share of the local market, much the same way a few radio and TV stations used to dominate local markets. Most service providers sell disk space on their servers, frequently for as little as a dollar a megabyte. Many also offer to let advertisers place a computer on premises, so it can hook up directly with the Net, and charge a flat rate for the connection regardless of the size of the advertisers files. Which option is better is determined by the size of the advertisers files. The flat rate is commonly around $500, so an advertiser with a full CD-ROM of data, or about 650MB of files, would find it would cost $650 to store the information on their service providers server, versus $500 for a direct connection to the server.

An advertiser in Denver, for instance, could pay to have their digital catalog stored on the servers of five or six service providers which covered 80% of the market. Most local Internet users would then be able to download the catalogs at the maximum speed available, regardless of how slow the Internet might be at any given time.

Advertisers may have even faster ways to reach consumers as cable companies begin to offer cable modem connections a hundred times faster than with standard phone lines. Already available in a few markets, these ultra high speed connections make Internet delivery of CD-ROM catalogs a current reality.

However much the capacity of the Internet improves, it won't make any sense to send consumers 650MB catalogs if consumers don't have any way to store them. That's where the second new technology comes in, the popular priced CD-ROM recorder. CD-ROM recorders are available now for less than $400, and they are dropping in price rapidly. Just three years ago CD-ROM recorders cost $2500 or more, took significant skill to operate, and used blank disks that cost $20 and up. By summer, easy to use recorders should be available for less than $250, and blank disks priced at well under a dollar.

As the cost of CD-ROM recorders continues to fall, they will largely replace the playback only CD-ROMs now found in most computer systems. By the year 2000 they will have gone from an esoteric accessory to standard equipment.

As consumers begin to have CD-ROM recorders in mass, advertisers can use the Internet to deliver entire catalogs to them, since the cost of storing them will be marginal compared to today's costs. The present cost of hard disk space is about 10 cents per megabyte, meaning it would cost a consumer $65 to store a 650MB catalog on their hard drive. If the consumer burned their own copy of the catalog on CD-ROM, it would cost less than $2, or about half the price of a current catalog or magazine.

Given the current spending on increasing the capacity of the Internet it's only a matter of two or three years before Internet delivery of 600+MB catalogs is feasible, if not common. Internet delivery of smaller catalogs is possible now, if advertisers will only take the initiative. In a few years, the Internet could replace Federal Express as the primary high speed catalog delivery system, and make the friendly, FedEx, "Don't Panic" buttons more appropriate to FedEx, than to their former customers. If advertisers reject the Internet, there may not be enough "Don't Panic" buttons to go around.

Copyright 1994 - 2010 by Glen Emerson Morris All Rights Reserved

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