First published May 3, 2007 in Mediapost’s Search Insider
Late last week I got to spend a couple of very enjoyable days in the desert heat of Tucson together with the sales team of ThomasNet.com. I was the guest speaker at their national sales conference. This week, likely as you read this, I’ll be in New York for the SEMPO Planning Retreat, and in another day or so, I’ll be on a plane to Florida for the Search Insider Summit. I get back for one week, briefly acclimatize myself and then it’s off to China for Search Engine Strategies. The point of rattling off my travel itinerary, other than gloating about the frequent flier miles I’m racking up? All this hopscotching around the globe can be tied together with one common theme. It was topic of my talk in Tucson. While preparing for it, I found some interesting details that speak of a groundswell of change that will impact every industry.
What Web Site? I Don’t Need No Stinking Web Site!
One of the challenges faced by ThomasNet, or for that matter, any online property that is targeting industrial manufacturers, is in convincing some of the advertisers of the need for establishing a Web presence. These are traditional and, very often, conservative businesses that have been around for decades, and they cast a jaundiced eye at anything too new, too trendy or anything that even vaguely smacks of “geekiness.” In many cases, they’ve been turning out steel widgets and doodads that have a very specific niche market. They know their customers, and their customers know them. So why would they need a Web site? Why would they need to advertise on a search engine? And why do they have to worry about a global marketplace? All the reasons can be summed up in two words: things change.
Agents of Change
In 1990, the travel industry was a relatively stable place. Travelers went to the local travel agents and the travel agents acted as the channel for the information from various airlines, cruise lines, hotel chains and vacation companies to the consumer. They served a vital part of the value chain in the industry. And with something as highly personalized and variable as travel, it was hard to imagine how these travel experts could ever be disintermediated.
Even when the Internet started to gain traction and the first online agencies popped up in the mid-’90s, travel agent’ place seemed relatively secure, because of many of the same reasons we currently hear from manufacturers: They knew their customers, their customers knew them and the exchange of information back and forth between the two parties proved the value of this relationship.
In 1995, the number of single-office travel agencies peaked at almost 22,000, according to the Airlines Reporting Corporation. And then things changed. The online travel agents upped the ante. They demystified travel and opened up control of information to anyone who had Internet access. Airlines and hotels readjusted their booking channels to be able to go first to online agencies, and ultimately, direct to savvy travelers. Online communities formed that allowed travelers to connect with others who’d been there, seen it and done it, getting firsthand advice of where to stay and how to get there. And by 2004, the number of single-office travel agencies had been cut in half. Less than 10 years and an industry was decimated. Things change quickly!
Look East for the Future
In 1999 Intel Chairman Andy Grove said, “In five years, all companies will be Internet companies, or they won’t be companies at all.” Grove may have been a touch optimistic in his timing (imagine, someone over-hyping the Internet in 1999), but I don’t believe that takes away from the importance of his message. One of the mistakes that travel agents made, and the mistake that many small manufacturers are making again, is to assume that just because they’re not interested in a global market, all other competitors are likewise uninterested in their market.
The balance of power in the manufacturing world is dramatically swinging eastward. Another sobering fact that I came up with in the preparation for my presentation was the fact that in the U.S., there are currently about 14 million jobs in manufacturing. In all G-7 countries combined (U.S., Canada, the UK, France, Italy, Germany and Japan), there are about 53 million manufacturing jobs. In China alone, there are almost 110 million jobs in manufacturing. A manufacturing powerhouse the likes of which we’ve never seen before is gearing up in Asia. And those Asian companies are desperately eager to learn how to use the Internet to connect with new markets right here, in our backyard. To add to what Andy Grove said, not only will all companies be Internet companies, we’ll also have to become global companies. At the very least, we’ll have to be acutely aware of our global competition.
And that brings me to the other destinations on my travel agenda. One of the things the SEMPO board will be discussing this Thursday in New York will be the driving trends in search. Globalization will be near the top of the agenda. Then, a few days later in Florida, at the Search Insider Summit, we’ll be gathering together in the Everglades to talk about emerging issues. Search’s expansion beyond its early consumer-based, direct-response successes into areas like manufacturing and other business-to-business verticals is almost sure to be discussed. Finally, I have to see for myself the economic explosion that’s happening in China. I was a little shameless in wrangling myself an invite to speak at Search Engine Strategies. But it seems that no matter where you go, one thing remains true. All roads lead online, and they all intersect with search at some point.