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E-Business Democracies in Europe

  |  March 9, 2001   |  Comments

Thankfully, unlike Tocqueville's observations on democracy after his visit to the old New World (America), Greg's observations on e-business globalization after his visit to the new New World (Europe in the age of the Internet) don't take up four volumes...

Last week Greg finished a two-week business trip to Europe to survey the state of e-business in France, Germany, and the U.K. It was his first visit since 1995, that is, since the "Internet revolution."

So with apologies to Alexis de Tocqueville and his "Democracy in America," this week we present "E-Business Democracies in Europe" -- a handful of observations Greg made about globalization during his travels to the Internet New World.

What Internet Recession?

U.S. enthusiasm for Internet start-ups may have worn out faster than Bill Clinton's welcome (even if the British do seem to love him more the naughtier he gets), but that's not so in Europe, where many growing e-businesses are moving full-steam ahead.

Whereas traffic, revenue, and other e-business metrics are projected to flatten over the next year in the U.S., many European nations are still experiencing significant growth. Any e-business with reasonable prospects and international ambitions should therefore seriously evaluate the possibility of globalizing.

Rules for Globalization

In summary, here are a few general rules for globalizing your business:

  1. Think globally, act locally. To the extent that outsiders are regularly incompetent at understanding the business nuances and climate of a local market, it pays to partner up with the locals. Some e-businesses identify strategic partnerships that start as joint ventures and mature into wholly owned international business units. Others fund in-country industry veterans to start a build-out, leveraging the established overseas brand of the host company for credibility in the new market. In any case, thinking like a global company and relying on local expertise is key.

  2. Seek economies of scale, but prepare to invest. Extending your brand into a foreign market is a lot like launching a start-up. Although it's wise to leverage back at corporate headquarters as many efficiencies as possible -- whether technology, workflow and processes, best practices, or relationships with other international businesses -- starting your business in a foreign market will require significant investments of time, money, and people (long before you see real returns).

  3. Globalization is 10 percent technology and 90 percent business process. Many e-businesses entering a new market have an oversimplified view, focusing only on the technical challenges of globalization. In fact, the greatest challenges lie in how people work together, how work processes adapt to remote offices and local customs, and how to resolve otherwise mundane issues such as the time of day when global offices can interact.

    For example, the technical details of developing an internationalized/localized Web site are relatively straightforward. What often trips up many companies are the organizational issues, such as developing a content distribution and translation strategy between multiple offices, managing a consistent brand among multiple international sites (while still accounting for the occasional cultural nuance), and dividing roles and responsibilities between local and centralized control.

  4. Don't be afraid to seek professional help. The old joke is that consultants will tell you what you already know and charge a hefty fee for it. However, misguided globalization efforts can lead to some terribly expensive lessons; the investment in globalization consulting is often worth the expense. Depending on your needs, international consultancies such as GlobalSight, Idiom, and Uniscape typically charge anywhere from $20,000 to well over $200,000. Thus, as with Web consultancies, it pays to do as much advance homework as possible on the needs of your business before you start the meter running. Also prepare to devote a lot of your own resources to get the most out of the process.

  5. Europe is not one country. It may sound silly, but this is the golden rule of European e-business. Unfortunately, many companies fail miserably at following it. Executives in each country that Greg visited lamented that American businesses often treat Europe as if it were one country and one culture. It's not.

Before we conclude this article, we'd like to note a few random observations about the e-business climate in the three countries Greg visited.

The United Kingdom

In London enthusiasm for the Internet seems as strong as it was in the U.S. not long before the Nasdaq's April 2000 downturn. Dot-com advertisements cover the sides of nearly every taxi, and television shows and newspapers still regularly report on their favorite Web sites.

That British Telecom (BT) still holds something of a virtual monopoly over the local telecommunications systems makes the level of Internet awareness somewhat surprising. As with much of the rest of Europe, Internet access is achieved overwhelmingly through dial-up accounts, and local phone calls to Internet service providers (ISPs) are still charged with metered rates.

Though BT promises to soon deploy always-on access in the form of DSL, it's difficult to imagine its incentive for doing so. For now, the only real broadband access U.K. consumers have is through an integrated services digital network (ISDN) -- which effectively doubles the metered rates BT collects.

In the wireless arena short message service (SMS) and text messaging between global system for mobile communications (GSM) phones remains very popular among teenagers, as in the rest of Europe. There are plans to soon introduce the BlackBerry to the U.K. business market. It will be interesting to see how much the local culture adopts an alternative mobile text-messaging medium.

Germany

One wonders how much tolerance Germans -- as residents of a society so used to things running smoothly and efficiently -- have for the glitches and seat-of-the-pants innovation of the Internet. Whether dealing with beta browsers or beta business models, many Germans -- as employees and as customers of e-businesses -- not only expect things to work but also expect them to work well.

When compared with other European Web sites, many German sites are experiencing huge levels of usage and traffic. Yet, though Germany has the largest economy in Europe, its culture has relatively few businesses that acknowledge a need to advertise. Therefore, costs per thousand impressions (CPMs) and sell-through rates on German Web sites can be disproportionately low.

France

In France the copyright laws have not been updated for the Internet age. Creators of Internet content -- not the companies for which they work -- retain all rights. Thus, to avoid lawsuits, some e-businesses request that their writers sign waivers allowing the companies to legally keep the posted content after the writer has left the company.

Though Europe presents some unique challenges, some things about e-business are the same no matter what country you're in. One of Greg's favorite French phrases is one regularly used to describe the e-business exec whose ego is just a little too large for the conference room: Literally it translates to "He has the balloon."

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