Leveraging The Internet In The Recession

This will be the first recession in which the Internet will play a central role for the American consumer--and for marketers.

Of course, the Internet was around during the shallow recession of 2001, and almost 50% of Americans were using it. But it was not yet embedded in our way of life, largely because broadband penetration was, at the time, only about 20%. Today, more than 70% of the population is online, with more than 80% of these Internet users having high-speed access.

The Internet has empowered consumers as never before, providing previously unknown and unimagined opportunities to make informed decisions with detailed information, product ratings, expert and user-generated reviews and price comparisons on anything from computers to coffee beans to cat food.

In good times, when consumers feel cash-rich and time-poor, they can afford to be less diligent about their spending. But as economic pressures mount, sentiment changes. People feel cash-poor and are more willing to invest time and effort in getting the best deal.

What sets the current recession apart is that, for the first time, consumers have a tool that empowers them to subject everyday buying decisions to the kind of scrutiny formerly reserved for big-ticket items and large business-to-business transactions.

Marketers should anticipate this shift. They will not be able to rely on ads to pull the wool over consumers' eyes--or on imagery to wow them.

Maybe even more important, it won't be as easy for companies to control the expense line to make up for the loss of top-line revenues. In past downturns, cutting corners on quality has been a virtually foolproof way to cut costs and boost margins, at least in the short-run.

Not this time. Not when consumers can set the bar higher and easily find what they want at the lowest possible price. Not when any degradation of product quality or crummy service experience is subject to being instantly "outed" by the bloggers and reviewers on the myriad user-generated consumer review sites.

"Caveat emptor" now has a companion: "seller beware." Even the slightest marketing chicanery is liable to be instantly pilloried on a global network, especially when consumers are fearful and on edge.

A confluence of factors has increased the likelihood of more consumers turning to the Internet to manage their way through their personal household recessions.

Let's start with the price of gas. Shopping online is just less expensive than driving to a store. Depending on how and where you shop, you can find tax savings and shipping deals online.

And the downturn is dovetailing with a plethora of new, category-specific consumer review sites. Joining broad-based veterans like Epinions, BizRate and CNET are narrowly-focused comparison shopping sites specializing in coffee, beauty products or pet supplies.

There's also been an explosion of online retailers: from Amazon and its brethren, to the online divisions of bricks-and-mortar retailers, to the many niche stores that exist only online. And then there are the Internet's versions of "mom and pops," "stores" that do business within the cozy confines of eBay (nasdaq: EBAY - news - people ) or Craigslist. It all adds up to a bonanza of choices for cash-strapped consumers--and a new set of challenges for those who sell to them.

Virtually anyone selling anything should be online, with as much sophistication as they can afford or muster. And they should follow two cardinal rules:

--Maintain quality and don't over-promise. When anyone who uses your product or service can readily find an audience to whom to complain, the road from credibility to ruin is very short.

--Keep a close eye on pricing. The online dynamic is totally different than having customers in your store, where they might be willing to pay a premium because they're there. Facing a page of pricing options online, shoppers can go to another "store" in a matter of seconds.

Online shopping--and the use of price-comparison engines and consumer-generated reviews to make buying decisions--has been growing steadily throughout the decade. The recession is going to supercharge that growth as current users find new categories in which to shop online and as millions of others jump in to manage their shrinking budgets.

As shoppers become increasingly comfortable with the process during this downturn, it is likely that the combination of convenience and easy-access to comparative information could cause enduring changes in consumer behavior.

User-Generated In Politics

The Internet makes politics fun, does it not?

Alternately, the Web has helped Barack Obama rocket past Hillary Clinton in the fund-raising scramble, and played host to a vicious smear campaign claiming, among other things, that the senator from Illinois and lifelong Christian is an inveterate Muslim who took his oath of office with his hand on the Koran.

Ah, the knife cuts both ways, on that Web of ours.

Never one to stay out of a political fracas playing out on the Internet, MoveOn.org has taken up Obama's part with its "Obama in 30 Seconds" contest, calling for submissions of short-form videos endorsing his candidacy. The user-generated video contest reprises MoveOn's 2004 "Bush in 30 Seconds" promotion, which resulted in videos torching the current president for the faulty intelligence that gave cause for the war in Iraq, the No Child Left Behind educational initiative, deficit spending and a skein of other issues.

MoveOn will award the winning entrant with a national airing of his or her ad, and $20,000 of video equipment.

The political action group has also lined up an impressive list of judges, including such luminary cause-heads as Ben Affleck, Moby and hip hop mogul Russell Simmons.

MoveOn is doing the same thing that a few of the more adventurous marketers have been attempting through consumer-generated ad campaigns. When a consumer becomes an evangelist for your brand, the reasoning goes, the message becomes much more convincing. The idea of the customer testimonial is as old as advertising itself, of course, but the viral distribution made possible by the YouTubes and MySpaces allows those messages to ricochet around an enormous audience, stripped away from the unseemly baggage that comes with a corporate-created branded message.

The problem for advertisers is that lighting up the Internet with a whimsical, branded romp on YouTube doesn't always deliver a return on the investment of promoting and managing the campaign. In politics, however, the translation between buzz and campaign momentum is far more direct.

Then, too, advertisers are crushingly aware of their responsibilities as stewards of their brands, so for many, the idea of relinquishing their messaging mission to the hoi polloi makes about as much sense as starting the day off with a tall glass of thermometer mercury.

Political branding plays by a looser set of rules, and judging by the best of the entries in MoveOn's 2004 Bush-bashing contest -- which range from poignant and tragic to, well, very funny -- Obama the brand is in no great danger. MoveOn also covers itself with the disclaimer that the contest is not endorsed by the Obama campaign.