(Ping! Zine Issue 5) – Most web hosting companies rely on conventional online marketing techniques to reach their prospects in order to gain more clients. Advertising mediums such as banners, hosting directory listings and pay-per-click search engine placements are flooded with hosting marketing messages. Although this has proven to be an effective traffic builder tool for a lot of hosters, it has not provided them with a high enough growth rate. This form of online advertising is considered the creation of the dot com boom/bust era and only reaches those potential customers that are currently online.
There are other mediums that the web hosting industry need to also consider. They include the old and conventional method of promoting a business such as print advertising and direct marketing. Now that hosters are operating their business the old fashioned way to please Wall Street and their shareholders, they also need to have a broader marketing strategy to increase their market share.
Taking direct marketing as a case study, marketers will tell you that the success of a direct mail or an outbound telemarketing campaign is dependant equally on two things: 1) how targeted the list is and; 2) how attractive the offer is to the recipients. The latter depends solely on how well hosters understand why their current clients stay loyal to them and keep referring new business (i.e., great customer service, price, and/or overall hosting package).
As for finding the best business list for the right campaign, it can get pretty tricky. Currently there are over 10,000 business-to-business lists that reach basically every type of company and decision maker in North America. Most of them typically offer various targeting methods such as industry type and company size. The problem with this selection is that it is not enough for the web hosting industry. That’s because this only provides hosters with demographics that are outside the online world and does not take into account what those businesses are actually doing on the Internet. In other words, these lists lack the most important demographics that hosters need, the technical characteristics of a company’s web site.
Onlinegraphics, as I like to call them, or e-business profiles simply provide important information to hosters that allow them to better promote the right hosting package (shared, dedicated, collocated or VPS) to the right companies that are actually using such services. Other online features can also identify the size and popularity of the site, what technologies and scripting language being used in order to measure the complexity of the site as well as getting a sense of how well maintained the site is. All of this and more provide hosters with ways to build a customized business list that corresponds to their technical target market criteria.
Taking an example of a hosting company that wants to target businesses for it’s high-end hosting package, in the past it had to rely on demographics such as the size of the company to guesstimate if those on the list are potential candidates of its dedicated service. However, companies with over 100 employees do not necessarily mean they also spend $100,000 a year on critical online applications. On the other hand, sometimes smaller companies with fewer than 10 employees can have 10 racks at a data center somewhere. In this case, identifying the companies that are currently using dedicated or managed hosting saves hosters time and money.
Other ways of targeting include identifying companies that have stretch the limits of their shared hosting package and can make excellent prospects for dedicated services. Also, identifying those with an e-commerce site that use a specific software such as MIVA also saves hosters money in pinpointing right from the start those that can be easily transferred to their licensed e-commerce software.
All this new way of targeting is currently available in the market, companies like Netvention (netvention.com) and Harte-Hanks (harte-hanks.com) provide hosting companies with accurate e-business targeting. Nevertheless, another issue that should be considered is the actual source of the data. A lot of hosting firms still rely on the WHOIS database for direct marketing. Not only is it illegal to use this data for mass marketing purposes but it is also incredibly inaccurate. Research conducted earlier this year by Netvention found that 35% of the data were out of date and another 5% of the WHOIS records were registered to web designers or small hosters (mainly resellers). This is due to the extended domain registration renewal rate from one year to 3 and sometimes 5 years. That’s when companies tend to normally update their WHOIS record, at the time of renewal only.
Luckily, advancements in data extraction technology have solved this problem. At Netvention for instance, a web data extraction technology have been under development since 1999 that crawls and extracts key business information (such as company name, address, phone, fax and contact names) directly from corporate web sites. Because the information found on these site are public data and are accurate, they can be used for direct marketing purposes. This technology has some limitations though; it can only extract what is available on web sites. This can actually work to the advantage of marketers because it eliminates those that omitted their addresses or phone numbers on purpose (a subtle way of an online do-not-call database). Another limitation is that email is not extracted because the publisher of the site has provided no permission to the compiler to sell his or her email to third party vendors.
Nevertheless, going back to targeting the right company with the right offer, hosters need to also know what direct marketing medium to use for which offer. The simple rule of thumb is: if the total revenue that could be generated from one client on an annual basis is between $100 to $250 (i.e., shared or simple e-commerce hosting), then direct or snail mail is recommended. You can also take advantage of email but I highly recommend you stick to opt-in email from reputable vendors such as NetCreations (postmasterdirect.com) and not be seduced by the cheap and opt-out kind that is easily attainable.
Anything over $250 of potential revenue a year, direct phone solicitation has proven to be more effective. We are not talking about using a simple method of telemarketing but a more sophisticated approach. One that will further qualify the prospect by identifying the right decision maker, who is their current hosting or colo provider (although this intelligence too can be obtained from the e-business profile directly) and when does their contract expires, etc.
This is when a relationship between the account manager of the hosting firm and the prospect can be developed. This method, however, can take months to materialize, but when the right opportunity presents itself, such as in the case of Cable & Wireless or Sprint closures, the hosting company that have proactively developed the right relationship with the prospect has a much higher chance of winning over the account. Those that simply react face an uphill battle because even when they get there, they often realize that the window of opportunity has already been lost.
All this to say is that web hosting companies should seriously start thinking of incorporating the old but proven methods of direct marketing to accelerate the growth of their business and not just to rely on the strategy of “if you build it, they will come”. The data and the intelligent way of using it are available and at an old fashion price too. The next big task would be to perhaps incorporate both the online with the offline advertising mediums (multi-channel marketing), but this is another subject on its own that deserves its own explanation.
Tarik Qahawish is the Sales and Marketing Director at Netvention Inc., a web data extraction and database solutions company. You can contact him through email at ([email protected]).