In 1997, I wrote an article for Internet Marketing & Technology Report titled “Marketing in Virtual Communities.” The IMTR newsletter, now out of print, was published by the research firm Computer Economics, where I assisted as a contributing editor during the late 1990s. Frank Scavo, president of Computer Economics, has kindly given me permission to re-post the text of my article, which appears below (I’ve added some images showing screen shots of online communities from 1997).

The article came to mind when a colleague on Facebook posted a link to another 1997 article, “The Epic Saga of The WELL,” published in Wired. While not the first online community, The WELL (Whole Earth ‘Lectronic Link, started in 1985) exemplified to many 1990s Internet users the potential of electronic networks to become true communities in online space.

Interesting as it was, The WELL did not represent what I was trying to write about, that is, the use of virtual communities as marketing media. Believe it or not, this was an uncertain and even controversial idea in 1997. At that time, there was still a significant contingent of users who regarded Internet marketing as a blasphemous idea. Many business people thought it was stupid and a waste of money to take your business online.

I wanted to re-post “Marketing in Virtual Communities” in part to provide this text with an online presence; in part to show what marketing experts were thinking back in 1997, before Facebook existed and even before the term “social media” entered common usage; in part to show how things turned out both differently and similarly to what we expected; and largely, I think, to show how hard it is to predict future innovations.

In the article, I listed a number of online communities that had been started as commercial efforts created with the goal of marketing to large groups of people associating together because of mutual interests. Some of the sites I named still exist today, but not as virtual communities as defined in the article. However, many social media efforts have gained large audiences and commercial success, somewhat along the lines of what we were thinking in 1997. According to one reckoning, social media ad spending will reach $68 billion in 2018, and Facebook boasts 2.2 billion active users.

And that brings me to what I like to call ‘the folly of futurism.’ When I first saw the NCSA Mosaic World Wide Web browser in 1993, I was astounded. I knew I had witnessed a great innovation, but I had no conception how far things would come in the next 25 years. We can try to predict the future, and more power to us. But we can’t count on being right.

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Marketing in Virtual Communities

by Al Bredenberg

First published by Computer Economics in Internet Marketing & Technology Report, October 1997. Republished with permission.

The idea of “communities on the Internet” might sound quaint in these days of widespread commercialization of the Net. However, an updated view of this concept reveals important opportunities for marketers, advertisers, Web publishers and prospective community organizers.

In his 1993 book, The Virtual Community, visionary Howard Rheingold described online communities mainly as a social phenomenon:

“Think of cyberspace as a social petri dish, the Net as the agar medium, and virtual communities, in all their diversity, as the colonies of microorganisms that grow in petri dishes. Each of the small colonies of microorganisms–the communities on the Net–is a social experiment that nobody planned but that is happening nevertheless.”

While communities like this do exist today, four years later, many intentional communities have come into being, built by companies, organizations and individuals with commercial motivations.

A virtual community can provide compelling benefits for the marketer:

• The opportunity to engage a loyal audience of members in an online environment where they feel secure, in control and open to commercial solicitation in their areas of interest.
• Availability of user demographics or intelligent targeting for promotions.
  The ability to develop special promotions tailored to the community’s audience and integrated with content.
• Reduction in the cost of searching out customers (the community helps vendors and consumers find each other).

Defining virtual communities

In the 1997 book, Net.Gain: Expanding Markets through Virtual Communities, John Hagel III and Arthur G. Armstrong set out an updated vision of online communities from a commercial perspective.

Hagel and Armstrong define a virtual community as an aggregation of people in a computer-mediated environment with these characteristics:

• A distinctive focus
• Interactivity, or integration of communication and content
• Emphasis on member-generated content
• Involvement of competing vendors
• Community organizers with a commercial motivation

In marketing today, considerable cost and effort must go into obtaining and maintaining audience information and marketing database. Hagel and Armstrong believe that, in the future, one of the great assets of the virtual community will be its possession of member and commercial transaction profiles.

This vital data, however, will be under the control of the members themselves, who will offer it in exchange for better deals and better service from vendors serving the community. “Members will choose to capture information about themselves so they can maximize the value from that information,” postulates Net.Gain on page 104.

“By shifting power generally from the vendor to the customer,” claim Hagel and Armstrong, “virtual communities will irrevocably alter the way large companies market and sell to customers in their core business. These changes will demand new ways of thinking about and approaching the marketing and sales functions.” (Page 186)

Emerging communities

Do any existing communities now fit the vision outlined in Net.Gain? Perhaps not yet, at least according to the rigorous requirements set out above. However, if the authors are correct, some mature communities will begin to emerge over the next few years with tremendous financial rewards for the members, organizers and marketers involved.

Even now, Web environments are emerging that exhibit some characteristics of virtual communities. Many of these are providing financial returns now. Others promise to do so in the future.

Existing communities offer numerous ways for advertisers and marketers to gain exposure. Nearly all have banner advertising programs. Many allow sponsorship of specific content or communication areas, provide special commercial areas (perhaps with online storefronts or mini-sites), or can develop specialized campaigns within the community.

Several online communities have managed to amass large memberships by providing a general-consumer environment for online interaction.

GeoCities [ http://www.geocities.com ] is a large, many-faceted site boasting 900,000 members. The site is divided into 38 “neighborhoods,” or interest areas with live chats, busy message forums, and free personal Web pages and e-mail.

The Globe [ http://www.theglobe.com/public.qry ], with 600,000 members, runs a number of popular “chat zones,” a matchmaking service, discussion forums, games and quizzes, and even a “Letters to Lola” advice column.

In a similar vein, The Park [ http://www.the-park.com ] emphasizes live chat, positioning itself as a “global communication system and online meeting grounds.” The Park’s 500,000 monthly visitors can participate in 115 chat areas, post personal ads, use a Human Matching System to find other members of like interests, exchange e-mail, and engage in online games and discussion boards. The Park’s founder, Brent N. Hunter, is motivated not only commercially but by his love of Internet technology and its ability to bring people together.

Many virtual communities are organized around specific areas of interest. iVillage [ http://www.ivillage.com ] describes itself as a builder of targeted communities “for grown-ups who want practical answers to real-life questions.” The iVillage channels, AboutWork, Better Health and Medical Network, ParentsPlace.com, Parent Soup, and Vices and Virtues, offer many focused resources, chats and discussion groups, and special question-and-answer areas, such as “Ask Dr. Gayle” in ParentsPlace.com.

Besides offering banner advertising, iVillage creates customized campaigns and special promotions within its communities, as well as bridge sites (mini-sites) branded to the advertiser. Each channel or community includes built-in retail shops targeted to the membership.

iVillage was started by a team of partners from publishing, media and marketing, and is backed by heavy-hitter financing from America Online, Cox Interactive Media and various venture capital companies. This is a group that is banking on a profitable future in the virtual communities business.

Travelocity [ http://www.travelocity.com ], operated by SABRE Interactive, a leading provider of travel reservation services, is almost a Net.Gain textbook case. Directed at travelers, Travelocity provides feature articles, fares, information on destinations, and travel advice and tips. However, it also furnishes busy chat and bulletin board areas, contests and games. Previous chat transcripts and board postings are kept on hand as member-generated content.

Vendor participation is quite active on Travelocity as well. Besides the expected banner ads, the site provides a travel agency directory and a travel mall with complete storefront and e-commerce capability for vendors. Also available: extensive coverage of destinations, complete with listings for lodging, dining, attractions, tours, shopping, events and more.

Evidently SABRE, as community organizer, hopes to position itself as the provider of travel bookings on the Internet, as well as to profit from electronic transactions handled via its e-commerce system.

Communities can be organized around geography as well. Total New York [ http://www.totalny.com ] is a funny, hip, offbeat site devoted to New York City. Members can enjoy news, features, interactive games, live chat events, bulletin boards and more. Total New York is produced by Digital City Studio, owned primarily by America Online and Tribune Co., more players obviously betting on the digital future.

Virtual Jerusalem [ http://www.virtual.co.il ], another geography-defined community, claims to be the largest site in the world for Jewish and Israel-related material. “The Jewish World from the Heart of Israel” offers news from Israel, religious content on Judaism, and features on business, culture, travel and tourism, and the arts. Members (25,000 registered) can interact via e-mail discussion lists and live chat and can send in questions to “Ask the Rabbi.” Virtual Jerusalem emphasizes its promotional capabilities: banner and sidebar advertising, Web presence on the site, a custom storefront in the online shopping area, opportunities to become a content provider and more.

Demographics can be the basis for communities as well. SeniorNet’s [ http://www.seniornet.com ] purpose is “to build a community of computer-using seniors.” Advertisers can sponsor special content areas; for example, the site includes the MetLife Solutions Forum and the Kaiser Permanente Health Discussion. Also demographically based, Vietspace [ kicon.com ] is a beautifully designed site directed to the Vietnamese audience.

Professional and business audiences form the basis of many virtual communities. Inc. magazine is building its brand on the Web with Inc. Online [ http://www.inc.com ]. The site offers a great deal of useful content, including interactive areas such as bulletin boards, chat areas and a “Virtual Consultant” section. Advertisers can sponsor special mini-sites on such topics as Finance and International Business.

Physicians’ Online Network [ http://www.po.com ] furnishes a compelling interactive environment for its 100,000 physician members, with a great deal of highly-focused, members-only content and many discussion areas. Advertisers can purchase banner advertising and can sponsor discussion groups and online events. Extensive demographics and targeting are available. POL can work with a medical marketer to develop a special “Disease Management Center,” positioning the company as a leader in a key disease or therapeutic area.

Environmental and Municipal Online [ http://www.environmentonline.com ] has built several well-designed virtual communities centered around water, pollution, public works and solid waste. These communities are designed to create an online marketplace by bringing together buyers and sellers for the various targeted vertical industries.

Virtual communities promise increasing returns

These are only a few of the emerging virtual communities now in formation. No doubt many more will arise as time goes on.

Hagel and Armstrong, the Net.Gain authors, predict that virtual communities will be the next increasing-returns business model. Successful virtual communities will enrich their organizers in the manner of Microsoft and Federal Express.

However, as in the case of Microsoft and FedEx, it will take some time to reach that point of phenomenal profits. Virtual communities must first reach critical mass in numbers of members, advertisers, vendors, and member usage profiles, as well as in volume of commercial transactions.

For some marketers, Web publishers and community organizers, virtual communities may promise profitability right now. For others, it will be more important to invest now and look for benefits in the long term.

In any case, Hagel and Armstrong claim that now is the time to get involved. The eventual winners will be the companies who enter the virtual communities business early. As they say, quoting a Silicon Valley maxim on page 7 of Net.Gain:

“Speed is God, and time is the devil.”

Al Bredenberg is a writer and marketing consultant. He is principal of COPYWRITER.COM (www.copywriter.com), providing Internet marketing, Web content and creative services.