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ECommerceTimes.com

Did Community Die with Theglobe.com?

By Charlyn Keating Chisholm
Aug 14, 2001 6:53 PM PT

This month's passing of Theglobe.com (Nasdaq: TGLO.OB) started me thinking about community. I reminisced about the chaotic time, a few short years ago, when so many new sites appeared at once. Every Web site began the struggle to be heard above the din.

Did Community Die with Theglobe.com?

Studies showed that the average consumer visited only a handful of sites on a regular basis. Every marketer had to ask the question: How do we get on the publicís radar?

Content may have been king then, but community had real power. Smart e-marketers added community elements to their sites as a way to target consumers and their short attention spans. Customer loyalty! Site stickiness! Repeat traffic! A strong community promised all these and more.

Indeed, many sites that offered elements like forums, chat rooms, personal home pages and free e-mail actually saw results from their community building efforts. Instead of once every few months, visitors came a few times every week. Once they came, they stayed longer.

Back in the Day

Those were the days when The Well's online community was already legendary. Theglobe.com, then an upstart, was gaining strength. When the IPO hit, Theglobe.com appreciated over 600 percent on the first day of trading. It seemed clear then that community was the answer.

Community as a marketing tool had arrived. Every site, from pharmaceutical companies to automotive manufacturers, tried to jump-start a community. And in some ways, it worked.

A report by Forrester from that time surveyed sites which used community elements. They found that 94 percent of those sites indicated community elements added to repeat traffic. Overall, community accounted for about 22 percent of site traffic. Marketers cited low maintenance cost, frequent visits from customers and emotional connections as indicators of community's success.

Changing Times

However, the glory days of community seem like eons ago in the rapid pace that marks the Internet. Competitors of Theglobe.com began to fall, one by one. The Well was acquired by Salon.com. Tripod was snapped up by Lycos. GeoCities was swallowed up by Yahoo!.

Despite the benefits, community sites had difficulty monetizing results. And in a soft advertising market, any weakness can be fatal.

Now, Theglobe.com is shuttering its flagship community areas, and laying off nearly 50 percent of its staff. According to the company press release, Theglobe is closing its community business located at Theglobe.com, as well as WebJump.com, its small-business Web-hosting property, effective August 15th, and is also "scaling down its online games operation."

In other words, say goodbye to Theglobe. It lasted longer than most.

Deconstructing Community

So, is community still a viable strategy? Was it ever?

For Theglobe.com, it was a good strategy -- at least in the beginning. When founders Stephan Paternot and Todd Krizelman discovered Internet chat rooms while students at Cornell, they were astounded.

"Seeing the effect it had on us, we knew then that when the world discovered this, there would be mania, absolute mania," Paternot writes in his memoir, "A Very Public Offering."

But the bubble soon burst. Major competitors were swallowed up by much larger entities. Theglobe.com's stock value took a dive. The soft ad market made it even more difficult to gain revenues for page views.

Traffic, Not Dollars

In lean times, only the strongest survive. And Theglobe.com simply wasn't as strong as it once was.

The truth is, community did deliver on every promise. Page views, stickiness, repeat traffic: by all these measures, community was a successful and cost-effective marketing tool.

The problem was only apparent in the bottom line. Revenues from community elements accounted for only 7 percent of overall site revenue. Marketers advertising on community sites found a very low return on investment (ROI). The audience, though present, was not buying. Page views weren't enough anymore. Profitability was the new king.

Pressing the Lever

The task facing marketers at this juncture is how to turn the positives of community into a stronger bottom line.

First, marketers hoping to cash in on the audiences that community features draw should take a more targeted approach. Instead of thinking of community as a homogenous mass market, focus on segments of highly targeted and influential users. The key is to locate highly targeted communities with buying power, and tailor a message specifically to them.

E-commerce sites hoping to profit from community elements should blend those elements with sales efforts. Look to models like Amazon, with user reviews of products, and eBay, with its community ratings of buyers and sellers. Tie the community to the commerce and things will start looking up.

It may be too late for Theglobe, but there's a world of Web users out there ready to connect elsewhere.

What do you think? Letís talk about it.


Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


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