In this edition of Web Enlightenment we'll be talking about how AOL - in 1994 - and Facebook have an awful lot in common for Internet Entrepreneurs.

For those of you that are keeping track of our publication schedule (there has to be something better to do with your time) you might notice Web Enlightenment did not go out last week - that shift was made so that there would not be an edition Turkey Day week or Xmas Week.

This newsletter focuses on giving you practical, interesting insights into how to successfully use technology as a tool to improve the way you do business. Bridging the gap between knowledge and understanding that all entrepreneurs have will help you make money online.

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All the best,

AOL (1994) and Facebook

Internet Retailer put out their list of the top 10 stories of 2009 last week, one of which was about the first online store on Facebook. A quote from Jim McCann, the CEO of 1-800-Flowers, really caught my eye:

"...in 1994 we were the first merchant of any kind to transact on AOL. Fifteen years later, we are extremely proud to again be the first—this time in launching a retail store inside Facebook, a bold step in unlocking the tremendous marketing potential of social media."

That really got me thinking about the days of dial-up modems and good old Windows 3.1.x - 1994 was the year that Nelson Mandela was elected President of South Africa. That same year OJ Simpson was arrested for murder and Ronald Reagan revealed that he had Alzheimer's disease. I was in my coding heyday back then and with sufficient Jolt Cola I could generate more than 2,000 lines a day.

The 1980's had been over for quite some time but being the fashion impaired beast that I am I was still sporting a members only jacket and using mousse in my hair - but I am departing from our story. If you imagine someone you'd openly refer to as a geek or a dweeb, that was me - and many would say that it still is.

Anyway, to get to AOL you dialed in on a modem that was usually external - and I'm pretty sure that very few people enjoyed that screechy high pitched sound but I know I sure did. AOL was competing with the "real" internet at that time (what we know as the web today could be accessed through Netscape) but the plain old www web paled in comparison to services like GEnie, CompuServe, or Prodigy. AOL had established a variety of "shopping malls" that people could use to buy things - those are the stores the CEO of 1-800-Flowers is referring to.

The AOL stores were a really amazing idea, pioneering indeed - and by pretty much every measure they were a total failure. They cost too much, they were complicated to setup and use, and the sales never really justified all the effort. Sometimes there was a bit of sales volume but the cost of doing business was always order of magnitude higher than on the "real" web.

Many folks at AOL may have felt "cheated" that that the web basically stole all of their good ideas and succeeded with them - but those "stealing" folks would look at the same situation and say they took a clunky idea proving prototype and made it really work.

AOL certainly had many wild successes over the years but mostly, in hindsight, they were an idea lab where other people that came later turned the concepts into real money making operations. We see this same thing all over the place in technology - Palm didn't invent the PDA, they simply copied the Apple Newton MessagePad.

Today we have Social Media and all of the excitement about it - and I agree that it is very exciting indeed. But the likelihood that any of the current "leaders" of social media will emerge as profitable operations a few years from now is approximately zero.

In 2008, 1-800-Flowers had about 750 million dollars in online sales, with 1.9 million monthly unique visitors considering the 2,500 products or so they carry - the average transaction is around $70. I'm not sure what percentage of 2009 sales will come from their Facebook store but you can be sure it will be a very very small percentage.

This past summer lots of folks reported on how Dell sold 3 million dollars worth of hardware through Twitter - which sounds like an awful lot. But if you look at the online sales for Dell in 2008 you'll find they were 4.83 Billion dollars - so the twitter sales were in fact 6 thousandths of one percent of all sales - or 0.000621118012. (and the number would be even smaller if we divided by 2009 sales).

I don't think the articles would have been very exciting if they had looked at it that way - Dell has plenty of single orders that are in excess of 3 million dollars - which is a fact that most folks pretty much just skipped right over in their coverage.

So what does all of this mean to you - the Internet Entrepreneur?

It is important to remember that today's Facebook - and all the others in that family - are a good preview of things to come. It will be profitable eventually but not in the next year or two. You'll see the features and function they have pioneered adopted all over the place and they will eventually become standards. Think about AOL in 1994 and remember that no one has figured out how to make money at this social stuff yet. Some folks put the emphasis on "yet" but as an Internet Entrepreneur you probably can't afford to do that.

I see lots of small and mid size businesses getting very excited about social media and I can see why they are - the potential for the future here is incredibly vast. But the fact remains that most of these business do not have well optimized sites, solid email campaigns, CPC marketing that is working well - or a host of other things that are real proven money makers.

Be aware of social trends in the same way you were aware of AOL in 1994, but spend your time and money on proven winners for now. If you have reviewed your web efforts and find that you really do have everything running like a well oiled machine, then you should run some basic social experiments to see how well all of this may work for you. No matter what you do don't make the common mistake of skipping over the basics and running to what is hot right now, that has never been a profitable way to do business on the web.

A Busy January Indeed

I am going to be busy after the new year.

From January 4-6 I'll be attending - and speaking at - the Mailorder Gardening Association's 2010 Winter Conference.

On the 19th I'll be speaking at the Maine Landscape and Nursery Association Show.

On the 26th I'll be speaking at Search Engine Marketing Networking Events (SEMNE).

And just so that February doesn't get jealous I'll be presenting a workshop at the Maine Governor's Conference on Tourism in Augusta, ME on February 2nd.

Reader Feedback

The last edition of this newsletter generated a nice bunch of reader feedback. Suggesting that it was stupid to buy web ads in the way newspapers have been selling ads approximately forever - that pissed off traditional people at Ad Agencies. I wish that didn't make me smile but truth be told it did.

A fellow geek from Growing Interactive provided a really cool link I'd like to share with you -

Ross,

Totally agree with you about the PPC vs PPM ads - very nicely written article.

How about this for a great banner ad though? Hope it makes you smile as much as I did: http://awardshome.com/cannes2009/pringles/can-hands.html (Hint: keep clicking even when it looks like it's finished and eventually get to something amusingly like a BSOD. Someone clearly had a lot of fun developing this one!)

Best wishes,

Jeremy Dore

And I would agree that it is worth the clicks. You do need to keep clicking way way past when you think it is over.