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DIRECT MARKETING ON THE INTERNET

Direct Marketing on the Internet
December 10, 1996

The Internet is revolutionizing the way the world does business. This revolution has begun and, as with any profound change, those willing and able to adapt will reap substantial benefits. This is the first in a series of articles that will address legal issues that should be considered by those considering marketing over the Internet. Some of the topics that we'll be covering over the next several months include:

Business Models Uniquely Adapted to Internet Marketing

  • Protecting the Content of Your Web Site through Copyright and Trademark
  • Privacy Issues Arising from New Technologies
  • Governmental Regulatory Rules that Apply to Internet Marketing
  • What is a Domain Name and How Do I Get One?
  • Creating an Enforceable Contract for use in Cyberspace
Digital Signatures, IBM's new Cryptolope and anything else interesting that comes to my attention that may be useful to the members of our organization.

First, some background. 30% of American homes have a personal computer, and of those, one-third are presently connected to the Internet, either directly through an ISP (Internet Service Provider) or through an on-line service, such as America On Line, Prodigy or CompuServe. In the first quarter of 1996 the number of users on the Internet rose from 19 million to 25 million and for the second quarter from 25 million to 35 million. Considering the usual impact of the holiday season on personal electronics sales, the Internet user population will exceed 50 million by the end of this year! Simply put, this is an extremely viable potential market.

Immediate and cost-effective access to so many customers, combined with the ability to target qualified customers, is something that any business person involved in direct marketing can not afford to overlook. Once the initial investment in an interactive web site is made, the maintenance costs are minimal. And, unlike telemarketing or direct mail marketing, Internet marketing has very low operating maintenance, since there are no distribution or personnel costs accompanying the interactive act between the company and the consumer is initiated by the consumer, limiting regulatory impact. Ongoing costs are limited to product or service distribution, ongoing site maintenance and, usually, a fixed server fee with access to the Internet.

The direct marketer wishing to take advantage of this new technology needs to invest substantial intellectual capital in the development of ideas and applications to take full advantage of this medium. With this expanded market come many unique legal issues that can impact on a business. It is indeed a new way of doing business. As such, it involves new legal issues and, oftentimes, the answer to a simple legal question is, at best, no more than an educated guess. This lack of certainty should not inhibit involvement in this medium. After all, anything worth doing in business carries risk. But, risk can be minimized. Anyone should be taking care that procedures are in full compliance with any regulatory scheme, that transactions are secure and that ideas and concepts are adequately protected.

Doing business on the new information highway is both a challenge and an opportunity that should be given serious consideration. With approximately 500,000 web sites, techniques must be developed to enhance the effectiveness of any Internet project. And, something more than the "build it and they will come" naiveté of the Field of Dreams is going to be required in order to make a project of this sort profitable. However, it has potential and potential is the stuff that dreams are made of.

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