Two of the biggest changes brought about by internet firms are the redirection of customer traffic and the enhancement of engagement with customers.
In the past, people typically preferred to go downtown, where shopping malls were always packed. It’s extremely difficult to compete for customers and drive customer traffic away from these shopping centers.
But now, a popular website, or even just an interesting post, can get hundreds of thousands of “likes”. If there is online news about a certain mall offering discounts, people would immediately flock to the place.
The internet has become such a powerful channel to attract traffic and direct traffic, thus giving internet players the opportunity to turn traffic into profit.
Take mobile payment as an example. Through aggressive promotions and subsidies, mobile payment firms have successfully built a large user base.
Parties that used to control the payment process, such as banks and credit card firms, now have no choice but to team up with these mobile payment firms and share some of the income such as fees and interest income.
Traditional firms are learning the trick too. Shopping malls have come up with their own apps, banks too.
As more and more companies master the art of drawing traffic through online platforms, engagement becomes the differentiation.
What is engagement? TV shows are watched by millions of people every day, but TV ads may not necessarily be good marketing channels. It only allows for one-way communication; the manufacturers and distributors have no idea what the audience think about their products.
Engagement means interaction. For instance, if you see an interesting post on social media, you can “like” it, leave a message or re-post it.
Some brands hire full-time employees to go through all customer feedbacks to their online content. That’s a much faster and better way to understand customers.
Stock investment is not only about analyzing financial statements, business models, and supply chains. Investors should also find out if a company is good at using new technologies because this is becoming increasingly critical to business success.
This article appeared in the Hong Kong Economic Journal on Aug 20
Translation by Julie Zhu
[Chinese version 中文版]
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