Will Recession Help or Hurt Web 2.0?

Ann All

Will the recessionary economy be a good thing or a bad thing for Web 2.0?


There are two starkly different outlooks, both of which are outlined in a recent SearchCRM.com story.


According to Forrester Research's G. Oliver Young, who recently predicted that prices of Web 2.0 tools will drop in the next five years, such tools may fall out of favor in the near term since they are often used for sales and marketing, and those functions may be in the line of budgetary fire.


Web 2.0 tools also don't exactly satisfy the growing demand for "solutions with a high and fast ROI," as I wrote back in August. In that post, I cited an expert who said demand for such tools had "atrophied."


Yet their falling costs could make the tools more attractive, especially the ones which can foster the kinds of close relationships between companies and their customers that "would be extremely valuable in a recession," says Young. A similar view was espoused earlier this year by Bob Suh, Accenture's chief technology strategist, who noted that companies risk turning off their customers with clunky technologies.


The result may essentially be a wash for Web 2.0, with many companies maintaining an uncertain stance on adoption. Says Young:

My estimate on this is it's probably going to wash out. The reduction in marketing spend is probably going to hurt more than the proximity to customers is going to help.

Others, including Gartner's Adam Sarner, are convinced that Web 2.0 will help differentiate companies from competitors who continue to rely on advertising and other traditional methods of communicating with their customers. Says Sarner:

I think we're only looking at the beginning of this as a communication tool. When you start talking about CRM, CRM is about how to treat different customers differently. I can't think of a more promising tool than social applications to start making those connections.

Sarner cautions companies to avoid using Web 2.0 simply in an effort to keep up with competitors, however. It's important to figure out the "mutual purpose" of such tools, the value they can provide for both customers and the company, before deploying them.

Add Comment      Leave a comment on this blog post
Nov 13, 2008 7:41 AM Sunita Sunita  says:
You are right then the main criteria for success would be deep pockets and marketing prowess, maybe open source may take over the game changer.Sunita Reply
Nov 17, 2008 1:28 AM Mike at MWM Solutions for Business Mike at MWM Solutions for Business  says:
Your points are very well taken. Most companies have postponed projects until 1st or 2nd qtr 2009, unless they are 'mission critical'. Now is the time to prepare a well constructed business case for 'Enterprise Collaboration'. Factors such as increased employee productivity, retention of intellectual capital and content management become the foundation for the business case. Typical beneficiaries of 'Enterprise Collaboration' are project teams, sales teams and R&D teams, especially those that are geopgraphically dispersed. Reply
Nov 19, 2008 3:01 AM Scott Sherman Scott Sherman  says:
Quick question - didn't the last recession help jump start web 2.o? Much of Web 2.0 is so much more cost effective. So it seems that there is a potential for new features, uses, and even paving the way for Web 3.0 to break into the mainstream. But then again, I am a glass half full kind of guy. Reply
Nov 19, 2008 3:56 AM Michael Michael  says:
Well it's unanimous. Everyone I've talked to who is in the business day to day, making money, says you and Young are completely full of it. First, there is no such thing as Web 2.0. Never has been. It's a paper diamond dangled out in front of people to convince them you are some sort of "elite". All the things being used are standard web events envisioned by those who developed the idea of a graphical web. The engines have become more sophisticated, but nothing that the original developers can't get the hang of quickly. If you need a fancy name for using these tools, call it Web Realized. Next, what reality are you in that the ROI for developing a sales and marketing site is higher than hiring ten's of thousands of salespeople to cover the entire world getting out word of your product? Finally, yes, salespeople and marketing people are some of the first to go during tight times (note, this is not a recession nor is there any real indication there will be unless the Democrats need to scare more people). But those companies that want to survive this time around are going to be keeping and expanding their programming staff as a team of three programmers can take the sales and marketing place of thousands if not more.Michael Reply
Nov 20, 2008 1:24 AM Sushant Chaudhary Sushant Chaudhary  says:
Web 2.0, had been a slow starter, but biggies (likes of web companies Y!,Google etc.) had always cashed on it and given its rightful status.Simple tweaking to have more user friendly stuff, always available and flourished over-last couple of years. Being most cost effective it will not bear a pinch to Investors looking for return.Over a period they have given good ROI, and would continue to be give consistent return.- Sushant Reply
Nov 20, 2008 1:34 AM Dhawal Dhawal  says:
Web 2.0 is not merely about tools for marketing and sales; it also addresses a huge area of User Experience, User interface, Customer interface and Collaboration; which is pain point even for Fortune 100 companies. As such decline in its overall usage; applicability and uptake seems highly unlikely. Yes we might see some decline on tactical ground; but then all the major verticals in industry suffer during such tough times. Reply
Mar 4, 2009 9:35 AM James James  says:

My company has produced a best of breed Web 2.0 / Social Medium that is specifically designed to deploy hundreds of websites that all work cooperatively.  Not only can we roll this solution out for an organization with hundreds of local entities for a fair price, but we can show a strong ROI in the first 12 - 24 months as the parent HQ entity can not play a forward role in the management of hundreds of active domains and can easily launch new marketing, advertising and integrations across the entire country or globally.

This is a money saver (communicate reguarly with tens of thousands of members without increased cost or labor burden), a huge membership benefit (unfolds in some many rich and exciting ways) and can unlock solid streams of income to the HQ and to each satellite entity seperately.

This is a solid win and the poor economy should bolster sales, eh?


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