Traditional big marketing spenders are investing heavily online: BA is using Google Earth technology to let customers view destinations and Pepsi has downloadable podcasts in a tie-up with radio stations in a bid to woo the 16-30 market.
Recently, much of this investment has moved to web 2.0 in the shape of user-generated content like blogs and video. Now companies can engage with customers and prospects in a way they've never been able to do before. By hosting dialogues or providing video sites, they're collating masses of independently authored content.
But, are companies investing wisely? If we are to avoid a second boom and bust, we need to be sure investment in user-generated content has a positive impact on online business. Most companies measure hits to their site or page views, but few measure the impact of web 2.0 applications on business objectives. Are they investing in applications that don't deliver?
Let's take blogs. There are around 50 million (Technorati.com, July 2006) and this figure has doubled every six months. Many are used by corporates to influence potential customers, but how many are worth having? Before investing in corporate blogs, businesses need to understand what they want to achieve.
User-generated content could be the reason why customers buy on your site or why they leave. How do you understand what content pulls people to your site and what turns them away? Who is your most profitable blogger? How much real influence do they have? Most importantly, can you justify your investment in user-generated content?
A great example is Channel 4's Fourdocs site where authors can post four-minute video documentaries. Which authors and content have the most impact? Which ones make people stay longer and watch other videos? Where do users go afterwards? What is the real impact of the content on the business? These questions must be answered if companies are to invest in user-generated content.
Getting this right could help engage customers and engender brand loyalty, but the same rules apply online as off: all investment in the business must be measured in hard commercial terms. If it isn't, we are in danger of seeing another false dawn.