SURVIVAL OF THE FITTEST
Editor's Note: A few of today's agribusiness/e-commerce companies were selected from the annual Marketing Services Guide to address the changing strategies of marketing on the Web. We asked these companies three questions:
*How has your business changed from one year ago?
*Has the goal or strategy of the business changed as well?
*What are the biggest challenges you face as you strive to reach these goals?
Spokesperson: Tom Davis, Publisher, @griculture
Online/Successful Farming, Des Moines, Iowa
@griculture Online, located at www.agriculture.com, is an ag community Web site created in 1995 and maintained by the editors of Successful Farming magazine. It provides farmers, ranchers and agribusiness with current news, weather, markets and interactive features.
* We are seeing more agri-marketers include the Internet into their overall marketing plans. They are beginning to explore and understand how the Internet can be used as a powerful and effective CRM tool.
* Our focus is on increasing and enhancing the features and services on the site that bring farmers and agribusiness together. Therefore, we have expanded our unique Buyers Guide section and Yellow Pages service.
Banners and buttons, though much maligned, are still effective advertising tools, but we've directed our team to help agri-marketers with expanded features i.e. interactive games, CRM-based e-mail applications, new ad size configurati ons, contextual advertising, high-tech graphics and custom-built applications.
* One of the challenges ahead is showing agri-marketers how important the Internet can be in building brands, developing customer relationships and increasing sales volume.
Providing agri-marketers with better metrics and standards that assure accurate and reliable reporting of site traffic and activity is still a goal of this industry. We need reputable auditing and reporting standards to assure the marketplace of the true value of each agricultural site.
Another challenge to the value of the Internet has been the explosion of "spam" e-mail. The proliferation of unsolicited and unwanted e-mail will reduce the reliability and trustworthiness of the Internet as a communications tool. Under challenging economic times, some Internet sites resort to selling their e-mail lists without any concern for the recipients. Spam e-mail damages trust, infringes on privacy and de-values the Internet as an effective communications medium.
Spokesperson: Peter Horvath, Vice President of Marketing, AgWeb.com, King of Prussia, Pa.
Launched in January 2000, AgWeb.com serves producers with agricultural news, weather, product and market information, and advice. For agri-business, AgWeb provides data-driven, integrated marketing services that include Internet advertising, e-newsletters, e-mail services, electronic coupon delivery and rebate fulfillment. AgWeb also licenses producer data, provides demographically selected mail lists and targeted e-mail promotions, CRM consulting, data access and management systems, and Web site development.
* A difference from a year ago is that we now have a track record with the products and services we offer. We've collected case studies to provide the "proof of concept" that electronic marketers have been searching for - and have dearly lacked in the past.
Recently, we had the opportunity to buy back outstanding shares from outside investors. This allows us to focus on our core strengths of data management and interactive agricultural marketing that are so complementary with the rest of the Farm Journal Media family.
* Our strategy today is to help clients develop data-driven integrated marketing programs - some call it CRM. We have a unique suite of products that plug into all stages of the marketing chain, from awareness to prospecting to response management to promotion to sales tracking to customer segmentation to relationship management and beyond.
We're structured so that we can help a marketing and distribution organization anywhere along this chain - like an a la carte menu.
* Corporate mergers and internal reorganizations have changed the industry. Consolidation often means smaller marketing budgets overall, and the tendency is to shrink back from new ideas or methods when times get tough. Some clients tend to spend what little they have left on the old tried and true. We try to point out that the old methods may not cut it anymore - that new CRM strategies, data integration and innovative ways to target and communicate with their customers can often provide better R.O.I. and a stronger bottom line.
Spokesperson: Carrie Thelen Bruck, CEO, 1stAg, Atlanta
1stAg has two main products and service offerings, eCustomer and AgIntegrator. Our products are now deployed in over 200 elevators and trading offices in North America. The business, which began in 1997, is now releasing products in Spanish for the South American marketplace.
* There are fewer e-business companies providing products to agribusiness than a year ago. We had no direct competitors from e-business companies, but many times we competed for the same customers' technology dollars. The most important factor for us has been the slower economy. We had sales in the last quarter of 2001 delayed until 2002. But, we are now seeing the demand pick up since 9-11.
* The biggest business change has come in our AgIntegrator product. There has never been a transactional solution like AgIntegrator available to the agribusiness industry. Any time you are first to market with a new solution, it takes longer to educate the customer on how your product will impact their business. Specifically with AgIntegrator, we have moved to more of a "hub and spoke" network, where companies become hubs and have business incentives to bring their trading partners on as spokes.
* The biggest challenge is the adoption rate of the industry. When you provide solutions and services to a mature and conservative industry, it does not happen overnight. It happens one step at a time. And once you get enough traction, everyone wants your products. Then the challenge becomes keeping pace. Finding balance is the key.
Spokesperson: Bob Wanzel, eSolutions Communications Manager, eDoane, St. Louis
eDoane, launched in early 2000, is a subscription-based marketing advisory service for producers and agribusinesses.
* Unique visits to the site have increased nearly 10-fold since last year. We have created a new product called Grain Tracker, which is an Internet-assisted, CD-based grain inventory and trading station.
* The strategy for eDoane.com really has not changed. We continue to convert our mail-delivered newsletter customers to the Web. Also, we have focused more of our marketing for eDoane on e-mail efforts, as well as our traditional direct-mail efforts.
n The download speed of the Internet is still a huge challenge for delivering premium market advisory services to farmers. Therefore, products such as Grain Tracker will remain CD-based until more producers are exposed to broadband Internet services.
Spokesperson: Scott Mathews, President and COO, eMerge Interactive, Sebastian, Fla.
eMerge Interactive, Inc. is the cattle industry's first and most active real-time online cattle auction and listing service. It began with the early 1999 acquisition of CyberStockyard, which had been in business since July 1997. This cattle marketing website is now merged under www.emergeinteractive.com.
* As a publicly traded, technology-based company, quite a lot has changed in the last year, as you can imagine! Primarily, several promising products under development, which were not going to add to profits anytime soon, were sold or shelved. The good news is that we are now more focused than ever on our three core product areas: individual-animal tracking, data management services, and cattle marketing and procurement.
* Our approach to the cattle marketing side of eMerge's business will continue to be a multi-channeled one. Our network includes 80 order buyers and cattle brokerage operations, along with institutional buyers that are tapping our broad and deep reach into the cattle marketplace to procure large supplies that customers are demanding. This includes a rising demand for source- and process-verified cattle for branded beef programs.
* It's to be expected that majority adoption will take time, and that is the case with marketing on the Internet. With the exception of the impact of last year's drought, we are pleased with our overall progress in terms of cattle sales numbers. However, many folks remain skeptical of the Internet in general, and only time and hands-on usage will change that.
Spokesperson: Joe Dales, Vice President and Co-Founder, Farms.com Ltd., London, Ontario
Farms.com provides news, markets, a search engine, free content and resources, and the AgCareers employment Web site. Launched in 1995, Farms.com continues to develop the swine industry products and services. The company recently acquired all of the shares of PigCHAMP, Inc. the leading swine software and knowledge management business.
* The company has reduced its operating expenses and has mothballed a number of services that were unlikely to generate positive cash flow in the short term. Farms.com restructured its ownership, with the original founders acquiring control of the business. The business plan has been amended to account for slower growth and adoption. But our vision of developing valuable products and services for the agriculture industry has not changed.
* Farms.com is building its business around the present services and customers, and will invest in opportunities that show quicker sales generation and growth. The success in the swine business is allowing the business to gain critical mass in that sector. We are also looking to partner with other companies, leveraging our technology, online marketing and other unique resources we have developed.
* This technology boom has been very rapid, and I think we have been ahead of the adoption rate. We have been inventing how the technology interacts with customer as we try to launch the business.
The use of the computer and Internet continues to increase on the farm and in agribusiness, and that should bode well for companies that invest in customer education and new Web-enabled services.
Spokesperson: Steve Bremner, Managing Partner, FarmPage, Waterman, Ill.
Cyber Alliance is a division of FarmPage and is a "members" only site that provides unbiased yield-trial data, herbicide and insecticide guides, and deep discounts on seed from 33 different companies. Chemicals and value-added grain opportunities are scheduled to be available in the coming months.
* Because we just launched in November 2001, our strategy has not changed. We have always tried to provide "value" to the farm producers.
* A big challenge is making sure farmers realize that seed purchased through Cyber Alliance still has the full backing of the manufacturer, and it will still run through the traditional distribution channel. The only thing that is different is the price.
Spokesperson: Chris Long, President, iFarm.com, Cordova, Tenn.
iFarm is a business-to-business (B2B) e-commerce hub for the agriculture industry. Since May 1999, iFarm has offered agronomic content, news, market information, weather, community, farm supply products and services, and resources for crop and livestock marketing.
* We've reduced expenses and are not adding further features to our product offerings at the present time. We've been seeking strategic agribusiness investors who want to utilize Internet marketing and communication to growers in order to leverage their business. Our e-commerce sales and site visitors continue to grow in spite of minimal marketing efforts.
* We're more actively seeking strategic partners for the company and AgLogics, our Internet-based technology platform.
* The difficulty in obtaining capital for start-up ventures and the depressed advertising market have been real challenges. Also challenging are the marketplace perceptions and agribusiness' fear of using Internet sales and marketing.
Spokesperson: Tad Mozena, Vice President of Marketing, Powerfarm.com, Cedar Falls, Iowa
Powerfarm.com, launched in November 1999, is the e-business extension of Ag Services of America, Inc. It offers flexible financing options to farmers, name brand inputs like seed, chemicals and fertilizer, animal health products, and general farm supplies.
* We are still offering the same name brand inputs and flexible financing options we were in the beginning. We have updated the site to load faster and navigate easier.
* Our goal has not changed at all. We are still striving to use e-business technology and the Internet to provide producers flexible financing options and the ability to purchase name brand inputs with the highest level of customer service and convenience.
* Slow and unreliable Internet access to rural America plays a significant role in the use and adoption of e-commerce by farmers. As this improves, I would expect progress in the use of the Internet to conduct business.
Spokesperson: Mason Pope, President, QuickFarm, Charleston, S.C.
QuickFarm provides Web services and e-commerce solutions for farmers and farm-related businesses, including co-ops, cotton gins, and grain elevators. Through QuickFarm's customized Web services, customers can access essential agricultural information, discount farm supplies, and valuable communication tools.
* Over the last year, we have devoted much time to finding out our customers' needs, and we have found online account access to be at the top of the list. As a result, the customized, interactive Web sites developed by QuickFarm now enable growers to access their gin or elevator records online, resulting in both significant time and cost savings for both the growers, and the gins and elevators.
* We believe that a large part of why QuickFarm has survived is due to the fact that our farmer-centric approach has remained the same since our founding in 1999. QuickFarm's goal has always been to benefit the farmer by cutting their costs and streamlining their operations.
* Farmers have experienced tough times in recent years, and one of the biggest challenges we have faced is their initial resistance to change from the status quo and adopt new technology. However, once they open up to the idea of change, the overwhelming majority sees that our product actually helps simplify their operations and improve their bottom line.
Spokesperson: David Forsee, President, MachineryLink, Inc., Kansas City, Mo.
MachineryLink launched in 1996 to create machinery efficiencies, cost savings and management solutions for farmers and crop service retailers. MachineryLink's Marketplace product currently offers access to more than 15,000 pieces of pre-owned ag equipment for sale in an online classified format. Our Innovation™ equipment leasing and ownership program uses the Web for promotion purposes but is very much a one-on-one, face-to-face program.
* We are just wrapping up the first year of the Innovation pilot program, which involved nine new combines and 25 grower participants. Because the Marketplace product was launched in its current form a year ago, we were able to shift some of our developmental resources to the Innovation programs. Today, Marketplace is recording its largest Internet traffic figures ever, and the Innovation programs have enjoyed outstanding acceptance, laying the groundwork for a very successful second year.
* Our experience in launching Marketplace and Innovation has lent itself to the creation of additional products and services for both farmers and crop service retailers. We believe new products will be equally successful because they are driven by customer needs and built from our current base.
* The challenge has been to keep the customer first while building our business. Equally challenging is adding employees who are not only skilled, but are entrepreneurial in their approach to daily activities.
Spokesperson: Scott Peoples, Vice President of Sales and Marketing, XSAg.com, Raleigh, N.C.
XSAg.com, founded in 1999, provides a secure Internet trading exchange for manufacturers, distributors, dealers, and producers to buy and sell agricultural chemicals, parts and equipment, and animal health products.
* From a business perspective, the transaction volume on the site grew three times, showing farmers are adopting e-commerce because of the savings available. Buyers have switched their trading preference from forward auctions to the "Name Your Price" trading method by a 4:1 ratio. We have also added new functionality in the form of Buying Groups. From an industry perspective many e-commerce companies that did not add value to their customers business have dissolved, leaving companies like XSAg.com to add value to the agriculture community.
* The strategy has never changed. XSAg.com's mission has always been to provide an alternative service that provides buyers and sellers a place to efficiently trade products for their mutual financial benefit.
* The biggest challenge has been educating both buyers and sellers to use the XSAg.com neutral exchange as an effective tool to improve their bottom line. AM