Netgateway Helps Operators Open Those Web Retail Doors

Cable World, Sept 11, 2000 by K.C. Neel

The term "e-commerce" is on just about every operator's mind these days. Everyone wants to participate, but few have figured out how to do it and come out financially ahead.

Netgateway, an e-business service provider, is helping operators create ways to integrate their cable TV ad sales efforts with the Internet by developing Internet commerce centers local cable operators can use to draw more ad clients and/or expand existing client relationships.

Netgateway creates and launches cable-branded e-malls, which feature local businesses and services users can access over the Internet. Netgateway handles all the back office functions of the Internet site, such as management of the internal search engine, links and e-mail.

Netgateway sells the service to cable operators at a wholesale rate. The operators, in turn, sell the service to the businesses and service companies at a retail rate. They also can tie the e-mall service to their advertising rates, says Jerry Czuchna, VP/GM of Netgateway's CableCommerce division.

Many operators have tried to develop their own local Internet sites, but have found them to be very time- and money-consuming.

"Newspapers have a wealth of content they can put on their sites that many cable operators don't have at their fingertips," Czuchna says. "This gives them a local site that makes money for them without the cost of developing content."

Netgateway has launched e-malls in 39 markets around the country and has corporate deals with Cable One, MediaOne (now AT&T Broadband) and Cox Communications, which is launching the malls in 16 of its markets.

Rick Wright, Netgateway's VP-marketing, says the company is in talks with every major MSO in the country.

Cable One's Fargo, N.D., system launched its e-mall in January, according to Chuck Ulrich, mall manager, and the program has worked well so far despite some negative publicity for e-commerce in recent months.

There has been very little churn from local businesses, and as the holidays approach consumer interest is picking up, he says.

Cable One runs one spot on its avails promoting the participating vendors; another appeals to businesses that might be interested in joining the e-mall.

It generally takes about 60 days from the time an operator signs a contract with Netgateway to the time when the e-mall is up and running. Netgateway gives the operators at least a month to pre-sell spaces before the site is available on the Internet.

It also conducts workshops for local businesses, explaining the concept of the electronic mall and what Netgateway and local operators can do for their business. Like a bricks-and-mortar mall, the e-malls generally go after anchor establishments, followed by a slew of smaller businesses. Netgateway is generally signing at least 50% of participants to the e-mall contracts, Wright says, during those workshops.

"Many businesses may already have a presence on the Internet and don't need a site, per se," he says. "But this is another way to drive traffic to their sites."

For operators, the e-malls provide a new opportunity to lure advertisers who haven't traditionally advertised on cable, Czuchna says.

For instance, operators around the country have attracted accountants, chiropractors, dentists and other businesses to the e-malls.

"We've been able to tap into new revenues by attracting new businesses as advertisers," Ulrich says. "And it's become a tool for us to get into the door for more cable spot sales."

"You may not see a local accountant advertise on cable," Czuchna adds, "but the e-mall concept is a perfect outlet for that kind of business. A CPA could, for example, put all his tax forms online so customers could download them before going into the office. They could also offer newsletters on tax tips, or dentists could offer dental hygiene tips to users. That kind of thing doesn't lend itself to cable advertising much, but it does appeal to a lot of businesses."