Untangling a New Web Scene
Roger Hughlett, Baltimore Business Journal 10.28.02
Mark Maloney likes to mind his own business.
That's probably for the best — keeping up with the Web design and development industry in Greater Baltimore is a daunting task these days. "I've got enough to worry about," said Maloney, co-founder and principal of Baltimore-based no|inc, a three-year-old Web design and development firm.
The local Web design and development scene continues to experience growing pains. With a handful of companies calling it quits in the past few years and several new companies rising from the ashes, Web firms in Greater Baltimore are still struggling to discover exactly what the industry is like now and what it's going to be like in the years ahead.
"On many levels it is vastly different," said John Berndt, CEO of the Berndt Group Ltd. "You encounter far fewer charlatans, fewer pie-in-the-sky schemes and fewer decision-makers who are flying blind — all of which is extremely healthy."
Exactly how much the local Web design industry is worth is tough because most shops are private and rarely disclose earnings or revenue. However, according to Baltimore Business Journal research, the 10 most active companies rang up more than $10 million in sales last year. In 2000, that figure was more than $20 million.
On a national level, the industry also has suffered. Web design and development work accounted for more than $15 billion in 2000. Last year, the number had shrunk to less than $10 billion, according to research firm The Yankee Group.
The lack of business has been caused several high-profile companies on both the national and local fronts to vanish. "The larger interactive agencies have dropped from the radar screen," said J.B. Siegel, partner at Baltimore-based Level 10 Communications LLC.
Besides the downfall and eventual closing of Baltimore-based Gr8 LLC, one of the region's oldest and most respected firm, even smaller niche shops were not able to find work in the slowed and still-changing market.
DigitalOrganism LLC and BionicBox Inc. both were forced to shut down this year because of lack of work, officials from both companies said.
"The business just isn't there right now," said Walt Rampata, founder and CEO of DigitalOrganism, when the firm closed in August.
Those left standing in the local community believe they have been able to survive because they've either shifted focus or expanded their services.
"Being nimble is vital in a fast-growth industry," said Syd Rubin, president of E.magination Network LLC, a company that has expanded its services to include more software development.
Another significant change in the industry here and across the nation is how companies view Websites. A site is no longer just an online brochure with slick graphics and maybe some sound. Websites are business tools now, according to officials with local companies.
"Companies are now more focused on ROI (return on investment) and are not making purchase decisions based on a hopeful outcome," said Larry Fiorino, CEO of Baltimore-based G1440 Inc.
By concentrating more on the using the Internet and more specifically a Website to have a positive impact on a company's bottom line, firms are demanding more from Web developers. That's perfectly fine with the folks running the local outfits.
"I think now the clients better understand the benefits of the Web, its efficiencies and see the Web as a viable business solution, rather than a necessary evil," Siegel said.
Mike Rosenfeld, partner with Baltimore-based Web Connection LLC, said his firm's customers are asking for more out of their Websites, too. And times could be worse for the local market.
"It's getting a little better every day," G440's Fiorino said.
© 2002 American City Business Journals Inc.