Web 2.0 is the second generation of the internet. It enables technology to be more efficient, effective, and customer-focused than Web 1.0 websites. (Web 1.0 is the first generation of the internet and refers to websites that do not have technical capabilities.) Today's online world is about empowering your customers with tools and technologies to interact with you and each other. At the same time, Web 2.0 helps small businesses and nonprofits lower costs and increase productivity.

According to a study by McKinsey, “70% of companies are using Web 2.0 technologies [social networking, RSS feeds and other website tools] to communicate with their customers because they believe it provides a competitive advantage and meets customer demands to help maintain their market position.”

Whether you are in B2C or B2B, marketing budgets are increasingly shifting to the internet because of two main reasons:

1. That’s where the customers are! (As of June 2008, there were 220,141,969 U.S. Internet users or 72.5% of the total population, according to Nielsen.)
2. It's one of the most cost-effective ways to communicate with customers (i.e., online surveys costs less than market research, online self-service cuts employee time, collaboration tools reduce travel costs, etc.).

Below are news articles and research studies about Web 2.0 and why organizations and businesses are participating in the second generation of the internet.

• "Video and audio on-demand product tours can produce a 35 percent increase in the sales conversion rate," according to Helen Leggatt's study "Study: Product tours increase sales conversion rates."
• "Video ads incorporating sound and visuals increased sales and brand awareness by 71%," according to research by MSN and DoubleClick in 2006.
• "Customer product reviews are increasing retail e-commerce conversion rates, site traffic and average order values," according to Bazaarvoice's Social Commerce Report 2007 report.
• "If there is a clear trend at this show it is that the Web 2.0 is no longer about social networking, SaaS, Web communities, or rich internet applications, it's about moving as many of the core business processes as you can to the platform of the Web. Or, perhaps better put: Web-enabled process outsourcing." Web 2.0…It’s About Process Outsourcing (Bring Core Business Processes to the Web). David Linthicum. InfoWorld. April 23, 2008.
• "Enterprise spending on Web 2.0 technologies will grow strongly over the next five years, reaching $4.6 billion globally by 2013, with social networking, mashups, and RSS capturing the greatest share. In all, the market for enterprise Web 2.0 tools will be defined by commoditization, eroding prices, and subsumption into other enterprise collaboration software over the next five years; it will eventually disappear into the fabric of the enterprise, despite the major impacts the technology will have on how businesses market their products and optimize their workforces." Global Enterprise Web 2.0 Market Forecast: 2007 To 2013. Forrester Research. April 21, 2008.
• What's Web 2.0? Blogs, collective intelligence, mashups, podcasts, RSS, social networking, web services, web widgets, and wikis. Defining Web 2.0: 9 Terms to Know. Brad Kenney. Industry Week. July 1, 2007.