Nurturing Resources

Internet Marketing Overview

Move over rock & roll, fast food, and syndicated television.

The Internet is now considered American's greatest 20th century gift to the world. What began in the late sixties as an alternative communication channel for the military has quickly developed into a complex business and economic system.

"Believe the hype. The Internet and the World Wide Web have become the most important new communication media since television, and ones that are fundamentally reshaping contemporary understanding of sales and marketing." Jim Sterne, author.

During the late nineties, the Internet explosion saw a myriad of new companies rapidly developing products and services that capitalized on the Web's potential. However, the push of first to market too frequently resulted in poor planning and business models that neglected to include realistic goals or profit margins. Unfortunately, as the final quarter of 2000 ended so did many of the dot-com firms.

Companies are realizing that web-based techniques and strategies must be approached as they would with any traditional marketing activity. Fundamental questions must still be answered:

• Who are our customers?
• What is the competition doing?
• What are the channel dynamics?
• Which marketing mix strategies are most effective?
• Are our business models realistic?
• How and when we will make a return on investment?

A Snapshot of The Internet and the World Wide Web
The Internet is a complex system of computer networks. Anyone with a computer interface (PC, laptop, PDA, etc.) and the ability to access the network (wireless modem, telephone line, cable,) can easily hook into the system.

The World Wide Web is a software application that runs on the Internet. It provides the platform that incorporates text, video, graphic and audio functions. Consider the "Web" as the user-friendly interface that brings the Internet to life.

The Changing Profile of Internet Users
At the start of the Internet's history, the typical user was a high-income, young man. It's not surprising that the people who developed the system would be its most dominant customers. However, the overall demographic profile (U.S.) is shifting to reflect the average population. Many analysts, including those from the Yankee Group, report that the Internet is now reaching the mass consumer market. Cheaper computer prices, cultural acceptance and the ubiquitous influence of the Internet are influencing the online surge of new users.

A significant finding from the Yankee Group's Interactive Consumer Survey (IAC) 2000 indicates the Internet is losing its mystique. For many the Internet has become an integral part of the daily lives of household users. According to the Yankee Group study, 87% of respondents logged online at least once a day.

As users gain a greater comfort level interacting with the Web and begin to establish trust among the Web sites they visit, it is logical to assume that online buying will continue to escalate.

In a study released May 2001, the Boston Consulting Group projected $65 billion in North American online sales for 2001. This represents a 45 percent increase from 2000 purchases. Another strong signal that the Internet is becoming more entrenched in daily life is the increase in time spent online. Based on a study from Media Metrics, the average user in the United States spends approximately 40 minutes a day on the Internet compared to 30 minutes online in 2000.

http://www.morganstanley.com/techresearch/index.html

When it comes to B2B, Jupiter Media Metrixorecasts that most business-to-business companies will eventually move online even though purchasing agents plan to conduct only 20 percent of their transactions via the Internet by 2002. Jupiter predicates that 85% of online transactions will occur between buyers and sellers who have established relationships. Forrester projects that online worldwide commerce, including both business-to-consumer and business-to-business, will reach $6.8 trillion in 2004. North America will capture $3.5 trillion.

Business and marketing on the Internet continues to explode. With easier access to computers, greater acceptance from the general public and faster connectivity the Internet is becoming the channel of choice for gathering information, and for some early adopters, the commerce medium of choice as well.

The Internet As A Business Tool

The terms Internet marketing, Web-based marketing and interactive marketing refer to the use of the Internet and related technologies to achieve marketing goals and objectives. There are two ways to view Internet marketing. The first is to look at Internet-based marketing as a way to provide added value to stakeholders: customers, company, investors, and the media.

For example, a press page presents editors with richer, more detailed information than a media release by incorporating graphics/photos video and audio. Detailed product information helps customers in the purchase decision process. An e-mail link to your customer service department decreases response time while cutting operating costs.

The second perspective is using the Internet to develop marketing strategies and tactics outside of your company Web site. The goal of these programs often is to drive traffic to your site, but the execution is through external means such as banner ads, sponsorships, and e-mail campaigns. Often these tactics are part of an overall branding strategy. Many traditional elements of marketing easily translate into Internet marketing such as price, product, place and promotion. For example in terms of "promotion" tactics consider the following.

A case can be made that there are Web-based strategies and tactics that parallel the familiar marketing mix: price, product, place and promotion. For example in terms of "promotion" tactics consider the following.

Traditional Marketing	Internet Marketing
Broadcast advertising	Banner ads
Direct mail	e-mail
Press releases	Web site pressroom
Promotions	Online events
Networking	Chat rooms/listserv
Word of mouth	Viral marketing

What is E-Commerce?
Electronic commerce, eCom or e-commerce is used most frequently in the context of business transactions such as selling, online shopping, bill paying and banking online. The main difference between the terms Internet marketing and e-commerce is the exchange of financial information -- usually via a credit card, payment for terms or smart cards.

As in any new industry or concept, the Internet has its share of confusing buzzwords and jargon. A Web site produced by Matisse Enzer, presents a comprehensive glossary of Internet terms.

http://www.matisse.net/files/glossary.html

Why The Excitement About Internet Marketing?
The Internet is a new medium of communication that presents an innovative approach towards traditional marketing techniques. It offers unique opportunities to create real-time, trackable interaction with customers and prospects.

For the first time since mass market and globalization changed the "corner grocer relationship," marketers have the ability to create one-to-one conversations with their customers. Through customization and personalization software, marketers can begin to understand a customer's individual needs and concerns. On the Internet, this communication is done in a dynamic environment.

• Special offers can be directed towards customers with specific interests.
• Pricing strategies can reflect best customer buying habits and loyalty patterns.
• Detailed online product/service information can shorten buying cycles.

These strategies have the potential to build stronger relationships between customers and the brands. The added bonus is it works at every stage of the buying cycle 24 hours a day/7 days a week/365 days a year.

Business Strategy On The Internet

Based on customer needs, company culture and resources each firm will determine how they can most effectively include the Internet as part of their marketing strategy.

• Communication channel
• Distribution channel
• Lead generation
• Media relations
• Revenue stream
• Increase speed of new products to market
• Reducing costs in order fulfillment
• Enhancing customer service
• Aftermarket information
• Medium for advertising
• Expanding into new markets
• Promotional programs
• Extending the branding experience Potential customers adopt a Web site or e-commerce site via the same process as in traditional, offline purchases.
• Awareness
• Evaluation
• Selection
• Purchase
• After Market Service

Business success online is the result of a longer-term view. This may many seem contradictory in the fast-paced Internet world, but marketers need to remember that business and sales are the result of developed relationships. The temptation thus far has been to replace the relationship with technology. Those companies died in the Internet shakeout.

Internet Strategy
Although marketers can capitalize on the technology in numerous ways, several important factors should be analyzed before committing resources.

• Company goals and resources:
  Where does the Internet fit into the organization's long-term and short-term goals?
  Does the company have the resources (time, people and money) to build and maintain the strategies?
• Target audience sophistication:
  How long has your typical customer used the Internet?
  What is your customer's typical connection to the Internet?
  How does your customer use the Internet?
• Marketing Integration:
  How can Internet marketing strategies support your traditional programs?
  How can Internet marketing add value to the customer's experience with the brand?
  
• Impact on the bottom line:
  How has your company defined success?
  How will you measure results?
  

Website Strategy

Too many companies fail to develop clearly defined goals. The result is often poorly designed sites that frustrate all users, erode the brand and end up as a black hole for resources.

Here's a simple five-step approach to get you started.

1. Determine what your business wants to achieve from going online
2. Understand your target audience e.g., technical capacities, use of the Internet
3. Define how your Web site will integrate with existing marketing activities
4. Ensure your brand/core competencies remain consistent to your offline efforts
5. Ensure backend processes are in place to support online initiatives

The Web enables information presentation in a variety of innovative formats such as hypertext, graphics, video, and sound. However, you can lose the potential return on your Web investment if you get too far out in front of your customers. Based on your customer knowledge, build your site to the least common denominator. For example, visitors are less likely to click off a page with fewer graphics but faster download time.

Pull vs. Push Medium
Internet-based marketing includes a few additional challenges not found in traditional offline strategies. The online environment demands that the customer is the center of your marketing programs. While the customer has been the focus of good marketing for some time, in a Web-based environment the customer is in control of the experience and interaction. If you want your customer's attention, the message had better be relevant, easy to read and compelling.

Traditional media such television and radio are passive "push-media." The Internet is a "pull-medium." Customers actively decide what will, and will not, happen online. They don't sit back and watch or listen to advertising or marketing messages. They don't wait for mail delivery of product information. The customer must decide to click a link, send an e-mail or drill down for more detail.

Since every visit is a unique experience, understanding what motivates each customer is essential to success. Although Internet marketing is a new strategy that comes with its own rules, traditional strategic market planning not only still applies, but also becomes increasingly important. How can you create value for your customer that is specific to their needs while at the same time distinctive from your competitors? What are the drivers for success?

John Deighton of Harvard Business School identified the following characteristics inherent in a digital medium (Deighton, 1996):

• The customer initiates contact
• The customer is seeking information (pull)
• It is a high intensity medium - the marketer will have 100% of the individuals attention when they are viewing a Web site
• A company can gather and store the response of the individual
• The customer can download and store information.

Website Types
Internet Web sites can be classified in many different ways. For purposes of an Internet marketing environment, let's consider the following three categories:

• Promotional sites
• Service sites
• E-commerce sites

Promotional Sites
A promotional site is an extension of your company's collateral materials, product/service catalogues and corporate data. The first generation of this type of site is often referred to as "brochureware" since it typically has limited interactive functionality. The goal is not to sell but to provide information to help customers make a purchase decision. More sophisticated sites allow visitors to search for specific details and some even link to maps. Photo Studio Imaging (http://www.photoimagingstudio.com) is a good example of a first generation Webpage. Although narrow in information, the site is provides interesting graphic product representation and e-mail functionality. The U.S. Army has taken the promotional site to the next level. In addition to providing information about opportunities, the site is positioned for capturing leads. At http://goarmy.com a visitor can download videos that capture stories of recruits going through basic training, find their nearest recruiter and discover job opportunities.

Service Sites
Service sites incorporate an authentic service within the Web site environment. Federal Express's Web site enables customers to track the status of their deliveries. As an added convenience, the site also enables customers to store account information such as pick-up and billing addresses. http://www.fedex.com/us/tracking Dell Computer (http://support.dell.com) offers customers the ability to download free software.

E-commerce Sites
From candy http://www.godiva.com to cars e-commerce sites allow customers to purchase products and services directly through the Web site.

Typically, payment is made through a credit card or pre-established payment for terms. Europeans are experimenting with Smart Card technology.

Yellow Freight Systems Web site incorporates a wealth of functionality combing elements from all three Web site concepts. This Web site integrates commerce, online customer service chat, industry information, and product tracking. In addition, the site includes an online media room complete with downloadable images of the famous yellow trucks.

Tips To Increase Traffic
Visualize a needle in a haystack. Then visualize a field full of haystacks.

With more than a billion Web sites on the Internet, that's the challenge facing the marketer in attracting traffic to a company Web site.

Following are 50 tactics to increase traffic to your site.

General Tips

1. Banner ads
2. Sponsorships
3. Interstitial ads
4. eNewsletter ads
5. Online events
6. E-mail newsletters
7. Participation in users groups and listserv
8. Join affiliate programs
9. Conduct research to better understand your market
10. Leverage traditional offline marketing strategies
11. Develop internal communication processes with managers of all marketing functions and channel responsibilities
12. Develop an integrated marketing plan
13. Include your URL in all corporate materials and product literature
14. Establish goals and success metrics
15. Develop partnerships Web site Specific
16. Corporate information including speeches and white papers
17. Public Relations press page
18. Review your Web site navigation and usability
19. Viral toys and postcards
20. Ensure that your content is fresh and adds value
21. Develop a process to ensure out dated information is deleted
22. Link to appropriate sites
23. Loyalty programs
24. Online community
25. Search engine placement - review monthly
26. Meta tags and key words
27. Security policy posted on site
28. Privacy policy posted on site
29. Develop an opt-in list
30. E-mail link to customer service department
31. Develop response standards to e-mail inquiries
32. Online chat connected to customer service department
33. Branding strategy - ensure the consistency of the brand is reflected on the site
34. Collect visitor information
35. Analyze your site's log trends
36. Include e-commerce capability
37. Register the common misspelling of your URL
38. Encourage employees to add your corporate URL to their e-mail signatures
39. Ask visitors to bookmark your site
40. Include a search engine function
41. Add a FAQ (frequently asked question) section
42. Include a site map
43. Ensure that shopping carts, order forms function properly
44. Periodically check all links
45. Periodically check the upload page time
46. Build your site to accommodate your customers' logon technology
47. Remember you are now a "global company"
48. Navigate your entire site as though you were a first time visitor
49. Incorporate personalization and customization functionality
50. Develop a CRM (customer relationship management) strategy to analyze and mine customer data

Like traditional marketing, successful online marketing requires persistence and commitment to a long-term strategy. Unfortunately, even with innovative technology, Internet marketing cannot be done with the click of a mouse. If the mantra of Internet marketing is building stronger relationships between the customer and the brand don't neglect the power of a Web-based plan.

Reprinted with permission from MarketingPower.com
© Bloomberg Marketing 2001