This document discusses various topics related to online marketing, including: 1) Google's success in search engine advertising and entering the local search market. 2) How the internet has changed culture and forced global competition, and an overview of e-commerce, interactive marketing, and consumer vs. business-to-business e-commerce. 3) Popular categories for online shopping and components/incentives for successful e-commerce like financial incentives, convenience incentives, and value-added incentives.

1. 9-1
9 Chapter Nine
E-active Marketing
Online Marketing
Prof. (Dr.) Kao Kveng Hong, PhD, D.Litt

2. Google
• Google has become part of vocabulary
• Uses a different business model
• Google provides service free
• Sells advertising
• Market leader in search engine advertising
• Search
• Indexing
• Retrieval
• 2004 – sold $1.67 billion in stock
• Google began advertising
• Entering “local search market”
Discussion Slide
9

3. Chapter Overview
• Internet has changed U.S. culture
• Global customers, competition
• E-active marketing
• e-Commerce + Interactive marketing
• Consumer e-commerce
• Business-to-business e-commerce
• Interactive marketing methods
Discussion Slide
9
E-Active Marketing

4. E-Commerce
 Selling of goods and services on the Internet
 More than 50% of U.S. households use e-commerce
 Online sales is 7% of total U.S. retail sales
 E-commerce sites also used for information gathering

5. Top Cyber Shopping Categories
Source: Based on “Cyber Shopping,” License, Vol. 7, No. 10 (November 2004), p. 12.
$52.4
$15.4
$12.0 $11.7
$8.1 $7.5 $5.1 $4.3 $3.7 $3.6
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
Travel
Office,home,
garden
Computer
hardware/software
Apparel
Automotive
Consumer
electronics
Food&Beverage
Eventtickets
Music&Videos
Books
BillionsofDollars

6. E-Commerce Components
• Catalog
• Shopping cart
• Payment procedure
• Customer service
• FAQs
• Public relations
• Optional elements

7. E-Commerce Incentives
• Cyberbait
• Financial incentives
• Convenience incentives
• Value-based incentives

8. Financial Incentives
 Attract first-time purchaser
 Effective incentives
 Reduced price
 Free shipping
 Most popular (80%)
 E-coupon
 Incentives must be
 Meaningful
 Changed periodically
Reduces costs through
 Lower shipping costs
 Lower labor costs
 Lower personnel costs

9. Convenience Incentives
 E-commerce available 24/7
 Used to obtain product information
 Update and change Web site
 Easy to locate merchandise
 Convenience services
 Wedding registries
 Popular items
 Measurement charts

10. F I G U R E 9 . 3
Reasons for Choosing a Particular Method of Researching a
Product
33,0%
16,8% 16,0%
9,3% 9,0% 8,5%
4,0%
0,0%
5,0%
10,0%
15,0%
30,0%
25,0%
35,0%
Easier Convenient Better prices Quicker Way always
done it
Availability More information
PercentofTotal

11. Value-Added Incentives
 Change purchasing habits – long term
 Personalized shopping
 Examples
 Merchandise available only online
 Free online courses
 Barnes & Noble, Charles Schwab
 Free information
 Tide – stain removal

12. Successful E-Commerce Incentives
 Combination
 Financial
 Convenience
 Value-added

13.  Seller opportunism
 Security issues
 Information privacy issues
 Brick-and-mortar purchasing
habits
F I G U R E 9 . 4
Reasons Consumers are Wary of Purchasing Online

14. Business-to-Business E-Commerce
• E-commerce is critical
• Websites hits directly related to
advertising and sales promotions
• Requires incentives
• Financial
• Convenience
• Value-added
• Online exchanges and auctions

15. Interactive Marketing
• Two-way communication
• Customer involvement
• Tracking of Internet activities
• Personalize targeted of information
• Engages consumer with company and products

16. F I G U R E 9 . 5
Online Interactive Tactics
44,5%
22,8%
80,0%
72,6%
70,0%
60,8%
60,0%
36,9%
11,0%
17,9%
13,7%
15,6%
10,0%
0,0%
20,0%
40,0%
50,0%
PercentofTotal
Source: Based on Larry Jaffee, “Follow the Money,” Promo, 20, No. 11 (November 2007 Sourcebook), pp. 5-10.

17. F I G U R E 9 . 6
Interactive Marketing Objectives
17,1%
58,9%
53,2%
49,8%
27,0%
41,1%
55,1%
36,5%
54,4%
30,8%
10,0%
0,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
PercentofTotal
Source: Based on Larry Jaffee, “Follow the Money,” Promo, 20, No. 11 (November 2007 Sourcebook), pp. 5-10.

18. Online Advertising
• Increase in online budgets
• Effective method for reaching
today’s consumers
• Impact shrinking
• Click-through response rate – 0.27%
• Brand spiraling

19. F I G U R E 9 . 7
Types of Online Advertising
• Display or banner ad
• Classified ads
• Search advertising
• Media/video ads
Online
Advertising

20. Blogs
• Online musings
• Power of online buzz
• 47% go to social networks
• Download coupons
• Search for information
• 45% go to social networks
• Upcoming sales
• Discounts
• 22% read or write a product
review on a blog

21. Negative Comments
• Join in discussion
• Identify self as employee
• Remain anonymous
• Ignore
• Search Internet for blogs
How should a company react?

22. Company-Sponsored Blogs
• Bluefly.com – Flypaper blog
• Fashion news
• New styles
• Fashion faux pas
• Do they work?
• Blog visitors spend more
• Online 23 hours/week versus 13
• Benefits
• Reassure shoppers
• Glimpse of how firm deals with customers
• Release company information
• Customers can voice opinion
• Company controls site
• Must be honest

23. Online Social Networks
• Facebook – 59 million active profiles
• MySpace -110 million active profiles
• YouTube – 160 million unique visitors
• 70% of social network ad dollars goes to Facebook and MySpace
• Smaller, more targeted social network sites

24. Social Networks
• Developing social network presence
• Start profile page
• Accept “friend requests”
• Specific product page – Sprite
• Posting of ads on social networks (Nike)
• Generate word-of-mouth buzz
• Consumer-generated advertising
• 2007 Super Bowl – Doritos ad
• Viewed as more genuine
• Contests for consumer-generated ads

25. Consumer-Generated
Reviews
• Amazon-com – leader
• Circuit City – online reviews of brands
• Early adopters
• Implications
• Negative reviews
• Low-star ratings
• Consistent quality products
• Information for
• Marketing plans
• Product modifications
• Service strategies

26. F I G U R E 9 . 8
Building a Successful E-mail Campaign
• It essential to:
• Integrate with other marketing channels
• Be based on web analytics
• Combine with future web analytics
• It is beneficial to:
• Integrate with Web site’s content management
• Integrate with a customer relationship program

27. Newsletters
• E-mail newsletters
• Build brand awareness
• Drive web traffic
• Customers sign up for newsletters
• Provide value
• Free subscription
• Tie-in with Web site
• Advertising on other newsletters
• Build brand awareness
• Drive web traffic
• Pick newsletters that are relevant

28. Search Engine Optimization
• 80% of all web traffic begins with a search engine
• SEO – process of increasing probability of a hit
• Methods of SEO
• Paid search insertion
• Increase identification through organic emergence of site
• First page search hit – 9x increase in Web traffic
• Second/third pages – 6x increase in Web traffic
• Top 10 listing – 42% increase first month, 100% second month
• Can take months, years to get into top 10 listings
• Paid search ads
• Accounts for 40% of online advertising dollars
• Click-through rate - 5% (0.2% online advertising)
• Future dangers
• Clutter
• Increased costs

29. Viral Marketing
• Message passed from one consumer to another
• E-mail
• Blogs
• Form of advocacy or word-of-mouth endorsement
• Viral marketing messages
• Advertisements
• Hyperlinked promotions
• Online newsletters
• Streaming videos
• Games

30. Keys to Successful Viral Marketing
• Focus on the product or business.
• Determine why individuals would want to
pass the message along.
• Offer an incentive.
• Make it personal.
• Track the results and analyze the data.
F I G U R E 9 . 9

31. Web Site Design
• Ensure Web site functions properly
• Cost of acquiring a new customer
• E-commerce company  $100
• Other companies  up to $500
• Design to meet function
• Match target market
• Front page often skipped
• Design every page with complete information

32. International Implications
• Shipping issues
• Payment methods
• Communication issues
• Technology issues