Internet marketing is the use of the Internet to advertise and sell goods and services. Internet Marketing includes pay per click advertising, banner ads, e-mail marketing, search engine marketing (including search engine optimization), blog marketing, and article marketing.

Definition and Scope

Internet marketing is a component of electronic commerce. Internet marketing can include information management, public relations, customer service, and sales. Electronic commerce and Internet marketing have become popular as Internet access is becoming more widely available and used. Well over one third of consumers who have Internet access in their homes report using the Internet to make purchases.

History

Internet marketing first began in the early 1990s as simple, text-based websites that offered product information. It then evolved into advertisements complete with graphics. The most recent step in this evolution was the creation of complete online businesses that use the Internet to promote and sell their services and goods.

Business Models and Formats

Internet marketing is associated with several business models. The main models include business-to-business and business-to-consumer (B2C). B2B consists of companies doing business with each other, whereas B2C involves selling directly to the end consumer. When Internet marketing first began, the B2C model was first to emerge. B2B transactions were more complex and came about later. A third, less common business model is peer-to-peer (P2P), where individuals exchange goods between themselves. An example of P2P is Napster, which is built upon individuals sharing files.

Internet marketing can also be seen in various formats. One version is name-your-price (e.g. Priceline.com). With this format, customers are able to state what price range they wish to spend and then select from items at that price range. With find-the-best-price websites (e.g. Hotwire.com), Internet users can search for the lowest prices on items. A final format is online auctions (e.g. Ebay.com) where buyers bid on listed items.

Benefits

Some of the benefits associated with Internet marketing include the availability of information. Consumers can log onto the Internet and learn about products, as well as purchase them, at any hour. Companies that use Internet marketing can also save money because of a reduced need for a sales force. Overall, Internet marketing can help expand from a local market to both national and international marketplaces.

Limitations

Limitations of Internet marketing create problems for both companies and consumers. Slow Internet connections can cause difficulties. If companies put too much information on their website, Internet users may struggle to load the web page. Also, Internet marketing does not allow shoppers to touch or try-on items before purchasing them.

Security Concerns

For both companies and consumers that participate in online business, security concerns are very important. Many consumers are hesitant to buy items over the Internet because they do not trust that their personal information will remain private. Recently, some companies that do business online have been caught giving away or selling information about their customers. Several of these companies have guarantees on their websites, claiming customer information will be private. By selling customer information, these companies are breaking their own, publicized policy. Some companies that buy customer information offer the option for individuals to have their information removed from the database (known as opting out). However, many customers are unaware that their information is being shared and are unable to stop the transfer of their information between companies.

Security concerns are of great importance and online companies have been working hard to create solutions. Encryption is one of the main methods for dealing with privacy and security concerns on the Internet. Encryption is defined as the conversion of data into a form called a cipher. This cipher cannot be easily intercepted unless an individual is authorized by the program or company that completed the encryption. In general, the stronger the cipher, the better protected the data is. However, the stronger the cipher, the more expensive encryption becomes.

Effects on Industries

Internet marketing has had a large impact on several industries including music, banking, and flea markets. In the music industry, many consumers have begun buying and downloading MP3s over the Internet instead of simply buying CDs. The debate over the legality of downloading MP3s has become a major concern for those in the music industry.

Internet marketing has also affected the banking industry. More and more banks are offering the ability to perform banking tasks online. Online banking is believed to appeal to customers because it is more convenient then visiting bank branches. Currently, over 50 million U.S. adults now bank online. Online banking is now the fastest-growing Internet activity. The increasing speed of Internet connections is the main reason for the fast-growth. Of those individuals who use the Internet, 44% now perform banking activities over the Internet.

As Internet auctions have gained popularity, flea markets are struggling. Unique items that could previously be found at flea markets are being sold on Ebay.com instead. Ebay.com has also affected the prices in the industry. Buyers and sellers often look at prices on the website before going to flea markets and the Ebay.com price often becomes what the item is sold for. More and more flea market sellers are putting their items up for sale online and running their business out of their homes.

Recent Issues

In November 2004, a lawsuit was filed against Bonzi Buddy software. The lawsuit alleged that Bonzi’s banner ads were deceptive. These ads often looked like Microsoft Windows message boxes. Internet users would run across the ads and when they attempted to close the boxes, they found themselves redirected to a website determined by Bonzi.

On May 27, 2005, Bonzi Buddy agreed to change the format of its ads so they did not resemble Windows message boxes. The boxes will now contain the word “Advertisement” so computer users know what they are looking at. The boxes will also no longer carry buttons that do not perform the correct actions.

Sales tax issues have also recently become debated. The current laws require that buyers of online products pay their state all due taxes on these goods at the end of the year, along with their other state taxes. However, most consumers do not appear to be making these payments. Thirteen states have now begun encouraging Internet businesses to collect sales tax on every sale. These states are currently not forcing the companies to collect the tax. However, it appears that if companies do not begin collecting the sales tax on their own, states will begin forcing the companies to do so. The states are claiming that each year they lose $15 billion in unpaid sales taxes associated with online purchases.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

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Smith and Chaffey (2001) describe five key online marketing activities (the ‘5Ss’) which can be applied by an organisation to implement various online marketing tactics. For example, for an e-newsletter, the 5Ss are:

• Sell - Grow sales (the e-newsletter often acts as both a customer acquisition tool and a retention tool - the lastminute.com e-newsletter has this dual role)
• Serve - Add value (give customers extra benefits online such as an online exclusive offer or more in-depth information about your products or the industry sector)
• Speak - Get closer to customers by creating a dialogue, asking questions through online research surveys and learning about customers’ preferences through tracking - which content are people most interested in.
• Save - Save costs (of print and post if you have a traditional offline e-newsletter can you reduce print runs or extend it to those customers you can’t afford to communicate with)
• Sizzle - Extend the brand online. A newsletter keeps the brand ‘front-of-mind’ and helps reinforce brand values. Added value can also be delivered by the e-newsletter by informing and entertaining customers.

Capturing attention of potential customers can be as simple as advertising using some of the new advertising tools the online world provides, such as advertising on search engines, but it can also be about configuring more remarkable methods that tend to spread across many sites and capturing the imagination of many people in the process. There are at least three major configurations of links and tools that have been used to capture attention online: funnel building, buzz marketing and cool tools.

Building a sales funnel requires working with search engine optimization, email newsletter distribution, discussion board entries, advertisements, affiliate activities and more. In fact, any way that additional links can be provided so that a potential customer can begin a conversation with a business, is educated about that business’ products/services, or is provided with concepts and propositions that will eventually lead to a sale. A funnel is usually laid down over time and is the result of continuous activity of marketers in online activities.

Buzz marketing tends to be a much quicker process and tends to involve less activity on behalf of marketers and requires attention of people online to spread by word-of-mouth, word-from-keyboards, to be fascinated or intrigued. Purple cow was sold largely through buzz marketing that spread by blogs relatively quickly.

Another tactic of gaining attention online is through the development and release of a cool tool. A cool tool is something that captures the imagination of the online browsing public and it is thought to be so cool that it should be shared with online friends. This could be a video clip, standalone software that is cute such as a cartoon character that lives on a users screen, or some other device that is used often for a specific purpose, such as 3Ms Post-it Notes.

Right in the middle of a new marketing practice is eBay with its datafeed marketing. Essentially a store owner sets up his/her data in eBay and then by way of feeds make this data available to advertising avenues, such as Froogle, Yahoo Product Search and about another twenty of thirty other sites that take datafeeds. All the advertising feed services point the prospective purchaser to the eBay auction. This is perhaps a little like building a sales funnel as described above, however, it uses a specific technology that enables ease of use.

Marketing on the internet requires that one be found using keyword searches or some form of online advertising. In any case the trick to being successful in Online Marketing is being found within the top 30 search results. There are 3 ways that one can be found. 1.) natural search engine ranking (70% of searchers will skip over sponsored results and start with the naturally ranked sites) 2.) Paid inclusion and 3.) Pay per click. Due to the extreme difficulty of achieving a natural high ranking on a major search engine most companies opt for #’s 2 and 3 for their online marketing. Unfortunately the 3rd option is very costly and only the most well heeled companies can afford to market online via pay per click.

What is true of Online Marketing today is that one must pay to play. Since the dot com bust several years ago search engines have discerned that in order to survive and thrive they must generate significant revenue. At first the hope was that banner advertising would be sufficient to fill the search engine coffers but it soon became evident that searchers did not respond to banners. It then became evident that there were 2 primary ways to create income for search engines and online directories. Thus paid inclusion and pay per click were born!

Recently potential greed-related challenges have emerged. There are companies that create false hits and traffic. Most recently Google has been sued for click fraud. [1] Whether or not the charges prove to be true, actions like this make people think twice about using pay per click as part of their online marketing package.

Semantic logic will allow searchers to use not just keywords to search, but rather they will search using common language. This is a big departure from the crude Boolean logic which has served the Internet searching community for the last decade.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

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Amazon at the Affiliate Meet Market

Early days

In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, trademark bidding on search engines, forced clicks to get tracking cookies set on users’ computers, and Adware. Many affiliate programs were poorly managed.

This changed dramatically over the last few years for multiple reasons. Revenue generated online grew quickly. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. Many companies hired outside affiliate management companies to manage the affiliate program.

When Google, the most popular search engine on the Internet, introduced AdWords (pay-per-click advertising pioneered by Goto.com, then Overture.com and now Yahoo! Search Marketing) many Merchants became aware of the issue of trademark bidding by affiliates. The terms of service were quickly modified by most merchants and structures were put in place to monitor affiliate activities.

Adware

Adware is still an issue today, but affiliate marketers have taken steps to fight it. Merchants usually had no clue what adware was, what it does and how it was damaging their brand. Affiliate marketers became aware of the issue much quicker, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums such as ABestWeb and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants’ reputations and also hurt the merchants’ general affiliate marketing efforts. Many affiliates simply “canned” the merchant or switched to a competitor’s affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban adware publishers from their network.

The new Web

The rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media allowed merchants to get closer to their affiliates and improved communication between each other. New portals like Return on Affiliates allow affiliates, merchants, and networks to interconnect easily, on a professional and a personal level.

New developments have made it harder for unscrupulous affiliates to make money. Emerging black sheep are detected and made known to the affiliate marketing community with much greater speed and efficiency.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

Video: Network Marketing and the Economy! Can Distributors Survive?

Affiliate Marketing is a popular method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber and/or customer provided through his efforts. It is a modern variation of the practice of paying finder’s-fees for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay per click), registrant (Pay per lead), or a commission for each customer or sale (Pay per Sale), or any combination.

The most attractive aspect of affiliate marketing, from the merchant’s viewpoint, is that with this pay for performance model, no payment is due to an affiliate until results are realized.

Some e-commerce sites run their own affiliate programs while other e-commerce vendors use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. Some businesses owe much of their growth and success to this marketing technique, although research has shown in general the increase to be approximately 15-20% of online revenue.

Some advertisers offer multi-tier affiliate programs that distribute commission into a hierarchical referral network of sign-ups and sub-affiliates. In practical terms: publisher “A” signs up the affiliate program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher “A” attracts other publishers (”B”, “C”, etc.) to sign up for the same affiliate program using her sign-up code all future activities by the joining publishers “B” and “C” will result in additional, lower commission for publisher “A”.

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each others’ existence, yet generate income for the higher level signup. Most affiliate programs are simply one-tier.

Merchants who are considering adding an affiliate strategy to their online sales channel should research the different technological solutions available to them. Some types of affiliate management solutions include: standalone software, hosted services, shopping carts with affiliate features, and third party affiliate networks.

In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.

Currently there is much debate around the affiliate practice of Spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages each devoted to different niche keywords as a way of SEOing their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic Search Engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google’s algorithm update dubbed “Big Daddy” in February 2006 which was the final stage of Google’s major update dubbed “Jagger” which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.