Internet Marketing and E-

Commerce
Session 12
YouTube Transforms the Media Landscape
• Problem
• Opportunities presented by new technology
• Solutions
• Streaming video
• Piggyback advertising
• Content subscription services
• Illustrates some major trends in e-commerce
• Sales of services
• Advanced data mining and search technology
• Mobile platforms
 eBay
Amazon.com

Pets.com Qualcomm
Webvan  Cisco
Boo.com
WorldCom
Dot com Bubble NorthPoint Communications
Global Crossing

1991: Internet opened

1993: Firstfor
Web 1994-2000: Maturity of security protocols
Commerce
Browser
(https) and DSL
The Growth of E-Commerce
Disruptive Digital Models
• The Internet
• A low-cost standard
• With fast Interactivity, moderates Time
• Exhibits network externalities
• Universal Reach
• Acts as a distribution channel
• Reduces information asymmetries between transacting parties
• It impacts
• Coordination
• Commerce
• Community
• Content
• Communications
Internet Marketing
• What is Internet Marketing?
• Process of promoting a business or brand and its products or services over
the internet using tools that help drive traffic, leads, and sales
• Difference between traditional and Internet marketing?
• Internet Marketing vs Digital Marketing
• Use digital channels, devices, and platforms (regardless of whether they are
online or not) to build or promote your marketing message
• Example: to run a mobile campaign where you send SMS texts to your customers
offering upcoming promotions from your business
• Don’t limit yourself to using the internet. – hence an umbrella term
• Games, Content Marketing, Video Marketing, Mobile Marketing (SMS text campaigns), TV Ads
The Web Epochs
Web Epochs and Internet Marketing

Web 1.0 Web 2.0 Web 3.0

Web Forms Web Applications Smart Applications
Directories Tagging User Behaviour
Page Views Cost Per Click User Engagement
Banner Advertising Interactive Advertising Behavioural Advertising
Britannica Online Wikipedia The Semantic Web
HTML/Portals XML / RSS RDF / RDFS / OWL
Internet Marketing
• Pull vs Push
• Customer initiated commerce activity The consumer is proactive in seeking out information
for their needs
• Imperative to have “good visibility” on search engines
Interactions with brands are attracted through
• Inbound Marketing content, search and social media marketing
• Content Marketing
• Search Marketing
• Social Media Marketing
• Zero Moment of Truth (ZMOT)
• Represents the moment between purchase stimulus and purchase decision
Internet Marketing
• The Internet provides marketers with new ways of identifying and
communicating with millions of potential customers at costs far lower
than traditional media, including –
• Search engine marketing,
• Data mining,
• Recommender systems,
• Targeted e-mail.
Techniques of Internet Marketing
• Display Advertising
• E-mail Marketing
• Social Media Marketing
Techniques of Internet Marketing
• Display Advertising
• E-mail Marketing
• Social Media Marketing
• Search Engine Marketing
• vs SEO (Search Engine Optimization)
• the process of maximizing the number of visitors to a particular website by ensuring that the site appears high on the
list of results returned by a search engine
• Often long term
• Invisible to the user
• vs SEA (Search Engine Advertising)
• Posting ads on search results pages or other websites using methods such as CPC (cost per click) - part of marketing
• Conversion Ratio – an important metric.
• Customer acquisition as well as retention
• Combination of SEA and SEO a part of SEM, branch of online marketing
Techniques of Internet Marketing
• Display Advertising
• E-mail Marketing
• Social Media Marketing
• Search Engine Marketing
• Affiliate Marketing
• Affiliate marketing is a type of performance-based marketing in which a
business rewards one or more affiliates for each visitor or customer brought
by the affiliate's own marketing efforts
Groupon Business Model
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Groupon Business Model: Social and Local
• Discussion: Groupon Business Model
• Within three years, had more than 83 million customers across 43
countries
• Is the model failure proof? Why or Why not?
1. In third year, lost $254 million on $1.6 billion in revenue
2. Biggest expense ($768 million in third year) - ?
3. Social and Local
• What strategy would you suggest?
Introduction to Digital Business and e-
Commerce
e-Commerce
“Digitally enabled commercial transactions between and among
organizations and individuals, where exchange of value (money) happens”

“All electronically mediated information exchanges between an

organization and its external stakeholders”
• Communication Perspective
• Business Perspective
Delivery of information, products or services
• or payment of
Application bytechnology
electronic means
towards the
Service Perspective
Enabling costofcutting
automation at the
business same time
transactions as
and
• Online Perspective
increasing
Buying andthe
workflows speed
selling of and quality
products andof service
delivery
information online
Key Concepts in eCommerce: Digital
Markets and Digital Goods
• Information Asymmetry
• When one party in a transaction has more information that is important for the
transaction than the other party
• Flexible and efficient Cost Structure
• Reduced search and transaction costs
• Lower menu costs (merchants’ costs of changing prices)
• Greater price discrimination
• Dynamic pricing
• Ability to change prices dynamically based on market conditions
• Disintermediation - Removal of organizations or business process layers
responsible for intermediary steps in a value chain
The Internet and the Value Network
E-Commerce
• Types of E-commerce:
• B2B
• Pros and Cons?
• B2C
• C2B
• Examples: eLance launched in 1999, inspired by HBR Article “The Dawn of the E-Lance
Economy”
• C2C
• M-commerce
eCommerce Business Models
• Portals
• Portals are gateways to the Web, and are often defined as those sites which
users set as their home page
• Web search tools: Google, Bing, Yahoo
• Integrated package of content and services: Facebook, MSN, and AOL
• Value: Services that attract very large audiences
• Revenues:
• Charging advertisers for ad placement,
• Collecting referral fees for steering customers to other sites, and
• Charging for premium services
eCommerce Business Models
• Portals
• eTailer
• The online retail stores
• Other variations of e-tailers—such as online versions of direct mail catalogs,
online malls, and manufacturer-direct online sales
• Value: Internet
• Revenues: Sales
eCommerce Business Models
• Portals
• eTailer
• Content Provider
• “Content” is defined broadly to include all forms of intellectual property
• Content providers distribute information content, such as digital video, music, photos, text, and
artwork, over the Web
• Content Providers may be the content creators
• Example: Disney.com
• Content Providers may not be the content creators
• Example: iTunes (led to the new era of Podcasting and Streaming)
• Value: The Internet
• Revenues:
• Sales (as a core product, and/or as a complement product)
• Advertising
eCommerce Business Models
• Portals
• eTailer
• Content Provider
• Transaction Broker
• Sites that process transactions for consumers normally handled in person, by
phone, or by mail
• Example: Financial Services, Travel Services
• Value:
• Savings of money and time,
• Providing an extraordinary inventory of products and packages in a single location
eCommerce Business Models
• Portals
• eTailer
• Content Provider
• Transaction Broker
• Market Creator
• Market creators build a digital environment in which buyers and sellers can
meet, display products, search for products, and establish prices
• Examples:
• eBay, Priceline, Amazon’s Merchants platform
eCommerce Business Models
• Portals
• eTailer
• Content Provider
• Transaction Broker
• Market Creator
• Service Provider
• While e-tailers sell products online, service providers offer services online
• Example:
• Google Apps, Google Sites, Google Docs
• Amazon Web Services
• Revenues:
• Pay-as-you-go models
eCommerce Business Models
• Portals
• eTailer
• Content Provider
• Transaction Broker
• Market Creator
• Service Provider
• Community Providers
• Sites that create a digital online environment where people with similar interests can transact (buy
and sell goods); share interests, photos, videos; communicate with like-minded people; receive
interest-related information; and even play
• Examples: Facebook, Google+, Tumblr, LinkedIn, and Twitter
• Do you know any company that launched its product on SecondLife?
eCommerce Revenue Models
• Advertising Revenue Model
• Generates revenue by attracting a large audience of visitors who can then be
exposed to advertisements
• Content on the Web—everything from news to videos and opinions—is “free” to
visitors
• Advertisers pay the production and distribution costs in return for the right to
expose visitors to ads
• Example:Google
• 95% revenues from advertising
• Selling keywords (AdWord)
• Selling Ad Spaces (AdSense)
• Selling Display Ad Spaces to Advertisers (Double Click)
• Search engine text ads
eCommerce Revenue Models
• Advertising Revenue Model
• Generates revenue by attracting a large audience of visitors who can then be
exposed to advertisements
• Content on the Web—everything from news to videos and opinions—is “free” to
visitors
• Advertisers pay the production and distribution costs in return for the right to
expose visitors to ads
• Example:Google
• 95% revenues from advertising
• Selling keywords (AdWord)
• Selling Ad Spaces (AdSense)
• Selling Display Ad Spaces to Advertisers (Double Click)
• Search engine text ads
eCommerce Revenue Models
• Advertising Revenue Model
• Sales Revenue Model
• Micropayment Systems
• Who pioneered it?
• Provide content providers with a cost-effective method for processing high volumes of very small monetary
transactions
• Subscription Revenue Model
• A Web site offering content or services charges a subscription fee for access to some or all of its
offerings on an ongoing basis
• Often used by Content Providers
• Example
• Netflix
• The Wall Street Journal (The largest online newspaper subscription)
• Others: Matrimonial sites, Music (Pandora.com)
eCommerce Revenue Models
• Advertising Revenue Model
• Sales Revenue Model
• Subscription Revenue Model
• Free/Freemium Model
• Firms offer basic services or content for free, while charging a premium for
advanced or special features
• Free services attract huge customer face – that creates network externalities work
for you
• Challenge - converting people from being “free loaders” into paying customers.
• Example:
• LinkedIn, Flickr
eCommerce Revenue Models
• Advertising Revenue Model
• Sales Revenue Model
• Subscription Revenue Model
• Free/Freemium Model
• Transaction Fee Revenue Model
• A company receives a fee for enabling or executing a transaction
• Example:
• E*Trade, an online stockbroker, receives transaction fees each time it executes a stock
transaction on behalf of a customer
eCommerce Revenue Models
• Advertising Revenue Model
• Sales Revenue Model
• Subscription Revenue Model
• Free/Freemium Model
• Transaction Fee Revenue Model
• Affiliate Revenue Model
• Web sites (called “affiliate Web sites”) send visitors to other Web sites in return for a
referral fee or percentage of the revenue from any resulting sales
• Example
• MyPoints
• Amazon Logo on blogs/websites
Benefits to Organization

• Global Reach
• Faster Processes
• Improved brand image
• Better customer services
• Extended hours: 24/7/365
Benefits to Customers

• 24x7 support
• More options to compare
• Review comments help in making a purchase
• Virtual auctions
• Information Availability
Discuss: How E-commerce Changes Business

• Rivalry among existing competitors

• Barriers to entry
• Threat of new substitute products
• Bargaining power of suppliers
• Bargaining power of buyers
How an Advertising Network Such
as DoubleClick Works
E-Commerce Presence Map