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CHAPTER 9 The Internet

KEY TERMS Internet opt-in email spam Usenet World Wide Web (WWW) surfing search engine portal website mash-up blog blogger click-through cost per thousand (CPM) paid search search engine optimization (SEO) display/banner ads sponsorship pop-up ad interstitial pop-under ad permission marketing viral marketing rich media, video, and audio corporate home page virtual mall widget Second Life sticky site domain name top-level domain (TLD) hits page views visits unique visitors Web analytic software click fraud WiFi WiMax Mobile-Fi Ultra broadband

SUMMARY LO1 Summarize the Internets role in integrated marketing communication (IMC).

The Internet will be important but is unlikely to replace other forms of brand promotion or even to become the main method of communicating with target audiences. Internet technologies and opportunities are changing dramatically. For example, small businesses are selling through auction sites, social networking provides a new way of delivering promotional messages, and new venues like Second Life offer communication opportunities very different from traditional message delivery. Finally, the Internets structure and potential as an advertising medium offer ways for marketers to create and deliver messages that are significantly different from those in traditional mass media. LO2 Describe the nature of the Internet as a medium for communicating promotional messages. The Web offers target market selectivitytargeting that is more finely tuned than traditional segmentation schemes such as demographics, geographics, and psychographics. Marketers can focus on very specific interest areas or geographic regions, times of day, or computer platforms. The Internet also allows advertisers to track how users interact with their brands and learn what interests current and potential customers. In addition, online content is delivered 24 hours a day, seven days a week, at the convenience of the receiver. A campaign can be tracked on a daily basis and updated, changed, or replaced almost immediately. Furthermore, the Internet is immediately a global medium unlike any traditional media option. Another benefit is

Chapter 9: The Internet

interactivity: a marketer can engage a prospective customer to a degree that just cannot be accomplished in traditional media. Finally, Web promotion is the most easily integrated and coordinated with other forms of promotion. LO3 Define options for promotion on the Web.

Web advertising includes paid search (placement of ads in or near relevant search results), display/banner ads (placed on sites containing editorial material), and pop-up/pop-under ads (which appear as a website page is loading or after a page has loaded). Internet ads can use rich media/video and audio (which include music and video clips) and widgets (software that people can drag and drop onto their personal Web page or blog). Marketers also can engage users with their brands through website sponsorship, email messages, and their corporate home pages. They can offer brand information and purchase opportunities in a virtual mall (a gateway to a group of Internet storefronts). And they can place billboards or branded business opportunities in a virtual worlds such as Second Life. LO4 Identify the issues involved in establishing a website.

Three issues are key to successfully establishing and maintaining a site on the World Wide Web: getting surfers to come back by creating a sticky site; purchasing keywords and developing a domain name; and promoting the website. LO5 List developments likely to shape the future of IMC on the Web.

The future of IMC on the Web will be guided by technological developments and marketers strategic focus. Two important trends in technology are the emergence of faster, more widespread wireless delivery systems and greater use of Web-launched video as high-speed connections become more widely available. The strategic approach to IMC is evident in mergers of powerful media companies. Marketers are combining expertise in techniques used on and off the Web to match marketing goals with new communication opportunities that engage todays Web-savvy consumers.

Chapter 9: The Internet

CHAPTER OUTLINE INTRODUCTORY SCENARIO: Axe Goes Where the Boys Are Axe is a brand that should be familiar to students in that Unilever conceived the IMC campaign described in this scenario specifically for themespecially the 18- to 25-year-old men in the class. Highlights of this scenario include: Unilever wanted a fresh and global campaign for Axe body spray. The ad agency Bartle Bogle Hegarty (BBH) came up with a phrase, BomChickaWahWah, that was not culture bound but was intended to catch on in the same way Homer Simpsons doh caught on. There was also an all-female band created around the phrase. The campaign combined a Web presence with a series of traditional-media ads. The television ads got widespread exposure on YouTube and Flickr, taking advantage of Web 2.0 social-networking communication.

The main point of the scenario: Firms like Unilever are using the Internet to reach target audiences, but the Web is never the only communication medium. The Web is integrated into an overall IMC campaign. I. The Internets Role in Brand Promotion

The Internet is truly strong as an e-commerce and online promotion resource for firms. Both business-to-business and consumer e-commerce top $10 trillion per year. A. What to Expect A few key points here: 1. The Internet is not going to take over all other advertising media as some predicted. 2. Advertisers are discovering ways to use the Internet as a key component of integrated marketing communication. 3. Auction sites like eBay are providing small businesses with new opportunities. 4. Web 2.0 social networking provides a new way of communicating commercial messages. B. How It Started Technology has the power to change everything, and the Internet has changed something fundamental about human existence. This is a short history of the Internet to give students some perspective. The Internet has connected consumers and empowered them to control at least part of the commercial information flow directed to them (recall Chapters 1 and 2).

Chapter 9: The Internet

C.

In 1994, the first Internet providers began to offer services to consumers, but the technology was not very advanced and not good for brand promotion. Today the Internet is accessed worldwide by over 1 billion users. Advertising revenues are estimated to grow to about $36 billion by 2011. The Internet is a valuable medium to reach companies of all sizes and consumers. Cyberspace: An Overview

Most students think they know all about the Internet because they use it on a daily basis. It is worth taking them through the basics to provide perspective and context. The Internet is a global collection of computer networks linking both public and private computer systems. It was originally designed by the U.S. military to be a decentralized, highly redundant, and thus reliable communications system in the event of a national emergency. Today the Internet is composed of a combination of computers from governmental, educational, military, and commercial sources. Internet connections have risen from 2 million in 1994 to 5 million in 1995 to about 10 million in 1996 to about 945 million worldwide by 2004. Estimates put connectivity at 1.8 billion as of 2009. It is worth pointing out to students when viewing Exhibit 9.1 that in many parts of the world, the majority of the population is not yet connected. Fewer than one in five people in China and one in ten in India are Internet users.

II. Internet Media There are several ways for marketers to communicate with consumers using the Internet. Three will be discussed here: email, Usenet, and the World Wide Web. A. Email is an Internet function that allows users to communicate much as they do using standard mail. Marketers, of course, use this function of the Internet to communicate their messages. A variety of companies collect email addresses and profiles that will allow marketers to direct email to a specific group. Opt-in email. A list of consumers who have given permission to have email sent to them about topics that interest them. Consumers vigorously negative response to spam has motivated many firms to use only opt-in lists. Spam. Uninvited email commercial messages. The fraudulent spamming practice called phishing should be highlighted here. Spam is now estimated at 120 billion messages daily, but spam persists because consumers respond to 5 to 7 percent of spam messagesabout double the rate for direct mail.

B. Usenet is a collection of discussion groups in cyberspace. People can read messages pertaining to a given topic, post new messages, and answer messages. For marketers, this is an important source of consumers who care about certain topics. For example, the Usenet group alt.beer would be an excellent place for a new microbrewery to promote its product.

Chapter 9: The Internet

As with email, spammingin this case, posting messages to many unrelated newsgroupsis a notorious practice. C. The World Wide Web (WWW) is a universal database of information available to most Internet users, and its graphical environment makes navigation simple and exciting. Of all the options available for Internet marketers, the Web holds the greatest potential. It supports detailed and full-color graphics, audio transmission, the delivery of in-depth messages, 24-hour availability, and two-way information exchanges between the marketer and customer.

1. Surfing the Web By using software such as Microsofts Internet Explorer or Mozillas Firefox, consumers can input addresses of websites they wish to visit and directly access information. However, the Web is a library with no card catalog. There is no central authority that lists where specific sites are located. This condition leads to surfinggliding from home page to home page. To use a search engine, a user types in a few keywords, and the search engine finds sites that correlate with the keywords. 2. Portals and Websites A portal is a starting point for Web access and search. Portals can be general, like Yahoo!; vertical (serving a specialized market or industries, such as Jobster, http://www.jobster.com, for employment opportunities); horizontal (providing access and links across industries, such as MSN, with access to a wide variety of topics); or community-based such as Latina Online. A website is a collection of Web pages, images, videos, and other digital content that is hosted on a Web server. A variation of the standard website is the mash-upa combination of one or more websites into a single site. An example is EveryBlocks Chicago crime section, where local crime statistics are overlaid on Google Maps so you can see what crimes have been committed in particular neighborhoods. Personal Websites and Blogs Many people have created their own Web pages that list their favorite sites. A blog, a short form for Weblog, is a personal journal that is frequently updated and intended for public access and accessible at a personal website.

3.

III. Promotion on the Internet

In 1995, $54.7 million was spent on advertising on the Web. By 1998 that number had grown to about $2 billion, by 2003 that had risen to $7.25 billion, and estimates place advertising on the Internet at $20 billion in 2008. But, help students keep perspective: About $300 billion was spent on traditional major media, and Web advertising amounts to just 6 to 8 percent of all advertising in the United States, representing less than 5 percent of all promotion dollars.

Chapter 9: The Internet

A. Advantages of Online Promotion 1. Target Market Selectivity. The Web offers marketers a precise way to target segments. Marketers can target based on interests, geographic regions, time of day, computer platform, or browser. 2. Tracking. The Internet allows tracking of consumers movements in ways that are not available in traditional media. 3. Deliverability, Flexibility, and Reach. Online advertising can be delivered 24 hours a day, seven days a week. In addition, advertising can be tracked, changed, or replaced almost immediately. 4. Interactivity. The Internet can engage consumers in ways that are not possible in traditional media. A click-through is a measure of the number of page elements that have actually been requested. 5. Integration. Web advertising can be easily integrated with other forms of promotion. The Web is one of the easiest components to integrate in the IMC process due to its deliverability and flexibility. B. Cost of Online Promotion On a cost per thousand (CPM) basis, Web ads for the most part compare favorably with ads placed in traditional media. Exhibit 9.3 compares the absolute cost and CPM for ads placed in traditional media and Web-based ads. Note: The numbers for CPM on the Internet are very speculative; no good numbers really exist. The real attraction of the Web is not in real numbers, but in the audience, which is highly desirable, highly segmentable, and highly motivated. C. Types of Internet Promotion There are many ways for marketers to post messages on the Web. 1. Paid Search. Paid search is the process by which companies pay Web search engines and portals to place ads in or near relevant search results from a users search. Paid search has grown astronomically and represents 40 percent of online ad spending. The catalyst for growth in paid search has been the success of Googles technology allowing placement for paid search and tracking of paid search results. An element related to paid search is search engine optimization (SEO). SEO is a process whereby the volume and quality of traffic to a website from search engines is improved based on surfers profiles. Basically, the higher a site is presented in a surfers search results, the more likely surfers are to visit that site. 2. Display or Banner Ads. Display/Banner ads are paid placements on other sites that contain editorial material. An additional feature of banner ads is that consumers not only see the ad but also can make a quick trip to the marketers home page by clicking on the ad. 3. Sponsorship. Sponsorship occurs when a firm pays to maintain a section of a site. In some instances, a firm may also provide content for a site along with sponsorship. 4. Pop-Up and Pop-Under Ads. A pop-up ad is an advertisement that appears on a Web page as it is loading or after it has loaded. A variation of the pop-up is the

Chapter 9: The Internet

interstitial, which appears on a site after the site page has been requested but before it has loaded. Pop-under ads are present under the Web users active screen and are visible only once the surfer leaves the original website. 5. Email Communication. Through email, marketers send messages and promotional offers to millions of receivers. When users agree to receive email messages from markets, this is called permission marketing. Permission marketing is well received by consumers, whereas spamming is not. Consumers may market to one another over the Internet; this form of word-of-mouth communication is called viral marketing. 6. Rich Media, Video, and Audio. This technology is the process of inserting TV- and radio-like ads through streaming technology that is activated when a users mouse passes over the ad. Research shows that streaming technology increases clickthrough rates. 7. Corporate Home Pages. A corporate home page focuses on the company and its products. A product-oriented site also makes it possible for consumers to request more information and communicate their comments and questions to the company. 8. Virtual Malls. A virtual mall is a gateway to a group of Internet storefronts that provide access to mall sites by simply clicking on a storefront. The advantage of malls for an advertiser is the opportunity to attract browsers to its site, much like the way window shopping works in the physical world. 9. Widgets. A new piece of technology that has potential as a marketing option is the widget, a module of software that people can drag and drop onto their personal Web page of their social network (e.g., Facebook) or onto a blog. Widgets look like a website window but carry the power of a full website. 10. Second Life and Virtual Worlds. A new Internet option available to marketers is participation in virtual worlds. The most prominent of the virtual worlds is Second Life, where participants log into a space and then use their mouse and keyboard to roam landscapes, chat, create virtual homes, or conduct real business. Participants exist in Second Life as avatarsonscreen graphical characters. It is unknown whether advertising will be accepted by participants in virtual worlds. 11. Video Games. Placing ads within video games is a popular option for marketers trying to reach the hard-to-reach 18- to 34-year-old male segment. There is some question as to whether ads are noticed in the heat of game competition. IV. Establishing a Website

Setting up a website is fairly easy; setting up a commercially viable one is a lot harder and a lot more expensive. The top commercial sites today cost $1 million to develop, about $4.9 million to launch, and $500,000 to a $1 million a year to maintain. There are some inexpensive ways of setting up a website and finding hosts to maintain it for small- and medium-sized businesses. Firms like 1&1 Internet can provide small businesses with a full range of services at a low cost. Several key issues are involved in setting up and succeeding with a website:

Chapter 9: The Internet

A. Luring Surfers Back For marketers, getting people to come back to their site is a primary concern. A site with nothing but pages showing the product and its specifications may have no appeal after a single visit. When a site is able to attract people to return often, it is called a sticky site. These sites have features that are appealing after the first visit; they are engaging and interactive. Success in getting visitors to return depends on substance, ease of use, and entertainment value. B. Developing a Domain Name A domain name is the unique URL through which a Web location is established. For large corporations, their domain name is usually the company name, like Sony or Gap, but for smaller firms, choosing a domain name can be a dilemma. Until late 2004, there were only five top-level domain names (.com, .edu, .org, .gov and .net). New names like .tv and .us were introduced to relieve pressure on the original TDLs. Country-specific extensions, such as .ca (Canada) and .uk (United Kingdom), are also available.

C. Promoting Websites Building a website is only the first step; the next is promoting it. Several major agencies specialize in promoting websites. A well-placed address for a website in a conventional print or television broadcast ad can draw considerable business. Marketers can also register with Yellow Pages on the Internet. Paid search produces the most traffic.

D. Security and Privacy Issues 1. Corporate Security. Any Web user can download text, images, and graphics from the World Wide Web. Although marketers place trademark and copyright disclaimers on their online displays, marketers on the Web have to be willing to accept the consequence that their trademarks and logos can be copied without authorization. Currently, there is no viable policing of this practice by users. 2. Consumer Privacy. There are various issues regarding consumer privacy and the Internet.

Asking consumers to register for a site typically results in lost user visits. A cookie is a coded identifier that is downloaded to the visitors computer. A cookie allows an Internet server to keep track of a visitor throughout the visit and collect other data. A user is typically unaware of a downloaded cookie. Wireless access to the Internet will complicate privacy issues.

Measuring Effectiveness of Online Promotion The information a website typically gets when a user connects with a site is the IP address of the Internet site that is requesting the page, what page is requested, and at what time.

Chapter 9: The Internet

A. What Gets Counted Several terms are used in Web audience measurement. Hits provide almost no indication of actual Web traffic. When a user requests a page with four graphical images, it counts as five hits. Thus, by inflating the number of images, a site can quickly pull up its hit count. Thus, hits do not translate into the number of people visiting a site. Click-throughs are the most rigorous measure, because users must click on the ad and go directly to the advertisers site. Page views are defined as the pages (technically the HTML files) sent to the requesting site. However, if a downloaded page occupies several screens, there is no indication that the requester examined the entire page. Visits are the number of occasions on which a user X looked up Y site during Z time. Users are the number of different people visiting X site during Y time. Unique visitors are the number of different people visiting a site (a new user is determined from the users registration with the site) during a specified period of time. Web analytic software is measurement software that not only provides information on hits, pages, visits, and users but also lets the site track audience traffic within the site. A site could determine which pages are popular and expand on them. It is also possible to track the behavior of people as they go through the site, thus providing inferential information on what people find appealing and unappealing.

B. Measurement Help Marketers are demanding better accountability of Web reach and consumer use. Companies like Arbitron and Nielsen NetRatings are starting to generate the type of data advertisers want. The methods rely on tracking the behavior of a sample of Internet families and projecting their behavior to a larger universe. The technique is designed to establish more accurate reach numbers. A list of companies providing measurement services is provided in Exhibit 9.3. C. Click Fraud This is an increasingly difficult problem. Web advertisers are victimized by bogus visits to ads or websites when they are on a pay-per-click program. Managing the Brand in an E-Community Aside from the shopping aspect, the Internet provides consumers with a convenient and efficient way to communicate with each other. The growing concept of brand communities talked about earlier in the book is manifest in the Web as well. The relevance for marketers is that the members of these communities like to communicate with one another. This has two implications. First, the corporate or brand Web page gives the marketer a chance to set up a listserv. Second, this is an ideal chance for marketers to try to stimulate positive word-of-mouth because of the speed and convenience of communication.

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Web 2.0 has demonstrated that e-communities are powerful. MySpace and Facebook attract up to 50 million unique visitors a month. V. The Future of Online Promotion

From a technological standpoint, two technologies, wireless communication and Web-launched video, will have the biggest impact. A. Wireless Technology The central discussion here should focus on the technological progression of access to the Internet and what it means relative to the Web as an advertising medium. Be sure students understand these variations: WiFi became widely popular in 2004 because it provided wireless Internet access connections reaching out about 300 feet. WiMax is similar to WiFi in that both create wireless hot spots around a central antenna with one major differenceWiMax has a range of 25 to 30 miles. WiMax is spreading more rapidly outside the United States due to communication interference problems that are being worked out in the United States. Mobile-Fi is similar to WiMax in that it has a multi-mile access but adds the capability of accessing the Net while the user is moving in a car or a train. Ultrabroadband is a technology that will allow people to move extremely large files quickly over short distances. On the road, a driver could download a large file from an onboard PC to a handheld computer. Or at home, you could do a wireless upload of your favorite concert from your PC to your TV. Advertisers and advertising agencies are preparing for new opportunities with mobile wireless communication. The opportunity to communicate through iPods and cell phones is yet to be fully tested for effectiveness.

An important take-away is that with this new technology, consumers can be reached through the Internet in more mobile settings. B. Video on the Web As more Web users have access to broadband, more complex data, including video files, can be streamed to them. The possibilities are attracting the big players, including Microsoft, ABC, and CBS. They see video streaming as another piece of the Web broadcast puzzle. The technology is available to provide direct links to websites for information and purchasing through television ads.

C. Strategic Online Communication The AOL/Time Warner merger in 2001 signaled the future direction for the Web and Web advertising. Time Warner brought to this merger all of its movie studio properties as well as an emerging Internet movie business and digital delivery of Warner Bros. movies on demand. Time Warner also includes Time Warner cable television. More recently, InterActiveCorp put together a conglomerate of Internet companies that can promote and sell each others products.

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What has been effective is driving traffic to websites through the use of traditional media advertising.

REVIEW QUESTIONS 1. What evidence supports the expectation that the Internet will continue to be a major part of integrated marketing communication (IMC)? 2. What may have driven advertisers to embrace the Internet early on in its development despite considerable uncertainty about audience size, audience composition, and costeffectiveness? 3. What unique characteristics of Internet brand promotion offer advantages over traditional forms? 4. Some companies establish a corporate home page that highlights product offerings, detailing their features and benefits, while others provide an entertaining destination for the companys target audience. Discuss how each type of home page might contribute to a companys integrated marketing communication. 5. What is it about the World Wide Web that makes it a powerful tool for niche marketing? 6. Visit some of the corporate home pages and websites described in this chapter, or think about websites you have visited. Of those you have encountered, which would you single out as being most effective in giving the visitor a reason to come back? What conclusions would you draw regarding the best ways to motivate repeat visits to a website? 7. The Internet was not conceived or designed to be a marketing medium, so some of its characteristics have perplexed marketers. If marketing professionals had the chance to redesign the Internet, what single change would you expect they would want to make to enhance its value from a marketing perspective? 8. What are blogs, and what are some of their personal and commercial uses? 9. How would you expect Web users to react to the presence of brand promotion in virtual worlds and video games? How, if at all, would you expect their reactions to vary by age group or other market segment? 10. What opportunities do you expect for mobile brand promotion through delivery systems like the iPod and cell phone?