Internet Marketing and its Tools

Definitions of Marketing and Internet Marketing
Definition of Marketing

Before defining internet marketing, let us say what actually is marketing. There are many definitions of marketing in the business world but most of them can be summarized as the following one: marketing is defined as a social and managerial process through which individuals and groups satisfy their needs and wishes in the process of production and trade of products and other values (Marketing; Kotler, Armstrong). Marketing consists of nonstop process of analyzing, planning, implementing and controlling and its significance is in creating and maintaining the long-term relations with the target customers. It plays important role in achieving set strategic goals and fulfilling the company’s mission (Marketing; Kotler, Armstrong 2004). Marketing as a whole has many aspects that can be studied but this work is going to concentrate especially on the internet marketing and its tools.

Internet Marketing
Internet marketing today is an inevitable part of the overall marketing strategy in companies from every industry – if it is a manufacturer, retail or a distributor – all of them need to communicate with customers or suppliers quickly, effectively and with minimal costs. These issues are fully solved by the internet marketing. It almost completely replaces some old ways of communication and significantly helps out other.

Formally, the internet marketing creates strategies and techniques applied on the Internet to support the organization's overall online marketing objectives. Goals may include driving targeted traffic to a website and features on the website to create a desired response from the customers. Internet marketing may include keyword strategies in different search engines, newsletters, banner advertising, reciprocal links, online promotions, content positioning, online image development, email strategies and other interactive features. Internet marketing uses many different tools to achieve goals set by marketing strategies. They will be described in detail later in this text. At first let us take a look at the internet marketing as a part of the e-business and its advantages in the business processes.

Marketing in the era of Internet
Doing business in the internet era requires a new model of a marketing strategy and the real life application. Some analysts says: “Internet causes radical change in thinking when creating relations between suppliers and customers, in creating values for them, in being able to achieve profits; in other words, it causes a radical change in marketing”, (Allan Mitchell, Marketing Week). The other predicts that once all the purchases and sales will include a direct electronic connection between companies and their customers. The new model will fundamentally change the way how customers think of convenience, speed, price, information about a product or service. This new thinking will influence every type of business. But the truth is that the internet marketing was doing just the first baby steps in past years, but with no doubt will have a huge influence on future marketing strategies.

E-business, E-commerce and Internet Marketing
There are important differences among the terms from the heading. It is necessary to know what each one represents in order to fully understand the internet marketing.

E-business
E-business includes the use of electronic platforms like intranet, extranet and internet to operate all the company’s functions. Internet and IT technologies sharply improved the ability of companies to make these operations faster and more precise.

E-Commerce
E-commerce is even more specific concept. Meanwhile, e-business consists of overall electronic exchange of information in the company, e-commerce is responsible only for sales and purchasing processes utilizing the electronic communication, especially Internet.

Internet Marketing
The idea of Internet marketing (or e-marketing) is included in the e-commerce concept. It is a sales part of the e-commerce. It takes care of communication, promotion and the actual sales of the products and services through Internet. E-commerce and the internet marketing bring a lot of advantages to the customers as well as to the sellers. The following segments describes some principal advantages.

Advantages for the Customers
There is quite a lot of reasons why internet shopping is good for the end users as well as for the companies. Customers will avoid traffic jams, looking for the parking place and wandering around the shops. They can easily compare offers from different electronic catalogues and web sites. Internet stores does not close, shopping is easy and private. There are not so many obstacles, customers do not need to communicate with the shop assistant or be confronted with the persuasion and emotional pressure.

Internet offers much broader selections of products. Web shops are not limited with the physical limits, they have almost unlimited range. There is also the possibility of comparing products in very convenient way that even the best shop assistant can not provide.

For example, Amazon.com offers a list of bestselling products, vast description of products, reviews from experts, opinions of customers and recommendations based on the previous purchases. Online shopping is interactive and immediate. Customers can often adjust the configuration of information, products and services according to their desires, and have them instantly available after that. They get better control over the processes thanks to the Internet.

Advantages for the Sellers
E-commerce brings lots of advantages also to the sellers. Internet is a powerful tool for creating relations with the customers. And because it is interactive, it is extra efficient marketing tool. Companies are able to electronically contact customers so that they can learn more about their needs and wishes. Online customers ask questions and voluntarily provide important feedback and companies can make their services better based on the feedback.

Internet and other electronic systems brings in the advantages like cutting costs and improving speed and effectiveness. Internet companies does not have maintain big stores and pay the rent, insurance and other fees. Companies like Amazon.com have even the advantage of getting money from the customers on another day from the purchase but pay to their suppliers (distributors of books and publishers) a month later. Companies like Dell Computer or General Electric achieved with the direct connection of factories, suppliers, distributors and customers through internet, extensive cost savings, which resulted in lower prices for their customers.

Because of customers communicating directly with the manufacturers, internet marketing often leads to lower costs and to higher effectiveness of distribution and logistic functions like processing of the orders, management of supplies, delivery and sales support. Electronic communication is usually cheaper than traditional printed. The company can create an electronic catalogue for a fraction of costs they would pay for printing and mailing of classic paper catalogues. Internet marketing as well provides flexibility because it can be adjusted anytime (like range of products and their prices).

Internet marketing tools
Internet marketing is used for the communication with customers, for promotion of products and services at company’s websites and finally it serves as a shopping medium. The actual act of shopping is most often processed at the website but there are also some other ways like e-mail but they are not used so often. In order to get customers to buy something from a company, it needs to drive enough potential customers to the website at first.

There is quite a lot of tools that internet marketing uses to satisfy the above mentioned issues. Let us take a closer look at them.

Search engines
It is much easier to make sales with customers that are calling a company rather than the company is calling them. In the latter case it is much harder because they are interrupting people who are not in the state of mind to buy. But when the customers call, they are in the state of mind to buy because they want the company to solve their problem. In this kind of situation the customer looks in the yellow pages – and in the internet – uses a search engine. Search engine is a tool that enables users to locate information on the World Wide Web. Search engines use keywords entered by users to find web sites which contain the information the customers are looking for. Some of the most popular world search engines:

- Google.com
- Yahoo.com
- Altavista.com
- Excite.com
- AskJeeves.com

Popular search engines in Slovakia:
- Zoznam.sk
- SuperZoznam.sk
- Centrum.sk
- Atlas.sk
- Google.sk

The interesting thing is that most search engines are free for both parties – the advertiser and the searcher. The problem is that almost every search gives thousands and even millions references and the fact is that only first 100 spots will ever see any significant traffic. Of course, there are ways of getting to the top positions but to get there it is necessary to know how the search engine works. There is always a possibility of paying for the positions in the first places.
Let us take a look at how the link popularity works in the most popular search engine today Google.com. Link popularity is a search engine’s measure of how important it considers a web page using some kind of mathematical formula. Each search engine has their own formula to determine your web page’s link popularity. Google calls it PageRank. The PageRank score is calculated from these factors:

- How many sites are linking to company’s site. The more the better in general.
- The types of sites that are linking to company’s site The more closely themed the better in general.
- The PageRank score of all the sites that link to company’s site. The higher the PageRank of these sites the better.
- How many outbound links are on each of the sites that link to company’s site (the less the better).

From these above mentioned factors is clear that reciprocal links are very important to drive more traffic to the web site.

The traffic is coming from the partners that linked the company’s web site but also from the search engines, because it scored high in the ranking thanks to the links referring to company’s web site.

Free and Paid advertisements
Free advertisements or classified ads can be posted on sites like Inzeraty.sk but the chance of getting customers through this internet marketing tool is very small.

Much more often are used paid banner ads. A banner is rectangular box filled with advertising (and often fancy graphics) that can be seen all around the web pages. The about banner ads is that people can quickly click on the banner ad and have their questions answered immediately. The reality is that click-through rate from banner ads is abysmally low. In 2003 the click-through rate for 1000 banner impressions was only 6 clicks. Therefore advertisers are looking for other, more effective internet marketing tools.

More statistics from year 2003 say that not only were there more online ads, they got larger. Leader board ads, sized at 728x90, registered a more than 900 percent increase throughout 2003, while button-sized ads (88x31) experienced a 58 percent decline. Other ad sizes that saw significant increases were various large rectangles and skyscrapers (also known as rich media), with growth that ranged from 42 percent to 262.3 percent. The once-popular standard banner size - 468x60 – measured a 12.6 percent decline from Q1 to Q4, and square pop-ups (250x250) fell 25 percent. E-mail marketing can be viewed as a form of direct marketing but without the need to pay for postage, usually the largest cost of any bricks-and-mortar direct marketer. An advertiser can create its own list of e-mail addresses which can take a long period of time or rent a list of e-mail addresses from a specialist company. E-mail marketing is getting more and more popular because the open rate in 2003 of an e-mail was 36.8% and the click-through rate 8.4% which is substantially higher than in case banner ads.

Newsletters are another interesting tool that can be very well used to hit the target audience. Most of the credible specialist web sites have their own regular newsletter and only readers really interested in the topic (and potential customers) subscribes to it. Properly chosen newsletter for the offered product or service can be a powerful way of advertising with strong response rate.

There are more ways of advertisement that are of minor importance like autoresponders or text links.

Word of Mouse Marketing
In short, the concept behind word of mouse marketing is to mobilize the customers to help the spread the message. In real world it is called a word of mouth and is a strong marketing tool. Online, word of mouse is the most highly recognized kind of marketing because people can communicate with each other so fast.

A positive buzz can launch a good idea overnight, but also kill it instantly in case of negative buzz. The two concepts using word of mouse marketing are viral marketing and affiliate programs.

Viral Marketing
The term was actually coined by the venture capital firm of Draper Fisher Jurvetson to describe the phenomenon of a company funded in 1996 called Hotmail. Besides having a great name, Hotmail was hot because of the way it was marketed. It spread like virus, going from zero customers to over 40 million in only three years, increasing its subscriber base more rapidly that any country in the history of the world.

The key to Hotmail’s phenomenal growth was the free price tag and the fact that every e-mail contained the following tag line and an implied recommendation by the sender:
Get Your Private, Free Email at http://www.hotmail.com

The more the service was used, the faster the word was spread. In 1998, Hotmail was sold to Microsoft for $400 million (original investment was $300 000). There are more successful products and franchises around that used principles of viral marketing (often unintentionally), for example Harry Potter, Ebay, ICQ, Amazon.com or The Blair Witch Project.

Affiliate Program
An affiliate program is nothing more than a joint venture between a company or private website owner, and a company that wants to promote a product. Basically, the company with the product provides the product, the web site, the customer service, the order handling and the fulfillment. But the company also gives the website owner a link so that when he refers clients to purchase its products, he earns a commission from every sale. The company wins because it has thousands of marketers all over the world recommending its products. The website owner wins by being paid to market the best products and services. In short, the marketer refers people to these sites and gets paid for any resulting sales. Even the biggest business players like Dell Computers use the advantages of affiliate programs.

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Internet Marketing and Its Tools