Internet Marketing

Networks

Topics

• The global matrix• Marketing with networks• Why the Net works• When the Net stumbles• Networks inside companies

The Global Matrix

• The Web is truly worldwide• Firms and governments around

the globe are devoting huge sums of money to make the promise of the Web come true

• Malaysia, for example

Marketing With Networks

• Networks are a social technology• A network of users and resources

creates new activities and powerful capabilities for marketers

• For Internet marketers, networks imply– ubiquity– expectations– sharing– specialization– virtual value activities

Ubiquity

Metcalfe’s LawThe value of a network starts to

grow at a rate that is the square of the size of the network

To Understand How Metcalfe’s Law Plays Out,

Let’s Take A Look At Some

Recent Headlines

Headline

Insert excerpts from a current article out of the business press (e.g. Wall Street

Journal, Wired News, Business 2.0, or Fast Company) that talks about the increasing number of people online. I usually take excerpts out of the lead paragraph, and

highlight keywords. I’ve found articles on the surging Net population in China, for example, that nicely illustrate Metcalfe’s

law.

Name of Publication - Date

Ubiquity

Metcalfe’s LawThe more people on line, the bigger

the e-commerce opportunity

Ubiquity

Opt-In, Opt-Out, Spam• Spam is a drawback to ubiquity• Net marketers must choose what terms

they offer users– No restrictions: the company has unrestricted

use of the information it gathers on visitors to its site

– Opt-out: users can choose not to receive any solicitation

– Opt-in: users can give permission to receive relevant solicitations

– No sharing: the company cannot use or sell user information

Expectations

• Publicity and Celebrity– Hype plays a large part of any

Net marketing campaign•Kim Polese, Marimba• Jeff Bezos, Amazon

• The economic logic of hype– Celebrity endorsements, media

stories, and general “buzz” create an aura of success

Sharing

• Low connection costs lead to sharing

• Shared resources enable companies to launch a Net presence more easily and cost-effectively

Specialization• The Internet makes it easier to

bring resources together from a wide range of alliance partners

• Each alliance partner specializes in providing particular content

• Visit any portal or search engine– Yahoo!– Excite– Alta Vista– Lycos– AOL

• A VVA takes information as input and outputs new kinds of info that helps customers– solve problems– make better decisions– entertain themselves

Virtual Value Activities

• Gathering• Organizing• Selecting & synthesizing• Distributing

The Five Virtual Value Activities

• Gathering: assembles info & links, so the user only has to go to one site instead of many

• Organizing: places info into categories and presents a structure that enables the user to find what he/she is looking for

• Distributing: using the Web to publish info and make it widely available

The Five Virtual Value Activities

• Selecting• Synthesizing• Enabled by AI technologies that build

up profiles of users (implicit) and allow a user to input preferences (explicit)

• Selects the most relevant info (to a given user) and makes it the most obvious– My Yahoo!– Preferred customer pages

The Five Virtual Value Activities

Why The Net Works

• It’s reliable and efficient• Multiple connections

– There are a number of ways to connect to each node on the network

– Even if multiple links aren’t working, a message can still get through

• Packet switching– Messages are broken up into pieces called

packets– This allows many users to simultaneously

share network resources

Why The Net Works• Open technology standards enable the

Internet to grow (scale)• Open standards

– software protocols and operations are readily available

– they are documented widely– they aren’t controlled by any one firm

• Scalability refers to the ability to add locations, paths, capabilities, and resources to the Net without having to reengineer the whole thing

When The Net Stumbles

• Outages on the Net are quite rare• Congestion and delay is more common• Access lags are caused by limited

transmission capacity from the user to the Internet– Faster connections will enable marketers to

utilize and send richer content

• Transmission lags are caused by limited transmission capacity from the user’s ISP to the server’s ISP

• Server lags refer to the time that a server takes to recognize and fulfill a user’s request

Networks Inside Companies

• Internet marketing uses Net technologies to reach out to customers

• Many companies divide their Net activities into three categories– the public Internet, managed by the

marketing department– the extranet, connects the company with

it’s major suppliers– the intranet, available only to the

company’s employees

How Companies Organize Net Activities

Figure 3.9

•Visible to the public•Managed by marketing

•Internal to a company•Available only to employees•Often managed by HR

•Visible to suppliers and B-to-B customers•Supply chain management•Managed by marketing and logistics

Wide Range of Internet Content

Figure 3.10

Contrasting Internal and External Network Roles

Diff erence An I ntranet An I nternet

ManagerialControl

Proprietary infoDecentralized

Public infoCentralized

CommunicationGoal

Employee Customer

Orientation ProcessDevelopmentCollaboration

Sales/marketingI mplementationTransactions

DesiredTransformation

Creates alearning

organization

Customer/salescycle

Create customerloyalty

Table 3.4