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|Pt. I||Get the Site Right: Web Marketing Fundamentals||9|
|1||Return on Investment Goals||11|
|2||Web Value Propositions||35|
|Case Study||Netiva: Avoiding Information Overload||115|
|Pt. II||Audience Development||123|
|5||Find and Be Found: Search Engines and Directories||125|
|6||Word of Web: Online Communities||149|
|Case Study||Women's Wire: Sisterhood of Demographic Excellence||183|
|7||Era of Innovation: Contests, Sweepstakes, and Other Special Promotions||191|
|Case Study||Macromedia: Realizing Visions of Success||219|
|8||Media Savoir-Faire: Public Relations for a Digital Age||227|
|9||Paid Media: The Many Faces of Web Advertising||269|
|App.: Internet Resources||333|
Return on Investment Goals
A bad Web site is bad marketing.
If you still aren't convinced that Net marketing will amount to a hill of beans, we'll try to save a place for you in the history books. But you'd do better to stay offline than slap together a site that only tells digerati that you're totally clueless.
A variety of online audience-development techniques may succeed in attracting visitors to your site, but if you lick the great lollipop of mediocrity, no one will return a second time. You'll just be wasting time and money online. With a million other interactive multimedia destinations to choose from, Net surfers don't bother much with second-rate sites.
The Six Online ROI Models
Before worrying about what users will think of your site, however, you're answerable first to yourself. The first step toward getting your site--along with the rest of your online marketing mix--right is to set clear objectives for a return on your company's investment online. In USWeb's experience, too many large companies spend substantial sums on the Web without a clear articulation of what it might do for their businesses.
"Well, everyone has a Web site these days," eager executives might tell us. Or, "Our competition is online." Or, "The CEO wants a URL on his business card." Or the ever-popular, "Because we'll make millions of dollars!" Conceivable, perhaps, but good luck.
The Web can be a highly economical arm of a company's overall marketing program, but it can also be a colossal money pit if the company doesn't outline specific goals for using it. The precise objectives for each company depend on individual factors, of course, but most successful online ventures find that the Internet offers marketers a return on investment (ROI) in one or more of the following six models:
* Direct Marketing
* Online Sales
* Customer Support
* Market Research
* Content Publishing/Services
In the last category--which includes the majority of content destination sites, such as The Wall Street Journal, Suck.com, MSNBC, Yahoo!, Quote.com, and Preview Travel--the return on investment is revenue through advertising, subscriptions, syndication, transaction commissions, or other means. Similarly, the online sales model promises revenue through a new type of retail channel. For most real-world businesses that aren't publishers, however, the Web is primarily an expense in return for a competitive advantage in the form of promotion, customer support, or market research.
In practice, of course, companies overlap several of these six ROI models. Creative businesses are constantly pushing the boundaries of what's been tried before and interpreting these marketing objectives in myriad ways. To determine how each model might work best for any particular company requires insight into its unique corporate circumstances, as well as a full understanding of the Net's core marketing values, discussed in more detail in Chapter 2, "Web Value Propositions." In this chapter, however, we look at examples of how companies are realizing ROI today with these six models.
The Web can play an important and cost-effective role, alongside television, print, billboards, and other advertising media, in building consumer awareness of an offline brand. Research by Millward Brown International, discussed in detail in Chapter 9, "Paid Media: The Many Faces of Web Advertising," argues that even standard ad banners can measurably increase brand awareness for advertisers.
In Part II, "Audience Development," we'll explore how to raise awareness of your site through advertising, public relations, online communities, and other means. All manner of Web marketing contributes to a positive brand image, however. Many companies, including Federal Express, Charles Schwab, Barnes & Noble, Sears Roebuck, Tower Records, The New York Times, Nike, Levi Strauss, and Harley-Davidson, have demonstrated that they are 21st-Century market leaders through their effective use of the Web.
The Net lets customers interact more intimately with brands than any other media. Unlike other media, which expect little of the consumer beyond passive attention, the Web invites netizens to get involved with the brand, learn details about the product, sign up for special services, return to the site regularly as a resource for a specific topic, and otherwise play an active role in the marketing experience, closely bonding with the brand along the way.
Even products like Crest, Ragu, and I Can't Believe It's Not Butter, with sites that are closer to show-biz than utilitarian, stand to impress the Web's demographically attractive consumers simply by having better sites than their traditional competitors.
Crest, for example, is unlikely to reach anyone online who's never heard of the product before. But if it provides a more engaging online experience than other toothpastes, the next time a netizen who's been to the site is looking at the supermarket shelves, Crest may stand out in her mind with a new positive brand association.
It's a bit like the joke about the two hikers in the woods who startle a grizzly bear. One guy drops his pack, yanks out a pair of running shoes, and frantically puts them on. The other guy says, "You're crazy, you'll never outrun that bear." "I don't have to outrun the bear," the first replies, sprinting off, "I just have to outrun you!"
Which site do you want to be, the guy with the running shoes or the guy carrying the beef jerky?
Although the Web makes it easy to keep a product name in front of the right audience, many advertisers seek more immediate results than brand awareness. For such direct marketers, the Web is hog heaven. Its capability to deliver highly qualified sales leads with ease means that online marketers can regularly outperform traditional direct mail, with none of the cost of paper, postage, and other associated expenses.
The Web audience is self-selecting by nature. According to Bruce Ryan, a VP and general manager at Media Metrix, a research firm that panels Web users for demographic characteristics, more than 80% of PC owners have at least one college degree, and the average household income of the same group is above $50,000 a year, well more than the $35,500 U.S. household average.
Those kinds of statistics make the online audience a more profitable market segment than TV viewers, who represent 95% of the households in the U.S. On the Web, marketers can easily find audience groups that are keenly defined by every kind of special interest. Add to that a wealth of techniques for further pinpointing user groups--with jargonistic names like collaborative filtering and neural networks, discussed further in later chapters--and the potential for target marketing online is tremendous.
Syed Madni, general sales manager of the JM Lexus dealer in Miami, raves about the results he got by targeting local residents on the PointCast push technology network. "We have already seen an amazing return on our advertising investment with the Miami Herald channel on PointCast," he said. "In just one month we scheduled 48 appointments because of our PointCast ad. From those appointments, we sold 16 cars."
PointCast offers users a variety of content programming "channels" that "push" information automatically to users' computers whenever they are connected to the Internet. The information is always ready on the users' desktop computers without requiring them to visit a traditional Web site and "pull" the information down themselves. (See further discussion of "push technology" in Chapter 7.)
As a charter advertiser on the Miami PointCast channel, JM Lexus spent only $700 for that month's advertising, according to PointCast officials. The rates for the same channel now range from $900-1,500 a month, depending on term of commitment. Considering the extraordinary return on investment JM Lexus found in its first month with the service, it's not surprising that PointCast reports the dealership just committed to another year's advertising on the channel.
As we will explore further in Chapter 9, several individual sites and networks, including DoubleClick and PointCast, allow advertisers to pay for ad banners on a performance basis, such as per clickthrough (that is, only for visitors who click on the ad banner and follow its link to the advertiser's site), per sales lead, or per completed sales transaction. Other services, such as BonusMail, Direct Value to You, and Netcentives, target users in various ways according to their known shopping interests and tempt them into action with discounts, coupons, and other promotional offers.
Smart marketers will exploit both direct and brand advertising possibilities online. For example, in most cases your banner ads should clearly state the product brand for the benefit of the 98% of surfers who won't click on them, even if driving site traffic with clickthroughs is your primary objective.
As we will discuss further in Chapter 9, measuring the value of clickthroughs is more complex than it may first appear. Your ad agency may help you achieve a higher-than-average clickthrough rate, and a publisher may charge you higher prices for them. But clickthroughs in and of themselves are meaningless if you can't relate them to clear objectives. Who exactly clicked through? A potential customer, or a randy teenager confused by a cryptic, teasing message? How many levels into your site did the visitor explore after clicking on the banner? How directly does a visit to the homepage translate into a sale or other marketing goal?
Marketers should rigorously demand from site publishers and agencies detailed accountability cutting-edge software targeting, and generally a high measure of success. If your business partners have the creative will, there is certainly the technical infrastructure to deliver on all that. Yet those marketers must also be rigorous themselves in defining what results they are seeking.
Occasionally, people ask us at USWeb when we think electronic commerce will become a reality. To which we reply, surprised to even hear the question still, that e-commerce already is a reality.
What do you want to buy? Whatever it is, you can get it online--cars, furniture, chocolate, computers, office supplies, hot sauce, houses, stereo equipment, books, maple syrup, plane tickets, CDs. You name it, it's for sale on the Net.
That's not to say every online vendor is making money--far from it. But some are. Already many of the biggest names in retail, such as Sears Roebuck, JC Penney, and L.L. Bean, have launched commerce sites offering vast arrays of products. Amazon.com sold $32 million in books from March 1996 to March 1997. Consumer products giant Sara Lee hopes women will want to shop in bulk for L'Eggs at www.pantyhose.com, while Peapod lets netizens in nine cities order their groceries online for home delivery. Fragrance Counter claims it's making a profit selling perfume online.
Forrester Research, a leading technology analysis group based in Cambridge, MA, predicts that online consumer-retail revenue will be $7.2 billion in the year 2000, almost twice their estimate of $4.5 billion that will be spent on Web advertising the same year.
One site that demonstrates how having clear objectives and planning well can pay off online is Andy's Garage Sale. A booming commerce site, Andy's motto is "New Stuff Dirt Cheap." The site sells a wide range of liquidation stock items at bargain prices, such as lamps, wet/dry vacuums, bird feeders, bathtub safety rails, hair clippers, bread boxes, jewelry, garage door openers, and much more.
The site is far more entertaining than the infomercial tone you might expect based on the product line. This is thanks to the charming, folksy personality of your host Andy, his devoted wife Gertie, and a motley group of characters that keep the site running in a homespun, Midwestern style. Along with the Big Deal of the Day and the weekly top 20 bargains, Andy and crew serve up a groaner Joke of the Week, as well as Tales from the Garage, where Andy waxes sentimental about the amusing goings-on in his small hometown.
Andy has cultivated such a devoted following among his shoppers that when he asked for suggestions about where he and Gertie should go for their summer road-trip vacation, customers across the country wrote to invite the couple to stay in their spare bedrooms.
Although it would probably surprise most of the site's visitors, Andy and Gertie don't really exist. Like Mr. Whipple, Bartles and Jaymes, and other familiar commercial characters, Andy and crew are pure marketing personas. Andy's Garage Sale really belongs to Fingerhut Companies, Inc., one of the world's largest catalogue and direct-marketing businesses.
Jane Westlind, manager of electronic commerce for Andy's, explained that Fingerhut thought carefully about how to take advantage of the Web's strengths to add value for customers to what was already a thriving business. "We took a business challenge, excess inventory, and turned it into a business opportunity online," said Ms. Westlind.
The Web neatly complements aspects of Fingerhut's existing catalogue business, such as enabling the company to react instantly when items run out of stock or new merchandise becomes available.
"Foremost, I'd tell other marketers to take advantage of what the Web uniquely offers," said Ms. Westlind. "Don't just take your existing model from another medium and cut and paste it into this one. Really rethink it. There's got to be a reason for being online, some added value. If the only reason to get online is to have a Web presence, anyone can do that. It's got to be smarter or faster or better or cheaper or more fun or more informative. That's the bottom line for us."
Customer support is truly one of the Web's killer apps. To date, few companies have realized thc full potential of this opportunity. Analysts predict, however, that in thc coming years many companies will shift significant portions of their existing telephone customer support to the Web.
Already customer support online is becoming more and more common, from simple FAQ (Frequently Asked Questions) Web pages to Federal Express's package-tracking system, discussed in the Introduction. In between those two ends of the spectrum, companies are aiding customers through staff replies to email inquiries, automated email responses, Web-based bulletin boards, newsgroups, AOL and CompuServe forums, complex searchable FAQ databases, live support chat, and more.
Specialized software products are making Web customer service a tempting alternative to traditional 1-800 and 1-900 telephone support, at potentially great savings in time, efficiency, and resources.
Aptex makes a product called SelectResponse that enables companies to automate email replies to customers, at least in part. Aptex's technology, an intelligent pattern-recognition neural network, can "understand" the context of most user questions sent in by email. According to Jane Leonard, Aptex's marketing manager, Charles Schwab uses the software to direct incoming emails to the appropriate internal analysts, who write personal replies to users' questions. Ms. Leonard also said that HomeShark, a Web-based realty, service, uses SelectResponse to grab an appropriate answer to a user's email question from a FAQ database and forward it to a salesperson. The salesperson reviews the original question and the canned answer SelectCast supplies. If the match is appropriate, the salesperson personalizes the answer and forwards it to the consumer.
"Customer service on the Web has moved beyond nice-to-have to must-have," said Carter Lusher, VP and research director of Gartner Group's Customer Service & Support Strategies division. "It has true value by now. A lot of companies look at online customer support as a cost-saving opportunity."
Mr. Lusher cites three principal opportunities in online customer support: revenue enhancement, cost-avoidance, and "soft benefits."
In terms of revenue enhancement, he suggests that the added value of effective customer support for online commerce sites will build loyalty among repeat customers.
"It costs more than 10 times as much for a company to acquire new customers as it does to retain existing ones," he said. Furthermore, customer support representatives have the opportunity to up-sell and cross-sell customers by using chat technology or even email.
As for cost-avoidance, companies can eliminate staffing and large telecom expenses by automating answers to customer queries online, as Federal Express and others have discovered.
The "soft benefits" Mr. Luster describes are subtle but compelling, such as increased customer loyalty through the investment the user makes in learning the customer support system, making him less likely to go to a competitor and learn new systems from scratch. Mr. Luster reasons that training the customers to rely on themselves for support, using efficient, automated online services, also slows the demand for future customer service as the company grows.
Many times, customers won't want to wade through complex help applications online, however, which is where real-time customer-support chat is most promising.
P. V. Kannan, president of Business Evolution, maker of a sophisticated customer-support chat system called Interact Service, says his software is "the functional equivalent of dialing zero for a company's operator." If a customer is browsing at a large corporate site and has a quick question he can't find an answer to, he can chat with a live operator at the site.
The software, which works with most standard browsers that support Java, divides the user's screen horizontally into two panels. On top the staff and customers can chat, and on the bottom the staff can forward relevant answers to complex questions from a database of explanations, thus avoiding repeat answers.
On the company side, a staff supervisor can monitor all the activities of the customer support representatives. And because a Web browser is the system's main interface, support staff and supervisors can work remotely, such as from home.
"Lots of merchants could encourage commerce with customer support," said Kate Doyle, an analyst in Jupiter Communication's Digital Commerce division. "Think of customers shopping at a site and wanting to ask, `How big is the large size? Can I get a discount? Is the Web really safe to buy something on?' I often wish there were a way I could ask a question about a product on a site."
Besides Business Evolution, several companies produce Web-based customer-support software, including Smart Technologies and Silknet, and several makers of traditional telephone customer-support software are adapting their products for Web-based support, such as Vantive and Clarify.
Increasingly, companies are recognizing the Net's awesome potential for market research. Market research consultants, of course, were quick to pick up on this.
Burke, Inc., an international market research firm that's been around for more than 65 years, conducts carefully controlled online focus groups for its clients in addition to its face-to-face and phone surveys. Using Web technology, the company brings together prescreened participants from different parts of the country for small, moderated real-time chat sessions. Clients can observe the chats from wherever in the country they happen to be.
Market research in a variety of forms is an ROI available to most companies online. There is much information that users simply volunteer about themselves, if sites take the time to observe it.
Software by firms like Accrue, Andromedia, Aptex, Autonomy, Nestor, and Imgis enables sites to study patterns in anonymous users' behavior and use that information to improve the site, surmise visitor demographics, and personalize content for users on-the-fly.
Of course, sites can conduct their own research simply by surveying visitors. If it's well-planned, this can be effective. Unfortunately, many sites slap up user surveys or registration forms with little strategy for what data they need or what motivation users will have to comply. As a result, many users lie on these forms or just ignore them, and the companies don't know how to interpret the results they get.
Beyond the inconvenience of surveys and registration forms, users fiercely guard their privacy online and fear their email addresses will be sold to reckless marketers. To overcome this, sites must earn users' trust and compensate them somehow for bothering to answer questions honestly for market research, ad targeting, or other purposes. (See more on privacy in Chapter 2.)
A few sites, such as The New York Times, offer such high-quality content that they can force all users to register for access to the site. Most sites, however, have found that 100% registration turns away too many users. Fortunately, there are several alternate ways to collect user information. Commerce sites can easily collect some demographic data as users enter their names and addresses for product delivery. Sweepstakes are a popular incentive to get users to fill out forms. Sites that personalize services can harvest loads of data as users reveal their likes and dislikes in exchange for a customized Web experience.
It boils down to trust and motivation: The more value a site offers its users and assurances that it will respect their personal data, the more information the users will reveal about themselves.
This last category is broad and includes many familiar online brands, such as Yahoo!, Excite, CNET, ESPN SportsZone, Microsoft Network, HotWired, Quote.com, Women's Wire, Disney.com, and so on. All of these sites produce or aggregate content or provide content services such as search engines, localized entertainment guides, or stock trackers.
The vast majority of these sites underwrite at least part of their costs by selling online advertising to sponsors. Many sites further subsidize their earnings with subscriptions, syndication agreements, transaction fees, sponsorships, special business services, and other revenue models. Few sites outside of the porno realm have been successful in charging a flat subscription price to all users, The Wall Street Journal being a notable exception.
Although few sites pursuing this ROI are profitable yet, many show the promise of success. But it's clearly not the model for everyone. AdKnowledge, a Palo Alto-based online ad services company, maintains a database called MarketMatch that lists details about commercial sites that accept advertising. The database is free for any site to sign up, but AdKnowledge counts just around 1,000 sites that are seriously pursuing advertising.
"As happens offline, advertising revenues online will aggregate among a small cluster of the top 20 or so publishers," predicts Marc Johnson, a Jupiter analyst. "It's happening now. The economies of scale, and the ability to brand across media properties and drive traffic that way just make it easier for big publishers. Smaller, niche-oriented players can certainly carve out nice profits, but as far as revenue goes, it is still going to be concentrated among a top few."
A few ad and content networks, including Aaddzz, DoubleClick, ValueClick, and PointCast, aim to help small- and medium-sized semiprofessional sites become ad revenue earners, too, by paying them for ad banners displayed on a per-clickthrough basis. Although the income may be a shot in the arm for many small-but-devoted publishers, few of them are likely to thrive on ads alone.
There are a handful of companies, such as Netscape, that aren't principally in the publishing business but do attract so much traffic to their sites that they can get into the ad revenue game. For most marketers of real-world products, however, this ROI model may be a fringe benefit at best and is unlikely to be a strong justification for online spending.
See other advertising-related resources in Chapter 9.