Chapter 1
Internet Marketing As Part of the Marketing Communications Mix
Learning Objectives:
By the time students complete this chapter they should be able to:
• Briefly describe how the Internet originated and what makes it unique as a
communications and transactions medium.
• Describe the implications of Web 2.0 and Web 3.0.
• Discuss the business benefits of using Web 2.0.
• Understand the generic marketing objectives that form the basis for Internet marketing
strategies.
Chapter Perspective
Students need to understand the evolution of the Internet, which should better prepare them for
the fact that the Internet continues to change and will do so for the foreseeable future. Beyond
that brief history the first chapter sets the stage for what is going to be covered in the remainder
of the text. It does so from the perspective that Internet marketing is no longer just a mainstream
Students have a tendency to believe they know about the Internet—after all, they use it every
day. Most of them actually know very little about how Internet business works, especially about
marketing on the web. This is particularly true of students with a technical background who
correctly believe this class may provide an added dimension to their training. They are able to
add technical detail to many discussions, but it may be hard to get them to take a customer-
oriented perspective.
The Evolution of the Internet
The degree of emphasis placed on the history of the Internet will depend on the instructor’s
interests and approach. At a minimum, it is important for students to understand that the Internet
If you want more information, the Internet Timeline is hugely informative
useful if you want to show the evolution of some of the major websites.
The main thing students need to realize is that the Internet was not originally a commercial
medium. That helps to explain some of the inherent tensions that still exist in the medium.
Current events can often help to illustrate the point. As this is written SOPA has gone away for
the moment, but you can expect continuing issues that concern the governance of the Internet
itself and the impact it has on particular industries and consumer segments.
It is also good to focus students on the section about the Internet bubble. Visuals like the eToys
The Sabre System
The Sabre example follows the history section for a particular reason. Just as the Internet
predates its current size and scope, Sabre started at almost the dawn of computing, long before
the Internet became a commercial venue. They have taken advantage of many new
Web 2.0 and Web 3.0
Web 2.0 and 3.0 are not absolutes but they are the best current descriptors of where the web
seems to be going at this moment. Tim O’Reilly is considered the guru of Web 2.0. His
descriptive characteristics are:
• Services, not packaged software (SaaS) with scalability essential
• Unique data collected on the web with behavioral data key to strategy
• Users as co-developers
• Harness collective intelligence
• Leverage the “Long Tail”
▪ Chris Anderson of Wired magazine coined the term in 2004. His website gives an
The O’Reilly map in Interactive Exercise 1.1 is interesting, and shows the power of interactivity,
but the point is a bit philosophical. The McKinsey interactive presentation of their research on
the benefits of what they now call “social technology” makes the interactive point as well as
having useful content. It has the benefit of being easier to present:
There is no firm answer to what Web 3.0 is going to look like, although the word “semantic”
appears in most discussions. The summary of CNN is as straightforward as it gets:
• Real time
• Semantic
• Open communication/data transfer
• Mobile and geolocation
The list of most valuable global brands in Table 1.2 is notable for the presence of some of the
Internet superstars like Google and some of the old economy firms who got the Internet early
from IBM in B2B to Coke in B2C. All of the brands listed—old economy or new—use the
Internet effectively and have been working on it for at least a decade. That’s the main point of
the listing.
The Internet Marketing Paradigm
This is an attempt to present the core content of the text in visual form. Like all such attempts it
probably falls somewhat short, but it does help students get the overall picture.
The objectives are:
• Customer acquisition
The marketing inputs are:
• Internet business models
• Interactive channels
▪ Websites, search, email, mobile (search added and wireless changed to mobile in
3rd edition)
The marketing actions are:
• Advertising and promotion
▪ Direct response
Notice that ecommerce is treated as one of the actions (tools), not as a separate discipline. That
helps to position the coverage for some students who see ecommerce as the chief issue, not as
part of the Internet marketing mix.
The Internet Infrastructure Stack
Students need to understand the essential technical elements of the Internet, and “stack” is
“The cloud” has been added to the stack in the third edition. It is important for students to
understand the potential cost savings and the ability to preserve security of data. If you wish to
get into the potential for “greener” computing, there is plenty of discussion on that. The links the
Apple Cloud and the Best Buy Cloud in Interactive Exercise 1.2 are interesting but the link to the
Microsoft material is the most important. Microsoft has set out to educate the business and
consuming public about the virtues of cloud computing and its ads are instructive.
Videos/product tours on sites like salesforce.com make the business benefits even more clear.
A Profile of the Internet and Its Users
The section that covers statistics on Internet usage around the world has been shorted and moved
to the first chapter. Students need to realize that these data are old before a book is printed.
Figures 1.3 through 1.8 and Table 1.3 come from sources that are regularly updated (some
through eMarketer). The basic sources are given on the notes pane of each slide for ease of
updating.
Strategic Drivers of the Internet Economy
This section is now summarized in Table 1.4. It is important, but the key issues should no longer
be a surprise to most students. It is worth point out that nothing in this list says that making a
profit is unimportant.
Internet Marketing Best Practices for Strategic Drivers
The chapter ends with a brief case history of the nonprofit Charity:water. This site is a creature
of the Internet—the rich media age, to be more specific—and it’s an excellent site to which to go
makes use of powerful web tools from video to blogging. Note that the tools are chosen
for interactivity as well as the power of communication.
• The online equivalent of word of mouth is used to acquire new donors, often at little or
no cost to the organization. We will talk about referrals and sharing in chapters to come.
• Donors are given choice in the way in which even small contributions are used and are
informed about how they benefit people who need clean water. To me, this is one of the
most impressive things they do.
• In spite of the number of people and their geographical distribution, it remains a highly
personal endeavor in which each person is made to feel a valued contributor. This
suggests the quality of their communications program.
As the text says, ending with this case history also emphasizes one of the main themes of the
text: the importance of integrating both online and offline marketing activities into a seamless
marketing operation. That is the only path to success.
Discussion Questions
1. The origins of the Internet are unusual in the history of commercial media. What
makes them unusual and what qualities does that impart to the medium?
The Internet began as a national defense initiative and government ownership of the network
prevented commercial activity until 1991. Another interesting aspect of Internet history is the
2. What do you believe are reasons for the highly visible failures of some of the early
Internet enterprises? Do you see any parallels in more recent years? Are there any
currently popular Internet sites that you think may not be sustainable?
Some of it was the time; not as many people were on the Internet and few had broadband
connections, so ecommerce had 2 strikes going in. Costs were a major issue; the sock puppet was
3. Discuss the characteristics of Web 2.0 and give an example of each.
• Services, not packaged software (SaaS) with scalability essential—income tax
preparation on the web instead of buying software
• Unique data collected on the web with behavioral data key to strategy—get them to
remember “every mouseclick.” They may bring up Facebook as well they should.
4. What are the broad outlines of Web 3.0?
• Real time—example music downloads, real-time web metrics
• Semantic—look at all the stuff on a search results page these days. A lot of it is social,
5. “The most powerful global brands are not enterprises that were founded in the Internet
era.” True or False?
Table 1.2 says it is a mix. Who are the top Internet brands and who are the top “old economy”
6. The Internet marketing paradigm includes both marketing inputs and marketing
actions. Discuss the major components of both the inputs and the actions.
You can use this question to reinforce the importance of integrating online with offline
marketing effort, since the inputs include both interactive and offline channels. Students may not
have much understanding of business models at this point. They should be sensitive to social
7. What is the Internet infrastructure stack? What is the relevance of this technological
concept to marketers? Why does it now have a cloud at the top?
The infrastructure stack is Figure 1.4. One purpose of including this small section of technical
information and terminology is to emphasize to students that they must know enough to deal
8. Discuss the role the Internet plays in the lives of consumers and businesses? Has it
changed the lives of consumers in any meaningful way? Has it changed the way
businesses operate in any significant fashion? Can you give examples of the impact of
the Internet in either B2C, B2B, or nonprofit markets?
This question can lead to extended and interesting discussion. Press students for specific
examples of what they do (and don’t do) on the Internet. Get them to think about generational
differences in usage. Depending on what students bring up, you can discuss subjects like why
9. Best practices represent business activities that consistently product good results. What
is an example you have seen that might be a best practice in customer acquisition? In
customer retention?
These tend to be hard to document so you should keep your eyes open for good current
examples. I just posted a 5-minute product marketing video for my students. It’s an excellent
video for a mobile commerce product. Beyond that, I received it embedded in an email (and it
10. This chapter emphasizes throughout that business and marketing processes are
changing in fundamental ways as a result of the Internet. Discuss in considerable depth
one specific driver of change and identify ways in which it is altering the way businesses
conduct their daily and strategic activities.
The list of change agents is not included in edition 3, but cost and access to customers are
obvious.
The strategic drivers are:
2. Distance does not matter—iTunes was suggested as the example. Note that iTunes now
distributes podcasts, which are assuming importance in marketing activities
3. Speed is of the essence. In many ways the expectations of consumers have been
increased by the Internet. You don’t have to wait for the weather, a stock quote, or
selected news. You can not only go to Weather.com, your broker’s site, or CNN.com—
from any of these sites you can get twitter feeds that give you up to date information on
subjects of your choice wherever you are.
as it sounds. An email newsletter, especially one that appears to have content customized
to your purchasing behavior, is a good example.
10. An information economy is characterized by choice and abundance. That is, for the most
part, wonderful for consumers. How do marketers make their products and services
visible in the midst of the profusion of information about other products and services?
That is the targeting and creative challenge we will discuss in coming chapters.
Internet Exercises
1. See the discussion of the Internet Career Builder Exercise in the introduction to the
Instructor’s Manual.
2. Select an organization (corporate or nonprofit) with which you are somewhat familiar
that uses both online and offline channels. Discuss two or three specific examples of
how it is taking advantage of the Internet in general and the drivers of strategic change
in particular.
This is a good discussion exercise and could make a two or three page written assignment. If
3. Select three different websites that you will follow for the semester. Your instructor
may make several different assignments based on these sites, so you should choose sites
of substance though they do not have to be large. Each should, however, be a brand
site, not a site for a mega corporation. Following at least one not-for-profit site can add
to the learning experience.
Signing up for free newsletters from the sites you select will help you understand
the various elements of their online strategies and may also give you insight into how
their multichannel marketing is carried out.
If the company has retail outlets nearby, you should also consider a visit to the retail
site, looking for ways in which the firm is integrating marketing activities on and off the
Internet.
I’ve used variations on this semester-long assignment off and on for several years and it works
4. Consider creating a blog to record your insights and discoveries as you move through
the Internet marketing course. Blogs will be discussed in Chapter 9. Directions for
Keeping a blog to document learning over the semester is a variant of student journals used in a
variety of courses. Simply learning to do it is an interesting Internet marketing exercise. You
can also let them choose a subject for their blog instead of making it a journal. Either way, you
5. Consider getting together with several of your classmate to create a Facebook page to
share resources and insights as you progress through the course. You might consider
making it closed page in order to gain experience in work-related collaboration on a
social network.
This sounds like a great idea, but the web is cluttered with Facebook pages that students of mine,
in courses and programs around the world, have set up. They primarily do it because they’ve
Key Terms
acquisition the process of obtaining new customers.
ARPANET stands for Advanced Research Project Agency, originally an arm of the U.S.
Department of Defense, which in the 1950s, developed a connected system of computers that
formed the basis of the modern Internet.
hosting storing a website on the servers that will make it available to the Internet; can be done
internally or by specialty suppliers that offer hosting and associated services such as web
metrics.
HTML (HyperText Markup Language) one of the foundations of the common Internet
platform, HTML describes the structure of Web documents using a type of coding called tags.
infrastructure stack term used to describe the various layers of hardware, software, and
purchased services that make up the network on which the Internet runs.
Web 3.0 third-generation Internet which is expected to have semantic abilities that support
learning and personalization of web experiences.
Web Services applications that allow enterprises to exchange information over the Internet using
open (public) standards; this permits otherwise incompatible systems to interact with one another
without human or programming intervention.