Online Advertising
Internet marketing
Internet marketing is the use of the
Internet to advertise and sell goods and services. Internet
Marketing includes
pay per click advertising,
banner ads,
e-mail marketing,
search engine marketing (including
search engine optimization), blog marketing, and article marketing.
Definition and Scope
Internet marketing is a component of electronic commerce. Internet marketing
can include information management, public relations, customer service, and
sales. Electronic commerce and Internet marketing have become popular as
Internet access is becoming more widely available and used. Well over one
third of consumers who have Internet access in their homes report using the
Internet to make purchases.
History
Internet marketing first began in the early 1990s as simple, text-based
websites that offered product information. It then evolved into
advertisements complete with graphics. The most recent step in this evolution
was the creation of complete online businesses that use the Internet to promote
and sell their services and goods.
Business Models and Formats
Internet marketing is associated with several
business models. The main models include business-to-business and
business-to-consumer (B2C). B2B consists of companies doing business with each
other, whereas B2C involves selling directly to the end consumer. When Internet
marketing first began, the B2C model was first to emerge. B2B transactions were
more complex and came about later. A third, less common business model is
peer-to-peer (P2P), where individuals exchange goods between themselves. An
example of P2P is
Napster, which is built upon individuals sharing files.
Internet marketing can also be seen in various formats. One version is
name-your-price (e.g. Priceline.com). With this format, customers are able to
state what price range they wish to spend and then select from items at that
price range. With find-the-best-price websites (e.g. Hotwire.com), Internet
users can search for the lowest prices on items. A final format is online auctions
(e.g. Ebay.com) where buyers bid on listed items.
Benefits
Some of the benefits associated with Internet marketing include the
availability of information. Consumers can log onto the Internet and learn about
products, as well as purchase them, at any hour. Companies that use Internet
marketing can also save money because of a reduced need for a sales force.
Overall, Internet marketing can help expand from a local market to both national
and international marketplaces.
Limitations
Limitations of Internet marketing create problems for both companies and
consumers. Slow Internet connections can cause difficulties. If companies put
too much information on their website, Internet users may struggle to load the
web page. Also, Internet marketing does not allow shoppers to touch or try-on
items before purchasing them.
Security Concerns
For both companies and consumers that participate in online business,
security concerns are very important. Many consumers are hesitant to buy items
over the Internet because they do not trust that their personal information will
remain private. Recently, some companies that do business online have been
caught giving away or selling information about their customers. Several of
these companies have guarantees on their websites, claiming customer information
will be private. By selling customer information, these companies are breaking
their own, publicized policy. Some companies that buy customer information offer
the option for individuals to have their information removed from the database
(known as opting out). However, many customers are unaware that their
information is being shared and are unable to stop the transfer of their
information between companies.
Security concerns are of great importance and online companies have been
working hard to create solutions.
Encryption is one of the main methods for dealing with privacy and
security concerns on the Internet. Encryption is defined as the conversion of
data into a form called a cipher. This cipher cannot be easily intercepted
unless an individual is authorized by the program or company that completed the
encryption. In general, the stronger the cipher, the better protected the data
is. However, the stronger the cipher, the more expensive encryption becomes.
Effects on Industries
Internet marketing has had a large impact on several industries including
music, banking, and flea markets. In the music industry, many consumers have
begun buying and downloading
MP3s over the Internet instead of simply buying CDs. The debate over
the legality of downloading MP3s has become a major concern for those in the
music industry.
Internet marketing has also affected the banking industry. More and more
banks are offering the ability to perform banking tasks online. Online banking
is believed to appeal to customers because it is more convenient then visiting
bank branches. Currently, over 50 million
U.S.
adults now bank online. Online banking is now the fastest-growing Internet
activity. The increasing speed of Internet connections is the main reason for
the fast-growth. Of those individuals who use the Internet, 44% now perform
banking activities over the Internet.
As Internet auctions have gained popularity, flea markets are struggling.
Unique items that could previously be found at flea markets are being sold on
Ebay.com instead. Ebay.com has also affected the prices in the industry. Buyers
and sellers often look at prices on the website before going to flea markets and
the Ebay.com price often becomes what the item is sold for. More and more flea
market sellers are putting their items up for sale online and running their
business out of their homes.
Recent Issues
In November 2004, a lawsuit was
filed against
Bonzi
Buddy software. The lawsuit alleged that Bonzi's banner ads were deceptive.
These ads often looked like
Microsoft Windows message boxes. Internet users would run across the ads and
when they attempted to close the boxes, they found themselves redirected to a
website determined by Bonzi.
On May 27, 2005, Bonzi Buddy
agreed to change the format of its ads so they did not resemble Windows message
boxes. The boxes will now contain the word "Advertisement" so computer users
know what they are looking at. The boxes will also no longer carry buttons that
do not perform the correct actions.
Sales tax
issues have also recently become debated. The current laws require that buyers
of online products pay their state all due taxes on these goods at the end of
the year, along with their other state taxes. However, most consumers do not
appear to be making these payments. Thirteen states have now begun encouraging
Internet businesses to collect sales tax on every sale. These states are
currently not forcing the companies to collect the tax. However, it appears that
if companies do not begin collecting the sales tax on their own, states will
begin forcing the companies to do so. The states are claiming that each year
they lose $15 billion in unpaid sales taxes associated with online purchases.
See also
External links
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