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This lecture takes a two-part look at the Internet. In Part I, we will examine what the Internet is, and present why companies should, at minimum, consider advertising there. In Part II, we will take a close look at how advertising is done on the Internet, and provide details about the different types of Internet advertising, costs, and related considerations.

It is an enigma, a mystery. It is the great unknown. It is the Internet, the most recent media form to be embraced by corporations ranging in size from the corner deli to the largest publicly traded firms in the world. Although the e-mail and file transfer possibilities of the Internet have been realized for many years, it has been only in the past five years that the potential of the world wide web (WWW), the multimedia portion of the Internet, has been unleashed.

Depending on whose data are believed, there are about 200 million people worldwide who have access to the Internet. Sixty-percent of American households have at least on PC. There are hundreds Internet Service Providers (ISPs) in the USA alone, with the major players being AOL, CompuServe, MSN, and Earthlink. And an estimated 25-percent of all corporations have a website (although this number may still be a little high).

In any regard, one thing is certain: use of the Internet is increasing rapidly, by private and public users, and for-profit and not-for-profit users. And there's no end in sight.

As the multimedia arm of the Internet, the WWW is what corporations are interested in. It has capabilities far beyond just text and pictures: movies and animation, moving graphics, sounds files and real-time sound, databases and catalogs, programs that run directly on your computer, and interactivity allowing user to submit information to the website.

Attention given to the Internet has mushroomed in recent years as well. For example, in 1993, US newspapers averaged about three articles per month about the Internet. In 1995, there were about 300 articles per month. By 1997, there were over 300 per day. And that's just the newspaper articles; not counted here are magazine articles, or TV and radio shows that explore the topic. In 2001, the Internet is ubiquitous. It would be fruitless to try to count the number of references to it in the media.

In just a few short years, the URL (uniform resource locator) has become almost ubiquitous: "http://www.yourcompanyname.com", appearing in the small print of TV advertisements, print ads, business cards, brochures...anywhere it can be printed. In fact, a company's Internet address has become nearly as important as, and sometimes more important than, a physical address (consider amazon.com, the mail-order book company with only an Internet address).

The Internet is not just an American phenomenon, either. Nations from Albania to Azerbaijan, and Zambia to Zimbabwe, have access to the Internet, thus opening up the entire world to Internet Marketers. The world economy is certainly being enhanced by the WWW and its reach.

If one word could be used to describe the culture of the WWW, it would be "change." It is the only thing with any degree of certainty. The Internet is dynamic; what one sees today is vastly different from what was seen six months ago. New high-speed hardware make data transfers occur four times faster than was the norm just three years ago, enabling many more applications to be added to websites. New tools are also being developed quickly. For example, Java Script,  Dynamic HTML, PHP, and Flash  allow programmers to do heretofore unbelievable things on their web pages. Finally, the number and types of new users continues to expand, especially since the prices of computers and online access have plummeted.

While change is the hallmark of this culture, there are other traits worth noting: users expect lots of information, and, at least for now, they expect to be able to get it for free. Furthermore, users generally do not appreciate unsolicited advertising e-mail (this practice is frequently called "spamming," or sending a mass e-mailing of an advertising message). Finally, as users become more familiar with surfing the web, they are becoming more discriminating; they expect to see good content at a website, and are more impressed with function than form.

This is the $64,000 question. While the Internet is enjoying rapid growth, it would make Marketing much easier if sufficient user information were readily available. The Internet Marketing Center has collected surveys from volunteer respondents who use the Internet. Among their findings in 1997:

• Average age: 33
• Male/Female Ration: 65 to 35
• Average Income: $59,000
• Frequency of Use: 78% use their web browser more than once a day
• Buying Online: 33% have purchased online; 46% have never bought online; 53% of those aged 19-25 have not purchased online.
• Marital Status: 41% married, 41% single, 10% living with someone, 5% divorced
• Occupation: 30% education, 28% computer-related, 19% professional or management
• Race: 87% are Caucasian
• Language: 88% use English as their first language

As part of your homework for this unit, you will update these statistics to show how usage has changed.

The GVU study collected demographic data much like the study cited above, but went much further in describing other aspects of the respondents' lives. For example, 92% were reported to be heterosexual, and David Letterman was favored 2-1 over Jay Leno for late-night TV host. Two-thirds of respondents said they would not pay fees to access websites, arguing that they already (in most cases) pay to access the web in the first place. Democrats outnumbered Republicans roughly 40% to 34%. Finally, the web has totally replaced TV for 35% of respondents, and has partially replaced TV for 27% of respondents.

What do these data mean? Although these studies suffer somewhat because of their volunteer samples, theire results are probably pretty accurate indicators of the current user market. Generally speaking, this market tends to be younger, male, educated, a little more liberal than conservative, and certainly better off.

Marketers can utilize this information in a variety of ways, but mostly these findings imply that there is a vast, virtually untapped market of rather affluent, open-minded users who can be targeted with the appropriate products and services. The findings also imply that certain groups of customers (older, less affluent, less educated) are probably not well-represented among web users, and thus are not very lucrative targets at this time. Of course, this could change, but at least for now, Marketers with the right mix of products and services that are demanded by current web users may profit greatly by advertising on this medium.

There are a number of caveats about Marketing on the Internet that need to be addressed. These caveats show the Internet and the WWW to be very unique among other media forms available to Marketers.

1. The WWW and Internet provide a level playing field. Anyone can have a presence on the Net, from the smallest mom and pop company to the top Fortune 500 firm. Users do not know the size of the firm when they are viewing a web page, thus allowing small and large to compete more equally. unlike in a shopping mall where company size can be judged by things like square footage and signage, the Internet erases all the trappings of corporate size. Web pages can be designed in-house very cheaply, or can be contracted out to web design houses; the point, though, is that a company does not have to incur great expense. A web site can be hosted for $35 per month or less.
2. The three most important factors in web publishing are content, content, and content. Just as in real estate and retailing, the three most important considerations are location, location, location, the analogy holds true for Internet advertising and content. While an eye-appealing website is fun to look at, if there is no content, it will immediately turn off visitors. Conversely, a solid content site, even with ho-hum graphics, can generate a lot of interest. For example, the The Skeptics Society website is rather plain, but is a treasure trove of information, and has won many awards for its content. The best-case scenario is strong content along with great graphics, but if forced to choose, always choose content.
3. The Net is narrowcasting at its best. Just like cable TV and magazine publishing are narrowcasting (the opposite of broadcasting), the Internet allows for extremely refined market segmentation. This is niche marketing at its finest. Furthermore, since the cost of advertising on the Internet is very inexpensive, a very small segment can be pursued without a major investment by the advertiser. Are you into ultra-distance running? Check out Ultra Running Magazine. Do you like adventurous winter sports and like to try new things? Check out Sled Dogs. The Internet makes it possible to target micro-segments which would otherwise be too expensive to market to under other conditions.
4. The Net allows for interactivity without the awkwardness of a face-to-face encounter. The advent of submittable forms on web pages allows for users to communicate with the Marketer. This can be as simple as filling out surveys, but may also involve making online purchases, enrolling in web-based classes, creating a "personal homepage" (like at The Weather Channel), or selecting categories of information.
5. The web site serves as a surrogate store, as well as a surrogate public relations department. Depending on how the Marketer uses the website, the Internet can be used strictly to append public relations efforts of the company, or can serve as a "virtual storefront." In fact, Marketers can rent "space" at virtual malls, which further levels the playing surface for smaller Marketers.
6. Marketing on the WWW is a "pull" activity, as opposed to a "push" activity. A "push" strategy is one in which the Marketer tries to reach final customers by selling through the trade (i.e., middlemen). A pull strategy seeks to build demand first with final customers, who then "pull" the product through channel intermediaries. While Marketing and selling efforts on the web may seem pervasive, they are no more pervasive than other traditional forms of advertising seen every day. Thus, it, too, is a "pull" form of Marketing.
7. The website must be visited at the volition of the user, much like a visitor to a store. But, in contrast to retailers with storefronts who are rather limited in how they can list their address (The Yellow Pages, business cards, etc.), the web advertiser can register with many search engines, like Yahoo. Through the strategic placement of key words in the HTML coding, the web advertiser can greatly increase its ranking on search engine lists. The only way a traditional retailer can do this is to rename their store the "AAAAA Widget and Thingamajig Store," which practically ensures getting the first alphabetic listing, but that's about it.

The Internet is not a panacea to all of a company's ills. Far from being "Easy Street," the Net places great demands on any company venturing into cyberspace. Following are a few hazards, traps, and pitfalls that all Internet Marketers should attend to:

1. Prior to launching a website, a very thorough assessment of the current competitive situation must be done. For example, the aspiring Internet Marketer will not get very fair if their proposed domain name (e.g., "www.ourcompany.com") is already taken by someone else. This is easily checked online by going to Network Solutions, which has a domain name checker on its website. (Note: Even though you may not find "www.ourcompany.com" when you go looking for it, the domain name may have already been reserved by someone else, and simply not developed yet. This can send a firm back to the drawing board...all the way back to possibly renaming the business.)


 In assessing the market, care must be taken to observe everything that is being done by competitors, as well as what is not being done. Analyze the threats and opportunities, and then determine an appropriate course of action. Some firms may even find that the Internet is not for them.

2. Launching a website is a major commitment. A website cannot be simply uploaded and then ignored for months and months. In order to keep the public interested and returning, the site must be updated on a regular basis. This does not necessarily mean it has to be entirely reinvented; rather, there must be some plan for timely updates that will continue to interest visitors so that they will want to return regularly just to see what's up with your company.
3. If the firm cannot commit to a full-time "webmaster" position, it should reconsider its presence on the web. This may sound rather heavy-handed, but the rigors of maintaining a website can easily become a full-time job, and it is best to have someone whose principal task is nothing more than minding the website. Smaller firms that cannot abide by this commandment should at minimum recognize that web maintenance is going to add numerous hours to the workweek.
4. Prepare for rapid change on the Internet. Yesterday's knowledge of HTML3.2 programming language is no longer sufficient for state-of-the-art websites. Whoever is doing the programming needs to stay abreast of changes in software and programming languages. New versions of browsers are introduced fairly regularly, each with new features. What time is not spent maintaining the website will probably be spent just in keeping up with the dynamics of the field.


The Internet is a unique type of medium. It combines elements of other media forms (e.g., newspaper, magazine, TV, etc.), but it is still different from all of them. Web designers must be mindful of these considerations when developing sites.

The Web can be used for many different aspects of a company's Marketing program. The possibilities are virtually limitless, and are bound only by the amounts of creativity and energy the firm has. The discussion below examines many of these options:

1. Brand recognition.Repetition is the key to building brand recognition with consumers, but before that comes initial brand exposure. The web allows advertisers to build both exposure and recognition rates among target customers.
2. Cost containment. It can be considerably cheaper for many firms to communicate through the web than through other media. On a cost-per-thousand (CPM) basis, the Net is usually just a fraction of the cost of using other media. Furthermore, since the Net is a "narrowcast" medium, it is thus even more cost effective, because it saves money while at the same time reaching a carefully defined audience.


 Furthermore, the web can shave personnel expenses. Federal Express and United Parcel Service both allow customers to track packages online, rather than through their "800" customer support lines.

3. Technical support.The web is an excellent way to be able to offer technical support to customers, especially for computer-related prpducts, because those customers are likely to have Internet access. For example, Dell Computers has an online technical support group waiting to handle customer problems.
4. Customer services.Closely related to technical support are basic customer services. These services can include product information, help features, software, and much more. Digital Equipment Corporation and Hewlett Packard offer a very thorough selection of customer services through their websites.
5. Presenting a good public image.The web allows advertisers of all kinds to come together on even terms. Some firms use the web for hard selling, while other companies use it for a soft-sell and just to have a presence. McDonald's and Taco Bell have very entertaining sites that do less to sell fast food and more to just look good.
6. Customer feedback and opinion surveys.Websites may also collect customer opinions and suggestions via the web. This helps the advertising company to know more about their customers, their needs, wants, likes, dislikes, etc. The Weather Channel allows users to create a custom "homepage" on which they can specify what information they want presented. The Weather Channel can then learn which features are most demanded by visitors.
7. Cybermalls and virtual stores.The web can be used as a virtual storefront. This may be a supplement to a legitimate storefront, or a surrogate for none at all. An example of a cybermall is I-Mall. Like all shopping malls, patrons come of their own volition, so the commercialism of sites like these is to be expected.
8. Direct sales.Not all commercial sites are capable of handling online sales. But, software is becoming increasingly available that can handle customer orders, calculate shipping charges, and even prepare credit card authorizations. A good example of this software is the ShopCart "shopping cart" software package. It allows customers to select items one at a time, which are deposited in a virtual shopping cart. When the customer is ready to leave the "store," his order is tallied, credit card and shipping information collected, and the final amount charged to his account.
9. Marketing research.Websites that have forms capabilities frequently ask visitors to complete surveys. This helps the Marketer learn more about the characteristics and demogarphics of web users, which are important considerations for the future of the website. These questionnaires ask about gender, race, income, education, etc. But webmasters do not have to ask certain questions, because the answers to these questions are available from the webserver: What type of platform is the user on (WIN 2000, Mac, etc.). Which browser is the visitor using? How long were they at this site? How many items did they click on? What state or country or they from?


 There are other forms of market research being conducted, though. The well-known VALS 2 survey can be taken online, and results generated in just a few seconds. (VALS stands for Values And LifeStyles.) In return for answering their 35 lifestyle questions, as well as demographic and computer-related questions, they will tell you your dominant and secondary lifestyle types. Furthermore, by voluntering to participate in this ongoing study, users are assisting the VALS folks learn more about online users.

10. Public relations.The web can be used for a variety of public relations activities, ranging from press releases to showing corporate sponsorship of events.


The press release can be used to announce new products or services, and anything else the company is currently involved with. (A good example is MCI.) While press releases are also sent to other media forms, with the web the company can be certain that their releases will see daylight, and that content will be as the company desires. Critics may then say that the web is nothing more than a vanity press. But, since websites are visited at the volition of the user, this criticism is not valid.

Companies will often show their sponsorship associations on their website. For example, during the 1996 Olympics, the many "official product" sponsors had webpages that proudly proclaimed their support of this most patriotic pursuit.

The time has come where employees are expected to know how to prepare, maintain, and update websites. I teach these skills in my Retail Management course. Students are expected to develop an e-commerce site for online retailing. In other words, in just a few short years, web advertising has gone from novelty to norm, and is becoming less an option, and more a necessity.

The next installment of this lecture will examine more of the details of web advertising, the costs, the types, the trends, and how to do it effectively.

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