Direct Marketing on the Internet
Our discussion of direct marketing and the Internet will approach the topic from two perspectives: the use of direct-marketing tools for communications objectives (as discussed in Chapter 14), and e-commerce. As we stated previously, many direct-marketing tools like direct mail, infomercials, and the like, have been adapted to the Internet, as you will see. At the same time, e-commerce—selling directly to the consumer via the Internet—has become an industry of its own.
Direct Mail Direct mail on the Internet (e-mail) is essentially an electronic version of regular mail. Like regular mail it is highly targeted, relies heavily on lists, and attempts to reach consumers with specific needs through targeted messages. As we discussed earlier under personalization, consumers can opt to have specific types of email sent to them and other types not sent. For example, if you permit, The New York Times will e-mail you information about specific promotions, articles that will appear, books on sale, and other items that you might purchase from it.
Sometimes users may also receive less targeted and unwanted e-mails. The electronic equivalent of junk mail, these messages are referred to as SPAM. (One e-mail-filtering company estimates that as many as 25 percent of all e-mails are SPAM.)15 U.S. companies spent $927 million on e-mail ads in 2001, up 87 percent from
2000. Because of the high volumes of SPAM that have been sent, and the fact that many consumers consider it a nuisance, the U.S. government has passed laws regulating its use.
Catalog-oriented companies like Lands' End have also increased their use of electronic media. Lands' End sells more apparel online than any other retailer ($327 million in 2001); online sales constitute 21 percent of its total revenues. Interestingly, unlike many other e-mail marketers, the company does not use SPAM. It sends messages only to those who have agreed to receive them—an indication that junk mailing may not be necessary to be successful.17 (See Exhibit 15-13.) The company recently aired television commercials to promote the ease and efficiency of using its online catalog, and sent customers in its existing database direct-mail pieces informing them of the same. In turn, many e-marketing companies now send out print catalogs to promote their sites.
While many consumers don't like SPAM or other forms of e-mail, studies have shown the effectiveness of e-mails. A study by Abacus indicated that in 2001 the value of online transactions increased by 47 percent while that of off-line catalogs remained the same. According to the study, the number of persons who received a catalog offline and then ordered online increased by 7 percent.18
Infomercials Yes, even the infomercial has discovered the Net. The same people who brought you "Amazing Discoveries" infomercials on television now produce infomercials for the Internet (and they are not alone). One such infomercial, by iMall, a company based in Provo, Utah, runs marketing seminars on how to make money on the Internet. Other companies are expected to follow. Does this mean we will soon see FlowBees on the Web?
Exhibit 15-13 Lands' End is an effective Internet user
E-Commerce E-commerce, or direct sales on the Internet, has truly taken off. Online spending for the fourth quarter was expected to reach $19.6 billion, a 23 percent gain over 2001.19
While more and more consumers buy online, consumer sales are only about one-fifth of those by business-to-business marketers. B-to-b sales are expected to be over $6 trillion by 2004.20 Many business -to-business companies like Applied Industrial Technologies, National Semiconductor, and Xerox have also found success in the world of e-commerce.
Home Shopping Channels In the direct-marketing chapter, we mentioned that QVC has taken its home shopping TV channel to the Internet in the form of iQVC. HSN also has an Internet shopping channel. In fall 2002, buy.com (the Internet-only company) announced that it would be initiating a new shopping channel on television.
Companies measuring the effectiveness of the Internet employ a variety of methods, most of which can be done electronically. As you will see in a moment, a number of companies provide Internet measures as part of a package; that is, they provide audience measurement information (demographics, psychographics, etc.) as "up-front' information, as well as some of the effectiveness measures described below. First, we will discuss some of the measures used to determine the effectiveness of a website. Then, we will discuss some of the companies providing these measures.
Continue reading here: Advantages and Disadvantages of the Internet
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