Shell Chemicals redefines its

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Chapter 2 E-commerce fundamentals

Activity 2.4 Revenue models at e-business portals Purpose To illustrate the range of revenue-generating opportunities for an online publisher. This site looks at three alternative approaches for publishing, referencing three different types of portal. Question Visit each of the sites in this category. You should: 1 Summarize the revenue models which are used for each site by looking at the information for advertisers and affiliates. 2 What are the advantages and disadvantages of the different revenue models for the site audience and the site owner? 3 Given an equivalent audience, which of these sites do you think would generate the most revenue? You could develop a simple spreadsheet model based on the following figures: • Monthly site visitors: 100,000, 0.5 of these visitors click through to affiliate sites where 2 go on to buy business reports or services at an average order value of €100; • Monthly page views: 1,000,000, average of three ads displayed for different advertisers at €20 CPM we are assuming all ad inventory is sold, which is rarely true in reality; • Subscribers to weekly newsletter: 50,000. Each newsletter broadcast four times per month has four advertisers each paying at a rate of €10 CPM. Note: These are not actual figures for any of these sites. The sites are: Econsultancy www.econsultancy.com, Figure 2.16. Marketing Sherpa www.marketingsherpa.com. Answers to activities can be found at www.pearsoned.co.ukchaffey visit the www Figure 2.16 Econsultancy www.econsultancy.com 325

Chapter 5 E-business strategy

Exercises Self-assessment questions 1 What are the key characteristics of an e-business strategy model? 2 Select a retailer or manufacturer of your choice and describe what the main elements of its situation analysis should comprise. 3 For the same retailer or manufacturer suggest different methods and metrics for defining e-business objectives. 4 For the same retailer or manufacturer assess different strategic options to adopt for e-business. Essay and discussion questions 1 Evaluate the range of restructuring options for an existing ‘bricks-and-mortar’ organization to move to ‘bricks-and-clicks’ or ‘clicks-only’ contributing a higher online revenue. 2 Explain the main strategy definition options or decisions available to an organiz- ation intending to become an e-business. 3 Between 1994 and 1999 Amazon lost more than 500m, but at the end of this period its valuation was still more than 20bn. At the start of 2000 Amazon.com underwent its first round of job cuts, sacking 150 staff or 2 per cent of its world- wide workforce. Later in 2000 its valuation dropped to less than half. Write an essay on the strategy of Amazon.com exploring its history, different criteria for success and its future. See the Wired Magazine archive for profiles of Amazon www.wired.com. 4 Analyse the reasons for the failure of the original boo.com. Research and assess the sustainability of the new boo.com business model. 5 What can existing businesses learn from the business approaches of the dot-com organizations? 6 What are the similarities and differences between the concepts of business process re-engineering BPR and e-business? Will the e-business concept face the same fate as BPR? 7 Discuss this statement by David Weymouth, Barclays Bank chief information officer Simons, 2000b: There is no merit in becoming a dot-com business. Within five years successful businesses will have embraced and deployed at real-scale across the whole enter- prise, the processes and technologies that we now know as dot-com. 8 Compare and contrast different approaches to developing e-business strategy. Examination questions 1 Define the main elements of an e-business strategy. 2 You are the incumbent e-business manager for a domestic airline. What process would you use to create objectives for the organization? Suggest three typical objectives and how you would measure them. 3 Explain the productivity paradox and its implications for managers. 4 What choices do executives have for the scope and timeframe of implementing e-business? 196 Real-world E-Business experiences The Econsultancy interview Interview with Mike Clark of GD Worldwide, supplier to the social net- work bands Overview and main concepts covered GD Worldwide is an online resource for independent bands originating in Australia. It is intended to help establish an Internet presence and manage the distribution of their material. It also allows bands to create a ‘backstage area’ via its Usync tool. It high- lights the innovation made possible by digital technology and how one web start-up business has taken advantage of them. We caught up with UK MD Mark Clark to discuss plans and progress to date... Q. When, how and why was the company formed? Mike Clark, GD Worldwide: The company is called GD Worldwide, and was formed in 2001 by the Australian band Gabriel’s Day – a touring, working band. They’re relatively small in the global scale of artists, but in Australia have got a core following and a sustainable fan base. The music business in Australia has, to an extent, been overlooked by the big record labels, at least relative to other markets, so it has spawned more of an independent, self- managed environment. The artists have much more of a sense of community about them. So the idea behind GD Worldwide was to take the experiences of Gabriel’s Day and give other artists the tools they need to create self-sustaining careers outside of the traditional, major label system. It gives them an alternative route to market – they don’t have to go through the existing model. In that model, the creative group behind a band have to go through a series of gate- keepers in order to reach their audience – the distribution, the rights organizations, the retailers and so on. There’s a whole load of people that get in between the artist and the audience and are taking meat off the table. Those people aren’t really adding a tremendous amount of value – they are normally taking it away – so the artists find it difficult to reach their audience in a sustainable way. The other side of it is that the gatekeeper model only represents what we estimate to be 3 of the total music marketplace. It’s the short tail and the market is set up to create and feed that, rather like the Hollywood star model. There is the other 97 of the market – the long tail, and we are a company set up to operate there. We put the artist at the centre of things and reorientate the resources around them. The other thing is that it’s no secret that record sales are declining, and while the music is predicting that there is huge growth to be had in the future, nobody seems to know how to get their hands on it. Q. What do you offer over the likes of Bebo and Myspace? Mike Clark, GD Worldwide: In Myspace, there are up to 3m artists but very few have worked out how to monetise their presence or commercialise the interest they have created. We think of our Usync product as the next step on from Myspace, where an artist can interact, manage and learn from their audiences, as well as commercialising them. Bands need a Myspace profile – it’s a great way to attract interest – but once you have brought people into your space, how many of those are true fans? You want to take the 20 of those that are, and bring them into the backstage area we create for you, where they get treated to exclusive content and so on. Part 1 Introduction In their blog posting Google engineers explain: Google downloads the web continuously, collecting updated page information and re- processing the entire web-link graph several times per day. This graph of one trillion URLs is similar to a map made up of one trillion intersections. So multiple times every day, we do the computational equivalent of fully exploring every intersection of every road in the United States. Except it’d be a map about 50,000 times as big as the US, with 50,000 times as many roads and intersections. Google no longer publishes the number of pages indexed on its home page, perhaps due to accusations that it is ‘evil big brother’; however, it is generally reckoned to exceed 10 billion. 115

Chapter 3 E-business infrastructure

Context In addition to being the largest search engine on planet Earth, mediating the searches of tens of billions of searches daily, Google is an innovator. All online marketers should follow Google to see the latest approaches it is trialling. Google’s Mission Google’s mission is encapsulated in the statement ‘to organize the world’s information ... and make it univer- sally accessible and useful’. Google explains that it believes that the most effective, and ultimately the most profitable, way to accomplish its mission is to put the needs of its users first. Offering a high-quality user experience has led to strong word-of-mouth promotion and strong traffic growth. Putting users first is reflected in three key commit- ments illustrated in the Google SEC filing: 1 We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept payment for inclu- sion or ranking in them. 2 We will do our best to provide the most relevant and useful advertising. Advertisements should not be an annoying interruption. If any element on a search result page is influenced by payment to us, we will make it clear to our users. 3 We will never stop working to improve our user experience, our search technology and other important areas of information organization. The range of Google services is well known: Google Web Search Movie, Music and Weather Information News, Finance, Maps, Image, Book and Groups Information Google Image Search Google Book Search Google Scholar Google Base. Lets content owners submit content that they want to share on Google web sites. Google Webmaster Tools. Provides information to webmasters to help them enhance their understanding of how their web sites interact with the Google search engine. Content owners can submit sitemaps and geotargeting information through Google Webmaster Tools to improve search quality. Google Co-op and Custom Search. Tailored version of the search engine. Google Video and YouTube Google Docs. Edit documents, spreadsheets, and presentations from anywhere using a browser. Google Calendar Gmail Google Reader. Google Reader is a free service that lets users subscribe to feeds and receive updates from multiple web sites in a single interface. Google Reader also allows users to share content with others, and function with many types of media and reading-styles. Orkut – a social network Blogger. Blogger is a web-based publishing tool that lets web users publish blogs. Google Desktop. Search own local content. Picasa. Picasa is a free service that allows users to view, manage and share their photos. Google GEO – Google Maps, Earth and Local Google Checkout provides a single login for buying online. On 1 February 2008, Google began charging merchants who use Google Checkout 2 of the transaction amount plus 0.20 per transaction to the extent these fees exceed 10 times the amount they spend on AdWords advertising. Google Mobile, Maps, Mobile, Blogger and Gmail are all available on mobile devices. Case Study 3.1 Innovation at Google Real-world E-Business experiences Interviews with industry leaders in the e-commerce world to give personal insight to students. Case Study Integrated throughout the text with many taken from the Financial Times, illustrating current examples of e-commerce and its applications. Essay, Discussion and Examination questions These provide engaging activities for students and lecturers in and out of the classroom. Activity To test students’ understanding of key topics. Student Companion Website Multiple choice questions, video material, online glossary and flashcards to aid learning and studying. Guided tour