• The Promise and Challenges of Online Marketing

• The Promise and Challenges of Online Marketing

Online marketing offers great promise for the future. Its most ardent supporters envision a time when the Internet and electronic commerce will replace maga­ zines, newspapers and even stores as sources for information and buying. Yet despite all the hype and promise, online marketing may be years away from re­

alizing its full potential. And even then, it is unlikely to fulfil such sweeping predictions. Instead, eventually, online marketing will become another important

tactical tool, much like the television or telephone, and should work alongside other tactical elements in a fully integrated marketing mix.

Although novel and exhilarating, online marketing has yet to carve out a central role in consumers' lives. For most online marketers, the Web is still not a money­making proposition — according to one report, money­losers exceed

money­winners by more than 2 to 1. 4 " Here are just some of the challenges that

online marketers face: • Limited consumer exposure and buying. Although expanding rapidly,

online marketing still reaches only a limited market­space. Even in affluent countries such as the United States, 98 per cent of the population owns a TV, whereas less than 10 per cent have Internet access. In Europe Internet connections lag behind the United iStates, although the gap is narrowing. Moreover. Web users appear to do more window browsing than actual

buying. Only an estimated 10­20 per cent of Web surfers actually use the Web regularly lor shopping or to obtain commercial services such as travel

information (see Figure 22.2). 41 • Skewed user demographics and psychograpkics. Online users tend to be

more upscale and technically oriented than the general population. This makes online marketing ideal for marketing computer hardware and software, consumer electronics, financial services and certain other classes

976 * Chapter 22 Direct and Online Marketing

of product. However, it makes online marketing less effective for selling mainstream products.

• Chaos and Clutter, The Internet offers up millions of Web sites and a staggering volume of information. Thus, navigating the Internet can be frustrating, confusing and time consuming for consumers. In this chaotic and cluttered environment, many Web ads and sites go unnoticed or unopened. Even when they are noticed, marketers will find it difficult to hold consumer attention. One study found that a site must capture Web surfers' attention within eight seconds or lose them to another site. That leaves very little time for marketers to promote and sell their goods. By contrast. TV commercials and hifomereials offer a narrative that the Internet cannot, and the marketer is able to control the pace and sequence of the advertisement.

• Security. Consumers worry that unscrupulous snoopers will eavesdrop on their online transactions or intercept their credit card numbers and make unauthorized purchases. In turn, companies doing business online fear that

others will uwe the Internet to invade their computer systems for the purposes of commercial espionage or even sabotage. Online marketers are developing solutions to such security problems. However, there appears to

be a "never­ending competition between the technology of security systems and the sophistication of those seeking to thwart them'. 42

• Ethical concerns. Privacy is a primary concern. Marketers can easily track Web­site visitors, and many consumers who participate in Web­site activities

provide extensive personal information. This may leave consumers open to information abuse if companies make unauthorized use of the information in marketing their products or exchanging electronic lists with other companies. There are also concerns about segmentation and discrimination. The Internet currently serves up­scale consumers well. However, poorer consumers have less access to the Net, leaving them increasingly less

informed about products, services and prices. 4 ­'

Despite these challenges, companies large and small are quickly integrating online marketing into their marketing mixes. More than the latest fad, towards the twenty­first century, online marketing will prove to be a powerful tool for building customer relationships, improving sales, communicating company and product information, and delivering products and services more efficiently and effectively.

Integrated Direct Marketing oo

Although direct marketing and online marketing have boomed in recent years, many companies still relegate them to minor roles in their marketing and pro­

integrated direct motion mixes. Many direct marketers use only a 'one­shot' effort to reach and sell marketing

to a prospect, or a single vehicle in multiple stages to trigger purchases. For Direct marketing

example, a magazine publisher might send a series of four direct­mail notices to a campaigns that use

multiple vehicles and household to get a subscriber to renew before giving up. A more powerful

multiple stages Co approach is integrated direct marketing, which involves using multiple­vehicle,

improve response rates multiple­stage campaigns. Such campaigns can greatly improve response. and profits.

Whereas a direct­mail piece alone might generate a 2 per cent response, adding a freephone number can raise the response rate by 50 per cent. A well­designed Whereas a direct­mail piece alone might generate a 2 per cent response, adding a freephone number can raise the response rate by 50 per cent. A well­designed

More elaborate integrated direct­marketing campaigns can be used. Consider the following multimedia, multistage marketing campaign;

Here, the paid ad to target customers creates product awareness and stimulates enquiries. The company immediately sends direct mail to those who enquire. Within a few days, the company follows up with a phone call seeking an order. Some prospects will order by phone; others might request a face­to­facc sales call. In such a campaign, the marketer seeks to improve response rates and profits by adding media and stages that contribute more to additional sales than to addi­ tional costs.

Consider the following examples: Flying Flowers is a L*K flowers­by­post business. The 17­acre Jersey­based

carnation nursery now offers a postal pack service to most northern European countries. Its strong sales have been achieved through direct­ response advertising and by mailing to an increasingly large customer database. The firm's progressive involvement with retail chains, mail­ order companies and credit card operators has also generated additional sales. It also became an Air Miles promoter. In special promotions such as for Valentine's Day and Mother's Day, Air Miles members who got Flying

Flowers to dispatch a bouquet of flowers would get up to 35 Air Miles awards. All the consumer had to do was order by phone, quoting his/her Air Miles membership number, eredit card details, bouquet code and Air Miles promotion reference number. Easy! It is clear that Flying Flowers uses multiple direct marketing channels, while also taking advantage of

its expanding marketing database to maintain a consistent sales growth record.

The French mail­order giant. Trois Suisses. integrates its existing mail­ order format with other direct retailing approaches. It takes orders by

post, telephone and the French interactive information network, Minitcl, which is installed in more than 3 million houses. It is linked with a

shopping programme on the French RTL­TV and is taking the step into television shopping. Trois Suisses believes that the online revolution could strengthen its foothold in the new shopping environment of the future. 45