E-MARKETING

PROMISE

• Disintermediate• Closer alignment of demand and supply• Develop close and loyal relationship with endusers• Leverage information• Lower cost, price, higher sales, profit

Customer acquisition cost, “viral marketing” = CAC plummets with increased customers word of mouth; Why do most B2C’s fail? Expected too much “viral marketing”, but it is very rare, 6sigmas away from mean, only first movers, 3 months, “tipped market”

$90-180 Most .com’s 99%

<$40$40

CAC

t

WHAT WENT WRONG?

• Expensive customer acquisition cost

• Costly site development and maintenance

• Poor customer experience• Difficult to navigate• Ask for too much information

• Technology snags• Narrow band access• Slow servers

YET, THE PROMISE REMAINS

• Technology gets better, cheaper

• Broadband will be a boost

• Firms understand challenges better

• Buyer centric exchange: commerce one

• Easy supplier acquisition

• Neutral exchange: ariba

• Focus independent exchanges

Most of them failed in the B2B: suppliers run away when hear “auction”, main factor: supplier flow hard to establish critical mass on both sides, customer-suppliers

• Likely outcomes

– Market and revenue growth below expectations

– Process efficiency may dominate auction

CHANNEL TRANSFORMATION: EXCHANGES

Ebay.com

• Started as C2C, now SmallBiz 2 C

• Quality-metric on both sides is key for trust

PROMOTION: ADVERTISING

• The steep descent of clickrates– 2% to 0.4%

• Lower banner ad costs

• Emphasis on sign-ups/ acquisition

• Is advertising on the net dead?

NET ADVERTISING WILL BE POWERFUL

• Curse: you can measure its effectiveness!

• Strength: you can measure its effectiveness!

• Advertising is a low efficiency mechanism

• Substitute to complementary

• Better targeting; influence ‘consideration’

• Can be more interactive and effective

ACQUISITION THRU’ THE NET: ART TO SCIENCE

NextCard: Experiment, learn, modify – real time

• 100 ads at a time from a stock of 2000• 3 billion impressions on 100 sites; $3M/month• 200,000 tests/ year!• Example:

– Five controls; two new ads– Sign-ups same as controls– However, balance transfer was expensive

• 3 cents versus 16 cents for each dollar transfer

– New ad: one was twice as profitable as another

PRICING ON THE WEB

• Search bots– Www.Mysimon.Com was getting blocked out, why? Only attractive to

price sensitive customers, as yahoo offers service+convenience+price– Destroyer of value?– Modest success

• Portals are becoming e-merchants– Pay for listing, transactions– Paradox: block bots but pay portals!– A wide array of products– Www.Yahoo.Com

• Virtual groups: b2c to b2b• Dynamic pricing and promotions

– Ebooks, emusic time-sensitive valuation– Basket promotions– Learn more about demand curve: dynamic experimentation

PRODUCTS AND SERVICES: CUSTOMIZATION

• One to one marketing– Low cost customization– Based on behavior inference

• Collaborative filtering• Clickstream analysis

– Based on stated preferences• Www.Landsend.Com

DRIVE TRAFFIC

• Old game: search engine optimization

• Pay for listing– www.Overture.Com– www.Google.Com