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.Google.Com