Internet Marketing and Monetization

Alvin All and Craig WortmannUniversity of Chicago

February 6, 2010

I. MarketingA. Defining the business modelB. The Web site as sales callC. Define Internet distribution pointsD. Variable Paid vs. Fixed Paid Marketing

II. MonetizationA. Advertising ModelB. Ecommerce Model

Internet Marketing and Monetization

Defining the Internet Business Model

Who is paying us?

Web SiteConsumer Advertiser$ $

Defining the Internet Business Model

What are they getting?

Web SiteConsumer Client$ $

Advertisers get access, leads and customers

Consumer buys a product or service

Defining the Internet Business Model

Consumer pays Web sitedirectly for product/service

Client pays to reach our audience

Ecommerce(Transaction)

Advertising(Relationship)

BusinessModel

Web site assumes each visitor is ready to buy - so place emphasis on price,

product features and urgency to buy now.

Web site offers content, tools and resources for free

and seeks long-term relationship.

BusinessModel

Description

Internet Business Model - Types of Web Sites

Ecommerce Advertising

WebSiteType

• Ecommerce store selling products or intellectual property

• Subscription to information or tools

• Photo sharing site• Search engine

• Information/Content• Search engine• Community• Social networking• File sharing• Blog

Ecommerce - Selling Products/Intellectual Property

Amazon

NetworkSolutions

iTunes

Ecommerce - Information Content

Wall Street Journal

The New York Times

Ecommerce - Tool

Trails.com

Survey Monkey

Ecommerce - Photo Sharing and Storage

Snapfish

Shutterfly

Ecommerce - Search Engine

Google

Yahoo

Advertising - Search Engine

Yahoo

Google

Advertising - Blogging

Lickmyspoon

Art Architecture

Advertising - Information Content

CNN

iParenting

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Advertising - Social Media

Facebook

MySpace

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The Website as Sales Call

• Think of a website visit as a prospect sales call, and think of how you would interact with that prospect if you were sitting in front of him. For starters, was the visitor able to find your site by performing a search engine query? Let’s assume he did. Now that he’s on your site, consider the following: Is your content engaging? Can the user find what he needs easily?

• Thinking about and structuring your site as if it were a living, breathing sales person is one of the most valuable exercises you can undertake.

• According to Phil Mui from Google, the overall average conversion rate of all websites using Google Analytics is 2%. TWO percent! So what is happening to the other 98%? Many users simply can’t find what they need or aren’t willing go deep enough to look for it.

The website as sales call

The website as sales call

The website as sales call

The website as sales call

The website as sales call

The website as sales call

The website as sales call

Defining the Internet Marketing Distribution Points

WebSite

Search Engine

Video

Podcasts

Email Blogs

Press Release

AffiliateMarketing

Social MediaVoting/Review

Sites

Domain name

misspellings

Intuitive domain names

Associations

TradeshowListing

Content Syndication

OtherWeb sites

Variable vs. Fixed Payment Distribution Points

WebSite

Search Engine

Video

Podcasts

Email Blogs

Press Release

AffiliateMarketing

Social MediaVoting/Review

Sites

Domain name

misspellings

Intuitive domain names

Associations

TradeshowListing

Content Syndication

OtherWeb sites

Variable Pay Fixed Pay

Variable vs. Fixed Payment Distribution Points

WebSite

Search Engine - KeywordsAffiliate marketingDomain name misspellingsIntuitive domain namesAdvertisingOther Web sitesEmail

Search Engine - SEODomain name misspellingsIntuitive domain namesPress releaseSocial mediaPodcastsVideoBlogEmailContent syndicationTradeshow listingAssociationsVoting/review sites

Variable Pay Fixed Pay

World Internet Statistics

Source: Internet World Stats

Search Engine Statistics

Source: Experian Hitwise

Search Engine - Paid Keywords

Google Tools

Search Engine - Paid Keywords Google Tools

Search Engine - Paid Keywords

Adgooroo

Affiliate Marketing

Commission Junction

Advertising Monetization

• How advertising is sold and purchased• Pricing structure• Ad unit types• Ad kit• Insertion order• Ad serving delivery and tracking tool• Remnant inventory

Advertising Sold and Purchased

Publisher Client1. Direct Sale

2. Client Agency

3. Publisher Agency

PublisherAgency(AOR)

ClientAgency(AOR)

Advertising Pricing Structure

• CPM - Cost Per Thousand: Advertisers pay for exposure of their message to the publisher’s audience.

• CPC - Cost Per Click: Advertisers pay each time a user clicks on their ad on the publisher’s Web site and is redirected to the advertiser’s Web site.

• CPA - Cost Per Action: Advertisers pay based on users clicking on their ad on the publisher’s Web site and completing an action at the advertiser’s Web site. This action could be an ecommerce transaction or registering/signing-up for something with the advertiser.

Advertising Pricing Example

CPM: 1,000,000 impressions served / 1,000 x $15 CPM = $15,000 in salesCPC: 1,000,000 impressions x 1.5% click on ad = 15,000 clicks x $ 1 CPC = $15,000 in salesCPA: 1,000,000 impressions x 1.5% click on ad = 15,000 clicks x 2% conversion to action = 300 conversions x $50 CPA = $15,000 in sales

Advertising Ad Unit Tips

• Try to get all ad units above the fold.• Use standard ad unit sizes.• Offer enewsletters and registration. Require

name, email address, zipcode, HHI registration. Ask for other data points that are pertinent to your Web site.

• Offer rich media - they get higher prices and better performance results.

• Offer direct emails to advertisers.• Offer enewsletter sponsorships.• Offer co-registration only to pertinent clients.

Ad Unit Type Web Site Examples728x90 Banner

300x250 Box 160x600 Skyscraper

Width x Height (In Pixels)

Ad Unit Type Email Examples

Ad Kit

Your ad kit should contain information about your Web site, such as unique user, page view and impression count, demographic information, ad units offered with rate card pricing, tech specs for ad units, minimum buys and more. This is the main brochure for an advertiser to become familiar with your Web site and your advertising options. You will email the ad kit to potential advertisers.

Ad Unit Delivery and Tracking

There are many ad unit serving and tracking tools. Ad units are fed into the ad serving tool and unique code is attached to the ad unit to track the impressions and clicks. The advertiser and the publisher need to have ad serving and tracking on the same ad and even when it is the same technology you both will have different counts!

Remnant Inventory

Remnant inventory is advertising inventory that the company was unable to sell. It is sold at a deeper discount than otherwise. Just like an airline you have some many seats to fill every day and sometimes you can’t with your sales force or an agency you use. At this point you let remnant inventory run on your Web site.

Internet Advertising Bureau (IAB) Standards

Ecommerce - Tips for Success

• Great search and navigation• Customer service number displayed on top• Show related products and cross sell• Allow shoppers to add to cart without immediate registration• Keep the wish list separate from “buy item” button• Customers should be able to easily access their cart• Show security badges and trust certificates• Offer payment and shipment options• Include order details on the confirmation page• Reduce shopping cart abandonment• Include product reviews

Ecommerce - Shopping Cart Abandonment• A study by PayPal and comScore found 45% of US online shoppers had

abandoned shopping carts multiple times in just three weeks.

• Most importantly from the merchants’ point of view, the average cost of abandoned goods in those shopping carts was $109.

• In the same study, 46% of online shoppers said high shipping charges were a “very important reason” for emptying carts.

• Other reasons for abandonment included:• Wanted to comparison shop: 37%• Lack of money: 36%• Wanted to look for a coupon: 27%• Wanted to shop offline: 26%• Couldn’t find preferred pay option: 24%• Item unavailable at checkout: 23%• Couldn’t find customer support: 22%• Security concerns: 21%

Ecommerce - Payment Structural Set-up

• Shopping Cart• SSL• Payment Gateway• Internet Merchant Bank• Your Company Checking Account

Ecommerce - Payment Flow

SSL

Authorize.net

InstaMerchant

PayPal, 2Checkout or Clickbank

Shopping Cart

Ecommerce - Shopping Cart Decision

Two types of shopping carts - Hosted/Rented/Managed vs. Software.

Hosted/Rented/Managed - Requires monthly rental fees to the hosting provider plus potentially transaction fees. The advantage is a quick setup, little to no technical skill by the operator, short-term contracts, web hosting included and server backups. The disadvantage is monthly fees and transaction fees and “low to no” ability to customize for a specific need that the operator might have.

Software - One time cost for the software. The advantage is with higher volume sales the software will financially be a lower cost than monthly fees and more customisable and flexible to specific needs. The disadvantage is higher upfront costs, more technical skill needed to get started and a cost for monthly web hosting fees.

Ecommerce - Shopping Cart Types

3dCartAbleCommerceCapturesCardinalCommerceCart2BuyCart32CartManagerChannelAdvisorCoreCommerceDesignCartE-junkieEasy Store CreatoreCartsofteCRATERFatFreeCartFlying CartFORTUNE3GoECartiBuilder

InfopiaKyozouLC E-Commerce SolutionsMagento CommerceMake-a-StoreMarketworksMercantecNetSuiteNetwork SolutionsPayLoadzPinnacle CartShopifyShopVisibleSmartCart.comSpotMerchantVendioVolusionYahoo StoreZoovy

Hosted/Rented Software1ShoppingcartAbleCommerceAFCommerceAspDotNetStorefrontCardinalCommerceCart32CS-CartdigiSHOPFORTUNE3LiteCommerceMagento CommerceMake-a-StoreMivaPinnacle CartProductCartShopSiteUberCartWordPress e-Commerce PluginX-Cart

Ecommerce - Payment Gateway Defined

A payment gateway is an e-commerce application service provider that authorizes payments for e-businesses, on-line retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets.

A payment gateway protects credit cards details encrypting sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant and also between merchant and payment processor.

A payment gateway facilitates the transfer of information between a payment portal and the Front End Processor or acquiring bank.

Ecommerce - Payment Gateways

Thank you for your time. If you want to reach us after the conference use our email addresses below.

Alvin Allalvin.all2@gmail.com

Craig Wortmanncraig@craigwortmann.com