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CHAPTER 15
INTERNET MARKETING AND INTERACTIVE MEDIA
Chapter Overview
Perhaps the most intriguing of all media—at least to students—is the Internet. Since the inception of the
World Wide Web, the Internet has created quite a stir in marketing. Likewise, in the advertising and
promotions area, the Internet has been hailed as major breakthrough for communications and a threat to
traditional media as a means of communications and even as a replacement for brick and mortar stores.
We have taken a much more conservative view of the Internet. We see it as an extremely valuable tool for
marketers and an important part of the IMC program. In our opinion, there are advantages and
disadvantages of the Internet just as there are for other media and the astute marketer will know how and
when to employ this medium.
The chapter starts off with a description of the Internet, identifying the Web participants in the consumer
and business to business markets. The objectives for using the Internet in an IMC program are then
discussed, focusing on the development of a website, and communications and e-commerce objectives.
The role of the Internet in the IMC program is considered next, and current methods of measuring
effectiveness are discussed (we say current, because by the time you read this, they may be gone!)
Strengths and limitations of the Internet and sources of information follow.
.
Learning Objectives
1. To explore the different ways the Internet is used to communicate.
2. To review the strengths and limitations of the Internet and interactive media.
3. To understand the role of the Internet and interactive media in an IMC program.
4. To evaluate the effectiveness of communications through the Internet..
Chapter and Lecture Outline
I.
DEFINING THE INTERNET
A brief history of the development of the Internet is provided. In addition, some of the Internet’s features
and the terminology that is important to understand are offered in Figure 15-1 and Figure 15-2.
The key terms as they relate to using the Internet as a marketing tool are:

E-Business – using the Internet to manage day-today business processes

E-Commerce – any commercial activity that is electronically facilitated

I-Commerce – all transactions done over the Internet

Internet Marketing – all of the key marketing functions applied to the Internet
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II. INTERNET MARKETING COMMUNICATIONS
To develop a successful Internet communications strategy, the disciplines covered so far in the text
certainly apply. These include an analysis of the key participants and a clear statement of communication
objectives.
A. Web Participants
These include:
1. Users: Consumer Market – usage rates and user demographics are constantly evolving.
Figure 15-4 highlights what users do online.
2. Shoppers – their profile is different from that of users, particularly regarding lifestyles.
3. Users: Business-to-Business – their usage of the Internet results in dramatically higher
online spending than that for shoppers. In addition to selling products to other
organizations on the Internet, businesses use the Internet for tracking sales leads, doing
sales training and conducting sales meetings.
.
B. Web Objectives
The Internet is both a communications and direct response medium. Appropriate objectives for it are:
1.
2.
3.
4.
5.
6.
7.
Build a brand image
Disseminate information
Create awareness
Gather research information
Stimulate trial and rebuy
Improve customer service
Increase distribution
C. Developing and Maintaining a Website—The Website is the home of the information the
company wishes to provide over the Internet. Developing and maintaining a successful site is
costly and time consuming. However, to attract new visitors and keep old ones coming back, it is
essential that sites be continually updated.
III.
INTEGRATED MARKETING COMMUNICATIONS AND TH EIMC APPROACH
The Internet both supports and is supported by an IMC program
A. Advertising—a variety of forms of advertising on the Internet are available
1. Banner ads—the most common form of advertising
2. Sponsorships—both regular and content sponsorships are available
3. Text ads – short messages with embedded web links
4. Pop-ups—small message boxes that appear on ones screen
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B.
C.
D.
E.
5. Interstitials—ads that appear on the screen while content is downloading
6. Push Technologies— also called webcasting, these are messages are sent to the
viewer rather than waiting for them to come to the message
7. Link ads—connections to other sites using text or logos
Sales Promotion—sampling, sweepstakes, contests and other forms of sales promotions are
commonly used on the Internet. In addition, a number of companies offer online coupons.
Personal Selling—the Internet has a number of ways of being combined with personal
selling. Many business to business companies are using the net to prospect for new
customers, qualify potential customers, provide product information and build customer
relationships. Others have used it effectively to assist the sales force, by removing many of
the more mundane tasks such as reordering and responding to routine inquiries.
Public Relations—as discussed in this chapter and Chapter 13, the Internet has become a very
valuable tool for disseminating public relations information, and achieving PR objectives.
Direct Marketing—many consider the Internet to be a direct marketing medium. The chapter
takes a broader perspective, and notes that a number of direct media are employed with and
for the Internet.
1. Direct mail
2. Database marketing
3. Infomercials
4. Direct sales
IV. EVALUATION OF INTERNET MARKETING
A. Strengths of the Internet marketing include:
1. Target marketing
2. Message tailoring
3. Interactive capabilities
4. Information access
5. Sales potential
6. Creativity
7. Exposure
8. Speed
B. Limitations of the Internet marketing include:
1. Measurement problems
2. Audience characteristics
3. Websnarl
4. Clutter
5. Potential for deception
6. Costs
7. Limited production quality
8. Poor reach
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VI.
ADDITIONAL INTERACTIVE MEDIA
A number of other interactive media are discussed, however, most of the attention is focused on
WebTV, and its potential for a role in the IMC program. To this date, this medium has still not
received wide acceptance.
Teaching Suggestions
This chapter may be one of the most interesting chapters in the text for students. At the same time, it may
be one of the more difficult for instructors to teach. Much of the difficulty will come from the fact that the
Internet world is changing so rapidly that by the time something is committed to print, it has changed.
Many of the companies we discuss in this chapter may no longer be in existence by the time the text
comes out. Others will have merged or changed their names. Another factor that makes the chapter
difficult to teach is the high level of knowledge and interest of the students. Many of them will know
more about the working of the Internet than we do.
We recommend getting the students involved in the discussion from the beginning. Showing examples of
effective websites—as defined by the communications and sales objectives—is a good starting point.
Then a discussion of why Internet companies fail might follow. The large number of companies providing
information and/or measuring effectiveness offer excellent examples to bring to class.
Answers to Discussion Questions
1. While some believe that the Internet poses a threat to traditional media, others disagree, arguing that
it is just another medium to marketers. Explain some of the arguments on both sides. What is your
conclusion?
When the Internet hit the market with a bang following the initiation of the WWW, there were many
who believed that traditional media would cease to exist, or at the very least, play a much less
important role in marketing communications programs. Many others disagreed.
While there has been an incredible rush to the Internet, with universities rapidly developing ebusiness programs, businesses diverting some monies to this medium, etc., the reality is that many of
the dire predictions of the demise of traditional media have not come true. In fact, just the opposite
has come true. The Internet may be one of the best things to ever happen to traditional media. Internet
marketers very quickly learned that they needed traditional media to promote their sites, and that
promoting on the Internet alone would not be sufficient. The result is that traditional media have
received the rewards of the Internet companies’ expenditures, and are bringing in revenues at a very
high rate. Recent events have demonstrated that for Internet companies to survive, they will need to
adopt more traditional marketing methods, and employ even more traditional media.
While some monies have been shifted from traditional media to the Internet, these figures are
relatively small in quantity. As the Internet grows, these numbers will grow as well, but there is no
serious threat to traditional media at this point, and there is not likely to be.
2. The Internet is growing at an extremely rapid pace. At the same time, there are indications that this
growth will slow. Discuss some of the factors that may lead to decreased growth of the use of this
medium.
As shown in Figure 15-3, the adoption of the Internet has occurred more rapidly than any other
medium. While this adoption is continuing, it is doing so at a slower pace. A number of reasons why
this rate of adoption will slow are:
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
Maturity—like any other innovation, the Internet will mature. Adopters will enter and leave the
market, and the curve will level off. Many innovations have an early trial rate, that eventually
levels off.

Dissatisfaction—the Internet is not for everyone. While you may get some argument with this
conclusion, the reality is that many people have tried the Internet, and found it to be less than
what they need, or may not need it at all. They will visit less, or discontinue use completely.

The digital divide—not everyone has a computer. Those that do, may adopt early, others may not
adopt at all.

Competition—many brick and mortar companies and traditional media have fought back to slow
the adoption of the Internet. For many of the advantages the Internet offers, traditional companies
have now been able to match or exceed, resulting in the slowing of the growth.
The result of these factors is a slowing in the growth of the Internet. This does not mean that it will
not continue to grow, only that it will do so at a slower rate.
3. Discuss the objectives marketers may be seeking in their use of the Internet. Which is the Internet best
suited for?
As noted on pp. 401-403, there may be a number of objectives for employing the use of the Internet.
These include communications objectives as well as e-commerce.
Communications objectives include:

Dissemination of information—perhaps one of the most effective uses of the Internet is that of
providing information. No other medium can provide more information, at a faster pace and for
less cost than the Internet

Creating awareness—establishment of a website immediately provides the potential of worldwide
exposure. However, it does not guarantee it. By establishing a web presence, companies with
limited budgets may now be discovered by potential customers, and may establish a website for
just this purpose.

Research information—again, due to its depth of content, and the speed and cost efficiencies with
which this information can be accessed, the Internet is a valuable tool for providing research
information.

Creating an image—websites can also assist a company in providing the market an image or to
communicate their positioning

Stimulate trial—due to its ease of use and speed, the Internet serves as a means for stimulating
trial

Improving customer service—the interactive capabilities of the Internet, along with its speed,
provide the potential for significantly improving customer service

Increasing distribution—the Internet is a distribution channel. Like direct marketing, it allows the
marketer to offer products and services through a new channel
All of the above constitute objectives for using the Internet, as does e-commerce. Depending on the
nature of the company, each may be more useful. For example, for a small company with a limited
budget, the ability to gain awareness may be the most valuable objective. For a large company, with
an extensive advertising budget, the ability to provide information or stimulate trial may be most
important. At any given time, these objectives may also change.
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4. Explain the different forms that advertisers may use to advertise on the Internet. Discuss some of the
advantages and disadvantages associated with each.
A variety of options are available to those who wish to advertise on the Internet. Each comes with its
own advantages and disadvantages:

Banners—the most common form of advertising on the Internet is through banner ads. Visit any
site, and you will see this form. Unfortunately, banner ads have not been proven to be as
successful as advertisers had hoped for, at least in regard to Internet evaluative criteria. (Very few
consumers actually click-through banner ads.)

Sponsorships—companies can also sponsor sites, or portions of a site. In these sponsorships, the
advertiser pays to be associated with the site, or specific content on the site. Like other traditional
sponsorships, the advantage is the association with the content. Content sponsorships are even
more involved, as the sponsor actually writes or participates in the writing of the content with
which they hope to be associated.

Pop-ups—the little boxes that appear on one’s screen when they visit a site, pop-ups are useful in
creating awareness. However, they may also suffer the disadvantage of being irritating.

Interstitials—ads that appear while content is downloading, interstitials offer the potential to
create awareness, but may not get noticed.

Push technologies—the ability to push the content to the consumer, rather than waiting for them
to come to the site offers the advantage of getting the information disseminated. Disadvantages
stem mostly from the fact that many consumers may not want the information, or become irritated
with it just as they might with telemarketing, direct mail, etc.

Links—links provide the opportunity to offer additional information to the visitor to the site.
Thus, they may appreciate the ability to gain new or additional insights. The disadvantage is that
they may take the visitor away from the site.
5. What is meant by personalization? Give an example of how a consumer company might use
personalization.
Personalization is the ability to provide a visitor to a site with specific information that they are
interested in, while not sending them that in which they have no interest. The consumer can actually
specify which types of information they want in many instances. Personalization is available in
consumer and business to business markets, and allows for very targeted information provision.
In many ways, personalization is the Internet’s version of direct marketing. It allows for precise
targeting of information, with a minimum of waste coverage, and can be both useful and interesting to
the consumer. Netscape allows users to personalize the information they receive. Individual.com does
the same thing for business to business and consumer markets, allowing visitors to receive
information on the topics they select. The Industry Standard provides personalization capabilities as
well. Purchase something from Amazon.ca, and you will see how the site uses push technologies to
personalize reading choices.
6. A number of Internet marketers have been criticized as engaging in unethical practices. Discuss some
of the practices that might be considered unethical. What should be done to curtail these practices?
Visit Whitehouse.com when you meant to visit Whitehouse.gov and you will be taken into a porn
website. Type in ifoseek when you meant infoseek, and the same thing will happen. This is just one of
the unethical practices that Internet companies engage in. Many companies attempt to get visitors by
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having a domain name very similar to that of a popular site. By mistakenly landing at their site, the
deceivers benefit by having you count as a visitor, and maybe even staying there to make a purchase
or surf.
Internet companies also gather a great deal of information about consumers without their knowledge
or permission. The use of cookies and other means of collecting this information may violate privacy
laws, and at the very least, results in very unhappy consumers.
Internet companies—particularly foreign sites—have also accepted product orders and never shipped
them. Knowing that it is difficult to file a complaint against a company in a foreign country, they take
the money and never deliver.
These are just a few of the deceptive practices some Internet companies engage in. One must
remember that like direct marketing companies, there is always the potential for a few to ruin it for
the many. There are always going to be companies that engage in deceptive practices in any industry,
and the Internet is no exception.
Unlike other industries, however, the Internet is like the “wild, wild, West”. At this point in time there
are very few regulations, and those in the industry would like to keep it this way—arguing that this is
one of the prime values of the Internet. Nevertheless, like other industries, rules and regulations will
have to be established to curtail deceptive practices. Like advertising and direct marketing,
perpetrators will have to be punished to bring some control and credibility to the medium.
7. Discuss some of the ways that marketers attempt to measure the effectiveness of their programs on the
Internet. How do these measures relate to more traditional measures? Describe the advantages and
disadvantages of traditional versus Internet measures.
As with other aspects of their programs, Internet marketers have, for the most part, not adopted many
of the traditional measures of effectiveness used in other communications areas. While this is true of
all of the IMC tools—public relations has their own measures, as does direct marketing—Internet
marketers have seemingly taken it a step further, using their own measures almost exclusively. These
measures, include:

Hits—the number of times a specific component of a site is requested

Viewers—the number of viewers of a site

Unique visitors—the number of different visitors to a site in a specific time period

Clicks and click throughs—the number of visitors that click onto a part of the site to acquire more
information (for example, onto a banner ad)

Impressions—the number of times a visitor views a page
As can be seen, these terms are not common to traditional media. As can also be seen, they focus on
the technology of the Internet. Other more traditional methods like tracking, surveys, etc., if used at
all, are used on a very limited basis.
The above measures offer the Internet company some insights into the effectiveness of their sites. At
the same time, they do not go far enough in demonstrating effectiveness. Like direct marketers who
may focus only on sales (Internet companies do also, focusing on e-commerce sales), they may be
missing some valuable information and insights. In the future, some traditional measures will need to
be adopted to get marketers to “buy in” to the value of the Internet.
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8.
Discuss some of the advantages of using the Internet. For which types of companies is the Internet
best suited? Why?
The Internet offers some distinct advantages to the marketer. These include:

Target marketing

Message tailoring

Interactive capabilities

Information access

Sales potential

Creativity

Exposure

Speed
A variety of companies can benefit from the use of the Internet. So far, those in the business to
business arena have seemingly achieved the most success as many consumer marketers have failed to
achieve their expectations. However, this does not mean that the medium is limited to business to
business marketers. While consumer e-commerce companies may not be as successful as they aspired
to be, they nevertheless can and have been successful. Most reports are that these companies’ sales
are about the same as those of catalogue companies—around 2%. While this may not be achieving
intended goals, it is still a significant figure—perhaps the goals are too high!
Other companies have found success (or could) in areas other than e-commerce. Large consumer
companies have used their websites for providing information, customer service, etc., and have found
success as measured by these criteria.
The text cites a number of companies that have saved millions of dollars through innovative uses of
the Web, and others who have improved the effectiveness of their sales forces through Internet
strategies.
Most companies may be able to find a way to use the Internet to operate to their advantage. They just
need to know how to define what the objectives they are seeking will be in determining its role.
9. What is interactive TV? Explain how interactive television differs from traditional television. Give an
example of how a company might employ this medium.
A number of companies, including Microsoft, are investing in interactive TV as a medium they see as
the future of television. Unlike traditional TV, which is a passive medium, interactive TV allows the
consumer to literally interact to determine programming they desire, times they want to see it,
repeating scenes or even entire programs, etc. Essentially, a combination of the Internet and TV,
viewers can access more information about products, gather statistics and even order through the TV
set.
Those who support concept of interactive TV contend that passive viewing is a thing of the past. They
argue that today’s TV viewer wants to multitask, that is, perform a number of activities while
watching TV. They cite SuperBowl statistics showing a high percentage of viewers engaging in
multitasking.
Others contend that TV is and will remain a passive medium, and that viewers are not interested in
doing anything else but watching. They cite the failure of interactive TV in test markets to support
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their views, and the fact that viewers often do not switch channels when watching as additional
support.
If WebTV and others work, it offers many opportunities to the marketer. TV can become an on-air
catalog, with each show demonstrating products and providing sales opportunities. Clothing
companies can get their products on actors to be seen, sports equipment companies can get product
placements and generate sales while one watches a ball game.
If interactive TV works, it offers great potential. It is, however, still a big “if”.
10. Many marketers feel that the Internet offers much more potential to business to business marketers
than it does to consumer marketers. Detail some of the reasons they feel this way, and draw a
conclusion as to the merits of this argument.
At this time, business to business has certainly the edge over consumer marketers when it comes to
marketing on the Internet. The sales of products and services over the Internet by b to b marketers
dwarf consumer sales. The future predictions show this trend continuing.
Business to business sales in many ways are more suited to the Net than consumer sales. Many
decisions are rational, with specifications that have to be met, and price is a critical factor. B to b
marketers can offer this information over the Internet, along with all the information a buyer needs to
have in real time. In many cases, the products are commodities, and little is left to judgment. Buyers
search the net for the best price, shipping and as long as the product meets specifications, orders.
Consumer decision making may be less rational, more emotional, and more judgmental. Specs may
not be known or even required. The consumer wants to touch, feel and see what the product looks
like. While this can be done through the Internet or catalogs, it may not have the same effect as
personally shopping.
For many consumers, shopping is a social activity. They like to get out, feel the product, enjoy their
shopping as leisure time, etc. For them, catalogs and the Internet are less of an option.
Business to business sales will continue to increase as will consumer sales. Consumer sales on the
Internet may be like those in catalogs—substantial, but not replacing the actual shopping experience.
IMC Exercise
Have students visit websites in both the consumer and business to business sectors. Have them
evaluate the sites based on the communications and e-commerce objectives discussed in the text,
critiquing the site and offering suggestions for improvement.
IMC Project
Develop the Internet strategy. Describe what the website will look like (or design one), and which
advertising and promotions forms will be employed. Will the site include e-commerce and public
relations sections?.
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