The Promise and Challenges of Online Marketing

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Online marketing offers great promise for the future. Its most ardent supporters envision a time when the Internet and electronic commerce will replace magazines, newspapers and even stores as sources for information and buying. Yet despite all the hype and promise, online marketing may be years away from realizing 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 money-making proposition — according to one report, money-losers exceed money-winners 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 market-space. 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 10-20 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 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 "never-ending 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 Web-site visitors, and many consumers who participate in Web-site 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 up-scale 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 twenty-first 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.

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