Internet Marketing

This page is mostly about how to do internet marketing. See Marketing for marketing basics. See the internet advertising industry for information about the key industry players and how internet advertising works. See the online marketing learning guide for an overview and guide to the key concepts in internet marketing.

Marketing is about more than advertising. It's also about:

Difference Between Offline and Online Marketing

Marketing in the offline world has traditionally about "hammering brand awareness" - sending messages repeatedly until people had developed awareness of your brand and a favorable impression of your brand. It was about response rates and return on investment.

Return on investment is still important, but some industry experts say that marketing online is more about a conversation with the customer, creating an interactive relationship, and engaging a customer's emotions.

Because buyers have so many sources of information communication is not one-way, or two-way, but "multi-way." If there's a problem with your product someone will publish it on the internet, in a blog or a discussion forum or on the feedback page of a site such as Amazon or Yahoo! Stores. Marketers can't "deny and defend." They have to respond and openly address concerns and questions. Marketers need to employ public relations (PR) and media skills. They need to do it fast too - negative feedback can spread very quickly on the internet.

Key Concepts

  • Attention is scarce
  • Because it's scarce, it's valuable - people will pay for it
  • Publishers have ad "inventory"
  • Cost is about impressions, click-through and conversions
  • Campaign involves targeting
  • Marketing involves a "two-sided" search
    • Buyers search for sellers
    • Sellers search for buyers

There's a lot of information on the internet. Economist Herbert Simon observed long ago that "a wealth of information creates a poverty of attention." Because attention is scarce, people will pay for it. If you have people's attention - say by organizing a baseball game or a beauty pageant - people will pay you to insert their message.

A New York Times article on 1/13/08 describes a Canadian dating site whose owner reportedly earns $10 million a year from working ten hours a week! Note that this is an advertising business model - the site does not require a registration fee. Advertisers pay him for the attention he provides.

Conversion Rate

Types of Online Advertising

  • Email
  • Newsletters
  • Display ads
  • Search ads
  • Viral marketing - via blogs, videos, widgets, social networking.

Two major types of online advertising are search ads and display advertising. Search ads are those that people see when they use a search engine, notably Google. Display ads are displayed when the user reaches a web site.


Emails need to be useful or interesting. Here's an example of email (that happens to be from an internet marketing company) with the right characteristics.

Search Advertising

According to a MarketWatch story about Microsoft's bid for Yahoo search engine ads account for 41% of the market. In February 2009 Yahoo! introduced graphics and video into search engine results.

Display Advertising

Internet advertising started with banner ads at the top of a page. These were "served" by internet advertising companies such as DoubleClick.

The basic type of display ads are banner (at the top or bottom of a page), skyscraper (at the side) and interstitial (within the page). However, there are many variants (see for example the New York Times online ad specs.

Inc. Magazine recently published an article called What You Need to Know About: The New Basics of Marketing.

Mobile advertising (on cellphones) is growing. Reuters (1/17/08) reports that T-Mobile and Yahoo recently signed an agreement in the UK.

Some sites now use avatars e.g.

Video Ads

Newspaper and other web sites are making greater use of video and selling video advertising.

Viral and "Word of Mouth" (WOM) Marketing

Because the internet is a network, information can spread quickly. Savvy marketers can use that to get interesting news to spread like wildfire (such as the release of the Apple iPhone). But bad news can travel fast too. Markets need to create blogs and engage with the online community to respond quickly to problems or complaints. Dell entered the blogosphere to participate in discussions about its products.

Videos are an effective viral marketing tool. People like to pass them on, and it's easy to do with email links to YouTube. Here's an example used by Ford Models Inc. The most effective viral ads are entertaining.

Behavioral Targeting

Behavioral targeting is the practice of targeting advertising to a person based on their online behavior - the sites they visit, the search terms they type in and the sections of a page they view. Behavioral targeting uses tracking cookies to follow users across the web. The Federal Trade Commission reviews behavioral targeting practices and publishes guidelines to safeguard privacy.

Top Search Sites December 2007

Worldwide Search Top 10
December 2007
Total World Age 15+, Home and Work Locations*
Source: comScore qSearch 2.0

Searches (MM) Share of Searches
Total Internet 66,221 100.0
Google Sites 41,345 62.4
Yahoo! Sites 8,505 12.8 Inc. 3,428 5.2
Microsoft Sites 1,940 2.9
NHN Corporation 1,572 2.4
eBay 1,428 2.2
Time Warner Network 1,062 1.6
Ask Network 728 1.1
Yandex 566 0.9 Corporation 531 0.8

Search Engine Optimization (SEO)

Search engine optimization is the process of designing a web site so that 1) it ranks near the top of relevant search engine results and 2) the content displayed by the search engine is relevant. For more information see search engine optimization.

Affiliate Marketing

In the offline world "affiliates" are organizations that help you get leads or referrals. For example, a firm might form an affiliation with the college you attended to market products such as clothing or credit cards. You would be more likely to pay attention to these marketing messages because they are affiliated with something you know well..

Affiliate marketing online is similar not identical. The idea is to get related sites or "affiliates" to link to your site to drive traffic. Commission Junction is one firm that facilitates affiliate marketing.

Web Site Analysis

Webmasters use web site analytics to evaluate the performance of pages. Google Analytics is a widely used free analytics package.

Key terms (some explained here) include page views, clickthrough and conversion rate. You need to analyze how many viewers click on a link, and how many who click end up purchasing the item. That's called the "funnel."

There are many suppliers of conversion tracking software.

Communities and Social Networking — Marketing and Web 2.0

The internet is a network. Networks provide connections, not just between computers but between the people who use them. Networks are especially useful for social interaction and search.

The ability of the internet to provide connections between people is behind the rise of social networking sites such as Myspace and facebook. These businesses are sometimes collectively referred to as Web 2.0. Virtual reality sites such as Second Life and massively multiplayer online role playing games (MMORPGs) such as World of Warcraft also provide a community as well as entertainment.

Why is this interesting for business? Because online communities provide attention, and that's what advertisers will pay for. Networks also facilitate search through referrals.

However, it's not always easy to turn attention into clicks. A 2/7/08 NYT article reported that Google's deal to advertise on MySpace had brought disappointing results. A 12/14/08 New York Times article reports that it's difficult to advertise effectively on social networking sites on Facebook because few people want to be "friends" with a brand.

Tools such as wikis and blogs can be used to engage customers in conversations that yield important feedback1 Visa has a social networking campaign running using Facebook. And "your fund wants to "friend" you.

Even Bill Cosby is marketing on the web, with a Flikr stream, the micro-video site 12seconds, MySpace, Facebook and Twitter.

Networks in Advertising

Here's a piece on the role of people networks in the future of advertising.


  • Tactics include re-messaging. Re-messaging is serving your ads again to targeted web users to increase the response rate.
  • Use of microsites. Microsites are small web sites dedicated to a particular product or promotion, often with their own URL. Macy's West created a microsite for Valentine's Day to get people to visit its stores. Here's Macy's Hotel Collection microsite.

The online world is evolving fast. Online marketers need to experiment. Not everything will work out.

Technical Tools that Help Marketers

  • Session Cookies - used to remember the page last visited
  • Persistent Cookies - recognize returning visitors
  • Tracking Cookies - track online behavior of the user across multiple sites
  • Query String - string of numbers and characters after a "?" symbol in a link - used to track sources of referrals and to identify respondents in surveys
  • Web beacons - similar use as query strings, but invisible. Also called clear gifs
  • Tags - identifiers on a web page. Can be implemented by a query string or a web beacon.

Information Sources


Thanks to Han Huang of Counterpoint Analytics and Marten van Pelt of Young & Rubicam for generously sharing their expertise in online marketing. All errors and omissions are the responsibility of the webmaster.

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