Business models

Internet marketing is associated with several business models:

• E-commerce – In this model, goods are sold directly to consumers (B2C) or businesses (B2B) or consumer to consumer(c2c)
• Lead-based Websites – Strategy where an organization generates value by acquiring sales leads from its website
• Affiliate Marketing – The process in which a product or service developed by one entity (e-commerce business, single person, or a combination) is sold by other active sellers for a share of profits. The entity of the product may provide some marketing material (sales letter, affiliate link, tracking facility), however, the vast majority of affiliate marketing relationships come from e-commerce businesses that offer affiliate programs.
• Local Internet Marketing – Strategy through which a small company utilizes the Internet to find and nurture relationships that are to be used for real-world advantage. Local Internet marketing uses tools such as social media marketing, local directory listing,^[2] and targeted online sales promotions.

The Hat terminology comes from the old black and white westerns where the good guys wore white hats and the bad guys wore black hats.

• White hat Marketing - This form of Internet marketing follows all of the acceptable practices for the search engines.
• Gray hat Marketing - This is when the practices are not specifically deceptive or abusive but lie in an area not specifically defined blackhat but still not entirely white hat.
• Blackhat Marketing – This is a form of Internet marketing that employs deceptive, abusive, or less than truthful methods to drive web traffic to a website or affiliate marketing offer. This method sometimes includes spam, cloaking within search engine result pages, or routing users to pages they didn't initially request.

One-to-one approach

The targeted user is typically browsing the Internet alone and therefore the marketing messages can reach them personally. This approach is used in search marketing, where the advertisements are based on search engine keywords entered by the users on the computer. This approach usually works under PPC (pay per click) method. With the advent of Web 2.0 tools, many users can interconnect as "peers."

Appeal to specific interests

Internet marketing and geo marketing places an emphasis on marketing that appeals to a specific behavior or interest, rather than reaching out to a broadly defined demographic. "On- and Offline" marketers typically segment their markets according to age group, gender, geography, and other general factors. Marketers have the luxury of targeting by activity and geolocation. For example, a kayak company can post advertisements on kayaking and canoeing websites with the full knowledge that the audience has a related interest.

Internet marketing differs from magazine advertisements, where the goal is to appeal to the projected demographic of the periodical, but rather the advertiser has knowledge of the target audience — people who engage in certain activities (e.g., uploading pictures, contributing to blogs).

[edit]Niche Marketing

Niche and hype-niche internet marketing put further emphasis on creating specialist destinations for web users and consumers on tightly targeted topics and products.^{[citation needed]}Niche marketers differ from traditional Internet Marketers as they have a more specialized topic knowledge.^{[citation needed]} For example, whereas in traditional Internet marketing a website would be created and promoted on a high-level topic such as kitchen appliances, niche marketing would be something much more specific such as 4-slice toasters.

Niche marketing provides end users of such sites very targeted information, and allows the creators to establish themselves as authorities on the topic or product.^{[citation needed]}

[]Geo-targeting

Geo targeting (in Internet marketing) and geo marketing are the methods of determining the geolocation (the physical location) of a website visitor with geolocation software, and delivering different content to that visitor based on his or her location, such as latitude/ longitude, country, region/state, city, metro code/zip code, organization, Internet Protocol (IP) address, ISPor other criteria.

]Advantages

Internet marketing is relatively inexpensive when compared to the ratio of cost against the reach of the target audience. Companies can reach a wide audience for a small fraction of traditional advertising budgets. The nature of the medium allows consumers to research and purchase products and services at their own convenience. Therefore, businesses have the advantage of appealing to consumers in a medium that can bring results quickly. The strategy and overall effectiveness of marketing campaigns depend on business goals and cost-volume-profit (CVP) analysis.

Internet marketers also have the advantage of measuring statistics easily and inexpensively. Nearly all aspects of an Internet marketing campaign can be traced, measured, and tested. The advertisers can use a variety of methods: pay per impression, pay per click, pay per play, or pay per action. Therefore, marketers can determine which messages or offerings are more appealing to the audience. The results of campaigns can be measured and tracked immediately because online marketing initiatives usually require users to click on an advertisement, visit a website, and perform a targeted action. Such measurement cannot be achieved through billboard advertising, where an individual will at best be interested, then decide to obtain more information at a later time.

Because exposure, response, and overall efficiency of Internet media are easier to track than traditional off-line media—through the use of web analytics for instance—Internet marketing can offer a greater sense of accountability for advertisers. Marketers and their clients are becoming aware of the need to measure the collaborative effects of marketing (i.e., how the Internet affects in-store sales) rather than siloing each advertising medium. The effects of multichannel marketing can be difficult to determine, but are an important part of ascertaining the value of media campaigns. Internet marketing refers the online marketing methods that are related to email, social networks and wireless devices.

[]Limitations

From the buyer's perspective, the inability of shoppers to touch, smell, taste or "try on" tangible goods before making an online purchase can be limiting. However, there is an industry standard for e-commerce vendors to reassure customers by having liberal return policies as well as providing in-store pick-up services.

The buyer can also be biased in case there is not sufficiently reliable product information available online.

[]Security concerns

Information security is important both to companies and consumers that participate in online business. Many consumers are hesitant to purchase items over the Internet because they do not trust that their personal information will remain private.

Some companies that purchase customer information offer the option for individuals to have their information removed from the database, also known as opting out. However, many customers are unaware if and when their information is being shared, and are unable to stop the transfer of their information between companies if such activity occurs.

Another major security concern that consumers have with e-commerce merchants is whether or not they will receive exactly what they purchase. Online merchants have attempted to address this concern by investing in and building strong consumer brands (e.g., Amazon.com, eBay, Overstock.com), and by leveraging merchant/feedback rating systems and e-commerce bonding solutions. All of these solutions attempt to assure consumers that their transactions will be free of problems because the merchants can be trusted to provide reliable products and services. Additionally, the major online payment mechanisms (credit cards, PayPal, Google Checkout, etc.) have also provided back-end buyer protection systems to address problems if they actually do occur.

[]Usage trends

Online advertising techniques have dramatically been affected by technological advancements in the telecommunications industry. Many firms are embracing a paradigm that is shifting the focus of advertising methodology from traditional text and image advertisement creatives to rich multimedia experiences such as those containing more updated technology likeHTML, JavaScript, and Adobe Flash. As a result, advertisers can more effectively engage and connect their audience with their campaigns which seek to shape consumer attitudes and feelings towards specific products and services. The paradigm shift from dialup to high speed internet has fueled these changes.

In a national survey between November 30, 2009 and December 27, 2009, the Pew Research Center found that 74% of American adults (ages 18 and older) use the Internet.^[3] The same study found that 60% of American adults use broadband connections at home. 55% of American adults connect to the Internet through a wireless network like a public/private access point, a WiMax network, or a cellular 3G/4G network through a mobile cellular device.

[]Effects on industries

The number of banks offering the ability to perform banking tasks over the internet has also increased. Online banking appeals to customers because it is often faster and considered more convenient than visiting bank branches. Currently over 150 million U.S. adults now bank online, with increasing Internet connection speed being the primary reason for fast growth in the online banking industry.^{[citation needed]} Of those individuals who use the Internet, 44 percent now perform banking activities over the Internet.^{[citation needed]}

Internet auctions have become a multi-billion dollar business. Unique items that could only previously be found at flea markets are now being sold on Internet auction websites such as eBay. Specialized e-stores sell an almost endless amount of items ranging from antiques, movie props, clothing, gadgets and much more.^[4][5] As the premier online reselling platform, eBay is often used as a price-basis for specialized items. Buyers and sellers often look at prices on the website before going to flea markets; the price shown on eBay often becomes the item's selling price. It is increasingly common for flea market vendors to place a targeted advertisement on the Internet for each item they are selling online, all while running their business out of their homes.

In addition to the major effect internet marketing has had on the technology industry, the effect on the advertising industry itself has been profound. In just a few years, online advertisinghas grown to be worth tens of billions of dollars annually.^[6][7][8] PricewaterhouseCoopers reported that US$16.9 billion was spent on Online marketing in the U.S. in 2006.^[9]

This has had a growing impact on the electoral process. In 2008 candidates for President heavily utilized Internet marketing strategies to reach constituents. During the 2007 primaries candidates added, on average, over 500 social network supporters per day to help spread their message.^[10] President Barack Obama raised over US$1 million in a single day during his extensive Democratic candidacy campaign, largely due to online donors.^[11]

There are several industries that have heavily invested in and benefited from internet marketing and online advertising. While some of these were originally brick and mortar businesses such as publishing, music, automotive or gambling, others have sprung up as purely online businesses, such as digital design and media, blogging or internet service hosting.

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