Chapter 6

1. Is growth of the Internet, in terms of users, expected to continue indefinitely? What will cause it to slow, if anything?

In the United States, the growth of the Internet has slowed to about 2% a year, in part because those most likely to use the Internet already have access.

5. What are some of the changes that Google has made to its search engine algorithms to improve search results and user experience?

Google has made frequent changes to its search algorithms in order to improve the search results and user experience. Google, for instance, reportedly makes over 600 search engine changes in a year. Most are small unannounced tweaks. Recent major changes have included Panda, Penguin, Hummingbird, and Knowledge Graph. Panda was introduced in 2011 in an effort to weed out low quality sites from search results. Those sites with thin content, duplicate content, content copied from elsewhere on the Web, and content that did not attract high-quality hits from other sources were systematically pushed down in the search results. Google introduced Penguin in 2012 in an effort to punish Web sites and their SEO marketing firms who were manipulating links to their site in order to improve their rankings. The Google search engine rewards sites that have links from many other sites. What some marketers discovered is that Google could not tell the quality of these back links, and they began to manufacture links by putting their clients onto list sites, creating multiple blogs to link to their clients’ site, and paying others to link to their clients’ sites. Penguin evaluates the quality of links to a site, and pushes down in the rankings those sites that have poor-quality back links. Google introduced Hummingbird, its new search algorithm in September 2013. Rather than evaluate each word separately in a search, Google’s semantically informed Hummingbird will try to evaluate an entire sentence. Semantic search more closely follows conversational search, or search as you would ordinarily speak it to another human being. Google introduced Knowledge Graph in 2012 as an effort to anticipate what you might want to know more about as you search on a topic or answer questions you might not thought of asking. Since 2013, results of Knowledge Graph appear on the right of the screen and contain more information about the topic or person you are searching on. Not all search terms have a Knowledge Graph result. Google displays information based on what other users have searched for in the past, as well as its database on over 500 million objects (people, places, and things), and some 18 billion facts. In 2015, Google introduced an update that prioritized “mobile-friendliness” of Web sites. Ads that obscure the screen and requests to download apps are considered suboptimal, and happen to be used by many of Google’s biggest competitors in search.

10. What pricing strategy turned out to be deadly for many e-commerce ventures during the early days of e-commerce? Why?

The pricing strategy that turned out to be deadly for many e-commerce firms in the early days of e-commerce was a low price leader strategy, which even resulted in “free” pricing. The idea was to attract enough eyeballs with free goods and services to amass a large, committed audience. It was supposed to achieve profitability through advertising and charging a small number of willing customers subscription fees for value-added services. Unfortunately, many early e-commerce businesses were unable to convert eyeballs into paying customers, and the strategy of piggybacking on a small number of users who would be willing to pay for premium services was not a great success.

15. What are some reasons why online advertising constitutes only about 28% of the total advertising market?

Online advertising constitutes only about 28% of the total advertising market because advertisers are still concerned about its cost versus its benefits and about how to accurately measure its results.

20.  What are marketing analytics and how are they used?

Marketing analytics are software packages that collect, store, analyze, and graphically present data on each of the stages in the conversion of shoppers to customers process on e-commerce sites. Marketing analytics packages can tell business managers how people become aware of their site, and where they come from (e.g., search, self-entered URL, e-mail, social campaigns, or off-line traditional print and TV ads), along with demographic, behavioral, and geographic information. This information can help managers decide the best ways to drive traffic to their sites, the so-called “in-bound” links to a site.

Once on the Web site, analytics packages can record how engaged visitors are with the site’s content, measured in terms of pages viewed and duration on site. This information can allow managers to change the design or their sites, or change the content viewers are seeing. In a social network marketing world, where consumers’ opinions and behavior can be harvested and broadcast to their friends, an important intermediate step in the consumer conversion process is to encourage visitors to interact with content and share their experiences, opinions, preferences, and behaviors with their friends, as well as other visitors to the site.

Web analytics packages can track visitor interaction and help managers decide what content leads to higher levels of visitor interaction with friends and other visitors. The purchase activity on the shopping cart page is a major focus of analytics tools not just because this is where the revenue is generated, but also because this is where the customer frequently exits the entire site and the firm loses a potential sale. Finally, Web analytics can help managers discover customer loyalty and post-purchase behavior. In an increasingly social marketing environment, marketing managers need to know how their products and services are being talked about on other sites.

The end objective of Web analytics packages is to help business managers optimize the return on investment on their Web sites and social marketing efforts, and to do this by building a detailed understanding of how consumers behave when visiting their Web sites. Web analytics also allows managers to measure the impact of specific marketing campaigns involving, say, discounts, loyalty points, and special offers, as well as regional, or demographic-based campaigns. Aside from its role in enhancing management decision making, and optimizing the effectiveness of building a Web presence, Web analytics packages also enable a near real-time marketing capability where managers are able to change the content of a Web site, respond to customer complaints and comments, and align campaigns with trending topics or news developments, all in a near real-time manner.