But… Where is the Business in the Web? (by Arrate Vidarte)

Over the past few years there has been a tremendous upsurge in the development of information and communication technology.
It is the use of company data that gives companies the competitive advantage and this is especially relevant with on-line data usage and integration with off-line data.
Businesses have been profitably selling goods and services for a long time and even the newest technologies are not about to change that fact.
There are three areas where the web is having a large impact on business:

1. E-Commerce
2. E-Media
3. E-Markets

Each are unique and defined by how the business makes profit.
Let’s now see each one more closely.

 
1. E-Commerce

E-commerce companies sell things over the web to customers who pay directly for them. Examples include such sites as Zalando or Amazon.
Doing business this way means speed for the customer and provides more flexibility for companies regarding inventory management, pricing, product positioning and inventory changes.
In some cases the web brings instant gratification to customers such as music download sites. For example Itunes.
The opportunities arise for companies because they can take advantage of collected data and mining of such data.

These areas include:

  • Reconfigure sites based on preferences and correlated purchases
  • Make constant recommendations to customers based on what they are putting in their baskets or the pages they are viewing.
  • Remembering a customer the next time they visit the site.
  • Tailor offers based on purchase behavior (frequency, recency and monetary values).

 

2. E-Media

These companies make their money primarily through advertising on the internet as opposed to content, these also include subscription based sites who make their livelihood by selling advertising.
Such companies typically provide access to users of specific content.
Regarding publishers, most make their profit selling advertising and it is no different on line or off line.
Most of you have probably seen that these publishers are sometimes providing additional content free of charge to off-line subscribers. So, how do they will support this benefit? They hope it will be through advertising.
The major difference between the online and offline world is cost of course.
The advantage of online advertising is you can see who is responding and which ads are working and then you can quickly shift your ads to maximize revenue and you can then take these “learnings” to the offline advertising world.
This is why the digital space is such a great space for testing price, offer, promotion, copy, etc.

 

3. E-Markets

Is the third way to make money on the web. They are intermediaries between buyers and sellers and they get paid for the service.
Ebay is the perfect example of such an intermediary. A similar case in the
offline world would be auction houses or real estate brokers.
The web has taken this to a new dimension allowing the intermediaries to introduce people not just locally for a transaction but globally, the web just expanded the range of goods and services that can be traded.
The main objective of data mining is to insert intelligence back into the customer relationship by using information systems so that businesses can better meet the needs of the customer.
The web is unique because it is a data collector of how we gather information, make decisions and act upon them. The web provides “real time” opportunities which allows us to act fast to:

  • Enhance the customer relationship
  • Build brands
  • Target offers
  • Enhance customer value

Advertising is the biggest part of the marketing budget in one form or another
Historically, mass-market advertising has been the primary means of establishing and maintaining brands. And it still is, but is becoming less important.
To understand who was purchasing your product was once difficult and expensive and required the use of panels. But that is no longer the case.
Advertising on the web can be tracked and for the first time it is possible to know who is responding to a message and how they respond and maybe even why.
Online or offline, we can use customer data to help us determine who to promote and with what offer. We can use customer data to determine:

  • Who might be interested in our offer
  • What is the next best offer to send
  • What is the appropriate number of communications and the sequence.
  • What is the appropriate channel to communicate with them

Using real time data we can act faster than in the offline world and most customers expect this.
As we all know an important part of the customer relationship is understanding the customer value. A better understanding of customers potential value will allow you to better understand how to direct a customer, the offers to send them and how often and with what vehicle.

 

Imagen de e.r.w.i.n. (CC by-nc)

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Arrate Vidarte

Consultora de Marketing Digital.

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