Web analytics is the study of the behaviour of website visitors. In a commercial context, web analytics especially refers to the use of data collected from a web site to determine which aspects of the website work towards the business objectives; for example, which landing pages encourage people to make a purchase.

Data collected almost always includes web traffic reports. It may also include e-mail response rates, direct mail campaign data, sales and lead information, user performance data such as click heat mapping, or other custom metrics as needed. This data is typically compared against key performance indicators for performance, and used to improve a web site or marketing campaign’s audience response.

Many different vendors provide web analytics software and services.

Display advertising is a type of advertising that may, and most frequently does, contain graphic information beyond text such as logos, photographs or other pictures, location maps, and similar items. In periodicals it can appear on the same page with, or a page adjacent to, general editorial content; as opposed to classified advertising, which generally appears in a distinct section and was traditionally text-only in a limited selection of typefaces (although the latter distinction is no longer sharp).

Display advertising uses static and animated images in standard or non-standard sizes called web banners as well as interactive media that might include audio and video elements. Flash by Adobe (originally Macromedia, which was bought by Adobe) is the preferred format for interactive ads on the internet.

Display ads do not have to be rich in images, audio or video. Text ads are also used where text is more appropriate or more effective. An example of text ads are commercial SMS messages to mobile devices users.

Opt-in email advertising or permission marketing is a method of advertising by electronic mail wherein the recipient of the advertisement has consented to receive it. It is one of several ways developed by marketers to eliminate the disadvantages of email marketing.

Email has become a very popular mode of communication across the world. It has also become extremely popular to advertise through. Some of the many advantages of advertising through email are the direct contact with the consumer and is “inexpensive, flexible, and simple to implement” (Fairhead, 2003). There are also disadvantages attached to email advertising such as, alienating the consumer because of overload to messages or the advertisement getting deleted without getting read.

Permission email marketing may evolve into a technology that uses a handshake protocol between sender and receiver (Fairhaed, 2003). This system is intended to eventually result in a high degree of satisfaction between consumers and marketers. If opt-in email advertising is used, the material that is emailed to consumers will be “anticipated.” It is assumed that the consumer wants to receive it, which makes it unlike unsolicited advertisements sent to the consumer (often referred to as spam). Ideally, opt-in email advertisements will be more personal and relevant to the consumer than untargetted advertisements.

A common example of permission marketing is a newsletter sent to a firm’s customers. Newsletters like this are a way to let customers know about upcoming events or promotions, or new products. In this type of advertising, a company that wants to send a newsletter to their customers may ask them at the point of purchase if they would like to receive this newsletter.

With a foundation of opted-in contact information stored in a database, marketers can automatically send out promotional materials. The marketers can also segment their promotions to specific market segments.

Because the CAN-SPAM Act of 2003 authorizes a USD 11,000 penalty per violation for spamming each individual recipient, many commercial email marketers within the United States utilize a service or special software that helps ensure compliance with the Act. A variety of older systems exist which do not ensure compliance with the Act. To comply with the Act’s regulation of commercial email, services typically: require users to authenticate their return address and include a valid physical address, provide a one-click unsubscribe feature, and prohibit importing lists of purchased addresses which may not have given valid permission.

In addition to satisfying legal requirements, service providers stepped in to help customers to set up and manage their own email marketing campaigns. The services provide email templates, automatically handle subscriptions and removals, and generate statistics on how many messages were received and openned, and whether the recipients clicked on any links within the messages.

Email marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every email sent to a potential or current customer could be considered email marketing. However, the term is usually used to refer to:

• Sending emails with the purpose of enhancing the relationship of a merchant with its current or old customers and to encourage customer loyalty and repeat business.
• Sending emails with the purpose of acquiring new customers or convincing old customers to buy something immediately.
• Adding advertisements in emails sent by other companies to their customers.
• Emails that are being sent on the Internet (Email did and does exist outside the Internet, Network Email, FIDO etc.)

Researchers estimate that US firms alone spent $400 million on email marketing in 2006

Advantages

Email marketing (on the Internet) is popular with companies because:

• The advantage of a mailing list is clearly the ability to distribute information to a wide range of specific, potential customers at a relatively low cost.
• Compared to other media investments such as direct mail or printed newsletters, it is less expensive.
• An exact Return on investment can be tracked (“track to basket”) and has proven to be high when done properly. Email marketing is often reported as second only to search marketing as the most effective online marketing tactic.
• It is instant, as opposed to a mailed advertisement, an email arrives in a few seconds or minutes.
• It lets the advertiser “push” the message to its audience, as opposed to a website that waits for customers to come in.
• It is easy to track. An advertiser can track users via web bugs, bounce messages, un-subscribes, read-receipts, click-throughs, etc. These can be used to measure open rates, positive or negative responses, correlate sales with marketing.
• Advertisers can generate repeat business affordably and automatically
• Advertisers can reach substantial numbers of email subscribers who have opted in (consented) to receive email communications on subjects of interest to them
• Over half of Internet users check or send email on a typical day.
• Specific types of interaction with messages can trigger other messages to be automatically delivered.
• Specific types of interaction with messages can trigger other events such as updating the profile of the recipient to indicate a specific interest category.
• Green – email marketing is paper-free

Disadvantages

Many companies use email marketing to communicate with existing customers, but many other companies send unsolicited bulk email, also known as spam.

Illicit email marketing antedates legitimate email marketing, since on the early Internet (see Arpanet) it was not permitted to use the medium for commercial purposes. As a result, marketers attempting to establish themselves as legitimate businesses in email marketing have had an uphill battle, hampered also by criminal spam operations billing themselves as legitimate.

It is frequently difficult for observers to distinguish between legitimate and spam email marketing. First off, spammers attempt to represent themselves as legitimate operators, obfuscating the issue. Second, direct-marketing political groups such as the U.S. Direct Marketing Association (DMA) have pressured legislatures to legalize activities which many Internet operators consider to be spamming, such as the sending of “opt-out” unsolicited commercial email. Third, the sheer volume of spam email has led some users to mistake legitimate commercial email (for instance, a mailing list to which the user subscribed) for spam — especially when the two have a similar appearance, as when messages include HTML and flashy graphics.

Due to the volume of spam email on the Internet, spam filters are essential to most users. Some marketers report that legitimate commercial emails frequently get caught by filters, and hidden; however, it is somewhat less common for email users to complain that spam filters block legitimate mail.

Companies considering an email marketing program must make sure that their program does not violate spam laws such as the United States’ CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act), the European Privacy & Electronic Communications Regulations 2003 or their Internet provider’s acceptable use policy. Even if a company follows the law, if Internet mail administrators find that it is sending spam it is likely to be listed in blacklists such as SPEWS.

PPC engines can be categorized into two major categories “Keyword” or sponsored match and “Content Match”. Sponsored match display your listing on the search engine itself whereas content match features ads on publisher sites and in newsletters and emails.
There are other types of PPC engines that deal with Products and/or services. Search engine companies may fall into more than one category. More models are continually evolving. Pay per click programs do not generate any revenue solely from traffic for sites that display the ads. Revenue is generated only when a user clicks on the ad itself.

Keyword PPCs

Advertisers using these bid on “keywords”, which can be words or phrases, and can include product model numbers. When a user searches for a particular word or phrase, the list of advertiser links appears in order of the amount bid. Keywords, also referred to as search terms, are the very heart of pay per click advertising. The terms are guarded as highly valued trade secrets by the advertisers, and many firms offer software or services to help advertisers develop keyword strategies. Content Match, will distribute the keyword ad to the search engine’s partner sites and/or publishers that have distribution agreements with the search engine company.

As of 2007, notable PPC Keyword search engines include: Google AdWords, Yahoo! Search Marketing, Microsoft adCenter, Ask, LookSmart, Miva, Kanoodle, Yandex and Baidu.

Online Comparison Shopping Engines

“Product” engines let advertisers provide “feeds” of their product databases and when users search for a product, the links to the different advertisers for that particular product appear, giving more prominence to advertisers who pay more, but letting the user sort by price to see the lowest priced product and then click on it to buy. These engines are also called Product comparison engines or Price comparison engines.

Some Online Comparison Shopping engines such as Shopping.com use a PPC model and have a defined rate card. whereas others such as Froogle (also know as Google Product Search) do not charge any type of fee for the listing but still require an active product feed to function.

Noteworthy PPC Product search engines include: Shopzilla, NexTag, and Shopping.com.

Service PPCs

“Service” engines let advertisers provide feeds of their service databases and when users search for a service offering links to advertisers for that particular service appear, giving prominence to advertisers who pay more, but letting users sort their results by price or other methods. Some Product PPCs have expanded into the service space while other service engines operate in specific verticals.

Noteworthy PPC services include NexTag, SideStep, and TripAdvisor.

Pay per call

Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate. The term “pay per call” is sometimes confused with “click to call”. Click-to-call, along with call tracking, is a technology that enables the “pay-per-call” business model.

Pay-per-call is not just restricted to local advertisers. Many of the pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers.

According to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.

History

In February 1998, Jeffrey Brewer of Goto.com, a 25 employee startup company (later Overture, now part of Yahoo!), presented a PPC search engine proof-of-concept to the TED8 conference in California.[4] This and the events that followed created the PPC advertising system. Credit for the concept of the PPC model is generally given to the Idealab and Goto.com founder, Bill Gross.

Pay per click (PPC) is an advertising model used on websites, advertising networks, and search engines where advertisers only pay when a user actually clicks on an ad to visit the advertiser’s website. Advertisers bid on keywords they believe their target market would type in the search bar when they are looking for a product or service. When a user types a keyword query matching the advertiser’s keyword list, the advertiser’s ad may appear on the search results page. These ads are called a “Sponsored link” or “sponsored ads” and appear next to, and sometimes, above the natural or organic results on the page. The advertiser pays only when the user clicks on the ad. Pay per click advertising is a search engine marketing technique.

Pay per click ads may also appear on content network websites. In this case, ad networks such as Google Adsense and Yahoo! Publisher Network attempt to provide ads that are relevant to the content of the page where they appear, and no search function is involved.

While many companies exist in this space, Google AdWords, Yahoo! Search Marketing, and MSN adCenter are the largest network operators as of 2007. Depending on the search engine, minimum prices per click start at US$0.01 (up to US$0.50). Very popular search terms can cost much more on popular engines. Arguably this advertising model may be open to abuse through click fraud, although Google and other search engines have implemented automated systems to guard against this.

Yahoo provides a wide array of internet services that cater to most online activities. It operates the web portal yahoo.com which provides contents including the latest news, Yahoo Finance and gives users quick access to other Yahoo services like Yahoo! Mail, Yahoo Maps, Yahoo! Groups and Yahoo! Messenger. The majority of the product offerings are available globally in more than 20 languages.

Search

Yahoo! Search is the second largest search engine on the internet, Yahoo also provides vertical search services such as Yahoo! Image, Yahoo! Video, Yahoo! Local, Yahoo! News, and Yahoo! Shopping Search.

Communication

Yahoo provides internet communication services such as Yahoo! Mail and Yahoo! Messenger, Yahoo Mail is the largest e-mail service in the world with almost half the market share. In March, 2007, Yahoo announced that their e-mail service will offer unlimited storage beginning May 2007, and they have started offering the unlimited storages, but this will take few months to cover all subscribers to allow smooth transition.

Yahoo also offers social networking services and user-generated content in products such as My Web, Yahoo! Personals, Yahoo! 360°, and Flickr.

Content

Yahoo partners with hundreds of premier content providers in products such as Yahoo! Sports, Yahoo! Finance, Yahoo! Music, Yahoo Movies, Yahoo News, and Yahoo! Games to provide media contents and news. Yahoo also provides a personalization service My Yahoo, which enables users to collect their favorite Yahoo features, content feeds, and information into a single page.

Yahoo has developed partnerships with different broadband providers such as AT&T(via BellSouth & SBC), Verizon Communications, Rogers Communications and British Telecom, offering a range of free and premium Yahoo content and services to subscribers.

Mobile

Yahoo! Mobile includes services for on-the-go messaging, such as email, instant messaging, and moblogging; information, such as search and alerts; and fun and games, including ringtones, mobile games, and Yahoo Photos for camera phones.

OneSearch

Yahoo introduced its Internet search system, called oneSearch, developed for mobile phones on March 20, 2007. The company’s officials stated that in distinction from ordinary Web search Yahoo’s new service presents a list of actual information, which may include: news headlines, images from Yahoo’s Flickr photos site, business listings, local weather and links to other sites. Instead of showing only, for example, popular movies or some critical reviews, oneSearch lists local theaters that at the moment are playing a certain movie, user ratings and news headlines regarding the movie. A zip code or city name is required for Yahoo oneSearch to start delivering local search results. The results of a Web search are listed on a single page and are prioritized into categories. The list of results is based on calculations that Yahoo computers make on certain information the user is trying to make.

Commerce

Yahoo offers commerce services such as Yahoo! Shopping, Yahoo Autos, Yahoo Real Estate and Yahoo Travel, which enables users to gather relevant information and make commercial transactions and purchases online.

Small Business

Yahoo provides services such as Yahoo Domains, Yahoo Web Hosting, Yahoo Merchant Solutions, Yahoo Business Email, and Yahoo Store to small business owners and professionals allowing them to build their own online stores using Yahoo’s tools.

Yahoo also offers HotJobs to help recruiters find the talent they seek.

Advertising

Yahoo! Search Marketing provides services such as Sponsored Search, Local Advertising, and Product/Travel/Directory Submit that let different businesses advertise their products and services in the Yahoo network. Yahoo! Publisher Network is an advertising tool for online publishers to place advertisements relevant to their content to monetize their websites.

Yahoo launched its new Internet advertisement sales system on February 5, 2007 called Panama. It allows advertisers to bid for search terms based on their popularity to display their ads on search results pages. The system takes bids, ad quality, click-through rates and other factors into consideration in determining how ads are ranked on search results pages. Through Panama, Yahoo aims to provide more relevant search results to users, a better overall experience, as well as increase monetization — to earn more from the ads it shows

Yahoo! Inc. (NASDAQ: YHOO) is an American public corporation and global Internet services company. It provides a range of products and services including a web portal, a search engine, the Yahoo! Directory, Yahoo! Mail, news, and posting. It was founded by Stanford University graduate students Jerry Yang and David Filo in January of 1994 and incorporated on March 2, 1995. The company is headquartered in Sunnyvale, California.

According to Web traffic analysis companies (including Comscore, Alexa Internet and Netcraft), Yahoo! has been one of the most visited Web sites on the Internet, with more than 412 million unique users.[citation needed] The global network of Yahoo! websites received 3.4 billion page views per day on average as of October 2005, making it one of the most visited U.S. Web sites

History and growth

Early history (1994-1996)

In January 1994, Stanford graduate students Jerry Yang and David Filo created a website named “Jerry’s Guide to the World Wide Web”. Jerry’s Guide to the World Wide Web was a directory of other web sites, organized in a hierarchy, as opposed to a searchable index of pages.

In April 1994, “Jerry’s Guide to the World Wide Web” was renamed “Yahoo!”. Filo and Yang said they selected the name because they liked the word’s general definition, as in Gulliver’s Travels by Jonathan Swift: “rude, unsophisticated, uncouth.” The name can also be a backronym for “Yet Another Hierarchical Officious Oracle”. Its URL was akebono.stanford.edu/yahoo.

By the end of 1994, Yahoo had already received one million hits. Yang and Filo realized their website had massive business potential, and on 1 March 1995, Yahoo was incorporated. On 12 April 1996, Yahoo had its initial public offering, raising $33.8 million dollars, by selling 2.6 million shares at $13 each.

“Yahoo” had already been trademarked for barbecue sauce, knives (by EBSCO Industries) and human propelled watercraft (by Old Town Canoe Co.). Therefore, in order to get the trademark, Yang and Filo added the exclamation mark to the name. However, the exclamation mark is often omitted when referring to Yahoo.

Growth (1997-1999)

Like many search engines and web directories, Yahoo diversified into a Web portal. In the late 1990s, Yahoo, MSN, Lycos, Excite and other Web portals were growing rapidly. Web portal providers rushed to acquire companies to expand their range of services, in the hope of increasing the time a user stays at the portal.

On 8 March 1997, Yahoo acquired online communications company Four11. Four11’s webmail service, Rocketmail, became Yahoo! Mail. Yahoo also acquired ClassicGames.com and turned it into Yahoo! Games. Yahoo then acquired direct marketing company Yoyodyne Entertainment, Inc. on 12 October 1998. On 28 January 1999, Yahoo acquired web hosting provider GeoCities. Another company Yahoo acquired was eGroups, which became Yahoo! Groups after the acquisition on 28 June 2000. Yahoo also launched Yahoo! Messenger on 21 July 1999.

When acquiring companies, Yahoo often changed the relevant terms of service. For example, they claimed intellectual property rights for content on their servers, unlike the companies they acquired. As a result, many of the acquisitions were controversial and unpopular with users of the existing services.

Dot-com bubble (2000-2001)

On 3 January 2000, at the height of the Dot-com boom, Yahoo stocks closed at an all-time high of $475.00 a share. 16 days later, shares in Yahoo Japan became the first stocks in Japanese history to trade at over ¥100,000,000, reaching a price of 101.4 million yen ($962,140 at that time).

On 7 February 2000, Yahoo.com was brought to a halt for a few hours as it was the victim of a distributed denial of service attack (DDoS). On the next day, its shares rose about $16, or 4.5 percent as the failure was blamed on hackers rather than on an internal glitch, unlike a fault with eBay earlier that year.

During the dot-com boom, the cable news station CNBC also reported that Yahoo and eBay were discussing a 50/50 merger. Although the merger never materialized the two companies decided to form a marketing/advertising alliance six years later in 2006.

On 26 June 2000, Yahoo and Google signed an agreement which retained Google as the default world-wide-web search engine for yahoo.com following a beta trial in 1999.

Post dot-com bubble (2002-2006)

Yahoo was one of the few surviving large Internet companies after the dot-com bubble burst. Nevertheless, on September 26, 2001, Yahoo stocks closed at an all-time low of $8.11.

Yahoo formed partnerships with telecommunications and Internet providers to create content-rich broadband services to compete with AOL. On 3 June 2002, SBC and Yahoo launched a national co-branded dial service. In July 2003, BT Openworld announced an alliance with Yahoo On 23 August 2005, Yahoo and Verizon launched an integrated DSL service.

In late 2002, Yahoo began to bolster its search services by acquiring other search engines. In December 2002, Yahoo acquired Inktomi. In February 2003, Yahoo acquired Konfabulator and rebranded it Yahoo! Widgets, a desktop application and in July 2003, it acquired Overture Services, Inc. and its subsidiaries AltaVista and AlltheWeb. On February 18, 2004, Yahoo dropped Google-powered results and returned to using its own technology to provide search results.

Google then released Gmail, its webmail service offering 1 GB of storage, on 1 April 2004. Yahoo responded by upgrading the storage of all free Yahoo Mail accounts from 4 MB to 100 MB, and all Yahoo Mail Plus accounts to 2 GB. In 2007, Yahoo took out the storage meters and made the storage limit unlimited. On 9 July 2004, Yahoo acquired e-mail provider Oddpost to add an Ajax interface to Yahoo! Mail Beta. Google also released Google Talk, a Voice over IP and instant messaging service, on 24 August 2005. On 13 October 2005, Yahoo and Microsoft announced that Yahoo! Messenger and MSN Messenger would become interoperable.

Yahoo continued acquiring companies to expand its range of services, particularly Web 2.0 services. Yahoo Launch became Yahoo! Music on 9 February 2005. On 20 March 2005, Yahoo purchased photo sharing service Flickr. On 29 March 2005, the company launched its blogging and social networking service Yahoo! 360°. In June 2005, Yahoo acquired blo.gs, a service based on RSS feed aggregation. Yahoo then bought online social event calendar Upcoming.org on 4 October 2005. Yahoo acquired social bookmark site del.icio.us on 9 December 2005 and then playlist sharing community webjay on 9 January 2006.

The future (2007- )

Yahoo! Next is an incubation ground for future Yahoo technologies currently in their beta testing phase. It contains forums for Yahoo users to give feedback to assist in the development of these future Yahoo technologies.

Google’s board of directors. In a 2006 report of the United States’ richest people, Forbes reported that Sergey Brin was #12 with a net worth of $14.1 billion, and Larry Page was #13 with a net worth of $14.0 billion.

Googleplex

As a play on Google’s name, its headquarters, in Mountain View, California, is referred to as “the Googleplex” — a googolplex being 1 followed by a googol of zeros, and the HQ being a complex of buildings (cf. multiplex, cineplex, etc). The lobby is decorated with a piano, lava lamps, old server clusters, and a projection of search queries on the wall. The hallways are full of exercise balls and bicycles. Each employee has access to the corporate recreation center. Recreational amenities are scattered throughout the campus and include a workout room with weights and rowing machines, locker rooms, washers and dryers, a massage room, assorted video games, Foosball, a baby grand piano, a pool table, and ping pong. In addition to the rec room, there are snack rooms stocked with various cereals, gummy bears, toffee, licorice, cashews, yogurt, carrots, fresh fruit, and dozens of different drinks including fresh juice, soda, and make your own cappuccino.

In 2006, Google moved into 311,000 square feet of office space in New York City, at 111 Eighth Ave. in Manhattan. The office was specially designed and built for Google and houses its largest advertising sales team, which has been instrumental in securing large partnerships, most recently deals with MySpace and AOL. In 2003, they added an engineering staff in New York City, which has been responsible for more than 100 engineering projects, including Google Maps, Google Spreadsheets, and others. It is estimated that the building costs Google $10 million per year to rent and is similar in design and functionality to its Mountain View headquarters, including Foosball, air hockey, and ping-pong tables, as well as a video game area.

Google is also making steps to ensure that their operations are environmentally sound. In October 2006, the company announced plans to install thousands of solar panels to provide up to 1.6 megawatts of electricity, enough to satisfy approximately 30% of the campus’ energy needs. The system will be the largest solar power system constructed on a U.S. corporate campus and one of the largest on any corporate site in the world. In June 2007, Google announced that they plan to become carbon neutral by 2008, which includes investing in energy efficiency, renewable energy sources, and purchasing carbon offsets, such as investing in projects like capturing and burning methane from animal waste at Mexican and Brazilian farms.

“Twenty percent” time

All Google engineers are encouraged to spend 20% of their work time (one day per week) on projects that interest them. Some of Google’s newer services, such as Gmail, Google News, Orkut, and AdSense originated from these independent endeavors. In a talk at Stanford University, Marissa Mayer, Google’s vice president of search products and user experience, stated that her analysis showed that half of the new product launches originated from the 20% time.

IPO and culture

Many people speculated that Google’s IPO would inevitably lead to changes in the company’s culture, because of shareholder pressure for employee benefit reductions and short-term advances, or because a large number of the company’s employees would suddenly become millionaires on paper. In a report given to potential investors, co-founders Sergey Brin and Larry Page promised that the IPO would not change the company’s culture. Later Mr. Page said, “We think a lot about how to maintain our culture and the fun elements. We spent a lot of time getting our offices right. We think it’s important to have a high density of people. People are packed together everywhere. We all share offices. We like this set of buildings because it’s more like a densely packed university campus than a typical suburban office park.”

However, many analysts are finding that as Google grows the company is becoming more “corporate”. In 2005, articles in The New York Times and other sources began suggesting that Google had lost its anti-corporate, no evil philosophy. In an effort to maintain the company’s unique culture, Google has designated a Chief Culture Officer in 2006, who also serves as the Director of Human Resources. The purpose of the Chief Culture Officer is to develop and maintain the culture and work on ways to keep true to the core values that the company was founded on in the beginning — a flat organization, a lack of hierarchy, a collaborative environment

Google is well-known for its web search service, which is a major factor of the company’s success. As of December 2006, Google is the most used search engine on the web with a 50.8% market share, ahead of Yahoo! (23.6%) and Live Search (8.4%). Google indexes billions of Web pages, so that users can search for the information they desire, through the use of keywords and operators. Google has also employed the Web Search technology into other search services, including Image Search, Google News, the price comparison site Google Product Search, the interactive Usenet archive Google Groups, Google Maps and more.

In 2004, Google launched its own free web-based email service, known as Gmail. Gmail features spam filtering technology and the capability to use Google technology to search email. The service generates revenue by displaying advertisements from the AdWords service that are tailored to the content of the email messages displayed on screen.

In early 2006, the company launched Google Video, which not only allows users to search and view freely available videos, but also offers users and media publishers the ability to publish their content, including television shows on CBS, NBA basketball games, and music videos. In August 2007, Google announced that it would shut down its video rental and sale program and offer Google Checkout credits to consumers who had purchased videos to own.

Google has also developed several desktop applications, including Google Earth, an interactive mapping program powered by satellite imagery that covers the vast majority of the earth. Google Earth is generally considered to be remarkably accurate and extremely detailed. For example, some major cities (Las Vegas, NV, USA for example) have such detailed images that one can zoom in close enough to read the license plates on cars on a street. Consequently, there have been some concerns about national security implications. Specifically, some countries and militaries contend the software can be used to pinpoint with near-precision accuracy the physical location of critical infrastructure, commercial and residential buildings, bases, government agencies, and so on. However, the satellite images are not necessarily frequently updated, and all of them are available at no charge through other products and even government sources (NASA and the National Geospatial-Intelligence Agency, for example.) Some counter this argument by stating that Google Earth makes it easier to access and research the images.

Many other products are available through Google Labs, which is a collection of incomplete applications that are still being tested for use by the general public.

Google has promoted their products in various ways. In London, Google Space was set-up in Heathrow Airport, showcasing several products, including Gmail, Google Earth and Picasa. Also, a similar page was launched for American college students, under the name College Life, Powered by Google.

In 2007, some reports surfaced that Google was planning the release of its own mobile phone, possibly a competitor to Apple’s iPhone. The project may be a collaboration between Google and Orange, HTC, Samsung, or another manufacturer. However, very little is known about the project and most of the information available is speculation.

Enterprise products

In 2007, Google launched Google Apps Premium Edition, a software suite for businesses that provides e-mail, instant messaging, calendar, word processing, as well as a spreadsheet program.[48] This product is targeted primarily at the business user, and intended to compete directly versus Microsoft’s Office suite, with a price of approximately USD50 per user per year compared to USD500 per user for Microsoft Office. A large implementation of Google Apps with 38,000 users is at Lakehead University in Thunder Bay, Ontario, Canada.

The first funding for Google as a company was secured in the form of a USD100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a corporation which did not yet exist. Around six months later, a much larger round of funding was announced, with the major investors being rival venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.

Google’s initial public offering took place on August 19, 2004. 19,605,052 shares were offered at a price of $85 per share. Of that, 14,142,135 (another mathematical reference as √2 ≈ 1.4142135) were floated by Google and 5,462,917 by selling stockholders. The sale raised $1.67 billion, and gave Google a market capitalization of more than $23 billion. The vast majority of Google’s 271 million shares remained under Google’s control. Many of Google’s employees became instant paper millionaires. Yahoo!, a competitor of Google, also benefited from the IPO because it owned 8.4 million shares of Google as of August 9, 2004, ten days before the IPO.

Google’s post-IPO stock performance has been very good as well, with shares surging to $500 by 2007, due to strong sales and earnings in the advertising market, as well as the release of new features like the desktop search function and personalized home page. The surge in stock price is fueled primarily by individual investors, as opposed to large institutional investors and mutual funds.

The company is listed on the NASDAQ stock exchange under the ticker symbol GOOG.

Growth

While the company’s primary market is in the web content arena, Google has begun to experiment with other markets, such as radio and print publications. On January 17, 2006, Google announced that it had purchased the radio advertising company dMarc, which provides an automated system that allows companies to advertise on the radio. This will allow Google to combine two niche advertising media—the Internet and radio—with Google’s ability to laser-focus on the tastes of consumers. Google has also begun an experiment in selling advertisements from its advertisers in offline newspapers and magazines, with select advertisements in the Chicago Sun-Times. They have been filling unsold space in the newspaper that would have normally been used for in-house advertisements.

Google was added to the S&P 500 index on March 30, 2006. Google replaced Burlington Resources, a major oil producer based in Houston which was acquired by ConocoPhillips.

 Acquisitions

Since 2001, Google has acquired several small start-up companies, often consisting of innovative teams and products. One of the earlier companies that Google bought was Pyra Labs. They were the creators of Blogger, a weblog publishing platform, first launched in 1999. This acquisition led to many premium features becoming free. Pyra Labs was originally formed by Evan Williams, yet he left Google in 2004. In early 2006, Google acquired Upstartle, a company responsible for the online word processor, Writely. The technology in this product was used by Google to eventually create Google Docs & Spreadsheets.

In February 2006, software company Adaptive Path sold Measure Map, a weblog statistics application, to Google. Registration to the service has since been temporarily disabled.

In late 2006, Google bought online video site YouTube for $1.65 billion in stock. Shortly after, on October 31, 2006, Google announced that it had also acquired JotSpot, a developer of wiki technology for collaborative Web sites.

On April 13, 2007, Google reached an agreement to acquire DoubleClick. Google agreed to buy the company for $3.1 billion.

On July 9, 2007, Google announced that it had signed a definitive agreement to acquire enterprise messaging security and compliance company Postini

Partnerships

In 2005, Google entered into partnerships with other companies and government agencies to improve production and services. Google announced a partnership with NASA Ames Research Center to build up 1 million square feet of offices and work on research projects involving large-scale data management, nanotechnology, distributed computing, and the entrepreneurial space industry. Google also entered into a partnership with Sun Microsystems in October to help share and distribute each other’s technologies. The company entered into a partnership with Time Warner’s AOL, to enhance each other’s video search services.

In 2006, Google and News Corp.’s Fox Interactive Media entered into a $900 million agreement to provide search and advertising on the popular social networking site, MySpace

Google Inc. (NASDAQ: GOOG and LSE: GGEA) is an American public corporation, specializing in Internet search and online advertising. The company is based in Mountain View, California, and has 13,748 full-time employees (as of June 30, 2007). Google’s mission statement is, “to organize the world’s information and make it universally accessible and useful.” Google’s corporate philosophy includes statements such as “Don’t be evil”, and “Work should be challenging and the challenge should be fun”, illustrating a somewhat relaxed corporate culture.

Google was co-founded by Larry Page and Sergey Brin while they were students at Stanford University and the company was first incorporated as a privately held company on September 7, 1998. Google’s initial public offering took place on August 19, 2004, raising $1.67 billion, making it worth $23 billion. Through a series of new product developments, acquisitions and partnerships, the company has expanded its initial search and advertising business into other areas, including web-based email, online mapping, office productivity, and video sharing, among others.

Google began as a research project in January 1996 by Larry Page and Sergey Brin, two Ph.D. students at Stanford University, California. They hypothesized that a search engine that analyzed the relationships between websites would produce better results than existing techniques, which ranked results according to the number of times the search term appeared on a page. Their search engine was originally nicknamed, “BackRub” because the system checked backlinks to estimate a site’s importance. A small search engine called Rankdex was already exploring a similar strategy. Convinced that the pages with the most links to them from other highly relevant web pages must be the most relevant pages associated with the search, Page and Brin tested their thesis as part of their studies, and laid the foundation for their search engine. Originally the search engine used the Stanford University website with the domain google.stanford.edu. The domain google.com was registered on September 15, 1997, and the company was incorporated as Google Inc. on September 7, 1998 at a friend’s garage in Menlo Park, California. The total initial investment raised for the new company eventually amounted to almost $1.1 million, including a $100,000 check by Andy Bechtolsheim, one of the founders of Sun Microsystems.

In March 1998, the company moved into offices in Palo Alto, home to several other noted Silicon Valley technology startups. After quickly outgrowing two other sites, the company leased a complex of buildings in Mountain View at 1600 Amphitheatre Parkway from Silicon Graphics (SGI) in 2003. The company has remained at this location ever since, and the complex has since become known as the Googleplex (a play on the word googolplex, a 1 followed by a googol zeros). In 2006, Google bought the property from SGI for $319 million.

The Google search engine attracted a loyal following among the growing number of Internet users, who liked its simple design and usability. In 2000, Google began selling advertisements associated with search keywords. The ads were text-based to maintain an uncluttered page design and to maximize page loading speed. Keywords were sold based on a combination of price bid and clickthroughs, with bidding starting at $.05 per click. This model of selling keyword advertising was pioneered by Goto.com (later renamed Overture Services, before being acquired by Yahoo! and rebranded as Yahoo! Search Marketing). While many of its dot-com rivals failed in the new Internet marketplace, Google quietly rose in stature while generating revenue.

The name “Google” originated from a misspelling of “googol,” which refers to 10100 (the number represented by a 1 followed by one-hundred zeros). Having found its way increasingly into everyday language, the verb, “google”, was added to the Merriam Webster Collegiate Dictionary and the Oxford English Dictionary in 2006, meaning, “to use the Google search engine to obtain information on the Internet.”

A patent describing part of Google’s ranking mechanism (PageRank) was granted on September 4, 2001. The patent was officially assigned to Stanford University and lists Lawrence Page as the inventor.

In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, forced clicks to get tracking cookies set on users’ computers, and adware, which displays ads on computers. Many affiliate programs were poorly managed.

Email spam

In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.

Search engine spam / spamdexing

There used to be much debate around the affiliate practice of spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages, many-a-times, using product data-feeds provided by merchants. Each devoted to different niche keywords as a way of SEOing their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic search engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google’s algorithm update dubbed “BigDaddy” in February 2006 which was the final stage of Google’s major update dubbed “Jagger” which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.

Sites made up mostly of affiliate links are usually badly regarded as they do not offer quality content. In 2005 there were active changes made by Google whereby certain websites were labeled as “thin affiliates” and were either removed from the index, or taken from the first 2 pages of the results and moved deeper within the index. In order to avoid this categorization, webmasters who are affiliate marketers must create real value within their websites that distinguishes their work from the work of spammers or banner farms with nothing but links leading to the merchant sites.

Affiliate links work best in the context of the information contained within the website. For instance, if a website is about “How to publish a website”, within the content an affiliate link leading to a merchant’s ISP site would be appropriate. If a website is about sports, then an affiliate link leading to a sporting goods site might work well within the content of the articles and information about sports. The idea is to publish quality information within the site, and to link “in context” to related merchant’s sites.
Adware

Adware is still an issue today, but affiliate marketers have taken steps to fight it. AdWare is not the same as spyware although both often use the same methods and technologies. Merchants usually had no clue what adware was, what it did and how it was damaging their brand. Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants’ reputations and also hurt the merchants’ general affiliate marketing efforts. Many affiliates simply “canned” the merchant or switched to a competitor’s affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban certain adware publishers from their network.

Resulting from this were the Code of Conduct by Commission Junction/BeFree and Performics, LinkShare’s Anti-Predatory Advertising Addendum and ShareASale’s complete ban of software applications as medium for affiliates to promote advertiser offers. Regardless of the progress made is adware still an issue. This is demonstrated by the class action lawsuit against ValueClick and its daughter company Commission Junction filed on April 20, 2007.
Trademark bidding / PPC

Affiliates were among the earliest adopters of pay-per-click advertising when the first PPC search engines like Goto.com (which became later Overture.com, acquired by Yahoo! in 2003) emerged during the end of the nineteen-nineties. Later in 2000 Google launched their PPC service AdWords which is responsible for the wide spread use and acceptance of PPC as an advertising channel. More and more merchants engaged in PPC advertising, either directly or via a search marketing agency and realized that this space was already well occupied by their affiliates. Although this fact alone did create channel conflicts and hot debate between advertisers and affiliates, was the biggest issue the bidding on advertisers names, brands and trademarks by some affiliates. A larger number of advertisers started to adjust their affiliate program terms to prohibit their affiliates from bidding on those type of keywords. Some advertisers however did and still do embrace this behavior of their affiliates and allow them, even encourage them, to bid an any term they like, including the advertisers trademarks.

Lack of self regulation

Affiliate marketing is driven by entrepreneurs who are working at the forefront of internet marketing. Affiliates are the first to take advantage of new emerging trends and technologies where established advertisers do not dare to be active. Affiliates take risks and “trial and error” is probably the best way to describe how affiliate marketers are operating. This is also one of the reasons why most affiliates fail and give up before they “make it” and become “super affiliates” who generate $10,000 and more in commission (not sales) per month. This “frontier” life and the attitude that can be found in such type of communities is probably the main reason, why the affiliate marketing industry is not able to this day to self-regulate itself beyond individual contracts between advertiser and affiliate. The 10+ years history since the beginning of affiliate marketing is full of failed attempts[23] to create an industry organization or association of some kind that could be the initiator of regulations, standards and guidelines for the industry. Some of the failed examples are the Affiliate Union, iAfma, USAMC, Affiliate Marketing Advertising Board and Affiliate Marketing Trade Association.

The only places where the different people from the industry, affiliates/publishers, merchants/advertisers, networks and 3rd party vendors and service providers like outsources program managers come together at one location are either online forums and industry trade shows. The forums are free and even small affiliates can have a big voice at places like that, which is supported by the anonymity that is provided by those platforms. Trade shows are not anonymous, but a large number, in fact the greater number (quantitative) of affiliates is not able to attend those events for financial reasons. Only performing affiliates can afford the often hefty price tags for the event passes or get it sponsored by an advertisers they promote.

Because of the anonymity of forums, the only place where you are to get the majority (quantitative) of people in the industry together, is it almost impossible to create any form of legally binding rule or regulation that must be followed by everybody in the industry. Forums had only very few successes in their role as representant of the majority in the affiliate marketing industry. The last example of such a success was the halt of the “CJ LMI” (“Commission Junction Link Management Initiative”) in June/July 2006, when a single network tried to impose on their publishers/affiliates the use of Javascript tracking code as a replacement for common HTML links.

Lack of industry standards

Training and certification

There are no industry standards for training and certification in affiliate marketing. There are training courses and seminars that result in certifications. Some of them are also widely accepted, which is mostly because of the reputation of the person or company who is issuing the certification. Affiliate marketing is also not a subject taught in universities. Only few college teachers work with internet marketers to introduce the concept of affiliate marketing to students majoring in marketing for example.

Education happens mostly in “real life” by just doing it and learning the details as you go. There are a number of books available, but readers have to watch out, because some of the so-called “how-to” or “silver bullet” books teach how to manipulate holes in the Google algorithm, which can quickly become out of date or that advertisers do not permit anymore some of the strategies endorsed in the books.

OPM companies usually mix formal with informal training, and do a lot of their training through group collaboration and brainstorming. Companies also try to send each marketing employee to the industry conference of their choice.

Other resources used include web forums, blogs, podcasts, video seminars and specialty websites that try to teach individuals to learn affiliate marketing, such as Affiliate Classroom, whose founder Anik Singal won the first place and $15,000 in the Young Alumni Category of the University of Maryland $50K Business Plan Competition in 2006.

Code of Conduct

CPA networks “threat”
Affiliate marketers usually avoid this topic as much as possible, but when it is being discussed, then are the debates explosive and heated to say the least. The discussion is about CPA networks (CPA = Cost per action) and their impact on “classic” affiliate marketing. Traditional affiliate marketing is resources intensive and requires a lot of maintenance. Most of this includes the management, monitoring and support of affiliates. Affiliate marketing is supposed to be about long-term and mutual beneficial partnerships between advertisers and affiliates. CPA networks on the other hand eliminate the need for the advertiser to build and maintain relationships to affiliates, because that task is performed by the CPA network for the advertiser. The advertiser simply puts an offer out, which is in almost every case a CPA based offer, and the CPA networks take care of the rest by mobilizing their affiliates to promote that offer. CPS or revenue share offers are rarely be found at CPA networks, which is the main compensation model of classic affiliate marketing.

The name “affiliate marketing”

Voices in the industry are getting louder that recommend a renaming of affiliate marketing. The problem with the word affiliate marketing is that it is often confused with network-marketing or multi-level marketing what it is absolutely not. “Performance marketing” is one of the alternative names that is used the most, but other recommendations were made as well,[33] but who is to decide about the change of a name of a whole industry. Something like that was attempted years ago for the search engine optimization industry, an attempt that obviously failed since it is still called SEO today.

Affiliate marketing pros and cons

Merchants like affiliate marketing, because in most cases, it is a “pay for performance model”, meaning the merchant does not incur a marketing expense unless results are realized, excluding the initial setup and development of the program. Some businesses owe much of their growth and success to this marketing technique, one example being Amazon.com, especially small and midsize businesses. However, unlike display advertising, affiliate marketing is not easily scalable.

Affiliate program implementation options

Some merchants run their own affiliate programs (In House) while others use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. (see outsourced program management) Merchants can choose from two different types of affiliate management solutions, standalone software or hosted services typically called affiliate networks.

Affiliate management and program management outsourcing

Successful affiliate programs require a lot of maintenance and work. The number of affiliate programs just a few years back was much smaller than it is today. Having an affiliate program that is successful is not as easy anymore. The days when programs could generate considerable revenue for the merchant even if they were poorly or not at all managed (“auto-drive”) is over.

Those uncontrolled programs were one of the reasons why some of the not so positive examples of affiliates were able to do what they did (spamming, trademark infringement, false advertising, “cookie cutting”, typosquatting etc.)

The increase of number of internet businesses in combination with the increased number of people that trust the current technology enough to do shopping and business online caused and still causes a further maturing of affiliate marketing. The opportunities to generate considerable amount of profit in combination with a much more crowded marketplace filled with about equal quality and sized competitors made it harder for merchants to get noticed, but at the same time the rewards if you get noticed much larger.

Internet advertising industry became much more professional and online media is in some areas closing the gap to offline media, where advertising is highly professional and very competitive for a lot of years already. The requirements to be successful are much higher than they were in the past. Those requirements are becoming often too much of a burden for the merchant to do it successfully in-house. More and more merchants are looking for alternative options which they find in relatively new outsourced (affiliate) program management or OPM companies that were often founded by veteran affiliate managers and network program managers.

The OPM are doing this highly specialized job of affiliate program management for the merchant as a service agency very much like Ad agencies are doing the job to promote a brand or product in the offline world today.

Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005. MarketingSherpa’s research team estimated that, in 2006, affiliates worldwide earned $6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing and forms of lead generation other than contextual ad networks such as Google AdSense.

Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors. The three sectors expected to experience the greatest growth are the mobile phone, finance and travel sectors. Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix. Of course, this is constantly subject to change.

Predominant compensation methods in affiliate marketing
80% of affiliate programs today use revenue share (Cost per sale) as compensation method. The remaining 19% use Cost Per Action.

Diminished compensation methods

The use of pay per click and pay per impression (CPM) in traditional affiliate marketing is far less than 1% today and negligible.

CPM requires from the publisher only to load the advertising on his website and show it to his visitors in order to get paid commission, while CPC requires one additional step in the conversion process to generate revenue for the publisher. Visitors must not only made aware of the ad, but also pursue them to click on it and visit the advertisers website.

CPC used to be more common in the early days of affiliate marketing, but diminished over time due to click fraud issues that are very similar to the click fraud issues modern search engines are facing today. Contextual advertising, such as Google AdSense are not considered in this statistic. It is not specified yet, if contextual advertising can be considered affiliate marketing or not.

Compensation methods for other online marketing channels
Pay per click is predominant as compensation model for pay per click search engines and their contextual advertising platforms, while pay per impression is the predominant compensation model for display advertising. CPM is used as compensation method by Google for their AdSense/AdWords feature “Advertise on this website”, but an exception in search engine marketing.

While search engines only recently started experimenting with compensation structures of traditional affiliate marketing, such as pay per action/CPA,[3] they did display advertising, offering CPA as early as 1998.[4] By the end of 2006 did the share of the CPA/performance pricing mode (47%) catch up with the CPM pricing mode (48%) and will become the dominant pricing mode for display advertising, if the trend of the last 9 years will continue in 2007.

CPM/CPC versus CPA/CPS (performance marketing)

In the case of CPM or CPC, the publisher does not care if the visitor is the type of audience that the advertiser tries to attract and is able to convert, because the publisher already earned his commission at this point. This leaves the greater, and, in case of CPM, the full risk and loss (if the visitor can not be converted) to the advertiser.

CPA and CPS require that referred visitors do more than visiting the advertisers website in order for the affiliate to get paid commission. The advertiser must convert that visitor first. It is in the best interest for the affiliate to send the best targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser.

For this reason affiliate marketing is also called “performance marketing”, in reference to how employees that work in sales are typically being compensated. Employees in sales are usually getting paid sales commission for every sale they close and sometimes a performance incentives for exceeding targeted baselines.[7] Affiliates are not employed by the advertiser whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers’ internal sales department.

The phrase, “Affiliates are an extended sales force for your business”, which is often used to explain affiliate marketing, is not 100% accurate. The main difference between the two is that affiliate marketers cannot, or not much influence a possible prospect in the conversion process, once the prospect was sent away to the advertisers website. The sales team of the advertiser on the other hand does have the control and influence, up to the point where the prospect signs the contract or completes the purchase.

Multi tier programs

Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups and sub-partners. In practical terms: publisher “A” signs up to the program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher “A” attracts other publishers (“B”, “C”, etc.) to sign up for the same program using her sign-up code all future activities by the joining publishers “B” and “C” will result in additional, lower commission for publisher “A”.

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each others’ existence, yet generate income for the higher level signup. This sort of structure has been successfully implemented by a company called Quixtar.com, a division of Alticor, the parent company of Amway. Quixtar has implemented a network marketing structure to implement its marketing program for major corporations such as Barnes & Noble, Office Depot, Sony Music and hundreds more.

This is not considered affiliate marketing. Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Programs beyond 2-tier are not considered affiliate programs, but rather multi-level marketing (MLM) or network marketing.

Even though Quixtar compensation plan is network marketing & wouldn’t be considered ‘affiliate marketing’, the big company partners are considered and call themselves affiliates. Therefore, you may argue that the Quixtar company is the affiliate marketer for its partner corporation.

Affiliate marketing is a method of promoting web businesses (merchants/advertisers) in which an affiliate (publisher) is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts.

Affiliate marketing is also the name of the industry where a number of different types of companies and individuals are performing this form of internet marketing, including affiliate networks, affiliate management companies and in-house affiliate managers, specialized 3rd party vendors and various types of affiliates/publishers who utilize a number of different methods to advertise the products and services of their merchant/advertiser partners.

Affiliate marketing overlaps with other internet marketing methods to some degree, because affiliates are using the same methods as most of the merchants themselves do. Those methods include organic search engine optimization, paid search engine marketing, email marketing and to some degree display advertising.

Affiliate marketing – using one site to drive traffic to another – is the stepchild of online marketing. While search engines, e-mail and RSS capture much of the attention of online retailers, affiliate marketing, despite lineage that goes back almost to the beginning of online retailing, carries a much lower profile. Yet affiliates continue to play a fundamental role in e-retailers’ marketing strategies.

Security concerns

For both companies and consumers that participate in online business, security concerns are very important. Many consumers are hesitant to buy items over the Internet because they do not trust that their personal information will remain private. Recently, some companies that do business online have been caught giving away or selling information about their customers. Several of these companies have guarantees on their websites, claiming customer information will be private. By selling customer information, these companies are breaking their own, publicized policy. Some companies that buy customer information offer the option for individuals to have their information removed from the database (known as opting out). However, many customers are unaware that their information is being shared and are unable to stop the transfer of their information between companies.

Security concerns are of great importance and online companies have been working hard to create solutions. Encryption is one of the main methods for dealing with privacy and security concerns on the Internet. Encryption is defined as the conversion of data into a form called a cipher. This cipher cannot be easily intercepted unless an individual is authorized by the program or company that completed the encryption. In general, the stronger the cipher, the better protected the data is. However, the stronger the cipher, the more expensive encryption becomes.

Effects on industries

Internet marketing has had a large impact on several industries including music, banking, and flea markets – not to mention the advertising industry itself.

In the music industry, many consumers have begun buying and downloading MP3s over the Internet instead of simply buying CDs. The debate over the legality of duplicating MP3s has become a major concern for those in the music industry.

Internet marketing has also affected the banking industry. More and more banks are offering the ability to perform banking tasks online. Online banking is believed to appeal to customers because it is more convenient than visiting bank branches. Currently, over 50 million U.S. adults now bank online. Online banking is now the fastest-growing Internet activity. The increasing speed of Internet connections is the main reason for the fast-growth. Of those individuals who use the Internet, 44% now perform banking activities over the Internet.

As Internet auctions have gained popularity, flea markets are struggling. Unique items that could previously be found at flea markets are being sold on eBay instead. eBay has also affected the prices in the industry. Buyers and sellers often look at prices on the website before going to flea markets and the eBay price often becomes what the item is sold for. More and more flea market sellers are putting their items up for sale online and running their business out of their homes.

The effect on the ad industry itself has been profound. In just a few years, online advertising has grown to be worth tens of billions of dollars annually. (2007-06-18) PricewaterhouseCoopers reported US Internet marketing spend totalled $16.9 billion in 2006.

As Advertisers increase and shift more of their budgets online, it is now overtaking radio in terms of market share.

Recent issues

In November 2004, a lawsuit was filed against Bonzi Buddy software. The lawsuit alleged that Bonzi’s banner ads were deceptive. These ads often looked like Microsoft Windows message boxes. Internet users would run across the ads and when they attempted to close the boxes, they found themselves redirected to a website determined by Bonzi.

On May 27, 2005, Bonzi Buddy agreed to change the format of its ads so they did not resemble Windows message boxes. The boxes will now contain the word “Advertisement” so computer users know what they are looking at. The boxes will also no longer carry buttons that do not perform the correct actions.

Sales tax issues have also recently become debated. In the USA, the current laws require that buyers of online products pay their state all due taxes on these goods at the end of the year, along with their other state taxes. However, most consumers do not appear to be making these payments. Thirteen states have now begun encouraging Internet businesses to collect sales tax on every sale. These states are currently not forcing the companies to collect the tax. However, it appears that if companies do not begin collecting the sales tax on their own, states will begin forcing the companies to do so. The states are claiming that each year they lose $15 billion in unpaid sales taxes associated with online purchases.

Advantages

Some of the benefits associated with Internet marketing include the availability of information. Consumers can log onto the Internet and learn about products, as well as purchase them, at any hour. Companies that use Internet marketing can also save money because of a reduced need for a sales force. Overall, Internet marketing can help expand from a local market to both national and international market places. And, in a way, it levels the playing field for big and small players. Unlike traditional marketing media (like print, radio and TV), entry into the realm of Internet marketing can be a lot less expensive.

Furthermore, since exposure, response and overall efficiency of digital media is much easier to track than that of traditional “offline” media, Internet marketing offers a greater sense of accountability for advertisers.

Compared to other types of media marketing (i.e. print, radio and TV), Internet marketing is growing very fast. It’s also gaining popularity among small businesses and even consumers when trying to monetize their blog or website. The measurability of the internet as a media makes it easier to experience innovative e-marketing tactics that will prove a better Cost of Acquisition than other media. However, in most developed countries, internet marketing and advertising spending is only around 5%, while TV, radio, and print are more.

Limitations

Limitations of Internet marketing create problems for both companies and consumers. Slow Internet connections can cause difficulties. If companies build overly large or complicated web pages, Internet users may struggle to download the information. Internet marketing does not allow shoppers to touch, smell, taste or try-on tangible goods before making an online purchase. Some e-commerce vendors have implemented liberal return policies to reassure customers. Germany for example introduced a law in 2000 (Fernabsatzgesetz – later incorporated into the BGB), that allows any buyer of a new product over the internet to return the product on a no-questions-asked basis and get a full return. This is one of the main reasons why in Germany internet shopping became so popular. Another limiting factor, particularly with respect to actual buying and selling, is the adequate development (or lack thereof) of electronic payment methods like e-checks, credit cards, etc. Additionally, there is the need to drive people to the site. Without other collateral such as print, television or radio (with print being the most effective due to the longevity of the piece compared to an ad on the radio or tv) it can often be difficult for the consumer or other businesses to find any specific address without prior knowledge.

Web Promotion is new genration marketing, where buyer can get easy information of seller in worldwide, typing keywords in search engine.