EIG Inc.: Online Marketing and Advertising

Introduction

Online marketing refers to the use of internet media to reach the targeted audience. Through the use of internet, companies are able to advertise and sell their commodities direct to the customers (Pavlik, p. 35). The use of internet in marketing is currently increasing at a high rate and many companies have set aside big proportions of their budget for us in online marketing. When using online marketing, various models are employed by companies in order to make the process effective (Sheppard, p. 78).

The methods include:

• Affiliate Marketing: this is a form of marketing whereby business entities come together under the umbrella of associates in order to indulge in marketing and promotion of their goods products. According to Sheppard (82) “the associates are paid by commissions on every customer, sale, subscriber that they bring to the company.” Sheppard (83) goes on to give examples of companies which use such an initiative and mentions, “the Amazon Associate central which uses its website Amazon.com to bring private website owners together in the business of online affiliate marketing.”
• Display marketing: According to Sheppard (84) “this model achieves its advertising goals by using banners and banner ads that are placed on the website of a third party in order to bring audience to company’s website which helps to increase the awareness regarding a certain product.”
• Email marketing: Sheppard (84) also mentions this form of marketing and he says that, “in this form of marketing companies go about their marketing by using emails to their customers or potential buyers of their products informing them about their products and why their products should be given preference over similar other products.”
• Interactive marketing: Sheppard (88) also mentions interactive marketing, and he says that, “In this case, the use of graphic techniques and animations is employed so as to create ads can lead to the viewers being engaged and the viewer can also be able to participate.”
• Viral marketing: finally Sheppard (88) mentions viral marketing and he asserts that, “this is a form of online advertising whereby customers are encouraged to pass along any information pertaining a company’s services or products.” An example of this method is the case where visitors of a certain website are allowed to email games that are attractive to their friends.

The use of any of these online advertising methods is associated with a number of advantages. Online advertising is very convenient, cheap and effective way to enable companies determine the results of their work. This method of advertising stresses on quality customer services, public relations, products sale and effective flow of information. All these services can be done as different services but online marketing simplify them and make the marketing process easy (Mohan, 89). This paper will discuss the trends of online marketing, factors contributing to the increase of online marketing (technological advancement, article marketing), limitations of online marketing (security concerns, technological limitations, Literacy, gender) and the advantages of this method as compared to other advertising methods.

Discussion

Trends of Online Marketing

The use of internet has increased at a high rate for the recent past (Adcock, p. 12). This has provided companies with the opportunity to reach the global audience in a very easy and effective way. Through the internet media, companies are able to provide responses to their customers promptly, and they are also able to advertise any new commodity to the large number of people who use the internet globally (Andresen, p. 90). In addition to advertisements, internet marketing enables companies to keep customer data in a digital form as well as storing the customer relationship data in an electronic nature (Andresen, p. 93).

For instance, reports of study carried out by on philanthropy researchers in 2005 indicated that online marketing in American businesses is increasing at a very high rate; EIG Inc was considered as an example. Mohan (pp. 67-9) asserted that “the study found out that $1.11 billion was spent in 2005, an estimated $1.34 billion will be spent in 2006, and the number is expected to rise further in 2007”. The study further established that slow growth was expected in 2009 as a result of the global recession. The study found out that 89 percent of American of the age bracket 13-25 years were in a position to change from one brand to another of the same price and type depending on their taste (Mohan, p. 70). The use of online marketing and advertising has more number of advantages when compared to the traditional media marketing. These advantages are discussed in some sections of this paper. This study provides a good example of how increase in online marketing is currently growing at a high rate. There are specific reasons that have lead to these increasing trends. However, the increasing rate of using online marketing may also be affected by other factors, such factors limit the way companies can use this effective method of marketing.

Factors Leading to Increase in Online Marketing

Impacts of the modern technology internet marketing

The modern advancement of the technological industry especially the telecommunications sector has had a positive response to the trend of online marketing and advertisement (Bruner and Anand, p. 67). This has created an opportunity for many industries to shift from the old online advertising that used simple ads to the use of rich multi-media experience. The result of this paradigm shift is that, companies are provided with the chance to ensure effective engagement and management of advertising companies that will lead to influencing customers to develop tastes and feelings towards certain commodities or services (Bruner and Anand, p. 69). An example of the technological advancement that is leading to increase of online advertising is the use of broadband.

The use of broadband in America is growing; by the year 2005 most of the residences in America had adopted the broadband technology. The trend continued until the year 2008 when close to ninety percent of the American homes had adopted this technology (Chekitan and Schultz, p. 65). According a study conducted by Nielsen 2008, the number of citizens who were able to use and access internet in the United States was 220,141,969. From this total, more than one hundred and ninety nine people used the broadband technology (Chekitan and Schultz, p. 69). These people are therefore able to see advertisements posted on companies’ websites any time they open their computers. Through the use of rich multimedia content, online advertisement will lead to creating fuzzy feelings which can be liked by the audience (Fiore and Shawn, p. 21).

The result of this technological advancement has enabled many banks to use online services in the United States (Gray, p. 24). This has been much successful because many people now prefer to use this system since it easier instead of going to the banks branches to seek these services. Statistics of the study conducted by Nielsen (2008) found that there are close to one hundred and fifty million adults in the United States who use online banking. This growth is attributed to the high rates of internet connectivity in America due to the use of the broadband technology. The study also found out that forty four percent of the internet users are able to access bank services online (Hoffman and Novak, p. 34).

Another business that is growing as a result of the use of broadband technology is the use of internet auctions (Korgaonkar and Wolin, p. 65). Some commodities which were traditionally found in flea market only can now be sold through internet auction websites like eBay. The use of e-stores to sell many commodities has as well increased in the United States, commodities like, clothing, gadgets and move props are currently sold through such stores. Hoffman and Novak, (p. 40) assert that, ”through the websites like eBay sellers and buyers can access the prices of commodities; this enables them to determine the prices without going to the flea market which would provide the same prices.” This ensures that vendors in the flea market post the prices of their commodities on the advertising websites while at the same time they run their businesses at the business premises (Korgaonkar and Wolin, p. 69).

The trend of online advertising in the United States has developed at a high speed to make it worth many billion united state dollars per annum. Price water house coppers (2006) established that 16.9 billion US dollars are used in the process of internet marketing (Kotler and Keller, p. 45). Internet marketing has also been used in the political arena in the United States; the 2008 campaigns employed this method whereby the Presidential aspirants used it to communicate their objectives to their constituents. Even president Barrack Obama himself was able to raise more than one million US dollars to be used in the Democratic candidature campaign through online sourcing (Kotler and Keller, p. 5).

Another notable industry that is using online marketing is the tourism sector. The marketing of museums in the United States is done online in order to engage many audiences in this sector. The improvement in technology has enabled museums to market digital projects online (Andresen, p. 13-20).

Article marketing

According to Palanisamy, (102) “this is the form of advertising whereby short articles regarding a company business are written and the articles are then easily made available through distribution to the market place.” These articles contain references and other useful information regarding a business for instance, products or services, contacts and business location (Palanisamy, p. 102). Currently, article marketing has been able to be done online due to technological advancement. Traditionally, this method was used as a media but currently online advertisers have made these articles accessible via the internet (Palanisamy, p. 112).

The use of Web 2.0 has made online marketing of articles to become popular. Information can be transmitted through viral-propagation of business articles by the use of social networks websites like Linkedin and facebook (Kotler and Keller, p. 98). The use of search engine optimization has also made it possible to market business articles. This technology determines how web pages are arranged depending on the keywords that are typed in search engines. In this case the web page that is ranked high will be more likely visited by many visitors. Many internet advertisers rank business articles high; this implies that they are easily accessible to many people due to traffic and the result is that more sales are expected (Kotler and Keller, p. 94).

Search engine optimization ensure that business articles are distributed in the bio box of a business website, this results to the creation of more links to the same website. This effort makes such websites to ranked high. This trend has increased recently and has resulted in many articles being written specifically for search engine optimization.

Factors Limiting Online Marketing and Advertisement

Security concerns

Many people who use a commodity or a service are very much interested with the privacy of the personal information. Many consumers today fear buying commodities or services online because of the fear that their personal information might be exposed. Some companies which do online business have recently be found exposing and even selling information of their customers (Korgaonkar and Wolin, p. 29). Most of these companies tell the audience who visit their website that the customer information is confidential. These companies tell their customers that, their information is never stored in customer database but this information can still be sold to other companies or be shared among companies. However, most of the consumers may not be a position to know if their personal information is shared and they therefore cannot stop this action. Another concern that affects consumers when transacting online is if they will be served with exactly what they intended to buy. Many companies have tried to provide their customers with solutions such as using strong consumer brands like Amazon.com and eBay in order to create confidence to their customers that they will get what they required. Additionally, companies address this problem by rating their service delivery in order to determine whether or not they provide customer satisfaction. There are companies which assure security to their consumers by provide effective money transfer options like Pay Pal and the use of credit card (Korgaonkar and Wolin, p. 21).

From a different perspective, even companies fear to do their businesses online because they fear exposing their secret information to the publics and even competitors (Pavlik, p. 123). Some companies fear that in the process of marketing, they might display private information to competitors and therefore fear that this might affect their functioning. This leads to such companies providing only some of the information which may not be enough to the customers (Pavlik, p. 129).

Technological limitations

The use of internet marketing requires the application of modern technology in order to ensure that it is effective. One major limitation is the internet connectivity speed. The traditional system was characterized by low internet speed that created a barrier in transfer of information (Kotler and Keller, p. 34). Companies whose websites are complicated create problems to their consumers who use dial-up connections or low internet speed, this creates delay. This implies that only the consumers who have high internet speed can be can be reached by this marketing method. Such companies should therefore target only the consumer who can access their website.

Literacy levels

Companies which use online marketing need to consider that not every consumer of a commodity or a service is able to use the internet. Internet is a very effective media for online marketing. However, many people especially in the developing world do not even know what computers are. The use of online advertising for such people would therefore be irrelevant despite the advantages that are associated with online marketing. Companies should therefore decide on better method of advertisement of products in order to reach such people who can be potential consumers of a commodity or a service (Kotler and Keller, p. 109).

Gender variability

According to many advertising researches, men and women have different affective and cognitive needs (Brunel and Nelson, 21). Researches indicate that men’s cognitive needs are higher than those of women and also women exhibit higher needs for emotions than men. These differences are not normally considered when companies decide to use online marketing. From a theoretical perspective, men exhibit higher cognition character that leads them to be critical when making judgments depending on the nature of a message (Brunel and Nelson, p. 24). As a result of this nature, men will tend to critically judge an advert and most likely ignore emotions that are created by the advertisement. According to Brunel and Nelson (p. 30) “the traditional advertising models, such as the attention, interest, desire, action (AIDA) concept, rely on the premise that “advertising is something done to consumers rather than something consumers interact with”. This determines how advertisement is considered by the audience. Using this traditional advertising model cognition involved determining someone’s knowledge and therefore a company could determine the needs of a consumer easily. The traditional advertising models also considered conation details which depended on the behaviors of the audiences, with these companies were also able to know what they could do in order to market their product. The use of internet require a certain amount of cognition, judgment and awareness in order for one to decide whether or not take an action.

Further studies found out that women tend to respond more higher to non-verbal stimuli, imagery interpretation and descriptions than men do. Women also tend to be more attentive and therefore ask more questions, this leads to them exhibiting an in-depth analysis of information. These differences determine how the internet message will be perceived in the case of online advertising (Wood, p. 76).

Advantages of Online Marketing over Traditional Methods of Marketing and Advertisement

Online market creates a two way communication process which is not possible in other advertising media services (Miller, 24). This makes it to have better communication tools than other advertising media services. Through a company website, information on brand building can be communicated and also a good marketing relationship is built. A website an opportunity for consumers to interact with the brand and this help him to determine the good or bad of a commodity. This cannot be possible when using the traditional media advertising. Pavlik (p. 23) supporting this idea noted that “advertisers adjust to a new medium that is not bound by either space or time and that has the capability to involve and engage the consumer.”

Online marketing is considered to be less expensive when compared to the traditional media advertising methods. This is so because the ratio of the cost of online advertisement to the reach target is high. According to Guiltinan (p. 12), “Companies can reach a wide audience for a small fraction of traditional advertising budgets.” Internet resource provides consumers with the opportunity carry out research, purchase commodities and services at a very convenient way. In this case, the cost-volume-profit analysis which is the main goal of marketing is well arrived at. It is also possible to measure the statistics of online marketing in a very cheap way. This is not possible while using billboards advertisements. The traditional media marketing is associated with the use of expensive means such as billboards, newspapers and even traveling. This differs from online marketing in that, marketers just require to post details of their commodities on the websites and the targeted audience can have the opportunity to see the details of these commodities (Brunel and Nelson, p. 44).

Due to be exposed, rates of response, and the level of effectiveness, it is quit easy to track when compared with the traditional media this is possible by the use of web-analytics, an example of this is the way in which Internet-marketing can provide a greater accountability to the consumers. Marketers together with clients are thus conscious of the necessity to determine the combined effects of marketing. The impacts of multi-channel marketing can be had to evaluate, even though they help in ascertaining the cost of media-campaigns (Korgaonkar and Wolin, p. 113).

According to Brunel and Nelson, (p. 48) “online marketers are able to determine what messages or offerings are appealing to t audience.” The outcome of campaigns are easily determined and tracked instantly as online-marketing initiatives normally require customers to click on an advertisement, look at a website, and therefore access the required information.

An advertising website can provides an opportunity to the consumers of a commodity to enable them interact with it therefore making the consumers to develop positive altitudes towards the commodity. This contributes so much to the feeling by company that the brand is liked. Palanisamy (34) noted that “Researchers also find a positive correlation between brand attitude and time spent on a Web site”. As a result, companies have recognized the need to establish interactive sites which will provide numerous opportunities to ensure that consumer engagement with the product is achieved. Research conducted in the United States by Forrester Research in 2005 found out online retail sales were expected to increase by 11 percent, to a total of 156 billion US dollars (Bruner, pp. 34-7). According to Palanisamy (p. 36) “analysts also focus that it was only those companies which will adopt a strong branding strategy shall be able to coup with the retail marketplace which is very competitive.” Haugtvedt, Cacioppo et al (p. 57) noted that “even in a difficult economic climate, interactive media continues to consume a larger piece of the overall advertising pie, which reflects the ongoing secular shift from traditional to online media”.

Another major advantage associated with internet marketing is that companies are able to connect and easily reach the target audience. Forrester Research (2005) used the example of a group of consumers who were college students. The target population for the consumption of commodity Y was those college students. These students have access to internet and their interactivity was very high. The students were provided a good market for commodity Y because their interaction rate was very high and the online advertisement which was used for the commodity engaged and entertained them (Korgaonkar, and Wolin, p. 103).

Conclusion

This research paper has discussed what online marketing is and how it carried out. It has been found out that currently many companies prefer to use this advertising method other than the traditional media method. The reason for this trend is due to the large number of benefits that are associated with the use of this method. However, there are also reasons which limit the use of internet marketing. This paper has also identified such issues like low internet connectivity, security matters and the level of literacy of the targeted consumers. As discussed above consumers of a commodity are able to interact with such a commodity through internet marketing and which is very important in marketing. In addition to the interactive and engagement nature of the internet, online advertising enables companies to have a direct communication with their consumers. By having a direct communication with the consumers, companies receive feedback on how to improve the market conditions (Miller, p. 32). The paper has also found out that, the increase in online advertising could be attributed to technological advancement in the modern days that ensure that internet connectivity is high. This paper has also discussed the advantages that are associated with use of online advertising over the traditional media advertising, these reasons are responsible for the increasing trends of online advertising.

However, the paper has also found out that there are limitations that have impacts on the use of online marketing. The limitations that were found are; security concerns, literacy levels, technological advancements and gender variability. These factors are responsible of affect the rate at which companies use online advertisement. There is need for companies to put these factors into consideration as they switch to using online advertising.

Works Cited

1. Adcock, Dennis and Al-Halborg, Caroline. Introduction marketing: principles and practice (4th edition). London: Oxford University Publishers, 2001.
2. Andresen, Richard. “Marketing or selling the arts: An orientation dilemma.” Washington DC: Oxford University Publishers. Journal of Arts Management 15.1 (2005): 13-20.
3. Brunel, Frederic and Nelson, Michelle. “Message order effects and gender differences in advertising persuasion.” Journal of Advertising Research 43, 5 (2003): 330- 341.
4. Bruner, Gordon and Anand, Kumar. “Web commercials and advertising hierarchy-of- effects.” Journal of Advertising Research 40.1 (2000): 35-42.
5. Chekitan, Phillip and Schultz, Peter. “In the mix: A customer-focused approach can bring the current marketing mix into the 21st century.” Marketing Management 14.1 (2005): 23-27.
6. Fiore, Frank and Shawn, Collins. Successful affiliate marketing for merchants. New York: QUE Publishing, 2001.
7. Gray, Daniel. The complete guide to associate and affiliate programs on the net. New York: McGraw-Hill Trade, 1999.
8. Guiltinan, Milton. Marketing management: Strategies and programs. New York: McGraw Hill, 2006.
9. Haugtvedt, Curtis Cacioppo, John et al. “Need for cognition and advertising: understanding the role of personality variables in consumer behavior.” Journal of Consumer Psychology 5.3 (2002): 239-260.
10. Hoffman, Donna and Novak, Thomas. “Marketing in hypermedia computer mediated environments: conceptual foundations.” Journal of Marketing 7.60 (2006): 50- 68.
11. Korgaonkar, Pradeep and Wolin, Lori. “A multivariate analysis of web usage.” Journal of Advertising Research 3.12 (1999): 53-68.
12. Kotler, Philip and Keller, Kevin. A framework for marketing management (4th edition). New York: Pearson Prentice Hall, 2009.
13. Miller, Richard. Communications theories: perspectives, processes, and contexts. New York: McGraw-Hill, 2005.
14. Mohan, Joshi. International marketing. New York: Oxford University Press, 2005.
15. Palanisamy, Ramaraj. “Impact of gender differences on online consumer characteristics on web-based banner advertising effectiveness.” Journal of Services Research 4.2 (2005) 45-74.
16. Pavlik, John. New media technology: Cultural and commercial perspectives. Boston: Allyn and Bacon Publisher, 2008.
17. Sheppard, Rogers Hartwick, Joseph and Warshaw, Paul. “The theory of reasoned action: A meta-analysis of past research with recommendations for modifications and future research.” Journal of Consumer Research 15.1 (2008): 325-343.
18. Wood, Julia. Gendered relationships. London: Mayfield Publishers, 2006.