By Dr Costas Kyritsis preveza.teiep.gr/kyritsis Department of Finance

1. Successful site functionalities and web-marketing techniquesof e-commerce in the 21st century By Dr Costas Kyritsis http://preveza.teiep.gr/kyritsis Department of Finance Technology and Education Institute of Epirus, Greece SDU International week Odense 2007

2. The general character of this presentation and the sources • Deciding to shift the attention from academic sources to valuable successful enterprises that take also the trouble to provide relevant non-academic 1st hand knowledge education about heir techniques. (E.g. www.nightingale.com , Paul Zane Piltzer NY University, Bill Gates, Steven K. Scott, R. Allen etc) • Academic statistical sources too (e.g. Bernardo A. Huberman PhD, MIT on e-cology )

3. Outline of the presentation • PART A : In this presentation we try to understand the new paradigms, the psychology, the life-styles, the concepts , and of course the technical functionalities of e-commerce in the first years of the 21st century. • Their selection is based not on the analysis of theoretical observers, but on the writings and reports of the successful e-commerce businessmen, that are not the largest companies like Amazon or google, but an increasing population of small web-marketers. • We discuss the new emerging web-marketing techniques and especially the “funnel” model of e-commerce which is entirely different in meaning and implications from the classical B-to-B or B-to-C models. • PART B: We present some relevant statistics

4. PART A: CONCEPTS AND WEB FUNCTIONLITIES

5. The underlying value of the web for business: Technology advance and the price of goods • Web marketing: Selling information rather than selling material goods

6. What is marketing in the first place? • “The marketing process consists of ....a tightly integrated effort to discover, create, arouse, and satisfy customer needs” Theodore Levitt 1975 • “The marketing process converts seeking strangers in to acquaintances, acquaintances in to friends, friends in to customers, and eventually customers in to partners” Robert Allen 2006

7. 21st century: Individual’s Globalization • 1500-1800: Globalization's protagonist is the national State (e.g. British empire) • 1800-2000: Globalization's protagonist is the multi-national company (e.g. products of parts made in different countries) • 2000- : Globalization's protagonist is the individual , using the Internet and introducing his own new concepts of services and products (source: T.L. Friedman : “The world is flat” )

8. Traditional marketing In traditional marketing there is the option of direct physical contact. High mailing costs Based on location Business week/business hour In Mass-media it is one-way marketing High entry costs High overhead High failure costs Difficult to test Operates from fixed location Money flow is a separate function Web-Marketing In web-marketing only seeing, listening, and interaction through text exchange is possible Zero mailing costs Based on relevancy, globally 24/7/365 Interactive marketing Low entry costs Almost zero overhead Low failure costs Easy to test and simulate Operates from any computer in the world Money tend to be absorbed by the concept of information Differences of Web Marketing compared to traditional marketing

9. A definition of web-marketing • Visual and audio emotional anchors are the main subjective channels that e-commerce can use. • A definition of web-marketing is that it is a setting up of automatic, repeatable systems that create the environment where people want to visit you again and again and probably in the future buy something from a references you give instead of you having to sell to them anything. • “All transactions now tend to be through the web and are of the type of self-service” Bill Gates

10. Classical programmer’s e-commerce functionalities 1.Bulk uploading of products 2. Catalog search 3. Credit card processing 4. E-mail notification/invoices 5. Inventory management 6. Multiple shipping & sales tax options 7. Order/customer tracking 8. Secure checkout & order processing 9. Other

11. The next list is taken e.g. from the most common modules of the platform dotnetnuke.com accounting advertising announcements Library of articles Chat Content Management Contacts Data viewing& Charting Events and announcements Feedback Forums Guestbook Search Engines Help Desk Links Maps Media players Messaging RSS News Opt-in-mails Paypal Advanced automation tools in website creation include functionalities like

12. The 10-most important functionalities of successful e-commerce sites based on the “funnel” model. • 1) WEB CASTING, with videos and mp3’s that can be plaid e.g. with windows media player. • 2)      Free newsletter or E-ZINE or RSS broadcasting • 3)      AUTOREPONDER • 4) LEADS data base • 5)      Ads and sponsored LINKS • 6)      Chat or FORUM hosting • 7)      FREEBIES and free entertainment for visitors (free downloads of e-books, e-articles, software downloads, coupons, quotes, music fulfillment and gratification mp3, photos, video, games etc) • 8)      Specialized and local directory SEARCH-ENGINE FACILITY • 9) AFFILIATEprograms • 10) SIMPLICITY in the aesthetic design

13. Affiliate programs: What are they • Affiliate programs is the easiest and most powerful way to find online dealers for e-commerce products, and thus enhance online sales and traffic in unexpected ways. It is also a very powerful way for many people, that do not want to sell their own products in the web, to earn in a fast and easy way cash. It is related to the tail effect of e-commerce. • Comprehensive sites for affiliate programs are the: • www.affiliatesdirectory.com • www.refer-it.com • www.associateprograms.com • www.clickquick.com • www.clickbank.com • www.affiliatezone.com • www.cj.com

14. Affiliate programs : How they are chosen • The features that have to be analyzed and characterize the affiliate programs are • 1) Are the sold products high quality? • 2) Does the e-merchant has good site and sells effectively? • 3) What is the payment model? (pay-per-sale, or pay-per-lead, or pay-per-click etc) • 4) Is there affiliate support? (detailed traffic and linking stats, notification be e-mail on the event of sale, real-time-accounting, etc) • 5) Does it pay good commissions? (commissions range from 5% to 80% or more!) • 6) Is it free to join? • 7) Does it have lifetime commissions for the customers re-visits? For how long? (Life time cookie) • 8) Is it two-tier commission? • 9) Is the payment per month with a reasonable minimum?

15. The funnel with loyal population of readers and visitors versus customers • Successful E-commerce has an hybrid mass-media character plus classical commercial character rather, then just a purely commercial character • Creating your own population of readers, visitors, audience and prospects versus selling products • And the keeping of the attention of the population has not to be due to his interest in the particular products.

16. The only successful way to run Affiliate programs: The funnel model of own opt-in list • Marketing's experts reports, mention that only 1 in a 100 individuals, that run affiliate programs, are successful in creating income • Affiliation programs are in the web as the MLM marketing in the direct human contacts marketing • Successful e-commerce businessmen (e.g. R. Allen) say: “You do not need to reach 10 million people. You just need to attract 10,000 hot people in to your funnel and you’ll be set for life! “

17. The web-audience funnel

18. Classical models of e-Business • Yves Pigneur :HEC University of Lausanne • http://www.hec.unil.ch/yp/

19. Resources for models of e-business • Timmers (1999): Timmers, P. (1999), Electronic Commerce: Strategies and Models for Business-to-Business Trading, John Wiley & Sons Ltd., Chichester, UK. • Slywotzky (1996): Slywotzky, A. J. (1996), Value Migration - How to Think Several Moves Ahead of the Competition., Harvard Business School Press, Boston, MA. • Rappa (2000):Rappa, M. (2000), Managing the Digital Enterprise. URL: http://ecommerce.ncsu.edu/business models.html • Tapscott et al. (2000): Tapscott, D., Ticoll, D. & Lowy, A. (2000), Digital Capital - Harnessing the Power of Business Webs, Nicholas Brealy Publishing, London. • Gordijn et.al (2001):Gordijn, J. & Akkermans, J. M. (2001a), ‘Designing and evaluating e-Business models’, IEEE Intelligent Systems - Intelligent e-Business 16(4), 11–17. • Bollier (1996): Bollier, D. (1996), The Future of e-Commerce, The Aspen Institute, Washington, DC. URL: http://www.aspeninstitute.org/ • Porter (2001): Porter, M. E. (2001), ‘Strategy and the Internet’, Harvard Business Review (march), 63–78. • Evans & Wurster (2000): Evans, P. & Wurster, T. S. (2000), Blown to Bits - How the New Economics of • Information Transforms Strategy, Harvard Business School Press, Boston, MA. • Rogers (1995): Rogers, E. M. (1995), Diffusion of Innovations, Free Press, New York, NY.

20. How the funnel is created: Free newsletters or e-zines • Free or paid e-zines is probably the most characteristic feature of web-marketing that makes it resemble to mass-media type of marketing rather than traditional sales. An e-zine is an electronic magazine that is send by e-mail. • Modern more advanced technologies use Blogs-sites and the RSS or similar techniques. In other words the electronic publications is displayed in the user’s web browser’s pages instead to his e-mail. The multimedia advantage is obvious, and in addition the content of the pages changes from the broadcasting source. • A good site to learn how to create an e-zine is the www.ezineuniversity.com

21. Hosting the e-zine • Hosting (editing and publishing) the e-zine is part of the greatly successful functionalities of the web-marketer and e-commerce. • There are several options: • 1) Use mailing programs like the Aureaute Group Mail in www.group-mail.com • 2) Develop your own mailing list management program using free CGI scripts e.g. as in www.cgi-resources.com or www.emailuniverse.com etc • 3) Hire a company such as the one in www.sparklist.com/index.html • Or • 4) Use free online services like in www.groups.yahoo.comwww.listtool.comwww.coollist.comwww.listhost.comwww.emailuniverse.com etc

22. Finding articles for the e-zine • While technologically is easy for the marketer to install and host the publication of an e-zine, to find material to publish is a continuous headache. Fortunately for them there are several methods to get articles for publications: • 1) After listing the e-zine in e-zine directories there shall appear many people that will offer articles that are also ads for them as the sign with a name and a link. • 2) They visit sites that post articles for e-zine editors like • www.mediapeak.com • www.ideamarketers.com • www.ezinearticles.com • www.web-source.net • etc

23. Free e-zine, subscribers data base • A prospect from the leads data base may or may not subscribe for free e-zines. But if he does then he belongs to the e-zine subscribers data base. • This populations makes the most active part of the market of the marketer. • This population is the one that sees the e-zine ads and offers. • It is defined a response and conversion rates on this data base. In other words what percentage of the subscribers shall respond to visit a new site about a new concept or product, and what percentage shall result to a final purchase.

24. E-zine ads • E-zine ads are the cheapest and most effective ads in the web. • There are mainly three kinds: • 1) The solo ad (the selling message is sent by e-mail to the complete list of the subscribers. It stands alone. It can be an entire page . It costs a little more than the other ads.) • 2) The top sponsor ad (it is a 5-15 lines add, and it is put at the top of the e-zine or at the bottom in which case it costs a little less) • 3) The classified ad (It is 3-5 lines and it is put anywhere in the e-zine and it is the cheapest. For a high publicity e-zine of 30,000 subscribers it may cost (2006) 0.000622 $ per line and subscriber) . Thus a 5 lines ad would cost 93.3 $

25. Leads data base • This is probably the greater treasure of the e-commerce marketer. A lead is a record about a prospect (not yet sales customer). It includes opt-in e-mail address, name, interests, and other personal data. • An opt-in e-mail is an e-mail that was given by the owner with his own free will to receive in the future information for his interests. Such e-mails are recorded when visitors want to download information that there is in this site, or want to download freebies like MP3’s, e-books, software or purchase a good of e-commerce etc. Good opt-in e-mails do not force the visitor to accept future mails when download freebies or purchase e-commerce goods. • The marketer may send from time to time e-mails with information about new products and services, upgrades of old products or simply for interesting news about other services of the internet. On the other hand he may never send e-mails himself but sell this data base to other web-marketers that try their relevant goods to the interest of this population. • “He who has the leads... makes the rules of the game” • Comparing it to the audience of a TV channel the advantages of the web marketer are obvious

26. Autoresponders : The autopilot of communication • Autoresponders is one of the most powerful tools for e-commerce marketers, and part of their e-business “autopilot”. It keeps prospects interest alive and makes the marketer’s follow-up automatic. Autoresponders can be set not only to reply immediately to a subscription in a leads data base or an online purchase, but also to send a preset number of e-mails (e.g. 5-10 e-mails) in sequence every few days deploying an offer or describing features of the products or simply arousing interest for whole series of services. They can also set to send e.g. one e-mail every month continuously.

27. Autoresponders : Where to find them • There are good free Autoresponders or at very low cost at the next addresses: • http://www.aweber.com • http://www.robotreply.com • http://www.getresponse.com • http://www.freeautobot.com • http://www.autoresponders.com • http://www.mailtrail.com • http://www.sendfree.com

28. Visitor’s paths analysis and decision’s psychology • Modern web-marketers analyze again and again the paths that a visitor and prospect customer follows from the ad to the e-commerce site • They hesitate to commit to a buying transaction from the first visit. • The need to visit various sites and possibly return after some days before the buy anything. • Visitors psychology is the psychology of a smart, active buyer, not a pathetic victim. • That is why most of the successful content-sites that sell through affiliation programs, are based on the concept of pre-sellrather than sell. • The e-commerce navigation must create a new valuable experience for the prospect either if he buys or not (this could be called e-commerce shop therapy)

29. The sequence of the pre-sell in the “funnel” model. • Marketer run ads in e-zines • Prospect replies to the autoreponder (marketer) • The marketer captures e-mail address and name in the leads data base • Autoresponder sends e-mail that directs the prospect to the affiliate program site-link (the e-commerce seller) • The prospect may or may not go to the e-commerce site and if he goes may or may not buy anything in the e-commerce site • Autoresponder shall follow-up automatically in a preset number of e-mails. • Gradually the leads data base grows.

30. Sequence of pre-sell and sell • Prospect probably visits the affiliate program site (seller) • Prospect probably buys from the affiliate site (seller) • Prospect becomes a customer • The e-commerce site monetizes the traffic to the marketer.

31. 8-Traffic channels of the “funnel” for a successful web-site • 1)      Opted-in mailing list rental (non-Spam) • 2)      Own e-zines (ads), or adds in RSS feed broadcasting • 3) e-zines (ads), or adds in RSS feed broadcasting on other’s e-zines and broadcastings • 4)      Search engines submissions . • 5) Free publications in other sites like articles, e-books, testimonials etc. • 6)      Free (or paid) classified advertising (in various sites) • 7)      Free (or paid) links-banners on other sites (word of mouse), but best of all belonging to a large site with already developed high traffic of relevant interest visitors • 8)      Own affiliate programs (in other words affiliate programs that direct prospects to your own e-commerce site)

32. 8-income flows in an successful e-commerce site: The concept of information absorbs the concept of money • 1)  From the sales of the  main products, and resellers rights (information services, information financial services, collectively written e-books, email courses, multimedia products, etc) • 2)      Other’s and own affiliation programs (no merchant account for other’s affiliation programs) • 3)      Ads accepted in your own site, e.g. adsense of google • 4)      Leads database : renting –selling-exchanging • 5)      Joint venture alliances (discount involved through endorsed offers) based on the leads database • 6)      Auction hosting commissions • 7)      From sales of infrastructure tools (internet marketing consulting, software and site-built etc) • 8)      Selling equity stocks for partnership, or selling finally all the site. • Conclusion: There are many more channels of indirect services income than from sales of products.

33. The concept of Money as Information in the 21st century: The financial success of the self-employed individual depends on its moral conception of money

34. TV: The broadcast production manager’s bias chooses the sample of events in news to represent reality The advertisements are in-between his time of watch, beyond his will. He cannot pin-down easily and advertisement or info and search more information about it In short TV-marketing makes audience passive Web: The surfer chooses his sampling of events to represent reality , through an even-based search. His search has not to be interrupted by advertisements. He can easily search at the very moment more about an ad or info. Web-marketing makes navigators active. Websites functions versus TV: Active versus passive audience

35. Traditional TV-advertising techniques • The foundations: Respect and Honor • The 3-dimensional of the communication: effective persuasion versus manipulation • The “hook” (Grabbing the attention) • The “salting” (Keeping the attention, creating curiosity) • Logic • The emotional word-pictures (the most powerful tool that affect thinking and acting in the average population) • Decision system triggers (motivation for options in actions) • (Source Steven Scott, www,nightingale.com)

36. Maslow’s Hierarchy of needs

37. Steven Scott’s method for 3 decades that created the most productive advertising company in United States • The desire for gain • The fear of loss • The desire for love. • (References: Steven Scott was cofounder of the USA most productive TV advertising company) • 1. A millionaire’s note book, By Steven Scott , Fireside 1996 • 2. Simple steps to impossible dreams, By Steven Scott , Fireside 1999 • 3. www.nightingale.com ) • American Telecast Corporation

38. Persuasive and effective communication in the web: From 3-dimensional to 4-dimensional • While from TV only the • 1. Intellect • 2. Emotions • 3. Motives • Can be influenced (thus a 3-dimensional communication) in the web due to its interactive character, the offer of free downloads etc, signifies an active behavior of the communicator introducing a 4h-dimension in the communication: • 4. Behavioral Interaction (downloads-games)

39. Red: strength, boldness, excitement, determination, desire, courage Orange enthusiasm, cheerfulness, affordability, stimulation, creativity Yellow :attention-grabbing, comfort, liveliness, intellect, happiness, energy Green :durability, reliability, safety, honesty, optimism, harmony, freshness Blue depth, stability, professionalism, loyalty, reliability, honor, trust Purle :power,nobility, luxury, mystery, royalty, elegance, magic Grey: conservatism, traditionalism, intelligence, seriousness Brown: endurance, relaxing, confident, casual, reassuring, earthy Black: elegance, sophistication, formality, strength, mystery White: cleanliness, purity, newness, virginity, peace, innocence, simplicity The semantics of colors in the website design

40. World class content: Individual’s wisdom in e-commerceas suggested by various gurus • Internet marketing is spiritual too • New concepts that lift the spirit and sent you soaring , make you reconnect with the state of happiness • Continuous improvement of the site and services is a formula after which life is never the same again. • Traffic statistics is an excellent barometer of what people truly value and believe to be important. • Believing that you, as a population of one, cannot have an impact is surrendering your 21st century power. • Give the people the pride to belong and they shall reward you. • While chasing success, by elevating the lives we reach and leaving the world better, makes us great. • There are many forms of wealth, and happiness comes when there is balance in them: Wealth of peace of mind, health, finance, family and friends, and creativity. This balance of riches is what people really need. • Setting and achieving goals creates happiness, character, creative abilities, inspiration, and social value. • E-commerce businessmen do not need to understand designers better, they need to be designers. • Committing to world-class excellence, creates self-esteem not only to the e-commerce businessmen but to their customers too. • Create a virtue with your site that the storm of changes cannot destroy.

41. The philosophy of win-win in e-commerce • Win-lose: Sellers gains versus buyers gains • Efficient Win-Win: Both sides undesired fair split without negotiation • Effective Win-Win: Both sides desired fair split after joint success-promising goal.

42. Other Principles of success for individuals in creating e-commerce • Purpose • Excellence • Responsibility • Service • Concentration • Cooperation • Creative alternatives • Self-development • Integrity • (source :Brian Tracy www.nightingale.com)

43. The e-code by Joe Vitale-Jo Han Mok John Wiley 2005 E-myth mastery By Michael Gerber HarperBusiness 2005 Business at the speed of though By Bill Gates, 1999 eBay income by C.L. Russel 2006 Tax loopholes for eBay Sellers By D. Kennedy, J. Elms, McGraw Hill 2006 Multiple Streams of Internet Income by Robert Allen, John Wiley 2006 EMoney: The Complete Guide To Using The Internet To Profit From Home by Dr. Jeffrey Lant At http://www.worldprofit.com/ebook/ Some resources for successful e-commerce and web-marketing.

44. PART B: SOME STATISTICS RELEVANT TO E-COMMERCE

45. Statistics of the Internet E-commerce: USA Estimated Quarterly U.S. Retail E-commerce Sales as a Percent of Total Quarterly Retail Sales:4th Quarter 1999–2nd Quarter 2006 Percent of Total

46. Statistical Sources for USA and EU USA: • Census bureau, http://www.Census.Gov/ • Bureau of labour statistics, http://www.bls.Gov • Bureau of economic analysis, http://www.Bea.Gov/ • Europe: • Eurostat, http://epp.eurostat.ec.europa.eu/

47. The size in pages and number of links of the sites in the Web follows a power distribution • Source: The Laws of the Web Bernardo A. Huberman The MIT press 2001

48. How a Power Distribution is Derived from Randomness and Growth: A law of evolution It can be proved in mathematics that that all the next lead to a power distribution of the size of exponentially growing entities: • Same initial sizes, different growth rate or age • Same initial sizes and age, different growth rate • Uniformly randomly different division of initial sizes (e,g. by a Poisson distribution) , same or different growth rate or age

49. The power distribution of clicks on the links Source: The Laws of the Web Bernardo A. Huberman The MIT press 2001

50. The major part of the e-commerce profits in a site come from a majority of items with little demand per this item, rather than the minority of “best-sellers” with large demand per item (source: Chris Anderson “The long tail, why the future of Business is selling less of more) The Long tail of the distribution The long tail effect of e-commerce