Lecture notes for MKTG350 for August 26th

1. Online & New Media
Business of Digital
SNC-MKTG350
August 26, 2013

2. Tonight’s Agenda: Business of Digital
• Web sales vs. brick and mortar retail
• Fee for service vs. ad sales subsidizing free
• Online advertising sales vs. magazine, radio and
newspaper sales
• Size of mobile phone and tablet ad sales,
mobile/web app production

3. Time Spent Online

4. Web Sales

5. Brick & Mortar Sales, Gen Merch

6. Brick & Mortar Sales, Clothing

7. Brick & Mortar Sales, Furniture

8. 3 Key Ideas
• Web sales = 8% retail sales
• $216B projected 2013
• Economies bounce back

9. The Internet is FREE!

10. The cost of FREE!
• Domain name $12-20 per year
• Hosting/Servers $10-150 per year
• Site build $0-100,000 one time
• Site design $0-50,000 one time
• Site content $0-5,000 per month
• Site maintenance $0-10,000 per month

11. The Internet is FREE!
• Google made $14Billion in 2012 (1)
• Apple Apps generated $9Billion in 2012 (2)
• Facebook made $5Billion in 2012 (3)
• Craigslist grossed $126Million in 2012 (4)
• Fandango estimated $72Million in 2012 (5)

12. Fee-for-Service Types
Business models differ based on which assets are captured
online:
– Customer transaction: to capture revenue
• Ie., eBay, Amazon, Gap.com, HP.com
– Customer data: to capture data about customer’s
purchasing needs
• Ie., Facebook, Amazon’s recommendations, Google
– Customer relationship: ability to influence customer’s
behaviors
• Content providers like NewYorkTimes.com, Fandango, Salon.com

13. Online Service Models
Business Model Description Revenue Source
Content Provider Provides content Advertising model or
subscription or both
Direct-to-Customer Sells goods or services to
consumer
Direct revenue
Intermediary Creates a marketplace, brings
buyers and sellers, facilitates
transactions
Per transaction percentage,
advertising model or
subscription
Virtual Community Facilitates online community,
common interest, typically
doesn’t engage with users
Advertising model or
subscription or both

14. 3 Key Ideas
• Multiple paths to revenue
• Does advertising have to
be intrusive?
• Is money the only value
you can get from a
customer?

15. Media Sales Volume

16. Media Audience Growth
Source: Pew Research Center, State of the News Media, 2012

17. Digital Media Sales Volume

18. Mobile Revenue

19. Mobile Mindset

20. Mobile Mindset
Suggests people want to
experience news and
events and shows in
multiple ways:
programmed and
unstructured
TV Producers and Internet
site publishers want to
move that 27% up:
TV use ratings can only tell
you if the TV is “on”.
Online engagement
tracking can tell you how
many people are talking
about a show or event, so
“layered” engagement is
better for attracting
advertisers.

21. 3 Key Ideas
• Which media generated
$65B in revenue in 2012
• Which media grew -4% in
2012?
• Why is mobile important
to digital?

22. Next session:
• Read Chapter 5: Don’t Make Me Think
• Writing for the web:
– Short and sweet
– Verbs first
– Use images
– Descriptive linking
• Using our blog site