The Business Of Internet Marketing - Harvard University PDF

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The Business of Internet MarketingPast1 Present Future

Services Marketplace Evolution:Pre-Internet MarketingL t’ go backLet’sb k ini theth timetimachinehi tot 1999:19992

Services Marketplace Evolution:Pre-Internet MarketingHomogenousIt was difficult for them to differentiate theirexperience, expertise and reliability.StaticThere was inherent inefficiency because they couldn’tcouldn tturn off the consumer demand when they were busy.BroadcastThey would receive leads outside their defined coverage.coverage3

Services Marketplace Evolution:Pre-Internet Marketing4

Services Marketplace Evolution:Pre-Internet Marketing“Does great work ”5

Services Marketplace EvolutionEddie, like most electricians, has the following characteristics:75% have less than 5 employees“Does great work ”35% spend less than 1k / year on advertising60% do not have a web presence in 2010 soimagine the number in 1999.79% are not advertising in the yellow pages87% are not engaged in online advertising6

Services Marketplace Evolution:Early Internet Marketing 1999 - 2003O li AdOnlineAdvertisingti i IInnovationsti– 1999 tto 2003Ratings & ReviewsRating:Review: “Had a good experience.They worked very hard in gettingthe right color of mortar for thedifferent areas of my house ”7

Services Marketplace Evolution:Early Internet Marketing 1999-2003DDynamici Ad SpendSd8

Services Marketplace Evolution:Early Internet Marketing 1999-2003HHyper-localll TargetingTti9

Services Marketplace Evolution:Internet Marketing Growth 2007 - 2012Global Interactive Advertising 147BUS Search Market 27 7B 27.7B23.8%26.8%CAGRCAGR US Billions2007 452012 147US Search Market US BillionsUS Search Market306B16.6%CAGRSearchesBillions of Searches2007 2012142.2 306.2Source: Kelsey/BIACAGR updated Feb. 2008102007 2012 9.5 27.710814%Per mo./userCAGRSearches per user/per month2007562012108

Demand for Home Improvement Queries is GrowingYoY Demand in Queries 2007-2010 (June)Queries are Growing7%% Change YoY200810%200925%2010YTD7%YoY Avg CPCs 2007-2010 (June)CPCs are Increasing18%Avg. CPC% Change YoY112008 1.4629%2009 1.8326%2010YTD* 2.1518%11Source: Google Custom Category Trending – ServiceMagic Home Improvement Terms Jan 2007 – Aug 2010 *CPC Data through June 2010

Home Services/Trade Businesses Late Adopters OnlineHome Services/Trade Businesses withWebsites or 2%60%50%Wave XII (Aug. 08)40%Wave XIII (Aug. 09)33.0%34.4%30%20%10%0%All lServicesSource: Kelsey/BIA Local Commerce Monitor Wave XIII August 2009; Wave XII August 2008.(Sample for each Super-Vertical approximately 300.)12

Home Services/Trade Businesses Late Adopters OnlineUsage of Specialized OnlineVertical Directories: Home/TradeSServicesi100%7%8%90%80%70%Not Aware of Them48%41%Yes, but don'tAdvertise in Them60%50%Yes, and Advertise inThem40%30%40%45%20%10%0%5%6%Wave XII (Aug. 2008)Wave XIII (Aug. 2009)Source: Kelsey/BIA Local Commerce Monitor Wave XIII August 2009; Wave XII August 2008.(Sample for each Super-Vertical approximately 300.)13Not Sure

Services Marketplace Evolution:How is it working?E l InnovationEarlyIti LedL d to:t1) Greater transparency in advertising results.2) Better matching between the right consumer and right proThis was ggood,, but not GREAT14

Services Marketplace Evolution:How is it working?Advertisers want more and expect more.They’re saying “Show me the money.”15

Services Marketplace Evolution:How is it working?Consumers:Give me choice, but alsomake it easy for me.16

Services Marketplace Evolution:Consumer BehaviorConsumers take longer to make decisionsHow has the Internet affected homeowner’s buyinghabits? (Choose all that apply)I have seen no change in buying habits7%20%21%Homeowners make quicker decisions because theInternet provides good informationThe Internet is delaying buying decisions ashomeowners spend more time researching theiroptionsHomeowners are buying materials directly that I usedto supply52%*Source: ServiceMagic Home Remodeling & Repair Index Service Professional SentimentSurvey. October 201017

Services Marketplace Evolution:Consumer BehaviorConsumers have different timelines formaking hiring decisionsCompiled Lead Generation Studies60%40%20%0%% Ready to Buy3 Months6 Months*Source: B2B marketing consulting firm, Kern Organization, 2009.1812 Months

Services Marketplace Evolution:Service Pro BehaviorService Professional Follow-up Doesn’t MatchConsumer Buying CyclesHow often do you or your companytypically follow-up with leads?6%Other6%Do not follow-up11%Regular /ongoing marketing6%30 days later20%One or two weeks later54%Multiple times in the first week38%Once in the first week00.2*Source: ServiceMagic Service Professional Survey. August 2009190.40.6

Services Marketplace Evolution20

Services Marketplace Evolution:What’s next?21

%500growthin mobile searchfrom 2008 to 20102222 Google Internal DataSource:22 gv91

Mobile Desktop Internet Users Within 5 Years2323

Services Marketplace Evolution24

Services Marketplace Evolution:Summary Early Internet Marketing Innovation brought increased efficiency andtransparency for both small business advertisers and consumers Local search is growing, service pros are late online adopters Both advertisers and consumers want more from internet platforms Consumer buying habits have changedFuture Innovations Getting further down the purchase funnel to improving connectivity andbooking jobs Streamlining all the new internet marketing options and social networks Mobile is the next “bigbig thingthing”25

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Services Marketplace Evolution:What’s next from Google?Google 7-Pack2009-2010Local results from GoogleMostly Local results from web27

Services Marketplace Evolution:What’s next from Google?Google PlacesOctober 2010Mostlyos y Localoca resultsesu sfrom webLinks to reviews andGoogle Place Page28

Services Marketplace Evolution:What’s next from Google?Google PlacesOctober 2010Photoso os aandd sousourceceLinks to reviewsonline29

Services Marketplace Evolution:Economic Downturn & Internet InfluencesConsumers are more savvy & price sensitiveWith the downturn in the economy, what changeshave you seen in homeowner’s buying habits?Homeowners are actively seeking more prices3%30%32%Homeowners are sharing prices between serviceproviders to drive down estimatesHomeowners are speaking to more serviceprovidersHomeowners are taking longer to make a decision12%23%Not changed*Source: ServiceMagic Home Remodeling & Repair Index Service Professional SentimentSurvey. October 201030

Services Marketplace Evolution:Economic Downturn & Internet InfluencesHow are the new buying habits of consumerschangingg g the wayy youydo business?I have adopted online new marketing practices11%13%I have become much more diligent regardingpricing and defending my estimates12%25%I have had to lower my estimates to remaincompetitive5%I have increased the amount I spend on advertisingI have not changed the way I do business34%I now have to offer more product and pricingoptions*Source: ServiceMagic Home Remodeling & Repair Index Service Professional SentimentSurvey. October 201031

Services Marketplace Evolution:Areas for improvement/innovationCoCommunicationu cat o Technologyec o ogy &Lead Management Disconnects100% Web-Based Leads96% off ProfessionalsP fil respondd viai PHONE*55% of Professionals respond via EMAIL**Source: ServiceMagic Service Professional Survey. August 200932

Services Marketplace Evolution:Areas for improvement/innovationToday, Winning the Job is all aboutRESPONSE SPEEDSPEED Odds of calling to contact a lead decrease by over 10times in the 1st hour. The odds of contacting a lead if called in 5 minutesversus 30 minutes drop 100 times. BUT*Source: THE LEAD RESPONSE MANAGEMENT STUDY fromInsideSales.com and MIT Faculty Fellow, Professor Oldroyd.33

• Early Internet Marketing Innovation brought increased efficiency and transparency for both small business advertisers and consumerstransparency for both small business advertisers and consumers • Local search is growing, service pros are late online adopters • Both advertisers and consumers want more from internet platforms