© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENT THOMSON BUSINESS and ECONOMICS 5109 Natorp Boulevard Mason, OH Phone: (800)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Part One: Chapter Three Networks “The science of networks has taught us that distance is deceiving. That two individuals can be connected through a short chain of network ties – through only six degrees – is a claim about the social world that has fascinated generation after generation.” Duncan Watts, Six Degrees: The Science of a Connected Age

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Evolving Internet A decade of rapid growth ends with the transition to a more mature market

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Evolving Internet A decade of rapid growth ends with the transition to a more mature market Experienced users more likely to engage in online commerce and upgrade to faster connection services

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Evolving Internet A decade of rapid growth ends with the transition to a more mature market Experienced users more likely to engage in online commerce and upgrade to faster connection services The seasoned user also moves away from exploratory “surfing the Net”

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Evolving Internet A decade of rapid growth ends with the transition to a more mature market Experienced users more likely to engage in online commerce and upgrade to faster connection services The seasoned user also moves away from exploratory “surfing the Net” A shift to deeper connections

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Changing Patterns in Global Net Use The declining share of U.S. Internet users Source: World Bank, U.S. Census

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation An Information Explosion, On the Go Music, books, x-rays and home videos all contribute to a sea of information

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation An Information Explosion, On the Go Music, books, x-rays and home videos all contribute to a sea of information Internet users increasingly obtain information from mobile devices

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation An Information Explosion, On the Go Music, books, x-rays and home videos all contribute to a sea of information Internet users increasingly obtain information from mobile devices Instant messaging and text messaging create new frontier for marketers

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation An Information Explosion, On the Go Music, books, x-rays and home videos all contribute to a sea of information Internet users increasingly obtain information from mobile devices Instant messaging and text messaging create new frontier for marketers Blogs, podcasts and beyond create new challenges for reaching audience

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Age Gap: vs. Instant Messaging Internet users who use IM Users who use IM more than Users who more than IM Gen Y 62%57%19% Gen X Trailing Boomers Leading Boomers Matures 25<17 Source: Pew Internet & American Life Project Training Survey, February 2004

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Second Generation Internet The early Internet served basic documents to anonymous users, helping drive widespread use but limiting its performance and security

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Second Generation Internet The early Internet served basic documents to anonymous users, helping drive widespread use but limiting its performance and security Second Generation Internet focuses on more descriptive content – the semantic web – and ways to reliably authenticate users

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Understanding Social Networks Network connections grow faster than the number of participants

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Understanding Social Networks Network connections grow faster than the number of participants Extensive local clustering: friends tend to have the same group of friends

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Understanding Social Networks Network connections grow faster than the number of participants Extensive local clustering: friends tend to have the same group of friends Small worlds: connecting any two people on a network with limited steps

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Understanding Social Networks Network connections grow faster than the number of participants Extensive local clustering: friends tend to have the same group of friends Small worlds: connecting any two people on a network with limited steps Hubs and Connectors spread information more quickly than other members

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Understanding Social Networks Network connections grow faster than the number of participants Extensive local clustering: friends tend to have the same group of friends Small worlds: connecting any two people on a network with limited steps Hubs and Connectors spread information more quickly than other members OK to lose members randomly, but networks vulnerable to deliberate attack

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Metcalfe’s Law Growth of a communications network strongly enhances its value Assuming equal value among network members, if v = 1, full value of a conversation is $2 In networks with changing communication value, value rises at a slower rate

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The value of a complete network rises rapidly, but not every link shares the same value

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Clusters and Connections Within clusters, connections made even more rapidly Any two members can usually be connected with only a few links Kevin Bacon and Six (or fewer) Degrees of Separation

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Marketing Value in Networks Networks are most valuable when they are ubiquitious: the power of the ever present

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Marketing Value in Networks Networks are most valuable when they are ubiquitious: the power of the ever present Increased speed can transform business

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Marketing Value in Networks Networks are most valuable when they are ubiquitious: the power of the ever present Increased speed can transform business Participants expectations are important and can be shaped by publicity and hype

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Marketing Value in Networks Networks are most valuable when they are ubiquitious: the power of the ever present Increased speed can transform business Participants expectations are important and can be shaped by publicity and hype Resource sharing benefits knowledge

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Marketing Value in Networks Networks are most valuable when they are ubiquitious: the power of the ever present Increased speed can transform business Participants expectations are important and can be shaped by publicity and hype Resource sharing benefits knowledge Greater opportunity for specialization and challenges in branding

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Virtual Value Activities Creating value from reams of available information is a key skill in online marketing – First step: Gathering Low cost Using creativity, resource and technology – Second step: Selecting and Organizing Well organized and intuitively structured Balance goals and objectives

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Virtual Value Activities – Third step: Synthesizing Synthesis of information is tied with personalization Collect most relevant material – Fourth step: Distributing Relies on network capabilities Pages should be fast loading and easy to access Automatic data collection