Websites first
The first marketing activity online started in the early 1990s with the creation of simple, text-based websites with basic information about a product or company.
These were complemented with basic emails – often unsolicited spam – that shared
information in a rudimentary way. As web tools evolved, so too did the websites,
incorporating images, sounds, videos and more advanced formatting styles.
Advertising takes off
As regulations fell away in 1995, internet marketing – and especially advertising
– boomed. To put the growth in perspective, US online advertising spend in 1994
was zero dollars, and leapt up to $301 million in 1996. Another year later, the
market was worth $1 billion. Search engine optimisation (SEO) started tentatively
in 1995, relying on luck and guesswork before hackers managed to crack the
first algorithms in 1997. Companies began thinking about advert placement and
started buying advertising space on related websites, with links back to their
pages and often accompanied with data-gathering measures such as asking
customers to enter their contact information. In 1998, HotWired began selling
banner advertising space to large corporate clients and achieved a remarkable
30% click-through rate.
Figure 2: The first banner advert in the world, run on HotWired by AT&T.
(Source: www.netlingo.com/word/ad-banner.php)
Online search portal Yahoo capitalised on this trend and offered advertising space
on its massively popular home page, quickly developing extra software for tracking
user preferences so it could target the advertising more effectively; it became
one of the few “dotcom” companies to earn a tidy profit from online advertising.
Google took the idea, streamlined it and improved the advert-targeting algorithms.
In 2000, it introduced AdWords, an advertising service that allowed marketers to
pay only for adverts that were clicked on by a customer. The strategy, which
accounts for 95% of Google’s current revenue, became phenomenally successful
and is now the benchmark search engine advertising method.
The dotcom phenomenon
The rapid improvement of online technology and the new business ideas that
it inspired led to the “dotcom boom” of the late 1990s. The boom was a time
when enthusiastic but inexperienced businesspeople conceptualised and financed
– through loans, advertising and venture capital – radical and exciting new webbased
companies. Unfortunately, because the medium was so new and the
strategies untested, many dissolved into nothing and a lot of investment money
was lost (a well-known example is Boo.com, a fashion retailer that burned through
R1,5 billion in just one year and then went bust) – the dotcom bubble had burst.
This had a massive effect on online advertising spend, which fell 33% from 2000
to 2002 and made companies much more cautious of advertising online. The
online advertising market was rescued by search engine advertising, a field led by
Google.
Introduction to internet marketing
GetSmarter Internet Marketing textbook
7
CHAPTER 1
Figure 3: A graph illustrating the dotcom boom in the late 1990s, followed by
the market crash in 2000 and 2001.
(Source: weblog.blogads.com)
The rise of the social web
Despite some failed marketing strategies – the annoying pop-up adverts that
appeared in 2001 were quickly neutralised by pop-up blocker programs – online
marketing recovered and grew rapidly in tandem with the rise of the social, sharingbased
web 2.0. The corresponding rise in online commerce – notably auction
websites, online retailers (etailers) and banking – has added to the financial focus
of the web.
The last and most profound change to the marketing space was the rise of social
media, which was gradual from 2004 and meteoric from 2006. Social media
platforms, such as social networking sites, opened the space for user-filtered
and recommended content – including marketing material. As the social media
platforms grew and people created exponentially more connections with each
other, the vision of viral marketing – the online equivalent of word of mouth
– became real. On the other hand, it made the necessity for online reputation
management clear, a lesson that computer company Dell learned the hard way
during the infamous “Dell hell” scandal in 2005.
Dell received a series of complaints after it had changed some of its products and
services, and one disgruntled blogger, Jeff Jarvis, vented his frustration on his
well-known blog. Other voices joined the online outcry, sharing stories and linking
blog posts and articles. Dell ignored the issue completely and remained silent in
response to complaints, but the mainstream media picked up on it and catapulted
it into public view. What followed was a two-year assault on the reputation of Dell,
which had reacted too slowly and unsatisfactorily to the negative online buzz.
The situation led to extremely negative publicity, substantial losses in sales and
plummeting long-term public perception. You can read some of Jarvis’ posts .