Marketing communications
The launch of Zopa has been quite different from Egg and
other dot-coms at the turn of the millennium. Many com-
panies at that time invested large amounts in offline media
such as TV and print to rapidly grow awareness and to
explain their proposition to customers.
Instead Zopa has followed a different communications
strategy, which has relied on word-of-mouth and PR with
some online marketing activities where the cost of cus-
tomer acquisition can be controlled. The launch of such a
model and the history of its founders, makes it relatively
easy to have major pieces about the item in relevant news-
papers and magazines such as the Guardian, the Financial
Times, the Economistand the Institute of Directors house
magazine, which its target audience may read. Around
launch, IOD (2005) reports that Duvall’s PR agency,
Sputnik, achieved 200 million opportunities for the new
company to be read about. Of course, not all coverage is
favourable, many of the articles explored the risk of lending
and the viability of the start-up. However, others have
pointed out that the rates for the best-rated ‘A category’
borrowers are better than any commercial loan offered by
a bank and for lenders, rates are better than any savings
account. The main online marketing activities that Zopa
uses are search engine marketing and affiliate marketing.Funding
Zopa initially received funding from two private equity
groups, Munich-based Wellington Partners and Benchmark
Capital of the US. Although the model was unique within
financial services, its appeal was increased by the well-
publicised success of other peer-to-peer Internet services
such as Betfair, the gambling web site, and eBay, the
auction site.
Sources: Financial Times(2005), New Media Age(2005), Institute of
Directors (2005), Zopa web site (www.zopa.com) and blog
(http://blog.zopa.com).Question
Imagine you are a member of the team at the investors
reviewing the viability of the Zopa business. On which
criteria would you assess the future potential of the busi-
ness and the returns in your investment based on Zopa’s
position in the marketplace and its internal capabilities?CHAPTER 2· THE INTERNET MICRO-ENVIRONMENT
Summary
1 The constantly changing Internet environment should be monitored by all organisa-
tions in order to be able to respond to changes in the micro-environment or the
immediate marketplace.
2 The Internet has created major changes to the competitive environment.
Organisations should deploy tools such as Porter’s five forces and the value chain and
value network models in order to assess opportunities and potential threats posed by
the Internet.
3 The Internet can encourage the formation of new channel structures. These include
disintermediationwithin the marketplace as organisations’ channel partners such as
wholesalers or retailers are bypassed. Alternatively, the Internet can cause reintermedia-
tionas new intermediaries with a different purpose are formed to help bring buyers
and sellers together in a virtual marketplaceor marketspace.4 Trading in the marketplace can be sell-side (seller-controlled), buy-side (buyer-con-
trolled) or at a neutral marketplace.5 A business model is a summary of how a company will generate revenue, identifying
its product offering, value-added services, revenue sources and target customers.
Exploiting the range of business models made available through the Internet is
important to both existing companies and start-ups.6 The Internet may also offer opportunities for new revenue models such as commis-
sion on affiliate referrals to other sites or banner advertising.