Analysis by Kemmler et al. (2001) of US and European e-commerce sites provided a cross-
industry average of the spend on different components of Internet marketing. The top
performers achieved an average operating profit of 18%. Costs were made up as follows:
cost of goods sold (44%);
maintenance costs (24%);
marketing costs (14%).2 Investment in online promotion techniques in comparison to offline
promotion
A balance must be struck between these techniques. Figure 8.23 summarises the tactical
options that companies have. Which do you think would be the best option for an
established company as compared to a dot-com company? It seems that in both cases,
offline promotion investment often exceeds that for online promotion investment. For
existing companies, traditional media such as print are used to advertise the sites, while
print and TV will also be widely used by dot-com companies to drive traffic to their sites.3 Investment in different online promotion techniques
Varianini and Vaturi (2000) have suggested that many online marketing failures have
resulted from poor control of media spending. The communications mix should be opti-
mised to minimise the cost of acquisition. If an online intermediary has a cost acquisition
of £100 per customer while it is gaining an average commission on each sale of £5 then,
clearly, the company will not be profitable unless it can achieve a large number of repeat
orders from the customer.CHAPTER 8· INTERACTIVE MARKETING COMMUNICATIONS
Figure 8.22Alternatives for balance between different expenditure on Internet
marketingMaintenance %(a) (b)Promotion % Site creation %Site creation %Maintenance %
Promotion %Figure 8.23Options for the online vs offline communications mix: (a) online offline,
(b) similar online and offline, (c) offline online(a) (b) (c)Offline
OnlineKey