Part One: Chapter Three Networks

1. Internet Marketing & e-CommerceWard HansonKirthi KalyanamRequests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENTTHOMSON BUSINESS and ECONOMICS5109 Natorp BoulevardMason, OH 45040Phone: (800) 423-0563

2. Part One: Chapter ThreeNetworks “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

3. The Evolving Internet • A decade of rapid growth ends with the transition to a more mature market

4. 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

5. 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”

6. 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

7. Changing Patterns in Global Net UseThe declining share of U.S. Internet users Source: World Bank, U.S. Census

8. An Information Explosion, On the Go • Music, books, x-rays and home videos all contribute to a sea of information

9. 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

10. 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

11. 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

12. Source: Pew Internet & American Life Project Training Survey, February 2004

13. Second Generation Internet • The early Internet served basic documents to anonymous users, helping drive widespread use but limiting its performance and security

14. 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

15. Understanding Social Networks • Network connections grow faster than the number of participants

16. Understanding Social Networks • Network connections grow faster than the number of participants • Extensive local clustering: friends tend to have the same group of friends

17. 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

18. 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

19. 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

20. Metcalfe’s LawGrowth 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

21. The value of a complete network rises rapidly, but not every link shares the same value

22. 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

23. Marketing Value in Networks • Networks are most valuable when they are ubiquitious: the power of the ever present

24. Marketing Value in Networks • Networks are most valuable when they are ubiquitious: the power of the ever present • Increased speed can transform business

25. 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

26. 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

27. 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

28. Virtual Value Activities • Creating value from reams of available information is a key skill in online marketing • First step: Gathering • Second step: Selecting and Organizing • Third step: Synthesizing • Fourth step: Distributing