When putting together a strategy for developing and commercializing a new product or service it is no longer possible to do so without taking into account the Internet, which as of 2014 had more than 280 million users in the United States and more than 3.2 billion users worldwide (approximately 40% of the world’s population had an Internet connection). More and more users and businesses have embraced the opportunities of “electronic commerce” as an important sales and marketing channel for their new and existing products and businesses and consumers all over the world regularly transact business over the Web. Surveys indicate that the number of digital shoppers in the United States as of 2014 exceeded 191 million and that business-to-consumer e-commerce volume in the United States in that same year was approximately $703 billion and retail e-commerce sales were approximately $236 billion. When access to the Internet via mobile devices, such as smartphones, is factored in, it becomes clear that businesses must integrate online marketing and sales into their overall business models.
The International Center for Growth-Oriented Entrepreneurship has just released a chapter on “Online Marketing and Sales Activities” from its Library of Resources for Growth-Oriented Entrepreneurs on Product Development and Commercialization which is available for free downloading and sharing by clicking here.
Some important things you need to know about planning for, and launching, online marketing and sales activities include the following:
1. The range of business uses of a website has expanded rapidly and an online presence has become an essential way for companies to disseminate basic information about their business and products. Businesses may use, or become involved with, the Internet in a variety of ways. For example, businesses use the Web to provide instant information about their products and services; expand customer service; test-market new goods and services; open up distant markets; augment traditional advertising with online advertising campaigns; provide customers a means of monitoring orders; target specialized markets; provide 24-hour accessibility; and raise “seed” financing directly from potential customers to underwrite the costs of developing new products. Additional advantages to having an online presence include the ability to provide customers with the opportunity to interact in “real time” with an online advertiser and leave comments or to request information from the advertiser; the ability to collect information about actual and prospective customers; and the ability to contract online with retail customers and/or other businesses interested in trading-partner relationships.
2. Launching an online business requires attention to the same level of detail as is required with any type of business. The site owners should prepare a detailed business plan that describes the proposed business, including the anticipated business model, target market, financing requirements and promotion strategies. While the initial plan should focus on launching the website and establishing the business, consideration should also be given to possible expansion of the business into new geographic and/or demographic markets. As part of the planning process, arrangements should be made to obtain the necessary financial support for the launch and early stage operation of the e-business, including capital from investors and/or banks or other commercial lenders. A website development and hosting strategy should be selected and other important launch-related activities include selection and registration of desired domain names; acquisition of rights to use desired content on the website; development and implementation of strategies for perfecting and protecting all intellectual property rights associated with the e-business and the website, including copyrights, patents and database protections; and development or other acquisition of tools to facilitate the sale and purchase of goods through the website.
3. While companies may have a substantial amount of in-house expertise regarding website development and maintenance, it is still quite common to rely on outside contractors for assistance in designing and operating a new website and these services will provided under the umbrella of a website development agreement. Website owners also look to outside hosting companies for connecting their servers and other equipment to the Internet. Content for the website will be supplied by employees and independent contractors engaged on a “work-for-hire” basis and the website owner should have appropriate employment and content development agreements with those parties. Companies may also gain access to content for the sites through content licensing and linking agreements. Promotion of the site and the products and services highlighted thereon may be provided by outside parties through marketing and advertising agreements and sales of the company’s products through the website may be conducted through online shopping agreements with vendors specializing in fulfillment of online orders.
4. The value of the Internet to any particular business depends on whether the business can design and operate an effective and functional website. Before serious design work begins, the site owner needs to carefully consider the type of information that will be included on the site and the way it should be placed and organized among the various pages that make up the site. While every site and business is different, there are certain elements that consistently appear on top-flight websites. Among the things that need to be considered are a home page; a legal page including various notices, disclaimers and site usage guidelines described elsewhere in this chapter; navigational tools; graphics; and multimedia content. In addition, the website should always contain information about the company such as a vision or purpose statement; products and services information, including most commonly asked questions, technical specifications, parts lists and troubleshooting, and ordering information; business resources and information including industry and legislative trends and articles and reports; commendations and testimonials; job opportunities and recruitment; and organizational, financial, and investment information.
5. In many ways, establishing a website is similar to creating and publishing a new book or magazine and the success of the site often depends on understanding the importance of content and presentation and being cognizant of various content acquisition strategies and associated legal issues. Companies often rely on employees and independent contractors to create original content for their websites; however, more often than not it will be necessary of desirable to acquire the rights to use, display and publish the creative works of third parties. Accordingly, website owners and their counsel will need to seek and secure content licenses or assignments of third party intellectual property rights covering a wide array of creative works and information including text, data, database content, software, graphics, sound and music and video and audiovisual works. Linking agreements may also be used to ease the process of making relevant content from other sites available for visitors. In order to keep track of the entire process, an inventory should be made of the form, content, and source of all information that is to be available on the website in order to properly review the legal ramifications of using the materials and facilitate the creation of the records necessary to demonstrate the website owner’s proprietary rights in the materials.
6. Site owners often have a fixed idea of what they are looking for with respect to development of their site and, in many cases, the appropriate arrangement will be dictated by the sophistication of the functions and activities associated with the proposed site. While it is not necessarily the best strategy for the long term, a smaller site owner can begin with a “do-it-yourself” approach to developing the site if sufficient in-house time and expertise is available. If this is not practical, or the scope of the project is relatively large, outside contractors can be brought in for assistance in designing and operating a new website. The degree of involvement of an outside contractor will vary depending on the circumstances, including the site owner's budget and the sophistication of the overall development project. Deciding between in-house and outside hosting depends on the sophistication and purpose of the site. If the site owner has a small site with plain HTML pages, it can probably get away with hosting the site on its own or turning hosting responsibilities over to one of the online community sites that offer such services. On the other hand, if the site owner is seeking to establish a high-traffic and commerce-enabled site, it will need the processing and bandwidth capabilities that can only be offered through a big-time Web server located in the site owner's office or at an outside hosting service with the capabilities to support a big site.
7. The time and amount of difficulty associated with selecting a website developer will vary depending on a number of factors, including the in-house resources at the company and the type of project. The site owner should begin by taking steps to bolster its knowledge of the Internet through some form of self-directed site owner education program. The site owner should then begin to put together a list of desired features, functions, and graphics by conducting a review of comparable sites. The next step is for the site owner to develop a “request for proposal”, or “RFP” to send out to prospective developers to elicit bids or other indications of interest in taking on the site owner's project. Upon receipt of indications of interest, the site owner should carefully evaluate all prospective developers by conducting a due diligence investigation as well as meetings and interviews. The final step is negotiation of fees, design specifications, timetables and schedules for completion of the project and other terms of the development agreement (i.e., ownership rights, acceptance testing, maintenance and updating and warranties and indemnification).
8. Like development agreements, hosting agreements come in various shapes and forms. Hosting agreements may need to be modified to fit the specific requirements of the industry or market in which the site owner is engaged. For example, an agreement covering the hosting of an online mortgage services provider should take into account applicable regulatory requirements regarding content and use of visitor records. From the site owner's perspective, a comprehensive form of website hosting agreement should cover the hosting services; the compensation to be paid to the host for its services; acceptance procedures; representations and warranties from the host regarding performance of the site; and representations and warranties regarding non-disclosure of confidential information relating to the site and the materials provided by the site owner. Performance-related issues include response time and throughput capacity connectivity and system redundancy. Other concerns include portability, user support procedures and security procedures.
9. Some developers recommend a “soft launch,” in which the site is activated without advance publicity and the resultant limited usage provides a way to test the site and determine whether there are any problems. Once the bugs have been worked out, the promotional campaign can begin. The launch should always be preceded by a rigorous program of testing and acceptance by the site owner. The testing and acceptance procedures should be laid out in detail in the development agreement and sufficient time should be left for any required changes. The days and weeks prior to launch of the site should also include close attention to the details of developing and implementing a site promotion strategy that includes registration of the site with Web search engines; meta-tagging; participation in mailing lists and newsgroups; linking arrangements; and advertising. Finally, the site owner should confirm the readiness of desired payment systems for online transactions to be conducted through the website.
10. Launching and maintaining a commercial website that disseminates information to viewers regarding the products and services of the website owner raises a wide array of potential legal issues that need to be addressed in the design process. The situation becomes even more complex when website are used to conduct commercial transactions, such as online sales of products, and/or collect information from viewers to be used in the website owner’s marketing and other operational activities. Website owners must be concerned with the enforceability of online contracts; jurisdictional issues; laws and regulations pertaining to privacy and security, including rules regarding protection of specific classes of viewers such as children; registration of domain names; copyright and trademark law issues; potential liabilities from linking and framing, as well as the possibility that linking and framing activities of others will cause harm to the value of their sites; potential liabilities for defamation; the need to comply with consumer protection laws that have been extended to cover online sales activities; regulation of e-mail marketing communications and “spamming”, and state taxation of online sales activities. Site owners should always include one or more notices or disclaimers on their site to protect themselves from potential liabilities and to perfect their legal rights with respect to content that they might create and post on the site. Robust and comprehensive terms and conditions of use are essential and should be accompanied by copyright and trademark notices, linking notices, warranty notices, privacy and security policies, limitations on damages and disclaimers of third-party postings.