With the presence of more than 1.6 million commercial sites, E-tellers are facing fierce competition to attract the new customers and make them purchase. But in the near future only those companies will survive who are able to reduce the customer acquisition costs. The research reveals that CDnow’s by developing multifaceted, integrated customer acquisition strategy was able to understand the economies of online business. The problem with banner Ads

Jason and Matthew created CDnow in Pennsylvania to provide music buyers with knowledgeable recommendations, convenience and large selection. With the emergence of Web as a platform for commerce, like many other E-tellers, CDnow also saw Banner Ads as a great way to promote its site to the Web surfers. Early online selling efforts were conducted by magazine salespeople who actually thought banner ads in the same way as they thought of a 30 second television spot or a print ad in a magazine. Hence, they sought to base their prices on the number of people who would see an ad i.e. often referred as exposure-based cost per thousand pricing (CPM) where M stands for Roman numeral 1000. This CPM was the conventional broadcasting which was just a new medium of advertising and nothing more. It proved similar to advertising as full page ad on magazine and a banner ad on web. CDnow realized this approach did not capitalize the unique advantage of internet as this could track only the amount of advertising delivered not the amount being consumed. CDnow thought to follow a prospect who clicked on banner ad to CDnow website and to actua...

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