Chapter 4 : Advertisement in Electronic Commerce

7/30/2019 Chapter 4 : Advertisement in Electronic Commerce

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Chapter 4

Advertisement inElectronic Commerce


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Opening Case:

Advertisement in the Digital Economy

Theknot.com and Wedding411.comInformation about planning weddings

Assistance selecting vendorsSite includes promotions and ads from vendors

Promosinmotion.comVW bugs painted with Web site logos

Dislplayed online and offlineTopbulb.com

Online catalog for light bulbs

Also displays the off-line businesswww.prestonians.webnode.com


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Opening Case:

Advertisement in the Digital Economy

Toyota

Promotes its SUV with banners on altavista.com

Kelly Blue Book (kbb.com) links to Toyota site

IBM

Uses banners linked to college campuses to

promote recruitment

Club Cyberblue became the scheme forrestructuring their traditional plan

www.prestonians.webnode.com


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Web Advertisement

Ad views

Banner

Click (ad click)

Click ratio

Cookie

CPM

Effective frequency

Hit

ImpressionsReach

Visit

Advertising is an attempt to disseminate information inorder to affect a buyer-seller transaction

Internet Advertising Terminology



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Web Advertisement (cont.)

Why Internet Advertisement?3/4 of PC users gave up some television time

Well educated, high-income Internet users area desired target for advertisers

Ads can be updated any time with a minimalcost; making them timely and very accurate

Ads reach very large number of potentialbuyers all over the world

Online ads are much cheaper in comparison totelevision, newspaper, or radio ads



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Web ads effectively use text, audio, graphics,

and animationAds easily combine games, entertainment, andpromotions

Web TV and Internet radio are attracting more

peopleWeb ads can be interactive and targeted

The use of the Internet is growing very rapidly


Why Internet Advertisement?



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Internet vs. Traditional methods

Combining advertising mediaInternet is the fastest growing medium in history



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Figure 5-1

Adoption Curves for Various Media

Source: Morgan Stanley Technology Research.



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Objectives and growth of Internetadvertisementpersuade customers to buy a

certain product or service

Targeted Advertisement (one-to-one)

Customize ads to fit individuals

Can be expensive as well as rewardingGain cost effectiveness by targeting groups(based on segmentation)



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The DoubleClick (DC) Approach3M /ciro,

wants to advertise its $10,000 multimediaprojectorsDC monitors people browsing the Web sites ofcooperating companies

Matches them against a databaseFinds those people working for advertisingagencies or using Unix system (potentialbuyers)



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The Double Click (DC) Approach for 3M Corp.

(cont.)

Builds a dossier on you, your spending, andyour computing habits using a cookie

Prepares an ad for 3M projectors targeted

for people whose profile matches what isneeded for 3M

DoubleClick shares revenue withcooperating partners



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Pros of Internet Advertisement

Internet advertisements are accessed ondemand 24 hours a day, 365 days a year, andcosts are the same regardless of audiencelocation

Accessed primarily because of interest in thecontent, so market segmentation opportunityis large




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Pros of Internet Advertisement (cont.)

Opportunity to create one-to-one directmarketing relationship with the consumer

Multimedia will increasingly make Web sites

more attractive and compelling



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Advertisement Methods

BenefitsCustomized to the targetaudience or one-to-oneads

Utilize forceadvertising marketingstrategy

Direct link to advertiser

Multi media capabilities

LimitationsHigh cost

Declining click ratioviewers have becomeimmune to banners

Size of banners is toosmall

Banners--banners are everywhereKeyword banners Random banners



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Advertisement Methods (cont.)

Banner swappingDirect link between one site to the other site

Ad space bartering

Banner exchangesFirm submits a banner

Receives credit when shows others banners

Can purchase additional display creditsSpecify what type of site where the banner isdisplayed

Usethe credit to advertise on others sites



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Banner exchanges (cont.)Credit ratio of approximately 2:1

Example: Link Exchange (bcentral.com)

Helps design banners

Provides membership in newsgroups

Delivers HTML tutorials

Runs contests

Is a banner-ad clearing house for more than200,000 small Web sites

Monitors the content of the ads of all itsmembers




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Standard (pop up boxes that look likenewspaper or magazine ads) and classified

adsMicro-sites

5 advertising sizes larger than banners

Pop-up boxes at sites they are linked to

Classified ads

Special sites (classifieds2000.com)

Free or for fee depending upon size




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E-mailSeveral million users may be reached directly

Purchase e-mail addressesSend the company information (low cost)

A wide variety of audiences (customer database)

Target a group of people that you know

something aboutProblems:

Junk mail

Spamming




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Mobile phonesInteractive one-to-one ads

Location, situation, weather-related ads

Splash ScreenCapture the users attention

Promotion or lead-in

Major advantage: create innovative multimediaSpot leasing

Permanent space on popular portal or Web page

Ads may be small and expensive



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URL (Universal Resource Locators)Advantages:

Minimal cost is associated with itSubmit your URL to a search engine and belisted

Keyword search is used

Disadvantages:Search engines index their listingsdifferently

Meta tags can be complicated




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Chat Rooms

Virtual meeting ground

Free addition to a business siteAllows advertisers to cycle through messages andtarget the chatter again and again

Advertising can become more thematic

More effective than banners

Used for one-to-one connections




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Advertisement Strategies

Internet-based Ad Design

Visually appealingTargeted to specific groups or to individualconsumers

Emphasize brands and a firms image

Part of an overall marketing strategy

Seamlessly linked with the ordering process



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Advertisement Strategies (cont.)

Internet-based ad design: important factors

Page-loading speed

Graphics and tablessimple, meaningful,and match standard monitors

Thumbnail (icon, graphs) are useful

Business content

Clear and concise text with compellingpage title and header text

Minimal amount of information requestedfor registration



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Internet-based Ad Design: Important Factors (cont.)

Navigation efficiency and compatibilityLinkswell-labeled, accurate, meaningful

Sitecompatible with browsers, software, etc.

Security and privacySecurity and privacy must be assured

Must provide option for rejecting cookies

Marketing Customer FocusClear terms/conditions of the purchasesdeliveryinformation, return policy, etc.

Confirmation page after a purchase



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Pull (Passive) StrategyEffective site provides helpful and attractivecontents and display

Effective and economical way to advertise,unidentified potential customers worldwide

Advertising Worldnon-commercial site thatguides the process of finding customersrequests

Yahooportal search engine site regarded aseffective aid for advertisement



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Push (Active) Strategy

Sending e-mails to relevant

peopleObtaining mailing listprocessof identifying target customers

Mailing list generationuses

agent technology, cookies, andquestionnaires (filled out bycustomer)



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Associated Ad Display Strategy

Associate the content of a Web page with a

related ad like:Search Yahoo on a topic, a banner pops upoffering search for books at

Amazon.com

Barnesandnoble.com

Keyword banners

Just-in-time strategy



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Ads as a commodity

CyberGold (MyPoints.com)

Direct payment made by the advertisersfor ads viewed

Consumers fill out questionnaires

CyberGold distributes targeted banners

Reader clicks the banner, passes sometests on its content, and is paid for theeffort



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Viral marketingword-of-mouth over theInternet

Easily forwarded e-mail messages from sites

Forward sites by filling out e-mail addresses

Advocacy marketinghotmail.comEach e-mail sent invited free hotmail service

Company grew from 0 to 12 million in 18months

DownsidesE-mail hoaxes

Spread of viruses



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Implementing the Strategies

Customized ad strategy

Filtering the irrelevant information by

providing customized ads

One-to-one advertisement

Customized ads in Webcasting

Personalized news and information bycategory

Users select specific categories they wantto receive



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Implementing the Strategies (cont.)

Comparisons as medium for advertisement

Customer compares alternative products andservices

Finds the least expensive place to purchasethe item

Uses the comparison site that lists vendorsand their prices for the product



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Figure 5-3Illustrative Screen for Product Comparison

Source: Korean Engine (no longer in business).



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Online Events, Promotions,

and Attractions

Enticing Web surfers to read Internet ads

Yoyodine, Inc.

Give-away games, discounts, contests,sweepstakes

Entrants agree to read product informationof advertisers

Netzero and others offer free Internet access inexchange for viewing ads



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and Attractions (cont.)


Egghead uses real people to help you

Lucent uses phone interviews that lead tomaterial and ads sent to your computer

Retailers provide special offers as shoppers

check outRiddler provides opportunity to play games forprizes



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and Attractions (cont.)


Netstakes runs sweepstakes (no skills necessary)

Register only once to win prizes randomlyfrom different categories

Sends traffic to several channels that havemultiple sponsors

Runs online ads both on the Web and inseveral hundred thousand e-mail lists

Offer free samples (freesamples.com)

Use company logo as cursor



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Push Technology

Benefits

Requested information they deliveredautomatically to their desktop via Webtechnology and the Internet

Decreases the number of hours used to search

the Web



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Push Technology (cont.)

Pointcastingmasscustomization ofinformation

Pre-specificationprofile

Select appropriate

content

Download selection

4 types of pushtechnology

Self-service delivery

Aggregated delivery

Mediated delivery

Direct delivery



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Push on the Intranet

Companies set up their own channels to pointcast

important internal information to:their own employees (on intranets)

their supply chain partners (on extranets)

The Future of Push Technology

Drawback: the bandwidth requirements are large

Experts prediction: the technology will never fly

Push Technology (cont.)



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Intelligent Agents

Product Brokering

Knows the customers profile

Tailors ads to the customers, or asks them ifthey would like to receive product information

Alerts users to new releases

Recommends products based on:

Past selections

Constraints specified by the buyers



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Effectiveness and Pricing of Advertisement

Exposure Models

Multiple of number of

guaranteed ad views

Number of hits

Click-Through

Number of times

customers click on banner

Only effective for large

corporations

InteractivityBased on how customer

interacts with the ad view

How much time was spent

viewing the ad

Actual Purchase

Referral fee based on

customers moving to ad site to

make a purchase

Methods for measuring advertisementeffectiveness, conducting cost benefit analyses,pricing ads



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Online Catalogs

Evolution of online catalogs

Merchantsadvertise and promote

Customerssource of information and pricecomparisons

Consist of product database, directory and searchcapability and presentation function

Replication of text in paper catalogs

More dynamic, customized and integrated



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Online Catalogs (cont.)

Classifications of catalogs

Dynamics of information presentation

Static catalogstextual description andstatic pictures

Dynamic catalogsmotion pictures,graphics, sound

Degree of customization

Ready-made catalogs: same catalog to allcustomers

Customized Catalogs: customized contents

and display depending upon the customerswww.prestonians.webnode.com


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Electronic catalogs allow integration ofOrder taking and fulfillment

Electronic payment

Intranet workflow

Inventory and accounting system

Suppliers extranetRelationship to paper catalogs

Online Catalogs (cont.)



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Customized Catalogs

Assembled specifically for:A company

An individual shopper

Customization systems can:Create branded, value-added capabilities

Allows user to compose order

May include individualized prices, products, anddisplay formats

Automatically identify the characteristics ofcustomers based on the transaction records



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Special Advertisement Topics

How much to advertise

Permission advertisement

Measuring, auditing, and analyzingWeb traffic

Self-monitoring of traffic

Internet ad standardsLocalization

Internet radio for localization



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Major Web ad playersAdvertising agencies and Web sitedevelopers

Market research providers

Traffic measurement and analysiscompanies

Networks/rep firms

Order processing and support

Special Advertisement Topics (cont.)



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Managerial Issues

Make vs. buy

Finding the most visited sitesCompany research

Commitment to Web advertising and

coordination with traditional advertisement



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Managerial Issues (cont.)

Integrated marketing campaigns

Ethical IssuesIntegrating advertisement with orderingand other business processes

Content is critical

Chapter 4 : Advertisement in Electronic Commerce

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