Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~...
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Transcript of Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~...
![Page 1: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/1.jpg)
Chapter EightTraffic Building
“A wealth of information creates a poverty of attention.”
~Herbert Simon
![Page 2: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/2.jpg)
Value and Scarcity Online
• Volume of online content is growing far faster than the number of Web users
![Page 3: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/3.jpg)
Value and Scarcity Online
• Volume of online content is growing far faster than the number of Web users
• Every site faces unique challenges to attract new visitors
![Page 4: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/4.jpg)
Value and Scarcity Online
• Volume of online content is growing far faster than the number of Web users
• Every site faces unique challenges to attract new visitors
• As Web users grow more experienced, they are less likely to explore new sites
![Page 5: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/5.jpg)
Value and Scarcity Online
• Volume of online content is growing far faster than the number of Web users
• Every site faces unique challenges to attract new visitors
• As Web users grow more experienced, they are less likely to explore new sites
• The true scarcity online: user attention
![Page 6: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/6.jpg)
Value and Scarcity Online
![Page 7: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/7.jpg)
Planning for Maximum Traffic
• Drawing more visitors to a site requires a thoughtful web traffic plan
![Page 8: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/8.jpg)
Planning for Maximum Traffic
• Drawing more visitors to a site requires a thoughtful web traffic plan
• Web traffic plans should consider each of the five main traffic sources:
![Page 9: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/9.jpg)
Planning for Maximum Traffic
• Drawing more visitors to a site requires a thoughtful web traffic plan
• Web traffic plans should consider each of the five main traffic sources: – Branding decisions (e.g. domain name)– Search engine marketing– Affiliate networks – Online banner advertising– Publicity and word of mouth
![Page 10: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/10.jpg)
Planning for Valuable Traffic
• Effective traffic plans assess the volume and quality of traffic generated
• Spotting broad use patterns through visualization tools helps calculate the cost and productivity of new visits
• Key tool for traffic-building analysis is cost-per-action: the number of visits that end in a particular action divided by the cost of the campaign
![Page 11: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/11.jpg)
Graphic of “Cost-Per-Action”
At each stage, visitors decline and costs rise
![Page 12: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/12.jpg)
Traffic-Building Goals
• Basic goal: best traffic at lowest cost
• But how to define best traffic?
![Page 13: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/13.jpg)
Traffic-Building Goals
• Basic goal: best traffic at lowest cost
• But how to define best traffic?
Best Traffic with Least Cost
Maximum Profit
Minimum Cost-per-Action
Maximize Actions
![Page 14: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/14.jpg)
Traffic-Building Goals
• Profit guidelines that include web site branding; ignore ad branding impact:
– Spend on traffic sources that maximize difference between unified visit value and cost per visit
– No ex ante spending limit or volume target– Acquire traffic as long as the cost per visit is
less than the unified visit value
![Page 15: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/15.jpg)
Traffic-Building Goals
• Profit guidelines that ignore branding and all other impacts:
– Spend on traffic sources that maximize difference between customer lifetime value and web customer acquisition cost (i.e., customer equity)
– Acquire traffic as long as online customer value exceeds acquisition cost
![Page 16: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/16.jpg)
Minimize “Cost-Per-Action”
• Rejects an “open-ended” approach to traffic building and “budget-driven actions” (e.g., “Maximize action” campaigns)– Instead, sets a volume target for some action &
seeks ways to achieve such an objective efficiently
• Number of unique new visits,• New registrations,• New customers, etc.
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Search Engine Optimization
• Top placement in search returns is key to generating organic Web traffic (i.e., “Above the Fold” management)
![Page 18: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/18.jpg)
Search Engine Optimization
• Top placement in search returns is key to generating organic Web traffic (i.e., “Above the Fold” management)
• User’s willingness to investigate falls sharply as items drop on the return list
– GoogleFight.com provides a fun example
![Page 19: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/19.jpg)
Search Engine Optimization
• Improving search engine placement– Get indexed on main search engines– Develop meta-tags & content with keywords – Structure site content & navigation to
reinforce search engine algorithms– Cultivate links from appropriate sites (not
“link farms”)– “link:ford.com” shows all links whereas
“link:ford.com-site:ford.com” shows outside
![Page 20: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/20.jpg)
Keyword Advertising
• Clickable, text-based ads bring in billions of dollars of ad revenue
• Ads steer traffic to an organization web site; fee charged only if click occurs
• Competitive bidding process determines a keyword’s value
![Page 21: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/21.jpg)
Keyword Advertising
• Evaluating keyword portfolios– Identify a site’s most relevant keywords
– Test and expand list, based on conversion and click-through rates
![Page 22: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/22.jpg)
Keyword Advertising
• Evaluating keyword portfolios– Identify a site’s most relevant keywords
– Test and expand list, based on conversion and click-through rates
• Bidding and tracking – Higher bids increase chance at higher keyword
position
– No click costs more than maximum bid
– Price charged depends on intensity of competition
![Page 23: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/23.jpg)
Keyword Advertising
Max Bids Actual Price
.095 0.83
0.82 0.57
Yahoo! System
0.56 0.36
0.35 (0.10 minimum) 0.34
0.33 0.14
0.13 0.10
![Page 24: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/24.jpg)
Keyword Advertising Assumptions
1. Desired action is a new customer & all customers have the same dollar value
2. Competitors’ bids are known & do not change in response to a firm’s bid
3. Ads are ranked by maximum bid (i.e., Yahoo! format)
4. Test market information showing click-through and conversion rates are known for each ad position
![Page 25: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/25.jpg)
Step 1: Proper Keyword Positioning
• Cost-per-action can be found once you have the min. bid for each position and the conversion rate for each position
CPAk(n) = bk
(n) ÷ CRk(n)
• Then, knowing the “click-through”…
E(π) k(n) = (V - CPAk
(n)) × CTRk(n) × CRk
(n)
• Profit = Margin*Traffic*Conversion Rate
![Page 26: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/26.jpg)
Step 2: Choosing Keywords Based on E(π)
• If the desired position is j for keyword k, then the right bid is 0 or bk
(j)
• Rank all different keywords by CPA for the chosen position & buy following rule.
• Rule of Thumb:– Bid bk
(n) for all keywords with a CPAk(j) < V;
do not bid on the keyword otherwise.
![Page 27: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/27.jpg)
Traffic by Association
• In traditional advertising, marketers put a company’s message where consumers work, live, play
![Page 28: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/28.jpg)
Traffic by Association
• In traditional advertising, marketers put a company’s message where consumers work, live, play
• Same concept holds true online
![Page 29: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention.” ~ Herbert Simon.](https://reader035.fdocuments.us/reader035/viewer/2022062313/56649d365503460f94a0eab9/html5/thumbnails/29.jpg)
Traffic by Association
• In traditional advertising, marketers put a company’s message where consumers work, live, play
• Same concept holds true online – Banner advertising – URL placement on shopping bags, billboards,
monthly statements– Sponsorship and co-branding
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Higher Click Through
• Has been found to correlate positively w/– Bold colors– Top of page placement– Animation– Calls to action– limited frequency of exposure– Leader Boards over Full Banners
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Purchase of a Banner
• Avg. click-through in 2004 for non-rich media ads was .2% (i.e., .002)
• Avg. cost for a search ad in 2004 was $1.50
• For price per impression to equal the price-per-click, the CPM would have to be $3– .002 x $1.50 = .003/impression– .003 x 1000 = $3 per thousand