IMS 6485: Marketing Communication

1Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Topics

• Marketing Communication

• Online Advertising

– Banner Ads − Rich Media Ads

– Search Engine − E-Mail Marketing

– Online Catalogs − Social Marketing

• Bringing Chapters 6 & 7 Together

• Metrics and Costs

• The Web Site as Marketing Communication

IMS 6485: Marketing Communication

2Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Marketing in the Value Chain?

TRANS-PORTATIONCOMPANY

BROKER

INFORMATION FLOWS(SELLERS TO BUYERS)

FLOW OF GOODS

ADVERTISING .

INVOICE .

ORDER INFORMATION .

INFORMATION FLOWS(BUYERS TO SELLERS)

REQUEST INFORMATION .

PLACE ORDER .

MAKE PAYMENTS .

Animal

Vegetable

Mineral

INVENTORY

INVENTORY

INVENTORY

FACTORYWHOLE-SALER

INTERMEDIATE

GOODS

WHOLE-SALER

RETAILER

Where do these topics fall?

IMS 6485: Marketing Communication

3Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Marketing Communication

• "Marketing Communications have a dual purpose: Branding and Sales"

– Branding: Building and reinforcing a firms brands

• Inform consumers about differentiating features of products and services

– Sales: Encouraging the consumer to buy products and services

• Any marketing communication must

– Be aware of which purpose it is accomplishing

– Not damage other goals

IMS 6485: Marketing Communication

4Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Forms of Marketing Communication

• Traditional

– Electronic media—TV, Radio, Movie product placement

– Print—Newspaper, magazine

• Online Advertising

– Increasing its share of total advertising spending (Figure 7.1)

– 10% of total advertising in 2009

– Expected to grow to 15% by 2012

– Growth of 200% in last five years

IMS 6485: Marketing Communication

5Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Advertising Advantages

• Audience moving to the Internet

– And concentrations formerly found in traditional media are dispersing as more channels and options appear

• Internet allows finer control over ad targeting

• Online advertising remains massively cheaper per impression than traditional advertising

IMS 6485: Marketing Communication

6Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Advertising Formats

• Banner ads and pop-ups

• Rich media video ads

• Search engine

• E-Mail marketing (and spam)

• Online catalogs

• Social marketing

IMS 6485: Marketing Communication

7Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Banner Ads

• Earliest forms of online advertising

• What is the role/consequence of the IAB's standardization of sizes for banner ads?

• What is the difficulty that advertisers are now finding with banner ads?

• What were the findings regarding pop-up ads?

– What decision does this pose for your online advertising approaches?

IMS 6485: Marketing Communication

8Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Rich Media & Video Ads

• Why are rich media ads growing in popularity?

– Rich media ad spending will grow about 212% from 2008 to 2012

• 80% of Internet users now watch videos online and "online video has become the audience aggregator of the 21st century"

– "Exactly how to take advantage of this opportunity is still a puzzle" (p 428)

– "the major video sites like YouTube and MySpace have had a difficult time selling their ad space and monetizing their huge audiences" (p 428) Why?

IMS 6485: Marketing Communication

9Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Rich Media & Video Ads (cont.)

• What decisions face your firm if you wish to use rich media advertising?

IMS 6485: Marketing Communication

10Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Search Engine Advertising

• The 900 lb gorilla in online advertising

• "More than any other form of online advertising, search engine marketing has altered the entire marketing communications industry." (p. 429)

– Note, the quote did not say the online marketing communications industry

– Why is this true?

• On an average day 71 million Americans will use a search engine for 10 billion searches a month

• Click-through rate for search marketing is generally 10-12%

IMS 6485: Marketing Communication

11Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Search Engine Advertising (cont.)

"How much would you pay to place your company's listing in front of the consumer just at the precise moment the customer is looking for products provided by your company?"

IMS 6485: Marketing Communication

12Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Search Engine Advertising (cont.)

• Three types of search engine marketing

– Organic search

– Paid inclusion

– Keyword advertising

• How does each type work?

• What are the relative costs to the advertiser of each type and what are advertisers paying for with the more expensive approaches?

• Should you consider search engine advertising for your project scenario companies?

– Which type would you use? Initially? Long term?

IMS 6485: Marketing Communication

13Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Network Keyword Advertising

• What is it and how does it work?

• Why are the search engines involved in this type of advertising?

• What are the benefits and risks to:

– Search engine companies?

– Advertising companies?

– Hosting web site owners?

IMS 6485: Marketing Communication

14Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Sponsorship

• What does "sponsorship" mean in a web advertising context?

• What is necessary if you want to consider sponsorship as a communication means?

IMS 6485: Marketing Communication

15Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

E-Mail Marketing and Spam

• What are the economics of E-Mail marketing?

– How do these factors influence the behavior of "legitimate" advertisers?

– How do they influence the behavior of spammers?

• "In general, e-mail works well for maintaining the customer relationship, but poorly in acquiring new customers" (p. 438)

• What are the economics of spamming and what has been the impact of spam on legitimate e-mail advertising? (And what is "legitimate" e-mail advertising?)

IMS 6485: Marketing Communication

16Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Catalogs

• What are the economics of online catalogs

– For online only merchants?

– For click-and-mortar merchants?

– For traditional mail-order merchants?

• Why are grid displays so popular (vs. full-page spreads)?

• A technology question: Where is the content for online catalogs typically stored? How then are the contents exposed to search engines? (I don't know.)

IMS 6485: Marketing Communication

17Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Social Marketing

• Getting an advertisement or other message into a social network

– Letting the network manage distribution

• Blog advertising

– Attractive audiences

– Difficult to classify

• Social Network Advertising

– $2 billion in revenue in 2009

– "It is easy to overstate the growth in social marketing, and it is risky to ignore it" (p. 444). Why?

IMS 6485: Marketing Communication

18Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Social Marketing (cont.)

• Game advertising

– Second life spaces

– Advergames (what are they?)

– Video in-game advertising

• $510 million in revenue in 2009

• Growing at a 15% compound rate

• What are the opportunities and limitations?

• What technological innovations in gaming make this advertising desirable?

IMS 6485: Marketing Communication

19Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Bringing it Together

• Chapter 6 discussed the web as a form of ultimate market segmentation with segments down to the individual level

• Chapter 7 in various places mentions limitations on the ability to quickly generate personalized ads for an individual

• But Google, Yahoo, and Microsoft have all invested heavily in ad network companies

• Could these technical limitations be overcome?

• What will happen when/if they are?

– Old investmentsobsolete?

IMS 6485: Marketing Communication

20Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Metrics & Costs

• See the exhaustive list of terminology and metrics in Table 7.5

– Acquisition rate

– Conversion rate

– Checkout conversion rate

– Abandonment rate

– Retention/Attrition rate

• Compare online vs. offline behavior

IMS 6485: Marketing Communication

21Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Metrics & Costs (cont.)

• How should you judge the success of online advertising efforts?

• What is the complete path from an advertisement to your measure of effectiveness?

• See cost of customer acquisition (Table 7.8)

– Internet search: $8.50

– Yellow pages: $20.00

– Online display ad: $50.00

– E-Mail: $60.00

– Television $17.00Any su

rprises h

ere?

IMS 6485: Marketing Communication

22Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Metrics & Costs (cont.)

• Evaluate the costs in Table 7.9

• How do we reconcile the relatively low cost of online banner ads with the relatively high cost of customer acquisition for online display ads?

• What would you like to know before undertaking an advertising campaign (in any media)?

• What would you like to know after the campaign?

• What advantages does the Web have over traditional media with respect to answering these questions?

IMS 6485: Marketing Communication

23Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

The Web Site in Marketing Communications

• "In some ways, a Web site can be viewed as an extended online advertisement." (p. 462)

• What issues should/must be considered when designing your web site?

• What collaborations must be present within the organization to ensure that the site is effectively designed?