Part Two: Chapter Eight Traffic Building
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Transcript of Part Two: Chapter Eight Traffic Building
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Internet Marketing & e-CommerceWard HansonKirthi Kalyanam
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Part Two: Chapter EightTraffic Building
“A wealth of information creates a poverty of attention.”
Herbert Simon, Designing Organizations for an Information-rich World
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Value and Scarcity Online
• Volume of online content is growing far faster than the number of Web users
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
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
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
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
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
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
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Value and Scarcity Online
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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 categories:
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
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 categories: – Branding decisions (e.g. domain name)– Search engine marketing– Affiliate networks – Online banner advertising– Publicity and word of mouth
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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
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Planning for Valuable Traffic
At each stage, visitors decline and costs rise
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Traffic-Building Goals
• Basic goal: best traffic at lowest cost• But how to define best traffic?
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
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
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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
– Acquire traffic as long as the cost per visit is less than the unified visit value
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
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
– Acquire traffic as long as online customer value exceeds acquisition cost
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Traffic-Building Goals
Variation in Average Customer Acquisition Costs for Four Net Companies
Company Time Period Acquired Customers Customer Acq. Cost
e-Commerce firms
Amazon.com 3/1997->3/2002 33,800,000 $7.70
eBay 12/1996->3/2002 46,100,000 $11.26
Online brokerages
Ameritrade 9/1997->3/2002 1,877,000 $203.44
E*Trade 12/1997->3/2002 4,117,370 $391.00
SOURCE: Gupta, Lehmann, Stuart: “Valuing Customers,” Journal of Marketing Research 41, no. 1 (Feb. 2004)
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Search Engine Optimization
• The power of landing “Above the Fold”
SOURCE: FPG/Getty Images
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Search Engine Optimization
• Top placement in search returns is key to generating organic Web traffic
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Search Engine Optimization
• Top placement in search returns is key to generating organic Web traffic
• User’s willingness to investigate falls sharply as items drop on the return list
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Search Engine Optimization
• Top placement in search returns is key to generating organic Web traffic
• User’s willingness to investigate falls sharply as items drop on the return list– Higher click rate on top-rated items– Few users go beyond first page or two
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Search Engine Optimization
• Improving search engine placement– Get indexed on main search engines– Use meta-tags and develop content with
appropriate keywords that trigger higher search engine rankings
– Structure site content and navigation to reinforce search engine algorithms
– Cultivate links from appropriate sites
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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
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Keyword Advertising
• Evaluating keyword portfolios– Identify a site’s most relevant keywords– Test and expand list, based on conversion and
click-through rates
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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
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Keyword Advertising
Collecting Keyword Data
Keyword Phrases Clicks Conversions Cost per click to hold position Conversion rate
Skylark fuel pump Position 1 62 6 $0.10
9.68%
GM fuel pump Position 2
148 18 $0.20 12.16%
Buick partsPosition 2
1246 48 $0.25 3.85%
Used Buick Skylark Position 1 8678 95 $0.23 1.09%
BuickPosition 3
362 15 $1.37 4.14%
Used car partsPosition 2
17265 98 $0.34 0.57%
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Traffic by Association
• In traditional advertising, marketers put a company’s message where consumers work, live, play
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© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Traffic by Association
• In traditional advertising, marketers put a company’s message where consumers work, live, play
• Same concept holds true online
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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