Prentice Hall, 2002 1 Chapter 5 (with modifications) J.Molka-Danielsen Advertisement in Electronic...

Prentice Hall, 2002 1

Chapter 5(with modifications)J.Molka-Danielsen

Advertisement in Electronic Commerce


Learning Objectives

Web Advertisement methods StrategiesPromotion technologiesEconomic issues (who pays, what benefits)Implementation issues, catalogs, email


Opening Case: Advertisement in the Digital Economy

Theknot.com and Wedding411.comInformation about planning weddingsAssistance selecting vendorsShow related vendor ads

Promosinmotion.comVW beetle cars painted with Web site logosReal life product shows there is an on-line web site

Topbulb.comOnline catalog for light bulbsOnline displays show there is an off-line business


Opening Case: Advertisement in the Digital Economy

ToyotaWhen anyone searches altavista.com on cars, the Toyota banner gets displayed. Kelly Blue Book (kbb.com) new car prices has links to Toyota site. 10,000 users in 2 months clicked on the ad.

IBMUses banners linked to college campuses to promote recruitment: “There is life after Boston College: click to see why” (click rate 5-30%)


Web Advertisement Terms

Ad viewsBannerClick (ad click)Click ratioCookieCPM

Effective frequencyHitImpressionsReachVisit

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

Internet Advertising Terminology


Visits and Page Views

Judith Molka-Danielsen -- Site Summary – 02.02.02Visits

Total ........................ 3,664Average per Day .................. 9 Average Visit Length .......... 2:32 This Week ...................... 125

Page Views Total ............... 5,751 Average per Day ................. 14 Average per Visit .............. 1.6 This Week ...................... 195


Free & Pay tools for advertisement


Visitors by IP address


Site Tracking by Timezone


Visitors by Operating System


Referrals


Why Ads on the Web (cont.)

Why Internet Advertisement?

3/4 of PC users gave up some TV timeWant the educated, high-income Internet users Update any time, at minimal costReach a large number of viewers Online ads cheaper than TV, newspaper, or radio ads


Use text, audio, graphics, and animationCombine games, entertainment, and promotionsWeb TV and Internet radio are attracting more peopleWeb ads can be interactive and targetedUse of the Internet is growing very rapidly

Why Web Advertisement (cont.)

Why Internet Advertisement?


Figure 5-1Adoption Curves for Various Media

Source: Morgan Stanley Technology Research.


Beginning of Web (History)1969 ARPAnet established. 1981 BITNET university and research network. First to use LISTSERV software for managing e-mail lists.1983 the term Internet coined (based on TCP/IP). 1984 Gateways between BITNET and ARPAnet established. Tim Berners-Lee (TBL) wrote the first client-browser (Enquire) and initial specifications for HTTP and HTML. He first envisioned the only thing the client woud do is get a statitc page. (He is called the inventor of the Web.)

1989, (Mar) TBL working at the Swiss Institute for Particle Physics (CERN) wrote "Information Management: A Proposal" 1990, Oct. TBL starts work on a hypertext GUI browser+editor and coins the term WWW, demonstrates it in Dec.1992, Jan. Line mode browser available by FTP.1993, (Jan) X and Mac browsers released. 50 known servers. (Feb) NCSA release Andreessen's "Mosaic for X”. (Oct) Over 200 known HTTP servers. 1994, March Marc Andreessen and colleagues leave NCSA to form "Mosaic Communications Corp" (now Netscape).


Web Advertising (cont.)

Volume sales Customer data Customer relationshipsPassive Passive Active

Food, personal-care products, beer, autos

Credit cards, travel, autos

Upscale apparel, travel, financial services, autos

High volume Targeted goods Targeted individuals

Madison Ave. Postal distribution centers

Cyberspace

Television, magazines

Mailing lists Online services

Storyboards Databases Servers, onscreen navigators, the Web

Mass Marketing Direct Marketing Interactive MarketingBest outcomeConsumer behaviorLeading products

Market

Nerve center

Preferred media vehicle

Preferred technologyWorst outcome Channel surfing Recycling bins Logoff


Targeted Ads (cont.)

Targeted Advertisement (one-to-one)The DoubleClick (DC) Approach—3M /ciro, wants to advertise its $10,000 multimedia projectors

DC monitors people browsing the Web sites of cooperating companiesMatches them against a databaseFinds those people working for advertising agencies or using Unix system (potential buyers)


Targeted Advertisement (cont.)

Targeted Advertisement (one-to-one)The Double Click (DC) Approach for 3M Corp. (cont.)

Learn about you, your spending, and your computing habits using ‘a cookie’Prepares an ad for 3M projectors targeted for people whose profile matches what is needed for 3MDoubleClick shares revenue with cooperating partners (incentive for 3M allowing the ads, also promote partners)


Summary: Pros of Internet Advertisement

Internet ads accessed on demand (24/365) costs are the same regardless of audience location (larger geographic spread)Accessed because of INTEREST, so market segmentation opportunity is largeOpportunity for one-to-one marketing Multimedia will get better, make web ads better

Web Advertisement (cont.)


Evaluate the Ad Methods

Banner BenefitsCan be Customized Use push “force advertising” Direct link to advertiser (shoppers don’t have to search)Multi media capabilities

Banner LimitationsHigh costDeclining click ratio— viewers may think its annoying Size of banners is too small (not noticed)

Banners--banners are everywhereKeyword banners Random banners


Advertisement Methods (pricing schemes.)

Banner swappingDirect link between 2 sites. (bartering 1-to-1)

Banner exchanges (can be 3rd party)1. Firm submits a banner2. Receives credit (less than 1-to-1) when they

show others’ banners3. Can purchase additional display credits4. Specify what type of site where the banner is

displayed (another business, or portal site)5. Use the credit to advertise on others’ sites

(2:1)


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

Micro-sites5 advertising sizes larger than bannersPop-up boxes at sites they are linked to

Classified adsSpecial sites (classifieds2000.com)Free or for fee depending upon size

Evaluate the Ad Methods (cont.)


E-mailSame benefits:

Access many, low costs, can use databases to target groups.

Same Problems:Purchase of e-mail addresses hurts trustIncreasing Junk mail Increasing Spamming



Cookies can be disabled by the user.Only the information that you provide, can be stored in a cookie. The site cannot know your e-mail name unless you choose to type it. Allowing a Web site to create a cookie does not give it or any other site access to the rest of your computer, and only the site that created the cookie can read it.


Cookies after one 30 sec. visit


Evaluate the Ad Methods (other opportunities.)

Mobile phonesInteractive one-to-one adsLocation, situation, weather-related ads

Splash Screen (better effects)Capture the user’s attentionPromotion or lead-in (Molde Jazz Festival, its optional so the viewer can skip it.)Major advantage: create innovative multimedia (Gives more of an experience.)

Spot leasingPermanent space on popular portal or Web pageAds may be small and expensive


URL (Universal Resource Locators) on Search Engines.

Advantages:Minimal cost is associated with itSubmit your URL to a search engine and be listedKeyword search is used

Disadvantages:Search engines index their listings differentlyMeta tags can be complicated



Chat RoomsVirtual meeting groundFree to add this feature to a business siteAdvertisers can search the messages and target the chatter again and again (but annoying!)Can be more effective than banners



Advertisement Strategies

Tips for Internet-based Ad DesignVisually appealingTargeted to specific groups Emphasize brands and a firm’s imagePart of an overall marketing strategySeamlessly linked with the ordering process


Advertisement Strategies (cont.)

Internet-based ad design: important factors

Page-loading speedGraphics and tables—simple, meaningful, and match standard monitorsThumbnail (icon, graphs) are useful

Business contentClear and concise text with compelling page title and header textMinimal amount of information requested for registration



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

Navigation efficiency and compatibilityLinks—well-labeled, accurate, meaningful Site—compatible with browsers, software, etc.

Security and privacySecurity and privacy must be assuredMust provide option for rejecting cookies

Marketing Customer FocusClear terms/conditions of the purchases—delivery information, return policy, etc. Confirmation page after a purchase



Pull (Passive) StrategySite itself provides attractive contents and displayUse a non-commercial site that guides the process of finding customer requestsYahoo— portal search engine site as an effective aid for advertisement

Push (Active) StrategySending e-mails or pop-up ads from collected cookie information.Obtaining mailing lists, cookie files.Mailing list generation—use agents, cookies, questionnaires



Associated Ad Display StrategyAssociate the content of a Web page with a related ad like:

Search Yahoo on a topic, a banner pops up offering “search for books at”

Amazon.comBarnesandnoble.com

Keyword banners


Eudora E-mail on covering the add


Ad Payment Strategies (cont.)

Ads as a commodityCyberGold (MyPoints.com)

Direct payment made by the advertisers for ads viewedCyberGold distributes targeted bannersReader clicks the banner, passes some tests on its content, and is paid for the effort



Viral marketing—word-of-mouth over the Internet

Forwarded e-mail messages from sites“Advocacy marketing”—hotmail.com

Each e-mail sent invited free hotmail serviceCompany grew from 0 to 12 million in 18 months

DownsidesE-mail hoaxesSpread of viruses


Comparison Sites as medium for advertisement

Customer learns about alternative products and where to purchase: the least cost place

Source: Korean Engine (no longer in business).


Online Events, Promotions,and Attractions

Enticing Web surfers to read Internet ads

Yoyodine, Inc.Give-away games, discounts, contests, sweepstakesEntrants agree to read product information of advertisers


Online Events, Promotions,and Attractions (cont.)

Enticing Web surfers to read Internet adsUse real people to help you (Egghead)

Uses phone interviews that lead to material and ads sent to your computer (Lucent)

Retailers give special offers as shoppers “check out”

Run sweepstakes (Netstakes, no skills necessary)

Offer free internet access (Netzero), or free samples (freesamples.com)

Use company logo as cursor


Push on the Intranet (Push technology I would refer to as pervasive technology. It has greater importance than just marketing. Discuss in a later lecture.)

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 TechnologyDrawback: the bandwidth requirements are largeExperts’ prediction: the technology will never fly (difficult to implement on the current Internet.)

Push Technology (only partly discussed)


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

Interactivity

Based 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 advertisement effectiveness, conducting cost benefit analyses, pricing ads


Online Catalogs as a form of advertising

Evolution of online catalogsConsist of product database, directory and search capability and presentation functionReplication of text in paper catalogs –or- More dynamic, customized and integrated

Ready-made catalogs: same catalog to all customersCustomized Catalogs: customized contents and display depending upon the customers


Electronic catalogs allow integration of

Order taking and fulfillmentElectronic paymentIntranet workflowInventory and accounting systemSuppliers’ extranetRelationship to paper catalogs

Online Catalogs (cont.)


Customized Catalogs

Customization systems can:Create branded, value-added capabilitiesAllows user to compose orderIndividualize prices, products, and display formatsAutomatically identify the characteristics of customers based on the transaction records


Special Advertisement Topics

How much to advertisePermission advertisementMeasuring, auditing, and analyzing Web trafficSelf-monitoring of trafficInternet ad standardsLocalizationInternet radio for localization


Major Web ad playersAdvertising agencies and Web site developersMarket research providersTraffic measurement and analysis companiesNetworks/rep firmsOrder processing and support

Special Advertisement Topics (cont.)


Managerial Issues

Where to get attention: Find the most visited sitesCompany research: make vs. buyIntegrated marketing campaigns: Web advertising coordination with traditional advertisementEthical IssuesIntegrating advertisement with ordering and other business processesContent is critical

Prentice Hall, 2002 1 Chapter 5 (with modifications) J.Molka-Danielsen Advertisement in Electronic...

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