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Copyright 2007 Pearson Education, Inc. Slide 8-1
E-commerce
Kenneth C. Laudon
Carol Guercio Traver
business. technology. society.Third Edition
Copyright 2007 Pearson Education, Inc. Slide 8-2
Chapter 8
E-commerce Marketing Communications
Copyright 2007 Pearson Education, Inc. Slide 8-3
ESPN Motion: Targeting the 18-to-34 MalesClass Discussion
How does the ESPN Motion system differ fromordinary video streaming?
What is the benefit of this new systems to consumersand to advertisers?
How does this system avoid Internet congestion?
Why would sports fans want to watch videoadvertising thats just like TV?
Why is user control important on the Internet (or onTV)?
Copyright 2007 Pearson Education, Inc. Slide 8-4
Marketing Communications
Online marketing communications: Methodsused by online firms to communicate withconsumer and create strong brandexpectations
Promotional sales communications: Suggestconsumer buy now and make offers toencourage immediate purchase
Branding communications: Focus on extollingdifferentiable benefits of consuming productor service
Copyright 2007 Pearson Education, Inc. Slide 8-5
Online Advertising
Paid message on a Web site, online service or otherinteractive medium, such as interactive messaging
2005: $12.9 billion spent, expected to grow to $24.7billion by 2010
Advantages: Ability to target ads to narrow segments and track
performance in almost real time
Provide greater opportunity for interactivity
Disadvantages:
Concerns about cost versus benefit
Concerns about how to adequately measureresults
Copyright 2007 Pearson Education, Inc. Slide 8-6
Online Advertising from 2000-2010Figure 8.1, Page 441
SOURCE: Based on data from Pricewaterhouse Coopers, 2005; eMarketer, Inc., 2005a;Universal McCann, 2005; authors estimates.
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Copyright 2007 Pearson Education, Inc. Slide 8-7
Online
Advertisingby Industry
Figure 8.2, Page 442
SOURCE: Based on datafrom eMarketer, Inc., 2004a,2005c; authorsestimates.
Copyright 2007 Pearson Education, Inc. Slide 8-8
Forms of Online Advertisements
Display and rich media ads
Search engine advertising: Paid search engineinclusion and placement
Sponsorships
Referrals (affiliate relationship marketing)
E-mail marketing
Online catalogs
Online chat
Blog advertising
Copyright 2007 Pearson Education, Inc. Slide 8-9
Display and Rich Media Ads
Display ads
Banners
Pop-ups and pop-unders
Rich media ads: Employ Flash, DHTML, Java,streaming audio and/or video
Interstitials
Superstitials
Copyright 2007 Pearson Education, Inc. Slide 8-10
Types ofDisplay Ads
Figure 8.3, Page 445
SOURCE: InteractiveAdvertising Bureau, 2005.
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Online Advertising Placement Methods
Banner swapping: Arrangements amongfirms allow each firm to have its bannersdisplayed on other affiliate sites for no cost
Banner exchanges: Arrange for bannerswapping among firms
Advertising networks: Act as brokers betweenadvertisers and publishers, placing ads andtracking all activity related to the ad
Copyright 2007 Pearson Education, Inc. Slide 8-12
Search Engine Advertising: Paid Search
Engine Inclusion and Placement
One of fastest growing and most effective formsof online marketing communications
Types:
Paid inclusion
Paid placement
Keyword advertising
Network keyword advertising
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Copyright 2007 Pearson Education, Inc. Slide 8-13
Search Engine Advertising: Paid SearchEngine Inclusion and Placement (contd)
Google and Yahoo (Overture.com) leaders in thistechnology
Issues
Appropriate disclosure of paid inclusion andplacement practices
Search engine click fraud (when competitor hiresthird parties to fraudulently click on competitor adsto drive up costs)
Ad nonsense (Google AdSense ads that areinappropriate for content)
Copyright 2007 Pearson Education, Inc. Slide 8-14
Sponsorships and Affiliate Marketing
Sponsorship: Paid effort to tie an advertisers nameto particular information, event, venue in way thatreinforces brand in a positive, yet not overtlycommercial manner
Advertorial a common form
Affiliate relationship: Permits a firm to put its logo orbanner ad on another firms Web site from whichusers of that site can click through to the affiliatessite
Sometimes called tenancy deals
Amazon/Toys R Us an example
Customer hijacking an issue
Copyright 2007 Pearson Education, Inc. Slide 8-15
Insight on Society: Marketing to Children:The Digital CultureClass Discussion
Why is online marketing to children a controversialpractice?
What is the Childrens Online Privacy Protection Act(COPPA) and how does it protect the privacy ofchildren?
How do companies verify the age of online users?
Should companies be allowed to target marketingefforts to children under the age of 13?
Copyright 2007 Pearson Education, Inc. Slide 8-16
E-mail Marketing and the Spam Explosion
Direct e-mail marketing: E-mail marketing messagessent directly to interested consumers who opt-in orhave not opted-out
Spam: Unsolicited commercial e-mail
Spam is exploding out of controlEstimated60%70% of all Internet e-mail purportedly wasspam
Efforts to control spam:
Technology (Filtering software) (only partlyeffective)
Government regulation (CAN-SPAM and statelaws) (largely unsuccessful)
Self-regulation by industry (ineffective)
Volunteer efforts (not enough)
Copyright 2007 Pearson Education, Inc. Slide 8-17
Percentage of E-mail That Is SpamFigure 8.7, Page 460
SOURCE: Based on data from MessageLabs.com, 2005.
Copyright 2007 Pearson Education, Inc. Slide 8-18
Spam CategoriesFigure 8.8, Page 461
SOURCE: Based on data from Symatec, 2005b, 2005c; Dunn, 2005. MID-POINT
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Copyright 2007 Pearson Education, Inc. Slide 8-19
Other Forms of Online MarketingCommunications
Online catalog: Provide equivalent of paper-based catalog
Online chat: Provides equivalent of help fromsales representative
Blog advertising: Online ads related tocontent of blogs
2nd half!
Copyright 2007 Pearson Education, Inc. Slide 8-20
The Mix of Online and Offline MarketingCommunications
Figure 8.10, Page 467
SOURCE: Based on data from Pricewaterhouse Coopers, 2005; eMarketer, Inc., 2004d,2005b; authorsestimates.
Copyright 2007 Pearson Education, Inc. Slide 8-21
Online Marketing Metrics: Lexicon
Metrics that focus on success of Web site in achievingaudience or market share
Impressions
Click-through rate (CTR)
View-through rate (VTR)
Hits
Page views
Stickiness (duration)
Unique visitors
Loyalty
Reach
Recency
Copyright 2007 Pearson Education, Inc. Slide 8-22
Online Marketing Metrics: Lexicon (contd)
Metrics that focus on conversion of visitor tocustomer
Acquisition rate
Conversion rate
Browse-to-buy-ratio
View-to-cart ratio
Cart conversion rate
Checkout conversion rate
Abandonment rate
Retention rate
Attrition rate
Copyright 2007 Pearson Education, Inc. Slide 8-23
How Well Does Online Advertising Work?
Click-through rates may be low, but these arejust one measure of effectiveness
Research indicates that most powerfulmarketing campaigns include both online andoffline advertising
Copyright 2007 Pearson Education, Inc. Slide 8-24
Click-through Rates by Format 20002005Figure 8.12, Page 475
SOURCE: Based on data from DoubleClick, 2005, 2004; eMarketer, Inc., 2005h, 2004;authorsestimates.
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Copyright 2007 Pearson Education, Inc. Slide 8-25
The Costs of Online Advertising
Cost per thousand (CPM): Advertiser pays for
impressions in 1,000 unit lots Cost per click (CPC): Advertiser pays pre-
negotiated fee for each click ad receives
Cost per action (CPA): Advertiser pays pre-negotiated amount only when user performsa specific action
Hybrid: Two or more of the above modelsused together
Copyright 2007 Pearson Education, Inc. Slide 8-26
Software for Measuring Online
Marketing Results
WebTrends: Software program thatautomatically calculates activities at site, suchas abandonment rate, conversion rate, etc.
WebSideStory: Web service that assistsmarketing managers
Copyright 2007 Pearson Education, Inc. Slide 8-27
Web Site Activity AnalysisFigure 8.14, Page 480
Copyright 2007 Pearson Education, Inc. Slide 8-28
Insight on Technology: Its 10 P.M. DoYou Know Who Is On Your Web Site?
Class Discussion
What are some of the services offered byWebSideStorys HBX Analytics products?
Why would you as a webmaster be interestedin these services?
Why is real time analysis and action soimportant to online marketing?
How did CBS Sportsline use HBX Analytics?
Copyright 2007 Pearson Education, Inc. Slide 8-29
The Web Site as a Marketing
Communications Tool
Web site can be viewed as an extended onlineadvertisement
Domain name: First communication an e-commercesite has with a prospective customer
Search engine optimization:
Register with as many search engines as possible
Ensure that keywords used in Web site descriptionmatch keywords likely to be used as search termsby user
Link site to as many other sites as possible
Get professional help
Copyright 2007 Pearson Education, Inc. Slide 8-30
Factors in the
Credibility ofWeb SitesFigure 8.15, Page 486
SOURCE: Based on data from Fogg, et al, 2002.
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