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Privacy and Online Advertising Trends

Explore surprising aspects of privacy and the reasons behind the decrease in spending on traditional advertising by internet retailers. Learn about the different types of online advertising and their effectiveness for customer acquisition and brand awareness.

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Privacy and Online Advertising Trends

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  1. In-Class #7 • Discuss 2 things you read about privacy that were surprising to you • Why do you think Internet retailers are spending less $$ on traditional advertising media than they did 2 years ago? HED 460

  2. Internet Advertising • 1999/2000 saw huge amounts of e-tail advertisements • 22% consumers were unable to recall any specific Internet advertisements (post-holiday) • Pure-play e-tailers budget nearly 2x as much for advertising as multichannel HED 460

  3. Mulitichannel Advantage • Name recognition • Low cost mechanisms • web address in advertising for stores, catalogs, store receipts, bags, other advertising media HED 460

  4. E-tailer’s Mktg. Budget HED 460

  5. Online Retailer Mkt. Spend HED 460

  6. Why Increased Online? • Traditional mediums did not work • Broad focus vs narrow focus needed • Difficult to target specific markets with TV, radio, newspaper • Online is easier to target small discrete groups HED 460

  7. Budget Allocation HED 460

  8. Strategy • Rapid growth mode • awareness and acquisition • Growth rates slow • customer loyalty and repeat business • currently less than 1/5 budget on customer retention HED 460

  9. Effective for Acquisition • Personalized/targeted email • 45% effectiveness for pure-play • 13% for multichannel • Cross-promos in catalog and “deals” with portals, ISP’s, community sites • 17.9% effectiveness with multichannel • Other web site links and direct mail • 10.3% effectiveness with multichannel HED 460

  10. Ad Revenues HED 460

  11. Types of Media • Banner ads HED 460

  12. Banners • Ad with clickable link to web site • Brand Awareness • Targets customers • Inexpensive • Annoying • Low click through rates • Undifferentiated HED 460

  13. Types of Media • Affiliates/Associates (usually outsourced) • Content sites receive financial incentive to sell other companies’ products or display their ads (CPA vs. CPM) • Affiliate gets a % of the sale (5-15%) • Affiliate receives no payment to display ad • Volume yields greater revenues/profits • Low risk to advertiser HED 460

  14. Affiliates/Associates HED 460

  15. Affiliates/Associates HED 460

  16. Affiliates/Associates HED 460

  17. Types of Media • Interstitials (5-10 seconds) • Messages delivered to browser as viewer awaits for page to download • Grabs attention • Ties offers to specific online behavior • Delays access to new page • Page loading delays • Intrusion factor HED 460

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