Chapter 5 (with modifications) J.Molka-Danielsen Advertisement in Electronic Commerce

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

2. Learning Objectives • Web Advertisement • methods • Strategies • Promotion technologies • Economic issues (who pays, what benefits) • Implementation issues, catalogs, email Prentice Hall, 2002

3. Opening Case: Advertisement in the Digital Economy • Theknot.com and Wedding411.com • Information about planning weddings • Assistance selecting vendors • Show related vendor ads • Promosinmotion.com • VW beetle cars painted with Web site logos • Real life product shows there is an on-line web site • Topbulb.com • Online catalog for light bulbs • Online displays show there is an off-line business Prentice Hall, 2002

4. Opening Case: Advertisement in the Digital Economy • Toyota • When 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. • IBM • Uses banners linked to college campuses to promote recruitment: “There is life after Boston College: click to see why” (click rate 5-30%) Prentice Hall, 2002

5. Ad views Banner Click (ad click) Click ratio Cookie CPM Effective frequency Hit Impressions Reach Visit Web Advertisement Terms • Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction • Internet Advertising Terminology Prentice Hall, 2002

6. Visits and Page Views • Judith Molka-Danielsen -- Site Summary – 02.02.02 • Visits • Total ........................ 3,664 • Average 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 Prentice Hall, 2002

7. Free & Pay tools for advertisement Prentice Hall, 2002

8. Visitors by IP address Prentice Hall, 2002

9. Site Tracking by Timezone Prentice Hall, 2002

10. Visitors by Operating System Prentice Hall, 2002

11. Referrals Prentice Hall, 2002

12. Why Ads on the Web (cont.) • Why Internet Advertisement? • 3/4 of PC users gave up some TV time • Want the educated, high-income Internet users • Update any time, at minimal cost • Reach a large number of viewers • Online ads cheaper than TV, newspaper, or radio ads Prentice Hall, 2002

13. Why Web Advertisement (cont.) • Use text, audio, graphics, and animation • Combine games, entertainment, and promotions • Web TV and Internet radio are attracting more people • Web ads can be interactive and targeted • Use of the Internet is growing very rapidly Why Internet Advertisement? Prentice Hall, 2002

14. Figure 5-1Adoption Curves for Various Media Source: Morgan Stanley Technology Research. Prentice Hall, 2002

15. Beginning of Web (History) • 1969ARPAnet established. • 1981BITNET 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). Prentice Hall, 2002

16. Mass Marketing Interactive Marketing Direct Marketing Best outcome Volume sales Customer relationships Customer data Consumer behavior Passive Active Passive Food, personal-care products, beer, autos Upscale apparel, travel, financial services, autos Credit cards, travel, autos Leading products Market High volume Targeted individuals Targeted goods Cyberspace Postal distribution centers Nerve center Madison Ave. Preferred media vehicle Television, magazines Online services Mailing lists Servers, onscreen navigators, the Web Preferred technology Storyboards Databases Worst outcome Channel surfing Recycling bins Logoff Web Advertising (cont.) Prentice Hall, 2002

17. 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 companies • Matches them against a database • Finds those people working for advertising agencies or using Unix system (potential buyers) Prentice Hall, 2002

18. 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 3M • DoubleClick shares revenue with cooperating partners (incentive for 3M allowing the ads, also promote partners) Prentice Hall, 2002

19. Web Advertisement (cont.) • 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 large • Opportunity for one-to-one marketing • Multimedia will get better, make web ads better Prentice Hall, 2002

20. Banner Benefits Can be Customized Use push “force advertising” Direct link to advertiser (shoppers don’t have to search) Multi media capabilities Banner Limitations High cost Declining click ratio— viewers may think its annoying Size of banners is too small (not noticed) Evaluate the Ad Methods Banners--banners are everywhere Keyword banners Random banners Prentice Hall, 2002

21. Advertisement Methods (pricing schemes.) • Banner swapping • Direct link between 2 sites. (bartering 1-to-1) • Banner exchanges (can be 3rd party) • Firm submits a banner • Receives credit (less than 1-to-1) when they show others’ banners • Can purchase additional display credits • Specify what type of site where the banner is displayed (another business, or portal site) • Usethe credit to advertise on others’ sites (2:1) Prentice Hall, 2002

22. Evaluate the Ad Methods (cont.) • Standard (pop up boxes that look like newspaper or magazine ads) and classified ads • Micro-sites • 5 advertising sizes larger than banners • Pop-up boxes at sites they are linked to • Classified ads • Special sites (classifieds2000.com) • Free or for fee depending upon size Prentice Hall, 2002

23. Evaluate the Ad Methods (cont.) • E-mail • Same benefits: • Access many, low costs, can use databases to target groups. • Same Problems: • Purchase of e-mail addresses hurts trust • Increasing Junk mail • Increasing Spamming Prentice Hall, 2002

24. 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. Prentice Hall, 2002

25. Cookies after one 30 sec. visit Prentice Hall, 2002

26. Evaluate the Ad Methods (other opportunities.) • Mobile phones • Interactive one-to-one ads • Location, situation, weather-related ads • Splash Screen (better effects) • Capture the user’s attention • Promotion 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 leasing • Permanent space on popular portal or Web page • Ads may be small and expensive Prentice Hall, 2002

27. Evaluate the Ad Methods (cont.) • URL (Universal Resource Locators)on Search Engines. • Advantages: • Minimal cost is associated with it • Submit your URL to a search engine and be listed • Keyword search is used • Disadvantages: • Search engines index their listings differently • Meta tags can be complicated Prentice Hall, 2002

28. Evaluate the Ad Methods (cont.) • Chat Rooms • Virtual meeting ground • Free to add this feature to a business site • Advertisers can search the messages and target the chatter again and again (but annoying!) • Can be more effective than banners Prentice Hall, 2002

29. Advertisement Strategies • Tips for Internet-based Ad Design • Visually appealing • Targeted to specific groups • Emphasize brands and a firm’s image • Part of an overall marketing strategy • Seamlessly linked with the ordering process Prentice Hall, 2002

30. Advertisement Strategies (cont.) • Internet-based ad design: important factors • Page-loading speed • Graphics and tables—simple, meaningful, and match standard monitors • Thumbnail (icon, graphs) are useful • Business content • Clear and concise text with compelling page title and header text • Minimal amount of information requested for registration Prentice Hall, 2002

31. Advertisement Strategies (cont.) • Internet-based Ad Design: Important Factors (cont.) • Navigation efficiency and compatibility • Links—well-labeled, accurate, meaningful • Site—compatible with browsers, software, etc. • Security and privacy • Security and privacy must be assured • Must provide option for rejecting cookies • Marketing Customer Focus • Clear terms/conditions of the purchases—delivery information, return policy, etc. • Confirmation page after a purchase Prentice Hall, 2002

32. Advertisement Strategies (cont.) • Pull (Passive) Strategy • Site itself provides attractive contents and display • Use a non-commercial site that guides the process of finding customer requests • Yahoo— portal search engine site as an effective aid for advertisement • Push (Active) Strategy • Sending e-mails or pop-up ads from collected cookie information. • Obtaining mailing lists, cookie files. • Mailing list generation—use agents, cookies, questionnaires Prentice Hall, 2002

33. Advertisement Strategies (cont.) • Associated Ad Display Strategy • Associate 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.com • Barnesandnoble.com • Keyword banners Prentice Hall, 2002

34. Eudora E-mail on covering the add Prentice Hall, 2002

35. Ad Payment Strategies (cont.) • Ads as a commodity • CyberGold (MyPoints.com) • Direct payment made by the advertisers for ads viewed • CyberGold distributes targeted banners • Reader clicks the banner, passes some tests on its content, and is paid for the effort Prentice Hall, 2002

36. Advertisement Strategies (cont.) • 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 service • Company grew from 0 to 12 million in 18 months • Downsides • E-mail hoaxes • Spread of viruses Prentice Hall, 2002

37. Comparison Sites as medium for advertisementCustomer learns about alternative products and where to purchase: the least cost place Source: Korean Engine (no longer in business). Prentice Hall, 2002

38. Online Events, Promotions,and Attractions • Enticing Web surfers to read Internet ads • Yoyodine, Inc. • Give-away games, discounts, contests, sweepstakes • Entrants agree to read product information of advertisers Prentice Hall, 2002

39. Online Events, Promotions,and Attractions (cont.) • Enticing Web surfers to read Internet ads • Use 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 Prentice Hall, 2002

40. Push Technology (only partly discussed) • 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 Technology • Drawback: the bandwidth requirements are large • Experts’ prediction: the technology will never fly (difficult to implement on the current Internet.) Prentice Hall, 2002

41. 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 Effectiveness and Pricing of Advertisement Methods for measuring advertisement effectiveness, conducting cost benefit analyses, pricing ads Prentice Hall, 2002

42. Online Catalogs as a form of advertising • Evolution of online catalogs • Consist of product database, directory and search capability and presentation function • Replication of text in paper catalogs –or- • More dynamic, customized and integrated • Ready-made catalogs: same catalog to all customers • Customized Catalogs: customized contents and display depending upon the customers Prentice Hall, 2002

43. Online Catalogs (cont.) • Electronic catalogs allow integration of • Order taking and fulfillment • Electronic payment • Intranet workflow • Inventory and accounting system • Suppliers’ extranet • Relationship to paper catalogs Prentice Hall, 2002

44. Customized Catalogs • Customization systems can: • Create branded, value-added capabilities • Allows user to compose order • Individualize prices, products, and display formats • Automatically identify the characteristics of customers based on the transaction records Prentice Hall, 2002

45. Special Advertisement Topics • How much to advertise • Permission advertisement • Measuring, auditing, and analyzing Web traffic • Self-monitoring of traffic • Internet ad standards • Localization • Internet radio for localization Prentice Hall, 2002

46. Special Advertisement Topics (cont.) • Major Web ad players • Advertising agencies and Web site developers • Market research providers • Traffic measurement and analysis companies • Networks/rep firms • Order processing and support Prentice Hall, 2002

47. Managerial Issues • Where to get attention: Find the most visited sites • Company research: make vs. buy • Integrated marketing campaigns: Web advertising coordination with traditional advertisement • Ethical Issues • Integrating advertisement with ordering and other business processes • Content is critical Prentice Hall, 2002