MKTG 1352 Electronic Marketing

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MKTG 1352 Electronic Marketing
Class 5 Internet Advertising
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Todays Agenda

• Questions from last class?
• Finish SEM
• Internet Advertising
• Time for group work

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Advertising

• If you build it, they will come.
• Not on the Internet!!!

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Internet Advertising

• Is Internet advertising an effective advertising
  medium?

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Two Questions

• What do advertisers want from consumers?
• What do consumers want from advertisers?

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1. What do advertisers want from consumers?

• Money (sales)
• Trust
• Loyalty
• Information
• Recognition
• Awareness
• Referrals

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2. What do Customers want from Advertisers?

• 84 of consumers stated they want control over
  the types and frequency of Internet ads sent from
  a specific merchant.
• 64 of consumers would trust a marketer more if
  they had control over the types of online
  communication that were sent to them.

Online Permissions Survey, sponsored by Dotomi,
is based on 1,799 responses from Internet users
in all major regions of the United States.
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2. What do Customers want from Advertisers?

• 89 of consumers would let a trusted marketer
  share their personal interests with a third
  party, in order to increase the quality of
  services and products produced.
• 82 of consumers wanted to be notified by an
  online merchant if they are provided with an
  incentive
• 92 asked to be notified if a product or
  promotion would be of great value to them based
  on past purchasing habits.

Online Permissions Survey, sponsored by Dotomi,
is based on 1,799 responses from Internet users
in all major regions of the United States.
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2. What do Customers want from Advertisers?

• To summarize, customers want advertising based
  on
• Permission
• Value
• Relevance

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Online Advertising Continues Rapid Growth

• eMarketer predicts that more than 12 billion
  will be spent this year on Internet advertising,
  double 2004 levels.
• By 2009, that's expected to reach 22 billion.
• Search marketing continued to dominate, grabbing
  40 percent of the total online ad spending in the
  quarter.
• Rich media advertising rose 26 percent in the
  quarter
• http//www.ecommercetimes.com/story/F5V2QnRSncyYYH
  /Online-Advertising-Continues-Rapid-Growth.xhtml

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Top Advertising Vehicles
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Top Online Advertisers Dec 2004

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Canadian Online Advertising Grows 2004, 2005

• Online Revenues will exceed 500 million dollars
  in 2005 Interactive Advertising Bureau of Canada
  (IAB).
• 43 more than the 2004 figure.
• Display ads are largest portion of the Online
  advertising pie at 45 , while Search advertising
  grew to 30
• Classified/Directories/Direct Response at 22 of
  total revenue, and E-mail at 3 percent.
• Recent research by Ipsos-Reid's shows that the
  Internet has eclipsed Radio in popularity among
  all wired Canadians, and actually exceed TV in
  the 18-34 demographic.
• Online advertising represents 4 of the total
  advertising dollars.

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Still Only a Small Piece of the Pie (but growing)
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Search Advertising

• This primarily represents the money spent on pay
  per click search engine advertising
• Based on keyword bidding

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Natural Results
Paid Results
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Banner Ads

• Nearly every web site that incorporates
  third-party advertising as part of their revenue
  model displays banner ads
• This is particularly true of consumer portal
  sites like Yahoo!, mytelus.com, msn.com etc. and
  community sites
• Clicking on a banner ad usually takes you
  directly to another web site

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Banner Ads come in all shapes and sizes
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Paying for Banner Ad Campaigns

• Normal click rates for banner ads are approximate
  1/2 of 1 (.62 in Q4 2003).
• Banner ad campaigns that generate click rates
  above 1 are considered to be highly successful.
• The cost of banner advertising is dependent on
  several factors, including
• Size of the banner ads
• Size of the campaign budget (rates decrease with
  larger budgets)
• Criteria for targeting the banner ads (the more
  effort that goes into targeting a banner ad, such
  as tying a banner ad to a keyword or phrase, the
  higher the cost)
• Popularity of the site(s) where the banner ad is
  to be placed.

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Banners Just Like Print Ads

• Interactive advertisers originally thought they
  could command a premium for interactivity, but
  the premium was set too high
• The impact of banner ads is more like traditional
  media
• Improved awareness, branding, etc.
• The expectation of immediate sales has been
  adjusted to also value the view through rate
  some action will be taken within a certain period
  of time after the ad has been viewed (e.g. 30
  days), but not immediately

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Sponsorship An Alternative to Banner Ads
Sponsorship Links
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Banner ads versus sponsorships
Banner ads small rectangles that appear on the
top, bottom, and sides of the content on a
variety of web sites.
versus
Sponsorships long-term promotional agreements
with a few sites.
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Sponsorship Opportunities

• Targeted content - Specific areas within your
  site that appeal to special interests
• E-mail
• Contests/surveys
• Webinars
• Subscriptions - Economist.com has offered
  sponsored subscriptions (Day Pass) which they
  sell as a lead generation tool for advertisers
• Blogs
• Streaming video

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Pop-Ups and Pop-Unders

• Pop-Up ads are windows that pop-up after you
  click on a hyperlink to go to another web page.
• Pop-Ups appear on top of other browser windows
• Pop-under ads are served "behind" all open
  browser windows
• Pop-Up ads can be annoying, because they
  represent "in your face" advertising.

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Pop-Ups and Unders

• Costs are at least twice those of banner ads
• Pop-up ads originated with adult-content Web
  sites, but have become prevalent at mainstream
  sites (including PCWorld.com).
• By July 2003, pop-up and pop-under ads hit their
  peak at 8.7 of all online ads but have declined
  steadily since

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Why did pop-ups become so pervasive?

• They are 13 times more effective at generating
  clicks than standard banners!!

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Beware Anti Pop-Up Software

• About 20 of surfers use pop-up blocker software
  (some advertisers think this is as high as 80)
• Available as a standard feature in IE, Firefox,
  Safari, etc.
• Mozilla's Firefox actually enables its users to
  block all of a Web page's display advertising by
  installing an extension for the browser.
• Firefox represents about 7 of the browser
  market though it's surpassed Netscape.
  (Microsoft's Internet Explorer still has roughly
  84 market penetration.)
• Google and Yahoo toolbars also offer this feature

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Rich Media

• The next wave in advertising?
• As people have broadband connections the usage
  and effectiveness of rich media will increase for
  branding purposes and "indirect response"
  advertising
• Some of the many forms
• Interstitials
• Banners
• Floating
• Full Screen
• http//www.webqem.com/portfolio/index.cfm?section
  search_results

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Rich Media

• More effective than traditional ads (pop-ups or
  banners)
• 5 times the click through rate
• Twice the post impression conversion
• Big improvements in brand awareness
• Better latent impact
• Drawbacks
• Higher production costs
• Can be annoying for dial-up or high-speed lite
  users

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Rich Media
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Mobile Advertising

• Current examples
• Mobile advertising revenues are expected to
  capture 2 of online advertising spend
• Over the next few years 88 of all handsets sold
  globally to be video-enabled
• Microsoft and others like Thumbdance offer mobile
  content channels
• Lighteningcast launched a mobile video
  advertising solution that allows mobile providers
  to insert ads into both real-time broadcast and
  on-demand video content.

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Ad Pricing Models
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Internet Advertising Agencies

• To manage a banner ad campaign, companies
  normally outsource to advertising agencies such
  as Doubleclick or 2/47 Media.
• Internet advertising agencies have advertising
  partners -- web sites where they place banner
  ads. 

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Metrics Used by Advertisers to Evaluate Online
Advertising Campaigns Effectiveness
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Advertisers Too Heavily Focused on Quantitative
Metrics

• Advertisers continue to focus heavily on a few
  quantitative results such as cost per click and
  cost per customer
• Some metrics have been ignored, such as such as
  Customer Lifetime Value and Cost per Shift in
  brand perception.
• Tracking immediate response, extended response,
  cross-channel response, and brand impact before
  calculating ROI is essential.

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Integrated Marketing Communications (IMC)

• Integrated Marketing Communications (IMC)
  postulates that a variety of communication
  disciplines must work together to ensure maximum
  clarity, consistency and communication impact.
• Communication disciplines include advertising,
  computer-mediated communication, direct
  marketing, sales promotion, and public relations.

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IMC (continued)

• Integration of the message allows the development
  of a unique and strong brand image.
• IMC Promotion (in the 4 Ps)
• Examples URL Everywhere (prints ads, direct mail
  brochures, letterhead, Email, business cards,
  schwag, etc.)

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IMC on Super Bowl Sunday

• Super Bowl Ads
• Go Daddy.com used URL, blog and controversy to
  create buzz for an ad pulled mid game in 2005
• Heres this years ad
• Ability to view the ads over again on website (at
  a fraction of the 2.5 million cost)
• AOL conducted an online poll for the best Super
  Bowl ad

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Top Gaining Super Bowls Advertiser Web Sites
(2005)
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The Telus IMC Example

• Telus, the dominant local phone company,
  practices IMC with common elements
• Simple messages in plain language
• Animals/nature themes
• Vibrant colours on a white background
• Music!
• Multiple media TV, Radio, Billboards, DM, Web,
  Email, Telemarketing, Print, Coffee Sleeves, POP
  Display Ads

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Telus (continued)

• Business lines use different themes for their
  campaigns in each quarter
• Benefits to Telus
• Cost savings simple creative re-used in
  different mediums for each campaign lowers costs
• Consistent, simple message reinforced by
  different mediums

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Telus (continued)

• IMC challenges
• Coordinating the work and schedules of multiple
  agencies or selecting the lead agency for a
  campaign
• Forcing agencies to use creative content that may
  not be theirs

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IMC Makes Measurement Difficult

• Measuring the effectiveness of one media over
  another is hard when practicing Integrated
  Marketing Communications (IMC)
• Post-campaign research might help, but it is
  expensive and probably not accurate (which medium
  really triggered a response or sale?)
• Landing pages are often used
• Only tracks immediate response for click through
• Most people dont remember the complex url

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View Through versusClick Through
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Behavioral Targeting
Offering ads based on contextual or behavioral
factors

• The content of the site
• Behavioral variables
• Sites you have visited
• Searches performed
• Content viewed
• Products have you purchased
• Client site visits/conversions
• Email/newsletter list membership
• User interest category

• Demographic/psychographic variables
• Geography
• Day part/day of week
• Gender
• At work/at home
• Technical variables
• Connection speed
• Browser/OS
• ISP/domain

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3 Types

• Single site
• Provide ads based on what content you have seen
  or your browsing and purchasing behavior on a
  given site
• E.g Snapple Meal Replacement and iVillage

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3 Types

• Ad Networks
• Tracking behavior across sites using ad network
  using 3rd party cookies
• Advertising.com, 24/7 Real Media, Drive
  Performance Marketing
• Desktop based
• Adware and Spyware

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Adware / Spyware

• Adware programs bundled with other downloaded
  software that monitor consumers' Web browsing and
  serve them ads based on their online habits (e.g.
  toolbars, freeware)
• Spyware is Adware that tracks a user's
  personal information and passes it on to third
  parties, without the user's authorization or
  knowledge.
• Huge privacy concerns and outcry
• Limited appeal
• Works for consumer-products where people are
  willing to give up personal data in exchange for
  something of value (i.e. music downloads)

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Next Class

• Lab Assignment 1 Due (Word doc is on WebCT in
  Lectures section)
• Personalization and Permission Marketing
• In-Class Permission Marketing Exercise
• Group Project Working Time