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

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Chapter 5(with modifications)J.Molka-DanielsenA
dvertisement in Electronic Commerce
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Learning Objectives

• Web Advertisement
• methods
• Strategies
• Promotion technologies
• Economic issues (who pays, what benefits)
• Implementation issues, catalogs, email

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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

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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)

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Web Advertisement Terms

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

• Effective frequency
• Hit
• Impressions
• Reach
• Visit

• Ad views
• Banner
• Click (ad click)
• Click ratio
• Cookie
• CPM

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Visits and Page Views

• Judith Molka-Danielsen -- Site Summary 02.02.02
• Visits
• Total ........................ 3,664
• Average per Day .................. 9
• Average Visit Length .......... 232
• This Week ...................... 125
• Page Views
• Total ............... 5,751
• Average per Day ................. 14
• Average per Visit .............. 1.6
• This Week ...................... 195

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Free Pay tools for advertisement
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Visitors by IP address
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Site Tracking by Timezone
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Visitors by Operating System


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Referrals
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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

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Why Web Advertisement (cont.)
Why Internet Advertisement?

• 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

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Figure 5-1Adoption Curves for Various Media
Source Morgan Stanley Technology Research.
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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
  browsereditor 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).

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Web Advertising (cont.)
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Targeted Ads (cont.)

• Targeted Advertisement (one-to-one)
• The DoubleClick (DC) Approach3M /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)

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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)

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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

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Evaluate the Ad Methods

• Banners--banners are everywhere
• Keyword banners Random banners

• Banner Limitations
• High cost
• Declining click ratio viewers may think its
  annoying
• Size of banners is too small (not noticed)

• Banner Benefits
• Can be Customized
• Use push force advertising
• Direct link to advertiser (shoppers dont have to
  search)
• Multi media capabilities

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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)
• Use the credit to advertise on others sites (21)

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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

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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

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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.
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Cookies after one 30 sec. visit
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Evaluate the Ad Methods (other opportunities.)

• Mobile phones
• Interactive one-to-one ads
• Location, situation, weather-related ads
• Splash Screen (better effects)
• Capture the users 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

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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

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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

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Advertisement Strategies

• Tips for Internet-based Ad Design
• Visually appealing
• Targeted to specific groups
• Emphasize brands and a firms image
• Part of an overall marketing strategy
• Seamlessly linked with the ordering process

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Advertisement Strategies (cont.)

• Internet-based ad design important factors
• Page-loading speed
• Graphics and tablessimple, 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

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Advertisement Strategies (cont.)

• Internet-based Ad Design Important Factors
  (cont.)
• Navigation efficiency and compatibility
• Linkswell-labeled, accurate, meaningful
• Sitecompatible 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 purchasesdelivery
  information, return policy, etc.
• Confirmation page after a purchase

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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 generationuse agents, cookies,
  questionnaires

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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

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Eudora E-mail on covering the add
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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

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Advertisement Strategies (cont.)

• Viral marketingword-of-mouth over the Internet
• Forwarded e-mail messages from sites
• Advocacy marketinghotmail.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

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Comparison Sites as medium for advertisementCust
omer learns about alternative products and where
to purchase the least cost place
Source Korean Engine (no longer in business).
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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

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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

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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.)

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Effectiveness and Pricing of Advertisement
Methods for measuring advertisement
effectiveness, conducting cost benefit analyses,
pricing ads

• 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

• 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

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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

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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

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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

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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

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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

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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