Transcript Chapter 7

E-commerce
business. technology. society.
Sixth Edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2010 Pearson Education, Inc.
Chapter 7
E-commerce Marketing
Communications
Copyright © 2009
2010 Pearson
Pearson Education,
Education, Inc.
Inc.
Slide 7-2
Video Ads Cure Banner Blindness:
String Master
Class Discussion




What advantages do video ads have over traditional
banner ads?
Where do sites such as YouTube fit in to a marketing
strategy featuring video ads?
What are some of the challenges and risks of placing
video ads on the Web?
Do you think Internet users will ever develop
“blindness” towards video ads as well?
Copyright © 2010 Pearson Education, Inc.
Slide 7-3
Marketing Communications

Online marketing communications:
 Methods used by online firms to communicate with
consumer and create strong brand expectations

Promotional sales communications:
 Suggest consumer “buy now” and make offers to
encourage immediate purchase

Branding communications:
 Focus on extolling differentiable benefits of consuming
product or service
Copyright © 2010 Pearson Education, Inc.
Slide 7-4
Online Advertising
$24.5 billion in 2009
 15% of all advertising by 2013
 Advantages:

 Internet is where audience is moving
 Ad targeting
 Greater opportunities for interactivity

Disadvantages:
 Cost versus benefit
 How to adequately measure results
 Supply of good venues to display ads
Copyright © 2010 Pearson Education, Inc.
Slide 7-5
Online Advertising from 2002–2013
Figure 7.1, Page 430
Copyright © 2010 Pearson Education, Inc.
SOURCES: Based on data from eMarketer, 2009a.
Slide 7-6
Forms of Online Advertisements

Display ads

Rich media

Video ads

Search engine advertising

In-game ads

Social network, blog, and game advertising

Sponsorships

Referrals (affiliate relationship marketing)

E-mail marketing

Online catalogs
Copyright © 2010 Pearson Education, Inc.
Slide 7-7
Display Ads

Banner ads
 Rectangular box linking to advertiser’s Web site
 IAB guidelines


E.g., full banner is 468 x 60 pixels, 13K
Pop-up ads
 Appear without user calling for them
 Provoke negative consumer sentiment
 Twice as effective as normal banner ads
 Pop-under ads: open beneath browser window
Copyright © 2010 Pearson Education, Inc.
Slide 7-8
Rich Media Ads

Use Flash, DHTML, Java, JavaScript

About 7% of all online advertising expenditures

Tend to be more about branding

Boost brand awareness by 10%

IAB standards limit length
Interstitials
 Superstitials

Copyright © 2010 Pearson Education, Inc.
Slide 7-9
Video Ads




Fastest growing form of online advertisement
IAB standards

Linear video ad

Non-linear video ad

In-banner video ad

In-text video ad
Formats: pre-roll, mid-roll, post-roll
Ad placement

Video advertising networks

Advertising exchanges
Copyright © 2010 Pearson Education, Inc.
Slide 7-10
Search Engine Advertising
Almost 50% of online ad spending in 2009
 Types:

 Paid inclusion
or rank
 Inclusion in search results
 Sponsored link areas
 Keyword advertising
 E.g., Google AdWords
 Network keyword advertising (context
advertising)
 E.g., Google AdSense
Copyright © 2010 Pearson Education, Inc.
Slide 7-11
Search Engine Advertising
 Issues:
 Appropriate
disclosure of paid inclusion and
placement practices
 Search engine click fraud
 Ad nonsense
Copyright © 2010 Pearson Education, Inc.
Slide 7-12
Sponsorships and Referrals
 Sponsorships
 Paid effort to tie advertiser’s name to particular
information, event, venue in way that reinforces brand
in positive yet not overtly commercial manner

Referrals
 Affiliate relationship marketing
 Permits firm to put logo or banner ad on another firm’s
Web site from which users of that site can click
through to affiliate’s site
Copyright © 2010 Pearson Education, Inc.
Slide 7-13
E-mail Marketing and the
Spam Explosion

Direct e-mail marketing
 Low cost method
 Primary cost is purchasing addresses

Spam: unsolicited commercial e-mail
 80%–90% of all e-mail purportedly is spam
 Efforts to control spam:
• Technology (filtering software)
• Government regulation (CAN-SPAM and state laws)
• Voluntary self-regulation by industries
 DMA
Copyright © 2010 Pearson Education, Inc.
Slide 7-14
Percentage of E-mail That Is Spam
Figure 7.6, Page 444
Copyright © 2010 Pearson Education, Inc.
SOURCE: MessageLabs.com, 2009.
Slide 7-15
Spam Categories
Figure 7.7, Page 445
Copyright © 2010 Pearson Education, Inc.
SOURCE: Symantec, 2009.
Slide 7-16
Online Catalogs

Equivalent of paper-based catalogs

Graphics-intense; use increasing with
increase in broadband use

Two types:

1.
Full-page spreads, e.g., Landsend.com
2.
Grid displays, e.g., Amazon
In general, online and offline catalogs
complement each other
Copyright © 2010 Pearson Education, Inc.
Slide 7-17
Social Marketing

“Many-to-many” model

Uses digitally enabled networks to spread ads
 Blog advertising

Online ads related to content of blogs
 Social network advertising

Ads on MySpace, Facebook, YouTube, etc.
 Game advertising


Downloadable “advergames”
Placing brand-name products within games
Copyright © 2010 Pearson Education, Inc.
Slide 7-18
Insight on Society
Marketing to Children of the Web in the
Age of Social Networks
Class Discussion




Why is online marketing to children a controversial
practice?
What is the Children’s Online Privacy Protection Act
(COPPA) and how does it protect the privacy of
children?
How do companies verify the age of online users?
Should companies be allowed to target marketing
efforts to children under the age of 13?
Copyright © 2010 Pearson Education, Inc.
Slide 7-19
Behavioral Targeting
Web as “Database of Intentions”
 Behavioral targeting

 Combines real-time information on visitors online
behavior with offline identity, consumptive information
 Data analyzed to develop profiles
 Ads delivered based on profile
 Hundreds of versions of ad for different profile groups
One of fastest growing online marketing
techniques
 Raises privacy concerns

Copyright © 2010 Pearson Education, Inc.
Slide 7-20
Mixing Offline and Online Marketing
Communications

Most successful marketing campaigns
incorporate both online and offline tactics

Offline marketing
 Drive traffic to Web sites
 Increase awareness and build brand equity

Consumer behavior increasingly multichannel
 60% of consumers research online before buying offline
Copyright © 2010 Pearson Education, Inc.
Slide 7-21
Insight on Business
Are the Very Rich Different
from You and Me?
Class Discussion

Why have online luxury retailers had a difficult time
translating their brands and the look and feel of
luxury shops into Web sites?

Why did Neiman Marcus’ first effort fail?

Why did Tiffany’s first effort fail?

Visit the Armani Web site. What do you find there?
Copyright © 2010 Pearson Education, Inc.
Slide 7-22
Online Marketing Metrics: Lexicon

Measuring audience size or market share
 Impressions
 Click-through rate (CTR)
 View-through rate (VTR)
 Hits
 Page views
 Stickiness (duration)
 Unique visitors
 Loyalty
 Reach
 Recency
Copyright © 2010 Pearson Education, Inc.
Slide 7-23
Online Marketing Metrics

Conversion of
visitor to customer
 Acquisition rate
 Conversion rate
 Browse-to-buy-ratio
 View-to-cart ratio
 Cart conversion rate
 Checkout conversion

E-mail metrics
 Open rate
 Delivery rate
 Click-through rate
(e-mail)
 Bounce-back rate
rate
 Abandonment rate
 Retention rate
 Attrition rate
Copyright © 2010 Pearson Education, Inc.
Slide 7-24
An Online Consumer Purchasing Model
Figure 7.9, Page 465
Copyright © 2010 Pearson Education, Inc.
Slide 7-25
How Well Does Online Advertising
Work?

Ultimately measured by ROI on ad campaign

Highest click-through rates: search engine ads,
permission e-mail campaigns

Rich media, video interaction rates high

Online channels compare favorably with traditional
channels

Most powerful marketing campaigns use multiple
channels, including online, catalog, TV, radio,
newspapers, stores
Copyright © 2010 Pearson Education, Inc.
Slide 7-26
Comparative Returns on Investment
Figure 7.10, Page 467
Copyright © 2010 Pearson Education, Inc.
SOURCE: Industry sources; author estimates.
Slide 7-27
The Costs of Online Advertising

Pricing models





Online revenues only


Sales can be directly correlated
Both online/offline revenues


Barter
Cost per thousand (CPM)
Cost per click (CPC)
Cost per action (CPA)
Offline purchases cannot always be directly related to online
campaign
In general, online marketing more expensive on CPM
basis, but more effective
Copyright © 2010 Pearson Education, Inc.
Slide 7-28
Web Site Activity Analysis
Figure 7.11, Page 472
Copyright © 2010 Pearson Education, Inc.
Slide 7-29
Insight on Technology
It’s 10 P.M. Do You Know Who Is
on Your Web Site?
Class Discussion
What are some of the services offered by
Omniture’s SiteCatalyst?
 Why would you as a Webmaster be interested
in these services?
 Why is site analysis and customer tracking so
important to online marketing?
 How did HP use SiteCatalyst?

Copyright © 2010 Pearson Education, Inc.
Slide 7-30
The Web Site as a Marketing
Communications Tool

Web site as extended online advertisement

Domain name:
 First communication e-commerce site has with
prospective customer

Search engine optimization:
 Register with as many search engines as possible
 Ensure keywords used in site description match keywords
likely to be used as search terms by user
 Link site to as many other sites as possible
 Get professional help
Copyright © 2010 Pearson Education, Inc.
Slide 7-31
Web Site Functionality

Main factors in effectiveness of interface
 Utility
 Ease of use

Top factors in credibility of Web sites
 Design look
 Information design/structure
 Information focus

Organization is important for first-time users,
but declines in importance
 Information content becomes major factor attracting
further visits
Copyright © 2010 Pearson Education, Inc.
Slide 7-32
Factors in the
Credibility of
Web Sites
Figure 7.12, Page 477
SOURCE: Based on data from Fogg, et al, 2003.
Copyright © 2010 Pearson Education, Inc.
Slide 7-33
Table 7.9, Page 478
Copyright © 2010 Pearson Education, Inc.
Slide 7-34
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Copyright © 2010 Pearson Education, Inc.
Slide 7-35