Transcript chapter4

FEB: E-Commerce (EBS 2053)
Chapter 4
Advertisement in
Electronic Commerce
Lecturer: Puan Asleena Helmi
(13/07/01)
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Learning Objectives
• Describe the objectives of Web advertisement, its types and
characteristics
• Describe the major advertisement methods used on the Web,
ranging from banners to chat rooms
• Describe various Web advertisement strategies
• Describe various types of promotions on the Web
• Discuss the benefits of push technology and intelligent agents
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Learning Objectives (cont.)
• Understand the major economic issues related to Web
advertisement
• Describe the issues involved in measuring the success of
Web advertisement as it relates to different ad pricing
methods
• Describe Web advertisement implementation issues
ranging from ad agencies to the use of intelligent agents
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Opening Vignette :
CD-Max Uses E-mail Lists to Advertise
• CD- Max Enterprises
A two-person business specializing in CD-ROM development
Operates a resource site for information delivery
Generated an e-mail list of site visitors
the list is also valuable to other advertisers
50 lists were created to fit different advertisers
outsourced the job of creating and maintaining the lists, and
selling them to potential advertisers, to NetCreation which
developed 275 lists from the names collected at CD-Max
the list sales “surpassed” the company’s expectations
selling e-mail lists has become a lucrative business
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Web Advertising
• Advertising is an attempt to disseminate
information in order to affect a buyer-seller
transaction
• Why Internet Advertisement?
– Three-quarters of PC users gave up some television
time
– Internet users are well educated with high-income,
which makes them a desired target for advertisers
– Ads can be updated any time with a minimal cost;
therefore they are timely and very accurate
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Web Advertising (cont.)
Why Internet Advertisement?
 Ads can reach very large numbers of potential
buyers all over the world
 Online ads are much cheaper in comparison to
television, newspaper, or radio ads. Such ads are
expensive since they are determined by space
occupied, how many days (times) they are shown,
and on how many national and local television
stations and newspapers they are posted.
 Web ads can be media rich, including voice and
video
 Web ads can be interactive and targeted
 The use of the Internet is growing very rapidly
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Web Advertising (cont.)
• Internet Advertising Terminology
Ad views
Banner
Clicks (or ad clicks)
Click Ratio
Cookie
CPM
 Effective Frequency
 Hit
 Impressions
 Reach
 Visit
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Web Advertising (cont.)
• Interactive Marketing
Consumer can click with his/her mouse on an ad for more
information or send an e-mail to ask a question
Mass Marketing Direct Marketing Interactive Marketing
Best outcome
Volume sales
Consumer behavior Passive
Leading products Food, personal-care
products, beer,
autos
Market
High volume
Customer data
Passive
Credit cards,
travel, autos
Customer relationships
Active
Upscale apparel, travel,
financial services, autos
Targeted goods
Postal distribution
centers
Mailing lists
Targeted individuals
Cyberspace
Servers, onscreen
navigators, the Web
Logoff
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Nerve center
Madison Ave.
Preferred
media vehicle
Television,
magazines
Preferred
technology
Worst outcome
Storyboards
Databases
Channel surfing
Recycling bins
Online services
Web Advertising (cont.)
• Internet is the fastest growing medium in history
Adoption Curves for Various Media - The Web Is Ramping Fast
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Web Advertising (cont.)
• Targeted Advertisement (one-to-one)
The Double Click (DC) Approach
3M Corp. wants to advertise its $10,000 multimedia
projectors
DC monitored people browsing the Web sites of
cooperating companies
then matches them against a database
then finds those people working for advertising agencies or
using Unix system (potential buyers)
then builds a dossier on 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
© Prentice Hall, 2000
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Web Advertising (cont.)
• Pros of Internet Advertisement
Internet advertisements are accessed on demand 24
hours a day, 365 days a year, and costs are the same
regardless of audience location
Accessed primarily because of interest in the content,
so market segmentation opportunity is large
Opportunity to create one-to-one direct marketing
relationship with the consumer
Multimedia will increasingly make Web sites more
attractive and compelling
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Web Advertising (cont.)
Pros of Internet Advertisement
Distribution costs are low (just technology cost),
so millions of consumers are reached at the same
cost as that of reaching one
Advertising and content can be updated,
supplemented, or changed at any time, and are
therefore always up-to-date
Ease of logical navigation — you click when and
where you want, and spend as much time as you
desire there
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Advertising Methods
• Banners
– Banners are everywhere
– Keyword banners
– Random banners
– Benefits
• be customized to the target audience
• be customized to one-to-one targeted advertisement
• utilize “force advertising” marketing strategy
• Banner Swapping
– Direct link between one’s site to the other site
– Ad space bartering
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Advertising Methods (cont.)
1) Banner Exchanges
– Swapping is a problem : a match is frequently not possible
– Banner exchange organizations
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a firm submits a banner
receives credit when shows others’ banners
can purchase additional display credits
specify what type of site the banner can be displayed on
use the credit to advertise on others’ sites
credit ratio of approximately 2:1
Example : Link Exchange offers help in banner design, provides
membership in newsgroups, delivers HTML tutorials, and even
runs contests. It acts as a banner-ad clearing house for more than
200,000 small Web sites. It also monitors the content of the ads of
all its members.
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Advertising Methods (cont.)
2) Paid Advertising and Ad Agencies
– Advantage of using banners
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ability to customize them to the target audience
ability to decide which market segments to focus on
be customized to one-to-one targeted advertisement
“forced advertising” marketing strategy is utilized
3) Splash Screen
– Capture the user’s attention
– Promotion or lead-in
– Major advantage : create innovative multimedia
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Advertising Methods (cont.)
4) URL (Universal Resource Locators)
– 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 ( tag giving a search engine specific
information) can be complicated
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Advertising Methods (cont.)
5) E-mail
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Several million users can be reached directly
Purchase e-mail addresses
Send the company information; low cost
A wide variety of audiences; customer database
Problem: Junk mail or spamming
Target a group of people that you know
something about
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Advertising Methods (cont.)
6) Chat Rooms
– Virtual meeting ground
– Can be added to a business site for free
– Allows advertisers to cycle through messages
and target the chatter again and again
– Advertising can become more thematic
– More effective than banners
– Used in one-to-one connection
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Advertisement Strategies
• Internet-base Ad Design
– Advertisements should be visually appealing
– Advertisements must be targeted to specific groups or to
individual consumers
– Advertisements must emphasize brands and a firm’s
image
– Advertisements must be part of an overall marketing
strategy
– Advertisements should be seamlessly linked with the
ordering process
– Designing Internet ads involve the following factors:
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Advertisement Strategies (cont.)
• Internet-based Ad Design: Important Factors
Page-Loading Speed
Graphics and tables should be simple and meaningful. They
need to match standard monitors.
Thumbnail (icons graphs) are useful.
Business Content
Clear and concise text is needed. A compelling page title
and header text is useful.
The amount of requested information for registration
should be minimal.
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Advertisement Strategies (cont.)
Internet-base Ad Design: Important Factors
Navigation Efficiency
• Well-labeled, accurate, meaningful links are a must.
Site must be compatible with browsers, software, etc.
Security and Privacy
• Security and privacy must be assured.
• Option for rejecting cookies is a must.
Marketing/Customer Focus
• Clear terms and conditions of the purchases, including
delivery information, return policy, etc. must be
provided.
• Confirmation page after a purchase, is needed.
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Advertisement Strategies (cont.)
• Passive Pull Strategy
Customer will visit a site if it provides helpful and attractive
contents and display
Effective and economical way to advertise, unidentified
potential customers worldwide
Advertising World is a non-commercial site that can guide the
process of finding the customer’s wish
Yahoo is a portal search engine site which can be regarded an
effective aid for advertisement
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Advertisement Strategies (cont.)
• Active Push Strategy
Sending e-mails to the relevant people
Obtaining the mailing list is the process of identifying
target customers
Mailing list generation is done in companies by using
agent technology and cookies as well as by filling out
questionnaires (by customers)
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Advertisement Strategies (cont.)
• Ad as a Commodity
CyberGold
exchange of direct payment made by the advertisers for
viewing ads
consumers fill out questionnaires
CyberGold distributes targeted banners
the reader clicks the banner to read it and, passing some
tests on its content, is paid for the effort
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Implementing the Strategies
• Customized Ad Strategy
Filtering the irrelevant information by providing customized
ads
One-to-One advertisement
Customized ads can be found in PointCast
personalized news and information by category
(Channel)
packaged by content providers, assembled by
PointCast, delivered on screen savers or at prearranged
times
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Online Events, Promotions and Attractions
• How to entice Web surfers to read Internet ads
There are dozens of innovative ideas; here are some examples :
Yoyodyne Inc. conducts give-away games, discounts, contests &
sweepstakes. Its entrants agree to read product information of
advertisers ranging from Major League Baseball to Sprint
communication.
Netzero and others offer free Internet access in exchange for
viewing ads.
www.egghead.com uses real people to help you. www.lucent.com
uses live people to talk to you over the phone and then “push”
material and ads to your computer.
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Online Events, Promotions and Attractions
(cont.)
 CyberGold (www.cybergold.com), Goldmine
(www.goldmine.com) and others connect you with advertisers
who pay you real money to read ads and explore the Web.
 Netstakes runs sweepstakes that requires no skills; in contrast
with contests. You register only once and can randomly win
prizes (see http://webstakes.com). Prizes are given away in
different categories. The site is divided into channels, each
has several sponsors. They pay Netstakes to send them
traffic. Netstakes runs online ads both on the Web and in
several hundred thousand e-mail lists that people requested to
be on.
 Free PCs will be given soon in exchange for obligation to
read ads.
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Push Technology
Benefit : instead of spending hours
searching the Web, people can have the
information they are interested in delivered
automatically to their desktop via Web
technology and the Internet
Pre-specification profile, selection of
appropriate content, and download selection
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Types of Push Technology
• 4 types of push technology
self-service delivery : provides the tools to download
pages for later viewing
mediated delivery: lets Net users control what
information they receive from participating marketers
and publishers by selecting from a menu of choices on
the mediators web site
direct delivery: the PC desktop interface pulls
information off the Net itself
aggregated delivery: acts like television networks in
that it provides users with a wide variety of content &
advertising choices packaged in a single offering
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Push Technology (cont.)
• Pointcasting
– Similar to mass customization
– Transmits the most relevant information directly to the user
• Push on the Intranet
– Companies use push technology to set up their own
channels to pointcast important internal information to
either their own employees (on intranets) and/or their
supply chain partners (on extranets)
• The Future of Push Technology
– Drawback : the bandwidth requirements are large
– Experts’ prediction : the technology will never fly
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Intelligent Agents
• Product Brokering
– Knows the customer’s profile
– Tailors an ad to the customers, or asks them if
they would like to receive product information
– Alerts the users to new releases, recommends
products based on past selections, or
constraints specified by the buyers
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Economics and Effectiveness of Advertisement
Payments are based on:
• Exposure Models:Cost-per-thousand impressions
(CPM),the cost of delivering an impression to 1,000
people
• Click Through: payment based on the number of times
a visitor actually clicks on it.
• Interactivity: Pricing based upon the amount the visitor
interacts with the target ad. E.g: the number of repeat
visits/ time spent viewing the ad.
© Prentice Hall, 2000
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Economics and Effectiveness of
Advertisement (Cont.)
• Actual Purchase: Web advertisers specify exactly what
the marketer would like the target ad to do.
• Other Methods:
• Many advertisers charge a fixed monthly fee, regardless
of traffic. Others use a hybrid approach, a combination
of the above.
• Let market determine prices via auctions. Publishers
post info about available space & buyers bid on it.
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Special Advertisement Topics
1) To Advertise or Not?
2) How Much to Advertise?: Need to understand what the Web is
and how it works; involves commitment from firms in terms
of manpower, time and financial resources to maintain a
web site.
3) Auditing and Analyzing Web Traffic: Audit is critical to validate
the number of ad views and hits claimed by the site; an
impartial & external analysis is recommended
4) Self Monitoring of Traffic: Several vendors sell software that
allow webmasters to monitor and implement advertisement
on their own web sites. E.g: NetGravity & NetIntellect
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Special Advertisement Topics (cont.)
5) Internet Standards: A cookie is the proposed standard in
web advertising. It is a mechanism that allows a web site
to record visitors comings and going usually without
knowledge or consent. Currently the Internet
Engineering Task Force (IETF) is reviewing the
utilization of cookies and make it more apparent to users.
6) Localization: the process of converting media products
developed in one country to a form culturally &
linguistically acceptable in countries outside the original
target market. E.g: Languages, dates, use of graphics &
icons, etc.
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Special Advertisement Topics (cont.)
• The Major Web Ad Players
– Advertising agencies and Web site
developers
– Finding market research providers
– Traffic measurement and analysis
companies
– Networks/rep firms
– Order processing and support
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Managerial Issues
• Make Vs. Buy (Ad agencies): Web advertisement is
a complex undertaking. Outsourcing should be
seriously considered.
• Finding the Most Visited Sites: Need to determine
where to advertise by checking the site’s traffic. Several
search engines portals such as Yahoo or Netscape
reports the traffic on popular web sites.
• Company Research: Currently most ad networks/
agencies provide little/ no control to the advertiser
regarding the execution of an ad campaign.
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Managerial Issues (Cont.)
• Commitment to Web Advertising: The successful
program requires input & vision from all department
and support from top management and it must also
coordinate with traditional ads.
• Ethical Issues: Issues such as spamming, selling of
mailing lists and customer information is subject to
legislation.
• Integration : Advertisement, Ordering, Other
The integration should be seamless.
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