Chapter 5 Advertisement in Electronic Commerce

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Chapter 5Advertisement in Electronic Commerce
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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
• Describe various Web advertisement strategies

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Learning Objectives (cont.)

• Describe various types of promotions on the Web
• Discuss the benefits of push technology and
  intelligent agents
• Understand the major economic issues related to
  Web advertisement

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Learning Objectives (cont.)

• Describe the issues involved in measuring the
  success of Web advertisement as it relates to
  different pricing methods
• Compare paper and electronic catalogs and
  describe customized catalogs
• Describe Web advertisement implementation issues

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Opening Case Advertisement in the Digital
Economy

• Theknot.com and Wedding411.com
• Information about planning weddings
• Assistance selecting vendors
• Site includes promotions and ads from vendors
• Promosinmotion.com
• VW bugs painted with Web site logos
• Dislplayed online and offline
• Topbulb.com
• Online catalog for light bulbs
• Also displays the off-line business

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Opening Case Advertisement in the Digital
Economy

• Toyota
• Promotes its SUV with banners on altavista.com
• Kelly Blue Book (kbb.com) links to Toyota site
• IBM
• Uses banners linked to college campuses to
  promote recruitment
• Club Cyberblue became the scheme for
  restructuring their traditional plan

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Web Advertisement

• 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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Web Advertisement (cont.)

• Why Internet Advertisement?
• 3/4 of PC users gave up some television time
• Well educated, high-income Internet users are a
  desired target for advertisers
• Ads can be updated any time with a minimal cost
  making them timely and very accurate
• Ads reach very large number of potential buyers
  all over the world
• Online ads are much cheaper in comparison to
  television, newspaper, or radio ads

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Web Advertisement (cont.)
Why Internet Advertisement?

• Web ads effectively use text, audio, graphics,
  and animation
• Ads easily combine games, entertainment, and
  promotions
• Web TV and Internet radio are attracting more
  people
• Web ads can be interactive and targeted
• The use of the Internet is growing very rapidly

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Web Advertisement (cont.)

• Internet vs. Traditional methods
• Combining advertising media
• Internet is the fastest growing medium in history

Growing Fast
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Figure 5-1Adoption Curves for Various Media
Source Morgan Stanley Technology Research.
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Web Advertisement (cont.)

• Objectives and growth of Internet
  advertisementpersuade customers to buy a certain
  product or service
• Targeted Advertisement (one-to-one)
• Customize ads to fit individuals
• Can be expensive as well as rewarding
• Gain cost effectiveness by targeting groups
  (based on segmentation)

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Web Advertisement (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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Web Advertisement (cont.)

• Targeted Advertisement (one-to-one)
• The Double Click (DC) Approach for 3M Corp.
  (cont.)
• 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
• DoubleClick shares revenue with cooperating
  partners

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Web Advertisement (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

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Web Advertisement (cont.)

• Pros of Internet Advertisement (cont.)
• 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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Advertisement Methods

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

• Limitations
• High cost
• Declining click ratioviewers have become immune
  to banners
• Size of banners is too small

• Benefits
• Customized to the target audience or one-to-one
  ads
• Utilize force advertising marketing strategy
• Direct link to advertiser
• Multi media capabilities

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Advertisement Methods (cont.)

• Banner swapping
• Direct link between one site to the other site
• Ad space bartering
• Banner exchanges
• Firm submits a banner
• Receives credit when shows others banners
• Can purchase additional display credits
• Specify what type of site where the banner is
  displayed
• Use the credit to advertise on others sites

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Advertisement Methods (cont.)

• Banner exchanges (cont.)
• Credit ratio of approximately 21
• Example Link Exchange (bcentral.com)
• Helps design banners
• Provides membership in newsgroups
• Delivers HTML tutorials
• Runs contests
• Is a banner-ad clearing house for more than
  200,000 small Web sites
• Monitors the content of the ads of all its members

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Advertisement 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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Advertisement Methods (cont.)

• E-mail
• Several million users may be reached directly
• Purchase e-mail addresses
• Send the company information (low cost)
• A wide variety of audiences (customer database)
• Target a group of people that you know something
  about
• Problems
• Junk mail
• Spamming

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Advertisement Methods (cont.)

• Mobile phones
• Interactive one-to-one ads
• Location, situation, weather-related ads
• Splash Screen
• Capture the users attention
• Promotion or lead-in
• Major advantage create innovative multimedia
• Spot leasing
• Permanent space on popular portal or Web page
• Ads may be small and expensive

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Advertisement Methods (cont.)

• 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 can be complicated

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Advertisement Methods (cont.)

• Chat Rooms
• Virtual meeting ground
• Free addition to a business site
• Allows advertisers to cycle through messages and
  target the chatter again and again
• Advertising can become more thematic
• More effective than banners
• Used for one-to-one connections

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Advertisement Strategies

• Internet-based Ad Design
• Visually appealing
• Targeted to specific groups or to individual
  consumers
• 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
• Effective site provides helpful and attractive
  contents and display
• Effective and economical way to advertise,
  unidentified potential customers worldwide
• Advertising Worldnon-commercial site that guides
  the process of finding customers requests
• Yahooportal search engine site regarded as
  effective aid for advertisement

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Advertisement Strategies (cont.)

• Push (Active) Strategy
• Sending e-mails to relevant people
• Obtaining mailing listprocess of identifying
  target customers
• Mailing list generationuses agent technology,
  cookies, and questionnaires (filled out by
  customer)

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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
• Just-in-time strategy

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Advertisement Strategies (cont.)

• Ads as a commodity
• CyberGold (MyPoints.com)
• Direct payment made by the advertisers for ads
  viewed
• Consumers fill out questionnaires
• 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
• Easily forwarded e-mail messages from sites
• Forward sites by filling out e-mail addresses
• 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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Implementing the Strategies

• Customized ad strategy
• Filtering the irrelevant information by providing
  customized ads
• One-to-one advertisement
• Customized ads in Webcasting
• Personalized news and information by category
• Users select specific categories they want to
  receive

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Implementing the Strategies (cont.)

• Comparisons as medium for advertisement
• Customer compares alternative products and
  services
• Finds the least expensive place to purchase the
  item
• Uses the comparison site that lists vendors and
  their prices for the product

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Figure 5-3Illustrative Screen for Product
Comparison
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
• Netzero and others offer free Internet access in
  exchange for viewing ads

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Online Events, Promotions,and Attractions (cont.)

• Enticing Web surfers to read Internet ads
• Egghead uses real people to help you
• Lucent uses phone interviews that lead to
  material and ads sent to your computer
• Retailers provide special offers as shoppers
  check out
• Riddler provides opportunity to play games for
  prizes

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Online Events, Promotions,and Attractions (cont.)

• Enticing Web surfers to read Internet ads
• Netstakes runs sweepstakes (no skills necessary)
• Register only once to win prizes randomly from
  different categories
• Sends traffic to several channels that have
  multiple sponsors
• Runs online ads both on the Web and in several
  hundred thousand e-mail lists
• Offer free samples (freesamples.com)
• Use company logo as cursor

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Push Technology

• Benefits
• Requested information they delivered
  automatically to their desktop via Web technology
  and the Internet
• Decreases the number of hours used to search the
  Web

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Push Technology (cont.)

• Pointcastingmass customization of information
• Pre-specification profile
• Select appropriate content
• Download selection

• 4 types of push technology
• Self-service delivery
• Aggregated delivery
• Mediated delivery
• Direct delivery

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Push Technology (cont.)

• Push on the Intranet
• 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

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Intelligent Agents

• Product Brokering
• Knows the customers profile
• Tailors ads to the customers, or asks them if
  they would like to receive product information
• Alerts users to new releases
• Recommends products based on
• Past selections
• Constraints specified by the buyers

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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

• Evolution of online catalogs
• Merchantsadvertise and promote
• Customerssource of information and price
  comparisons
• Consist of product database, directory and search
  capability and presentation function
• Replication of text in paper catalogs
• More dynamic, customized and integrated

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Online Catalogs (cont.)

• Classifications of catalogs
• Dynamics of information presentation
• Static catalogstextual description and static
  pictures
• Dynamic catalogsmotion pictures, graphics, sound
• Degree of customization
• 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

• Assembled specifically for
• A company
• An individual shopper
• Customization systems can
• Create branded, value-added capabilities
• Allows user to compose order
• May include individualized 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

• Make vs. buy
• Finding the most visited sites
• Company research
• Commitment to Web advertising and coordination
  with traditional advertisement

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Managerial Issues (cont.)

• Integrated marketing campaigns
• Ethical Issues
• Integrating advertisement with ordering and other
  business processes
• Content is critical