Advertisement in Electronic Commerce

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Advertisement in Electronic Commerce
KAIST EC 2002 Fall Jae Kyu Lee KAIST
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Learning Objectives

• Describe the objectives of Web advertisement, its
  types and characteristics
• Describe the major Web advertisement methods
• and strategies
• Describe Web advertisement implementation issues

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Web Advertising for Interactive Marketing
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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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Figure 5-1Adoption Curves for Various Media
Source Morgan Stanley Technology Research.
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Internet Advertising Terminology
1. Page an HTML document that may contain text,
images, and other online elements, such as Java
applets and multimedia files. 2. Visit a
sequence of requests made by one user in one
visit to the site. 3. Ad views (also page views
or impressions) the number of times users call
up a page with a banner during a specific time
(e.g., ad views per day) 4. Hit number of
files in a Web page
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Internet Advertising Terminology

• 5. CPM (cost-per-thousand impressions) 10100
• 6. Banner a graphic display on a Web page used
  for advertisement
• 7. Clicks (or ad clicks) every time a visitor
  clicks on an advertising banner to access the
  advertisers Web site
• 8. Click ratio(Click-Through-Rate) ratio
  indicating the success of an advertising banner
  in attracting visitors to click on the ad. 23
• 9. Effective frequency the number of times an
  individual is exposed to a particular advertising
  message in a given period of time.
• 10. Reach the number of people or households
  exposed to an ad at least once over a specified
  period of time.

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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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Push Technology

• Pre-specification profile, selection of
  appropriate content, and download selection
• 4 types of push technology
• Self-service delivery gives Web surfers the
  tools to download pages for later viewing.
• Aggregated delivery provides users with a wide
  variety of content and advertising choices
  packaged in a single offering
• Mediated delivery lets internet 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

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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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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