Copyright © 2010 Pearson Education, Inc. E-commerce Kenneth C. Laudon Carol Guercio Traver business. technology. society. Sixth Edition

Copyright © 2010 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Slide 7-2 Chapter 7 E-commerce Marketing Communications

Copyright © 2010 Pearson Education, Inc. 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? Slide 7-3

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-4

Copyright © 2010 Pearson Education, Inc. Online Advertising $24.5 billion in % 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 Slide 7-5

Copyright © 2010 Pearson Education, Inc. Online Advertising from 2002–2013 Figure 7.1, Page 430 Slide 7-6 SOURCES: Based on data from eMarketer, 2009a.

Copyright © 2010 Pearson Education, Inc. 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) marketing Online catalogs Slide 7-7

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-8

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-9

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-10

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-11

Copyright © 2010 Pearson Education, Inc. Search Engine Advertising Issues:  Appropriate disclosure of paid inclusion and placement practices  Search engine click fraud  Ad nonsense Slide 7-12

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-13

Copyright © 2010 Pearson Education, Inc. Marketing and the Spam Explosion Direct marketing  Low cost method  Primary cost is purchasing addresses Spam: unsolicited commercial  80%–90% of all purportedly is spam  Efforts to control spam: Technology (filtering software) Government regulation (CAN-SPAM and state laws) Voluntary self-regulation by industries  DMA Slide 7-14

Copyright © 2010 Pearson Education, Inc. Percentage of That Is Spam Slide 7-15 Figure 7.6, Page 444 SOURCE: MessageLabs.com, 2009.

Copyright © 2010 Pearson Education, Inc. Spam Categories Figure 7.7, Page 445 Slide 7-16 SOURCE: Symantec, 2009.

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-17

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-18

Copyright © 2010 Pearson Education, Inc. 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? Slide 7-19

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-20

Copyright © 2010 Pearson Education, Inc. 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 multi- channel  60% of consumers research online before buying offline Slide 7-21

Copyright © 2010 Pearson Education, Inc. 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? Slide 7-22

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-23

Copyright © 2010 Pearson Education, Inc. 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 rate  Abandonment rate  Retention rate  Attrition rate metrics  Open rate  Delivery rate  Click-through rate ( )  Bounce-back rate Slide 7-24

Copyright © 2010 Pearson Education, Inc. An Online Consumer Purchasing Model Figure 7.9, Page 465 Slide 7-25

Copyright © 2010 Pearson Education, Inc. How Well Does Online Advertising Work? Ultimately measured by ROI on ad campaign Highest click-through rates: search engine ads, permission 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 Slide 7-26

Copyright © 2010 Pearson Education, Inc. Comparative Returns on Investment Figure 7.10, Page 467 Slide 7-27 SOURCE: Industry sources; author estimates.

Copyright © 2010 Pearson Education, Inc. The Costs of Online Advertising Pricing models  Barter  Cost per thousand (CPM)  Cost per click (CPC)  Cost per action (CPA) Online revenues only  Sales can be directly correlated Both online/offline revenues  Offline purchases cannot always be directly related to online campaign In general, online marketing more expensive on CPM basis, but more effective Slide 7-28

Copyright © 2010 Pearson Education, Inc. Web Site Activity Analysis Figure 7.11, Page 472 Slide 7-29

Copyright © 2010 Pearson Education, Inc. 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? Slide 7-30

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-31

Copyright © 2010 Pearson Education, Inc. 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 Slide 7-32

Copyright © 2010 Pearson Education, Inc. Factors in the Credibility of Web Sites Figure 7.12, Page 477 Slide 7-33 SOURCE: Based on data from Fogg, et al, 2003.

Copyright © 2010 Pearson Education, Inc.Slide 7-34 Table 7.9, Page 478

Copyright © 2010 Pearson Education, Inc.Slide 7-35 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. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall