1. 1 Chapter 4 Advertisement in Electronic Commerce FEB: E-Commerce (EBS 2053) Lecturer: Puan Asleena Helmi (13/07/01)

2. 2 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

3. 3 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 Learning Objectives (cont.)

4. 4 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

5. 5 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

6. 6  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 Web Advertising (cont.) Why Internet Advertisement?

7. 7 Internet Advertising Terminology y Effective Frequency y Hit y Impressions y Reach y Visit Web Advertising (cont.) Ad views Banner Clicks (or ad clicks) Click Ratio Cookie CPM

8. 8 Interactive Marketing Web Advertising (cont.) Consumer can click with his/her mouse on an ad for more information or send an e-mail to ask a question Volume sales Customer data Customer relationships Passive Active Food, personal-care products, beer, autos Credit cards, travel, autos Upscale apparel, travel, financial services, autos High volume Targeted goods Targeted individuals Madison Ave. Postal distribution centers Cyberspace Television, magazines Mailing lists Online services Storyboards Databases Servers, onscreen navigators, the Web Mass Marketing Direct Marketing Interactive Marketing Best outcome Consumer behavior Leading products Market Nerve center Preferred media vehicle Preferred technology Worst outcome Channel surfingRecycling binsLogoff

9. 9 Internet is the fastest growing medium in history Web Advertising (cont.) Adoption Curves for Various Media - The Web Is Ramping Fast

10. Targeted Advertisement (one-to-one) Web Advertising (cont.) 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 10 © Prentice Hall, 2000

11. 11 Pros of Internet Advertisement Web Advertising (cont.) 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

12. 12 ¦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 Web Advertising (cont.) Pros of Internet Advertisement

13. 13 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

14. 14 1) Banner Exchanges –Swapping is a problem : a match is frequently not possible –Banner exchange organizations 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. Advertising Methods (cont.)

15. 15 2) Paid Advertising and Ad Agencies –Advantage of using banners 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 Advertising Methods (cont.)

16. 16 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 Advertising Methods (cont.)

17. 17 5) E-mail –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 Advertising Methods (cont.)

18. 18 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 Advertising Methods (cont.)

19. 19 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:

20. 20 Internet-based Ad Design: Important Factors Advertisement Strategies (cont.) 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.

21. 21 «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. Advertisement Strategies (cont.) Internet-base Ad Design: Important Factors

22. 22 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 Advertisement Strategies (cont.)

23. 23 Active Push Strategy Advertisement Strategies (cont.) 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)

24. 24 Ad as a Commodity Advertisement Strategies (cont.) 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

25. 25 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

26. 26 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.comwww.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. www.lucent.com

27. 27  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.www.cybergold.comwww.goldmine.com  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.http://webstakes.com  Free PCs will be given soon in exchange for obligation to read ads. Online Events, Promotions and Attractions (cont.)

28. 28 PBenefit : 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 PPre-specification profile, selection of appropriate content, and download selection Push Technology

29. 29 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

30. 30 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 Push Technology (cont.)

31. 31 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

32. Economics and Effectiveness of Advertisement 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. 32 © Prentice Hall, 2000 Payments are based on :

33. 33 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.

34. 34 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

35. 35 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.

36. 36 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 Special Advertisement Topics (cont.)

37. 37 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.

38. 38 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.