Chapter 4: Advertisement in Electronic Commerce ppt

 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 m

Chapter 4 Advertisement in Electronic Commerce

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

 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

 Compare paper and electronic catalogs and

describe customized catalogs

 Describe Web advertisement implementation

issues ranging from ad agencies to the use of

intelligent agents

Learning Objectives (cont.)

 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

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

 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

 Why Internet Advertisement?

 Internet Advertising Terminology

 Interactive Marketing

 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 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

 Internet is the fastest growing medium in history

Adoption Curves for Various Media - The Web Is Ramping Fast

 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

Pros of Internet Advertisement

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

 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

 Pros of Internet Advertisement

be customized to the target audience

 be customized to one-to-one targeted advertisement

 utilize “force advertising” marketing strategy

 Direct link between one’s site to the other site

 Ad space bartering

 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.

 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

 Splash Screen

 Capture the user’s attention

 Promotion or lead-in

 Major advantage : create innovative multimedia

 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

 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

 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

Advertisement Strategies

 Internet-base Ad Design

 Advertisements should be visually appealing

 Advertisements must be targeted to specific groups or

 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.

 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.

 Internet-base Ad Design: Important Factors

 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

 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)

 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

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

Implementing the Strategies (cont.)

 Comparison Aid as Medium of Advertisement

Product Database

Mall Operator A

Product Database

Mall Operator B

Product Database

Mall Operator C

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

 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.

Online Events, Promotions and Attractions

(cont.)

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

content, and download selection

 Analogous to mass customization

 Transmits the most relevant information directly to the user

 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)

 Drawback : the bandwidth requirements are large

 Experts’ prediction : the technology will never fly

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

Economics and Effectiveness of

Online Catalogs

 To merchants, the objective of catalogs is

advertisement and promotion

 The purpose of catalogs to customers is

providing a source 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

1) Dynamics of information presentation

 Static Catalogs: The catalog is presented in textual

description and static pictures.

 Dynamic Catalogs: The catalog is presented in motion

pictures and graphics and possibly sound.

2) Customization

 Ready-made Catalogs: Merchants offer the same

catalog to any customer.

 Customized Catalogs: Deliver customized contents and

display depending upon the characteristics of customers.

 3) Integration with business processes

 Integration with order taking and fulfillment

 Integration with electronic payment

 Integration with intranet workflow

 Integration with inventory and accounting system

 Integration with supplier’s extranet

 Relationship to paper catalogs

Customized Catalog

 Identify the interesting parts out of the whole catalog

 Tool for aiding customers to concentrate on their needs

 LiveCommerce

 creating catalogs with branded, value-added

capabilities

 locate the information

 compose their order

 individualized prices, products, and display formats

 Let the system automatically identify the

characteristics of customers based on the transaction

records

Special Advertisement Topics

 To Advertise or Not

 How Much to Advertise

 Auditing and Analyzing Web Traffic

 Self Monitoring of Traffic

 Internet Standards

 Localization

 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.)

Managerial Issues

 Make Vs Buy (Ad agencies)

 Finding the Most Visited Sites

 Company Research

 Commitment to Web Advertising

 Ethical Issues

 Integration : Advertisement, Ordering, Other Processes