Lecture Computing for management - Chapter 15

Lecture 15 - Advertisement in electronic commerce. After studying this chapter you will be able to understand: Web advertisement, its types and characteristics; 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.

Advertisement in Electronic

Commerce

Lecture 15

Summary of Previous Lecture

 Electronic Commerce definition.

Summary of Previous Lecture

Summary of Previous Lecture

Summary of Previous Lecture

 Types of Inter organizational systems

 Electronic data interchange (EDI)

 Extranets

 Electronic funds transfer (EFT)

 Integrated messaging systems

Today’s Lecture Objectives

 Web advertisement, its types and characteristics

 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

 Describe Web advertisement implementation issues ranging from ad agencies to the use of intelligent agents

Today’s Lecture Objectives

Where to start?

Web Advertisement: A Way to Make Money out of your Computer

What is Advertisement?

 Advertising is an attempt to disseminate

information in order to affect a buyer-seller transaction

high- Ads can be updated any time with a minimal cost; therefore they are timely and very

accurate

Internet Advertisement

 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

Internet Advertisement

 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 Advertisement Example

Advisement banners

Web Advertisement Example

Web Advertisements Terminologies

 Terminologies being commonly used are

Web Advertisements Terminologies

Web banners

Ad Clicks

 Action from a user clicking on an advertisement to get more information

Number of times users click on an ad banner.

 “Hit Count” are very useful to determine

the demand or interest in any product.

Ad-Clicks statistics Within different Operating Systems

Click Ratio

 Clickthrough rate (CTR) is a way of measuring

the success of an online advertising campaign for a particular website

 The clickthrough rate of an advertisement is

defined as the number of clicks on an ad divided

by the number of times the ad is shown

(impressions), expressed as a percentage

 For example, if a banner ad is delivered 100 times

(100 impressions) and receives one click, then the

clickthrough rate for the advertisement would be 1%

 A cookie, also known as an HTTP cookie, web cookie,

or browser cookie, is usually a small piece of data sent

from a website and stored in a user's web browser while

a user is browsing a website

 When the user browses the same website in the future, the data stored in the cookie can be retrieved by the website to notify the website of the user's previous activity

Not this Cookie

Cost per Thousand (CPM)

 The letter "M" in the abbreviation is the Roman numeral for one thousand

 CPM is used by Internet marketers to price ad

banners

 Sites that sell advertising will guarantee an advertiser

a certain number of impressions (number of times an

ad banner is downloaded and presumably seen by visitors.), then set a rate based on that guarantee times the CPM rate A Web site that has a CPM rate

of $25 and guarantees advertisers 600,000 impressions will charge $15,000 ($25 x 600) for those advertisers' ad banner

Effective Frequency

 An estimated amount of times a person must see a particular brand awareness commercial on a product in order to change that person’s attitude and awareness about that product

 A hit is a request to a web server for a file

(For example a web page).

 When a web page is uploaded from a server the number of "hits" or "page hits"

is equal to the number of files requested.

 Therefore, one page load does not always equal one hit because often pages are made

up of other images and other files which stack

up the number of hits counted

 It is the exact number of times a specific

Web site has been accessed or viewed by

a user.

A page impression acts as a counter for Web pages, informing site owners how many times their sites were visited

Credit cards,  travel, autos Upscale apparel, travel, financial services, autos

High volume Targeted goods Targeted individuals Madison Ave Postal distribution 

centers CyberspaceTelevision, 

magazines Mailing lists Online servicesStoryboards Databases Servers, onscreen 

 Internet is the fastest growing medium in history

Web Advertising

Web Advertising

 Targeted Advertisement (one-to-one)

 The Double Click (DC) Approach

 3M Corporation 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 file 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

Web Advertisings

 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

 Opportunity to create one-to-one direct marketing

relationship with the consumer

 Multimedia will increasingly make Web sites more

attractive and compelling

Internet Advertising Pros

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

 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 exchange

 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

Advertising Methods

Banner Exchange organization

 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

Banner Exchange Website

 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

Advertising Methods

 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

 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

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

Advertisement Strategies

 Internet-base Ad Design: Important Factors

 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.

Advertisement Strategies

 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

 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

Filtering the irrelevant information by providing customized ads

One-to-One advertisement

 Customized Ad Strategy

Product Database

Mall Operator  A

Product Database

Mall Operator  B

Product Database

Mall Operator  C

Implementing the Strategies

 Comparison Aid as Medium of

Advertisement

Online Events, Promotions and Attractions

 How to attract 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

computer

Lucent.com Web attraction

 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

Push Technology

 Pointcasting

 Analogous 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

Intelligent Agents

 Intelligent Agents are automatic programs, which run separately and are capable of performing different advertisement related functions For example,

 Product Brokering Agents

 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

Today’s Misconception

 Today we have been learnt

How to advertise on the Web?

 Pros of Internet Advertisement

 Double Click Approach

 Advertisement Methods

Banners and Banner Exchanges

Banner Swapping

Advertisement Strategy

 Internet Based Ad Design

 Passive Pull Strategy

 Active Push Strategy

 Ad as a Commodity

Push Technology

Implementing Strategy

Intelligent Agents