© Farhan Mir © Farhan Mir 20 2008 08 IMS IMS E-Commerce E-Commerce BBA (Hons) 7 BBA (Hons) 7 th th (Advertisement in E- (Advertisement in E- Commerce) Commerce) Lecture Week 10,11,12 Lecture Week 10,11,12 By: By: Farhan Mir Farhan Mir
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E-CommerceE-Commerce
BBA (Hons) 7BBA (Hons) 7thth
(Advertisement in E-(Advertisement in E-Commerce)Commerce)Lecture Week 10,11,12Lecture Week 10,11,12
By: Farhan MirBy: Farhan Mir
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Learning ObjectivesLearning Objectives
Describe the objectives of Web advertisement, its types and characteristicsDescribe the major advertisement methods used on the Web, ranging from banners to chat roomsDescribe various Web advertisement strategiesDescribe various types of promotions on the WebDiscuss the benefits of push technology and intelligent agents
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Understand the major economic issues related to Web advertisementDescribe the issues involved in measuring the success of Web advertisement as it relates to different ad pricing methodsCompare paper and electronic catalogs and describe customized catalogsDescribe Web advertisement implementation issues ranging from ad agencies to the use of intelligent agents
Learning Objectives Learning Objectives (cont.)(cont.)
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A Framework for ECA Framework for EC
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AdvertisingAdvertising
An attempt to disseminate information in order to affect buyer-seller transactionsCompanies must:
Deliver ads in an appropriate manner that will Deliver ads in an appropriate manner that will ‘stick’ in the minds of consumers‘stick’ in the minds of consumers
Ensure goods and services are those that meet Ensure goods and services are those that meet the needs of consumersthe needs of consumers
Ensure that advertising is not annoying and does Ensure that advertising is not annoying and does not have a negative impactnot have a negative impact
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HistoryHistory
The world wide web was invented by a British scientist in a research
and development lab in 1993.
Internet Marketing began one year later, with advertising in 1994 when
Hotwired.com sold the first banner ad.
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Online AdvertisingOnline Advertising
The Internet is the fastest growing communication media
Each year, the percentage of the advertising industry captured by the online market is growing
Utilizes ‘interactive marketing’ as it allows advertisers to interact directly with consumers
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Internet is the fastest growing medium in history
Web Advertising Web Advertising (cont.)(cont.)
Adoption Curves for Various Media - The Web Is Ramping FastAdoption Curves for Various Media - The Web Is Ramping Fast
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Internet advertising is the Internet advertising is the fastest growing marketing fastest growing marketing
channel. channel.
2001: 2001: 5.25% 5.25% 2004: 2004: 8.35% 8.35% 2007: 2007: 17.00%17.00%
PercentagPercentage of Media e of Media
Budget Budget Allocated Allocated to Online to Online
Ads:Ads:
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Online Advertising and Revenue Online Advertising and Revenue GenerationGeneration
Advertising revenue remains a significant source of income for many Internet-based organizationsAdvertising revenue on the Internet was $8.2 billion in the United StatesMany dot-com failures were a result of relying on online advertising revenue as the only revenue sourceYahoo.com currently relies on its advertising revenue as its major revenue source
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Opening Case :Opening Case : CD-Max Uses E-mail Lists to AdvertiseCD-Max Uses E-mail Lists to Advertise
CD- Max Enterprises– A two-person business specializing in CD-A two-person business specializing in CD-
ROM developmentROM development– Operates a resource site for information Operates a resource site for information
deliverydelivery– Generated an e-mail list of site visitorsGenerated an e-mail list of site visitors
• the list is also valuable to other advertisersthe list is also valuable to other advertisers• 50 lists were created to fit different advertisers50 lists were created to fit different advertisers• outsourced the job of creating and maintaining outsourced the job of creating and maintaining
the lists, and selling them to potential the lists, and selling them to potential advertisers, to NetCreation which developed 275 advertisers, to NetCreation which developed 275 lists from the names collected at CD-Maxlists from the names collected at CD-Max
• the list sales “surpassed” the company’s the list sales “surpassed” the company’s expectations expectations
• selling e-mail lists has become a lucrative selling e-mail lists has become a lucrative business since thenbusiness since then
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Web AdvertisingWeb Advertising
Advertising is an attempt to disseminate information in order to affect a buyer-seller transactionWhy Internet Advertisement?
Three-quarters of PC users gave up some Three-quarters of PC users gave up some television timetelevision time
Internet users are well educated with high-Internet users are well educated with high-income, which makes them a desired target income, which makes them a desired target for advertisersfor advertisers
Ads can be updated any time with a minimal Ads can be updated any time with a minimal cost; therefore they are timely and very cost; therefore they are timely and very accurateaccurate
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Ads can reach very large numbers of potential Ads can reach very large numbers of potential buyers all over the worldbuyers all over the world
Online ads are much cheaper in Online ads are much cheaper in comparison to television, newspaper, comparison to television, newspaper, or radio ads. Such ads are expensive or radio ads. Such ads are expensive since they are determined by space since they are determined by space occupied, how many days (times) they occupied, how many days (times) they are shown, and on how many national are shown, and on how many national and local television stations and and local television stations and newspapers they are posted. newspapers they are posted. Web ads can be media rich, including voice and Web ads can be media rich, including voice and videovideo
Web ads can be interactive and targetedWeb ads can be interactive and targeted
The use of the Internet is growing very rapidlyThe use of the Internet is growing very rapidly
Web Advertising Web Advertising (cont.)(cont.)
• Why Internet Advertisement?Why Internet Advertisement?
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Interactive MarketingWeb Advertising Web Advertising (cont.)(cont.)
– Consumer can click with his/her mouse on an ad for more Consumer can click with his/her mouse on an ad for more information or send an e-mail to ask a questioninformation or send an e-mail to ask a question
Volume salesVolume salesCustomer dataCustomer dataCustomer relationshipsCustomer relationshipsPassivePassive PassivePassive ActiveActive
Food, Food, personal-personal-care care products, products, autosautos
Credit Credit cards, cards, travel, travel, autosautos
Upscale Upscale apparel, apparel, travel, travel, financial financial services, autosservices, autos
High volumeHigh volume Targeted goodsTargeted goodsTargeted individualsTargeted individuals
TelevisioTelevision, n, magazinmagazineses
Mailing Mailing listslists
Online Online servicesservicesStoryboardsStoryboards DatabasesDatabases Servers, Servers, onscreen onscreen navigators, the navigators, the WebWeb
Mass MarketingMass Marketing Direct MarketingDirect Marketing Interactive MarketingInteractive Marketing
Best outcomeBest outcomeConsumer behaviorConsumer behaviorLeading productsLeading products
MarketMarket
PreferrePreferred media d media vehiclevehiclePreferred Preferred technologtechnologyy
Worst outcomeWorst outcomeChannel Channel surfingsurfing
Recycling Recycling binsbins
LogoffLogoff
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Advertising MethodsAdvertising MethodsBanners
Banners are everywhereBanners are everywhere
Keyword bannersKeyword banners
Random bannersRandom banners
BenefitsBenefitsbe customized to the target audience
be customized to one-to-one targeted advertisement
Banner SwappingDirect link between one’s site to the other siteDirect link between one’s site to the other site
Ad space (a source of revenue for many Ad space (a source of revenue for many companies)companies)
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Banner AdvertisingBanner Advertising
Most common form of online advertisingSo prevalent many users have developed “banner blindness”Banners can be distributed in a variety of waysBanner success is most often measured by “click through rate”Banners build brand awareness and increase purchase probability
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Splash ScreenCapture the user’s attentionCapture the user’s attention
Promotion purposePromotion purpose
Major advantage : create innovative Major advantage : create innovative multimediamultimedia
Advertising Methods Advertising Methods (cont.)(cont.)
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E-mailSeveral million users can be reached Several million users can be reached directlydirectly
Purchase e-mail addressesPurchase e-mail addresses
Send the company information; low costSend the company information; low cost
A wide variety of audiences; customer A wide variety of audiences; customer databasedatabase
Problem: Junk mail or spammingProblem: Junk mail or spamming
Target a group of people that you know Target a group of people that you know something aboutsomething about
Advertising Methods Advertising Methods (cont.)(cont.)
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Chat RoomsVirtual meeting groundVirtual meeting ground
Can be added to a business site for freeCan be added to a business site for free
Allows advertisers to cycle through Allows advertisers to cycle through messages and target the chatter again messages and target the chatter again and againand again
More effective than bannersMore effective than banners
Used in one-to-one connectionUsed in one-to-one connection
Advertising Methods Advertising Methods (cont.)(cont.)
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Pop UpsPop Ups
Pop ups are becoming increasing popular (and frustrating! In other situations….solution in the last lines)
Very intrusive form of advertingVariety of methods used to attract and Variety of methods used to attract and keep user’s attentionkeep user’s attention
Internet users and ISPs can provide software packages to block pop ups (Pop-Up Stopper)
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URL (Universal Resource Locators)Advantages:Advantages:
minimal cost is associated with itsubmit your URL to a search engine and be listedkeyword search is used
Disadvantages:Disadvantages:search engines index their listings differently
But still very useful method to advertise But still very useful method to advertise
Advertising Methods Advertising Methods (cont.)(cont.)
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Keyword SearchKeyword Search
Currently the fastest growing venue for internet marketingControl $1.3 billion marketing dollars ~Jupiter Research
Search engines are now full-fledged media companies
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Advertisement StrategiesAdvertisement StrategiesInternet-base Ad Design
Advertisements should be visually appealingAdvertisements should be visually appealing
Advertisements must be targeted to specific Advertisements must be targeted to specific groups or to individual consumersgroups or to individual consumers
Advertisements must emphasize brands and a Advertisements must emphasize brands and a firm’s imagefirm’s image
Advertisements must be part of an overall Advertisements must be part of an overall marketing strategymarketing strategy
Advertisements should be seamlessly linked with Advertisements should be seamlessly linked with the ordering processthe ordering process
Designing Internet ads involve the following Designing Internet ads involve the following factors:factors:
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Internet-based Ad Design: Important Factors
Advertisement Strategies Advertisement Strategies (cont.)(cont.)
– Page-Loading SpeedPage-Loading Speed• Graphics and tables should be simple and Graphics and tables should be simple and
meaningful. They need to match standard meaningful. They need to match standard monitors.monitors.
• Thumbnail (icons graphs) are useful.Thumbnail (icons graphs) are useful.
– Business ContentBusiness Content• Clear and concise text is needed. A compelling Clear and concise text is needed. A compelling
page title and header text is useful.page title and header text is useful.• The amount of requested information for The amount of requested information for
registration should be minimal.registration should be minimal.
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Navigation EfficiencyNavigation Efficiency
Well-labeled, accurate, meaningful links are a must.
Site must be compatible with browsers, software, etc.
Advertisement Strategies Advertisement Strategies (cont.)(cont.)
• Internet-base Ad Design: Important Internet-base Ad Design: Important FactorsFactors
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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 Online Events, Promotions and Attractions Attractions (cont.)(cont.)
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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 InternetPre-specification profile, selection of appropriate content, and download selection
Push TechnologyPush Technology
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Also known as “Pointcasting”Analogous to mass customizationAnalogous to mass customization
Transmits the most relevant information directly to Transmits the most relevant information directly to the userthe user
Push on the IntranetCompanies use push technology to set up their Companies use push technology to set up their own channels to pointcast important internal own channels to pointcast important internal information to either their own employees (on information to either their own employees (on intranets) and/or their supply chain partners (on intranets) and/or their supply chain partners (on extranets)extranets)
The Future of Push TechnologyDrawback : the bandwidth requirements are largeDrawback : the bandwidth requirements are large
Experts’ prediction : the technology will never flyExperts’ prediction : the technology will never fly
Push Technology Push Technology (cont.)(cont.)
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Online CatalogsOnline 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
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1) Dynamics of information presentationStatic Catalogs: The catalog is presented in Static Catalogs: The catalog is presented in textual description and static pictures.textual description and static pictures.
Dynamic Catalogs: The catalog is presented in Dynamic Catalogs: The catalog is presented in motion pictures and graphics and possibly motion pictures and graphics and possibly sound.sound.
2) CustomizationReady-made Catalogs: Merchants offer the Ready-made Catalogs: Merchants offer the same catalog to any customer.same catalog to any customer.
Customized Catalogs: Deliver customized Customized Catalogs: Deliver customized contents and display depending upon the contents and display depending upon the characteristics of customers.characteristics of customers.
Online Catalogs Online Catalogs (cont.)(cont.)
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Customized CatalogCustomized CatalogIdentify the interesting parts out of the whole catalog
Tool for aiding customers to concentrate on their needs LiveCommerce
creating catalogs with branded, value-added creating catalogs with branded, value-added capabilitiescapabilities
locate the informationlocate the information
compose their ordercompose their order
individualized prices, products, and display individualized prices, products, and display formatsformats
Let the system automatically identify the characteristics of customers based on the transaction records
Customized, Interactive and Dynamic Catalogs (Remember the Ford Company Website!)
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Is There a Negative Side to Is There a Negative Side to Online Advertising?Online Advertising?
Pressure to create new online advertising formats came following the dot-com crash
Result was an explosion of creative ways to engage users in the ads using sound, animation, etc.
User experience began to decline
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Managerial IssuesManagerial Issues
Make Vs. Buy (Ad agencies)
Finding the Most Visited Sites
Company Research
Ethical Issues