Ecommerce Chap 04

1© Prentice Hall, 2000

Chapter 4Advertisement 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 strategiesDescribe various types of promotions on the WebDiscuss 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.)


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 advertisers50 lists were created to fit different advertisersoutsourced 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

Web Advertising (cont.)

Why Internet Advertisement?


Internet Advertising Terminology

Effective Frequency

Hit

Impressions

Reach

Visit


Ad views Banner Clicks (or ad clicks) Click Ratio Cookie CPM


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 relationshipsPassive Passive ActiveFood, 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 MarketingBest outcomeConsumer behaviorLeading products

Market

Nerve center

Preferred media vehicle

Preferred technologyWorst outcome Channel surfing Recycling bins Logoff


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) Approach3M Corp. wants to advertise its $10,000 multimedia

projectorsDC monitored people browsing the Web sites of

cooperating companiesthen matches them against a databasethen 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 projectorstargeted for people whose profile matches what is

needed for 3M



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


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


Advertising Methods

Banners Banners are everywhere Keyword banners Random banners Benefits

be customized to the target audiencebe customized to one-to-one targeted advertisementutilize “force advertising” marketing strategy

Banner Swapping 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 bannerreceives credit when shows others’ bannerscan purchase additional display creditsspecify what type of site the banner can be displayed onuse the credit to advertise on others’ sitescredit ratio of approximately 2:1Example : 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.)


Paid Advertising and Ad Agencies Advantage of using banners

ability to customize them to the target audienceability to decide which market segments to focus

onbe 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 itsubmit your URL to a search engine and be listedkeyword search is used

Disadvantages:search engines index their listings differentlymeta 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

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:


Internet-based Ad Design: Important Factors

Advertisement Strategies (cont.)

Page-Loading SpeedGraphics and tables should be simple and meaningful.

They need to match standard monitors.Thumbnail (icons graphs) are useful.

Business ContentClear and concise text is needed. A compelling page

title and header text is useful.The amount of requested information for registration

should be minimal.


Navigation EfficiencyWell-labeled, accurate, meaningful links are a must.Site must be compatible with browsers, software, etc.

Security and PrivacySecurity and privacy must be assured.Option for rejecting cookies is a must.

Marketing/Customer FocusClear 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)


Ad as a Commodity


CyberGoldexchange of direct payment made by the advertisers

for viewing adsconsumers fill out questionnairesCyberGold distributes targeted bannersthe 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

ProductDatabase

MallOperator

A

ProductDatabase

MallOperator

B

ProductDatabase

MallOperator

C

Meta-Malls Coordinator

Customer

Meta-MallsCustomer Assistant

Direct Visit

Summaryand IndexDatabase

© Prentice Hall, 2000


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 computer.

http://www.egghead.com/


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.)

http://www.cybergold.com/

http://www.goldmine.com/

http://webstakes.com/


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

Pre-specification profile, selection of appropriate content, and download selection

4 types of push technology self-service delivery aggregated delivery

mediated delivery direct delivery

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 (cont.)


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 Advertisement

Exposure Models (CPM)

Click Through

Interactivity

Actual Purchase

Other Methods32© Prentice Hall, 2000

Payments are based on:


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 catalogsMore 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.

Online Catalogs (cont.)


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

Online Catalogs (cont.)


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 NotHow Much to AdvertiseAuditing and Analyzing Web

TrafficSelf Monitoring of TrafficInternet StandardsLocalization


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 SitesCompany ResearchCommitment to Web AdvertisingEthical IssuesIntegration : Advertisement,

Ordering, Other Processes

Ecommerce Chap 04

Education

special advertisement

prentice hall

ad agencies

web advertisement

potential

online events

online catalogs

read ads