advertising.ppt

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advertising.ppt

  1. 1. ADVERTISING, PR, SELLING 15.823 Internet marketing Prof. Glen L. Urban Spring 2001
  2. 2. OUTLINE <ul><li>Historical Perspective </li></ul><ul><li>Advertising Copy </li></ul><ul><li>How Much to Spend on Advertising </li></ul><ul><li>Acquisition/Retention Modeling </li></ul><ul><li>Role of PR and Selling </li></ul>
  3. 3. HISTORICAL PERSPECTIVE <ul><li>TV Model 1950’s </li></ul><ul><li>1960s - 80s -- Stable Media Mix </li></ul><ul><li>1990’s </li></ul><ul><ul><li>Interactive TV </li></ul></ul><ul><ul><li>Internet Banners </li></ul></ul><ul><ul><li>Push Marketing </li></ul></ul><ul><li>Internet 2000 </li></ul><ul><ul><li>Eye Ball Race -- Print/TV/Banners </li></ul></ul><ul><ul><li>Click Through Rates Down </li></ul></ul><ul><ul><li>Personalized Ads -- Streaming Video </li></ul></ul><ul><li>Current - 2001 </li></ul><ul><ul><li>Multi-Channel </li></ul></ul><ul><ul><li>Customer Life Time Value </li></ul></ul><ul><ul><li>Rich Media </li></ul></ul>
  4. 6. ADVERTISING COPY
  5. 7. HOW MUCH SHOULD YOU SPEND ON ADVERTISING?
  6. 8. APPROACHES <ul><li>All You Can Afford </li></ul><ul><li>Match Competition </li></ul><ul><li>Sales Goal - Short Run - Long Run Share </li></ul><ul><li>Profit (Loss Goal) </li></ul><ul><li>Reach and Frequency Goals </li></ul><ul><li>Response - Sales/Profits </li></ul><ul><li>-functions </li></ul><ul><li>-flow model </li></ul>
  7. 9. RESPONSE ANALYSIS Ask what you are getting for your $ Marginal response -- profit -- sales -- customer acquisition
  8. 10. Slide #1 SIMPLE FLOW MODEL AWARE VISIT SITE BUY LOYALTY UNAWARE .33 .33 .03 .75
  9. 11. MODEL EXTENSIONS <ul><li>Depth of Repeat </li></ul><ul><li>Multi-period </li></ul><ul><li>Competition </li></ul><ul><li>Additional Variables </li></ul>
  10. 12. SALES REVENUE PROFIT BEFORE ADVERTISING PROFIT AFTER ADVERTISING ADVERTISING SALES RESPONSE -- MAXIMIZE PROFIT DOLLARS
  11. 13. DOLLARS WHAT WE KNOW ADVERTISING SALES PROFIT AFTER ADVERTISING PROFIT BEFORE ADVERTISING * * * A 0
  12. 14. ESTIMATION JUDGMENT STATISTICS - Sale History - Nielsen - Click Stream EXPERIMENTATION
  13. 15. PERSONAL SELLING
  14. 16. ROLE OF SELLING <ul><li>Still need </li></ul><ul><li>Complex System Design </li></ul><ul><li>Big price </li></ul><ul><li>B2B </li></ul><ul><li>Communication Mix </li></ul>
  15. 17. FUNCTIONAL SUBSTITUTION AWARENESS PERCEPTION PREFERENCE PURCHASE SELLING ADVERTISING ADVERTISING SELLING SELLING
  16. 18. NEW METHODS AWARENESS PERCEPTION PREFERENCE PURCHASE TELEMARKETING ADVERTISING SELLING SELLING TELEMARKETING TELEMARKETING INTERNET SELLING
  17. 19. NEW METHODS AWARENESS PERCEPTION PREFERENCE PURCHASE TELEMARKETING ADVERTISING SELLING SELLING TELEMARKETING
  18. 20. NEW METHODS AWARENESS PERCEPTION PREFERENCE PURCHASE PR INTERNET SELLING TELEMARKETING
  19. 21. PR <ul><li>“Free” ads </li></ul><ul><li>- actually many pay </li></ul><ul><li>- invest in PR (“marketing”) staff </li></ul><ul><li>Believability </li></ul><ul><li>Word of Mouth Transfer -- Community </li></ul>
  20. 22. INTEGRATION <ul><li>Behavioral Flow Model </li></ul><ul><li>CLTV Model </li></ul>
  21. 24. IMPLICATIONS <ul><li>Advertising Goals (budget & copy) </li></ul><ul><li>Will Increasingly Become Response </li></ul><ul><li>Acquisition Modeling and Loyalty </li></ul><ul><li>Communication Mix </li></ul><ul><li>- advertising / PR </li></ul><ul><li>- multi-channel selling </li></ul>
  22. 26. ILLUSTRATIVE EXAMPLE SIZE OF MARKET 10,000 NUMBER OF SEGMENTS 5 PRICE OF PRODUCT $ 16,000 CONTRIBUTION MARGIN $ 5,000 FIXED COST $750,000 COSTS ONE AD $ 30,000 COST OF PERSONAL VISIT $ 125 COSTS OF ONE TELESELL $ 37.50 ADVERTISING REACH 1 AD .1 10 ADS .65 FRACTION READ AD .5
  23. 27. MODEL SEGMENT 1 AWARENESS REQUEST RECOMMEND PURCHASE RESOURCES ADVERTISING PERSONAL SELLING TELEMARKETING AWARENESS REQUEST RECOMMEND PURCHASE AWARENESS REQUEST RECOMMEND PURCHASE SEGMENT 2 SEGMENT N OUTPUT SALES SALES / CALL PROFIT PROFIT / CALL MODEL
  24. 29. BASE - ALL SELLING SALES FORCE SIZE 28 NUMBER OF CALLS / YEAR 22,000 TOTAL SALES ($) 13,984,000 COMMUNICATION BUDGET ($) 2,750,000 PROFIT ($) 870,000 PROFIT / CALL 39.55
  25. 30. SELLING ALLOCATION PERSONAL SELLING + ADVERTISING + TELEMARKETING COLD CALLS (PERSONAL) 2 2 0 0 0 1200 CALLS (TELESELL) 2 2 0 0 0 SEGMENT 1 2 3 4 5 ALL SELL 4 4 2 1 0 FOLLOW UP “ PRESOLD”
  26. 31. ALL BEST BEST WITH SELL WITH ADS TELEMARKETING NUMBER OF ADS - 7 - NUMBER PERSONAL CALLS 22,000 20,140 11,040 NUMBER TELESELL - - 29,200 TOTAL SALES 13,984 14,056 20,710 COMMUNICATION BUDGET 2,750 2,727 2,475 PROFIT 870 915 3,215 PROFIT/PERSONAL CALL 40 45 291 PROFIT / COMMUNICATION BUDGET .32 .34 1.30 PROFIT PER HOUR OF TOTAL SELLING EFFORT 1.97 2.20 8.76 SALES PER HOUR OF TOTAL SELLING EFFORT 316 348 560

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