This document discusses various topics related to advertisement in electronic commerce, including objectives, types of ads, strategies, and methods. It describes common ad formats like banners, e-mail marketing, and push technology. It also covers measuring ad effectiveness, customized catalogs, and managing web traffic and standards. The overall aim is to introduce key concepts in online advertising.

1. Chapter 4
Advertisement in
Electronic Commerce
© Prentice Hall, 2000 1

2. 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
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3. Learning Objectives (cont.)
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
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4. 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 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
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5. 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
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6. Web Advertising (cont.)
Why 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.
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
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7. Web Advertising (cont.)
Internet Advertising Terminology
Ad views Effective Frequency
Banner Hit
Clicks (or ad clicks) Impressions
Click Ratio Reach
Cookie Visit
CPM
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8. Web Advertising (cont.)
Interactive Marketing
Consumer can click with his/her mouse on an ad for
more information or send an e-mail to ask a question
Mass Marketing Direct Marketing Interactive Marketing
Best outcome Volume sales Customer data Customer relationships
Consumer behavior Passive Passive Active
Leading products Food, personal-care Credit cards, Upscale apparel, travel,
products, beer, travel, autos financial services, autos
autos
Market High volume Targeted goods Targeted individuals
Nerve center Madison Ave. Postal distribution Cyberspace
centers
Preferred Television, Mailing lists Online services
media vehicle magazines
Preferred Storyboards Databases Servers, onscreen
technology navigators, the Web
Worst outcome Channel surfing Recycling bins Logoff
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9. Web Advertising (cont.)
Internet is the fastest growing medium in history
Adoption Curves for Various Media - The Web Is Ramping Fast
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10. Web Advertising (cont.)
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
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11. Web Advertising (cont.)
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
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12. Web Advertising (cont.)
Pros of Internet Advertisement
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
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13. Advertising Methods
Banners
Banners are everywhere
Keyword banners
Random banners
Benefits
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 bartering
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14. Advertising Methods (cont.)
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.
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15. Advertising Methods (cont.)
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
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16. Advertising Methods (cont.)
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
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17. Advertising Methods (cont.)
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
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18. Advertising Methods (cont.)
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
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19. 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:
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20. Advertisement Strategies (cont.)
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.
Business Content
Clear and concise text is needed. A compelling page
title and header text is useful.
The amount of requested information for registration
should be minimal.
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21. Advertisement Strategies (cont.)
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.
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.
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22. Advertisement Strategies (cont.)
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
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23. Advertisement Strategies (cont.)
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)
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24. Advertisement Strategies (cont.)
Ad as a Commodity
CyberGold
exchange of direct payment made by the
advertisers for viewing ads
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
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25. 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
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26. Implementing the Strategies (cont.)
Comparison Aid as Medium of Advertisement
Customer
Meta-Malls
Customer Assistant
Summary
Meta-Malls Coordinator and Index
Database
Mall Mall Mall
Operator Operator Operator
Direct A B C
Visit
Product Product Product
Database Database Database
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27. Online Events, Promotions and Attractions
How to entice Web surfers to read Internet ads
There are dozens of innovative ideas; here are some
examples :
1 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.
2 Netzero and others offer free Internet access in exchange
for viewing ads.
3 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. © Prentice Hall, 2000 27

28. Online Events, Promotions and Attractions
(cont.)
4 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.
5 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.
6 Free PCs will be given soon in exchange for obligation
to read ads. © Prentice Hall, 2000 28

29. Push Technology
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 mediated delivery
aggregated delivery direct delivery
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30. Push Technology (cont.)
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
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31. 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
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32. Economics and Effectiveness of
Advertisement
Payments are based on:
Exposure Models (CPM)
Click Through
Interactivity
Actual Purchase
Other Methods
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33. 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
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34. Online Catalogs (cont.)
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.
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35. 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
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36. 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
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37. Special Advertisement Topics
To Advertise or Not
How Much to Advertise
Auditing and Analyzing Web
Traffic
Self Monitoring of Traffic
Internet Standards
Localization
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38. Special Advertisement Topics (cont.)
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
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39. 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
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