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Chapter 4
Advertisement in
Electronic Commerce
1
Opening Case:
Advertisement in the Digital Economy
Theknot.com and Wedding411.com

Information about planning weddings
Ass...
Opening Case:
Advertisement in the Digital Economy
Toyota
Promotes its SUV with banners on altavista.com
Kelly Blue Book (...
Web Advertisement
Advertising is an attempt to disseminate information in
order to affect a buyer-seller transaction
Inter...
Web Advertisement (cont.)
Why Internet Advertisement?
3/4 of PC users gave up some television time
Well educated, high-inc...
Web Advertisement (cont.)
Why Internet Advertisement?

Web ads effectively use text, audio, graphics,
and animation
Ads ea...
Web Advertisement (cont.)
Internet vs. Traditional methods
Combining advertising media
Internet is the fastest growing med...
Figure 5-1
Adoption Curves for Various Media

Source: Morgan Stanley Technology Research.

8
Web Advertisement (cont.)
Objectives and growth of Internet
advertisement—persuade customers to buy a
certain product or s...
Web Advertisement (cont.)
Targeted Advertisement (one-to-one)
The DoubleClick (DC) Approach—3M
/ciro, wants to advertise i...
Web Advertisement (cont.)
Targeted Advertisement (one-to-one)
The Double Click (DC) Approach for 3M Corp.
(cont.)
Builds a...
Web Advertisement (cont.)
Pros of Internet Advertisement
Internet advertisements are accessed on
demand 24 hours a day, 36...
Web Advertisement (cont.)
Pros of Internet Advertisement (cont.)
Opportunity to create one-to-one direct
marketing relatio...
Advertisement Methods
Banners--banners are everywhere
Keyword banners
Benefits
Customized to the
target audience or oneto-...
Advertisement Methods (cont.)
Banner swapping

Direct link between one site to the other site
Ad space bartering

Banner e...
Advertisement Methods (cont.)
Banner exchanges (cont.)

Credit ratio of approximately 2:1
Example: Link Exchange (bcentral...
Advertisement Methods (cont.)
Standard (pop up boxes that look like
newspaper or magazine ads) and classified
ads
Micro-si...
Advertisement Methods (cont.)
E-mail

Several million users may be reached directly
Purchase e-mail addresses
Send the com...
Advertisement Methods (cont.)
Mobile phones
Interactive one-to-one ads
Location, situation, weather-related ads

Splash Sc...
Advertisement Methods (cont.)
URL (Universal Resource Locators)
Advantages:

Minimal cost is associated with it
Submit you...
Advertisement Methods (cont.)
Chat Rooms
Virtual meeting ground
Free addition to a business site
Allows advertisers to cyc...
Advertisement Strategies
Internet-based Ad Design
Visually appealing
Targeted to specific groups or to individual
consumer...
Advertisement Strategies (cont.)
Internet-based ad design: important factors
Page-loading speed
Graphics and tables—simple...
Advertisement Strategies (cont.)
Internet-based Ad Design: Important Factors (cont.)
Navigation efficiency and compatibili...
Advertisement Strategies (cont.)
Pull (Passive) Strategy

Effective site provides helpful and attractive
contents and disp...
Advertisement Strategies (cont.)
Push (Active) Strategy
Sending e-mails to relevant
people
Obtaining mailing list—process
...
Advertisement Strategies (cont.)
Associated Ad Display Strategy
Associate the content of a Web page with a
related ad like...
Advertisement Strategies (cont.)
Ads as a commodity
CyberGold (MyPoints.com)
Direct payment made by the advertisers
for ad...
Advertisement Strategies (cont.)
Viral marketing—word-of-mouth over the
Internet

Easily forwarded e-mail messages from si...
Implementing the Strategies
Customized ad strategy
Filtering the irrelevant information by providing
customized ads
One-to...
Implementing the Strategies (cont.)
Comparisons as medium for
advertisement
Customer compares alternative products and
ser...
Figure 5-3
Illustrative Screen for Product Comparison

Source: Korean Engine (no longer in business).

32
Online Events, Promotions,
and Attractions
Enticing Web surfers to read Internet ads
Yoyodine, Inc.
Give-away games, disco...
Online Events, Promotions,
and Attractions (cont.)
Enticing Web surfers to read Internet ads
Egghead uses real people to h...
Online Events, Promotions,
and Attractions (cont.)
Enticing Web surfers to read Internet ads
Netstakes runs sweepstakes (n...
Push Technology
Benefits

Requested information they delivered
automatically to their desktop via Web
technology and the I...
Push Technology (cont.)
Pointcasting—mass
customization of
information
Pre-specification
profile
Select appropriate
conten...
Push Technology (cont.)
Push on the Intranet
Companies set up their own channels to pointcast
important internal informati...
Intelligent Agents
Product Brokering
Knows the customer’s profile
Tailors ads to the customers, or asks them if
they would...
Effectiveness and Pricing of Advertisement
Methods for measuring advertisement
effectiveness, conducting cost benefit anal...
Online Catalogs
Evolution of online catalogs
Merchants—advertise and promote
Customers—source of information and price
com...
Online Catalogs (cont.)
Classifications of catalogs
Dynamics of information presentation
Static catalogs—textual descripti...
Online Catalogs (cont.)
Electronic catalogs allow integration of
Order taking and fulfillment
Electronic payment
Intranet ...
Customized Catalogs
Assembled specifically for:
A company
An individual shopper

Customization systems can:

Create brande...
Special Advertisement Topics
How much to advertise
Permission advertisement
Measuring, auditing, and analyzing
Web traffic...
Special Advertisement Topics (cont.)
Major Web ad players

Advertising agencies and Web site
developers
Market research pr...
Managerial Issues
Make vs. buy
Finding the most visited sites
Company research
Commitment to Web advertising and
coordinat...
Managerial Issues (cont.)
Integrated marketing campaigns
Ethical Issues
Integrating advertisement with ordering
and other ...
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E-Commerce 04

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E-Commerce 04

  1. 1. Chapter 4 Advertisement in Electronic Commerce 1
  2. 2. Opening Case: Advertisement in the Digital Economy Theknot.com and Wedding411.com Information about planning weddings Assistance selecting vendors Site includes promotions and ads from vendors Promosinmotion.com VW bugs painted with Web site logos Dislplayed online and offline Topbulb.com Online catalog for light bulbs Also displays the off-line business 2
  3. 3. Opening Case: Advertisement in the Digital Economy Toyota Promotes its SUV with banners on altavista.com Kelly Blue Book (kbb.com) links to Toyota site IBM Uses banners linked to college campuses to promote recruitment “Club Cyberblue” became the scheme for restructuring their traditional plan 3
  4. 4. Web Advertisement Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction Internet Advertising Terminology Ad views Banner Click (ad click) Click ratio Cookie CPM Effective frequency Hit Impressions Reach Visit 4
  5. 5. Web Advertisement (cont.) Why Internet Advertisement? 3/4 of PC users gave up some television time Well educated, high-income Internet users are a desired target for advertisers Ads can be updated any time with a minimal cost; making them timely and very accurate Ads reach very large number of potential buyers all over the world Online ads are much cheaper in comparison to television, newspaper, or radio ads 5
  6. 6. Web Advertisement (cont.) Why Internet Advertisement? Web ads effectively use text, audio, graphics, and animation Ads easily combine games, entertainment, and promotions Web TV and Internet radio are attracting more people Web ads can be interactive and targeted The use of the Internet is growing very rapidly 6
  7. 7. Web Advertisement (cont.) Internet vs. Traditional methods Combining advertising media Internet is the fastest growing medium in history 7
  8. 8. Figure 5-1 Adoption Curves for Various Media Source: Morgan Stanley Technology Research. 8
  9. 9. Web Advertisement (cont.) Objectives and growth of Internet advertisement—persuade customers to buy a certain product or service Targeted Advertisement (one-to-one) Customize ads to fit individuals Can be expensive as well as rewarding Gain cost effectiveness by targeting groups (based on segmentation) 9
  10. 10. Web Advertisement (cont.) Targeted Advertisement (one-to-one) The DoubleClick (DC) Approach—3M /ciro, wants to advertise its $10,000 multimedia projectors DC monitors people browsing the Web sites of cooperating companies Matches them against a database Finds those people working for advertising agencies or using Unix system (potential buyers) 10
  11. 11. Web Advertisement (cont.) Targeted Advertisement (one-to-one) The Double Click (DC) Approach for 3M Corp. (cont.) 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 DoubleClick shares revenue with cooperating partners 11
  12. 12. Web Advertisement (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 12
  13. 13. Web Advertisement (cont.) Pros of Internet Advertisement (cont.) Opportunity to create one-to-one direct marketing relationship with the consumer Multimedia will increasingly make Web sites more attractive and compelling 13
  14. 14. Advertisement Methods Banners--banners are everywhere Keyword banners Benefits Customized to the target audience or oneto-one ads Utilize “force advertising” marketing strategy Direct link to advertiser Multi media capabilities Random banners Limitations High cost Declining click ratio— viewers have become immune to banners Size of banners is too small 14
  15. 15. Advertisement Methods (cont.) Banner swapping Direct link between one site to the other site Ad space bartering Banner exchanges Firm submits a banner Receives credit when shows others’ banners Can purchase additional display credits Specify what type of site where the banner is displayed Use the credit to advertise on others’ sites 15
  16. 16. Advertisement Methods (cont.) Banner exchanges (cont.) Credit ratio of approximately 2:1 Example: Link Exchange (bcentral.com) Helps design banners Provides membership in newsgroups Delivers HTML tutorials Runs contests Is a banner-ad clearing house for more than 200,000 small Web sites Monitors the content of the ads of all its members 16
  17. 17. Advertisement Methods (cont.) Standard (pop up boxes that look like newspaper or magazine ads) and classified ads Micro-sites 5 advertising sizes larger than banners Pop-up boxes at sites they are linked to Classified ads Special sites (classifieds2000.com) Free or for fee depending upon size 17
  18. 18. Advertisement Methods (cont.) E-mail Several million users may be reached directly Purchase e-mail addresses Send the company information (low cost) A wide variety of audiences (customer database) Target a group of people that you know something about Problems: Junk mail Spamming 18
  19. 19. Advertisement Methods (cont.) Mobile phones Interactive one-to-one ads Location, situation, weather-related ads Splash Screen Capture the user’s attention Promotion or lead-in Major advantage: create innovative multimedia Spot leasing Permanent space on popular portal or Web page Ads may be small and expensive 19
  20. 20. Advertisement 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 20
  21. 21. Advertisement Methods (cont.) Chat Rooms Virtual meeting ground Free addition to a business site Allows advertisers to cycle through messages and target the chatter again and again Advertising can become more thematic More effective than banners Used for one-to-one connections 21
  22. 22. Advertisement Strategies Internet-based Ad Design Visually appealing Targeted to specific groups or to individual consumers Emphasize brands and a firm’s image Part of an overall marketing strategy Seamlessly linked with the ordering process 22
  23. 23. Advertisement Strategies (cont.) Internet-based ad design: important factors Page-loading speed Graphics and tables—simple, meaningful, and match standard monitors Thumbnail (icon, graphs) are useful Business content Clear and concise text with compelling page title and header text Minimal amount of information requested for registration 23
  24. 24. Advertisement Strategies (cont.) Internet-based Ad Design: Important Factors (cont.) Navigation efficiency and compatibility Links—well-labeled, accurate, meaningful Site—compatible with browsers, software, etc. Security and privacy Security and privacy must be assured Must provide option for rejecting cookies Marketing Customer Focus Clear terms/conditions of the purchases—delivery information, return policy, etc. Confirmation page after a purchase 24
  25. 25. Advertisement Strategies (cont.) Pull (Passive) Strategy Effective site provides helpful and attractive contents and display Effective and economical way to advertise, unidentified potential customers worldwide Advertising World—non-commercial site that guides the process of finding customer’s requests Yahoo—portal search engine site regarded as effective aid for advertisement 25
  26. 26. Advertisement Strategies (cont.) Push (Active) Strategy Sending e-mails to relevant people Obtaining mailing list—process of identifying target customers Mailing list generation—uses agent technology, cookies, and questionnaires (filled out by customer) 26
  27. 27. Advertisement Strategies (cont.) Associated Ad Display Strategy Associate the content of a Web page with a related ad like: Search Yahoo on a topic, a banner pops up offering “search for books at” Amazon.com Barnesandnoble.com Keyword banners Just-in-time strategy 27
  28. 28. Advertisement Strategies (cont.) Ads as a commodity CyberGold (MyPoints.com) Direct payment made by the advertisers for ads viewed Consumers fill out questionnaires CyberGold distributes targeted banners Reader clicks the banner, passes some tests on its content, and is paid for the effort 28
  29. 29. Advertisement Strategies (cont.) Viral marketing—word-of-mouth over the Internet Easily forwarded e-mail messages from sites Forward sites by filling out e-mail addresses “Advocacy marketing”—hotmail.com Each e-mail sent invited free hotmail service Company grew from 0 to 12 million in 18 months Downsides E-mail hoaxes Spread of viruses 29
  30. 30. Implementing the Strategies Customized ad strategy Filtering the irrelevant information by providing customized ads One-to-one advertisement Customized ads in Webcasting Personalized news and information by category Users select specific categories they want to receive 30
  31. 31. Implementing the Strategies (cont.) Comparisons as medium for advertisement Customer compares alternative products and services Finds the least expensive place to purchase the item Uses the comparison site that lists vendors and their prices for the product 31
  32. 32. Figure 5-3 Illustrative Screen for Product Comparison Source: Korean Engine (no longer in business). 32
  33. 33. Online Events, Promotions, and Attractions Enticing Web surfers to read Internet ads Yoyodine, Inc. Give-away games, discounts, contests, sweepstakes Entrants agree to read product information of advertisers Netzero and others offer free Internet access in exchange for viewing ads 33
  34. 34. Online Events, Promotions, and Attractions (cont.) Enticing Web surfers to read Internet ads Egghead uses real people to help you Lucent uses phone interviews that lead to material and ads sent to your computer Retailers provide special offers as shoppers “check out” Riddler provides opportunity to play games for prizes 34
  35. 35. Online Events, Promotions, and Attractions (cont.) Enticing Web surfers to read Internet ads Netstakes runs sweepstakes (no skills necessary) Register only once to win prizes randomly from different categories Sends traffic to several channels that have multiple sponsors Runs online ads both on the Web and in several hundred thousand e-mail lists Offer free samples (freesamples.com) Use company logo as cursor 35
  36. 36. Push Technology Benefits Requested information they delivered automatically to their desktop via Web technology and the Internet Decreases the number of hours used to search the Web 36
  37. 37. Push Technology (cont.) Pointcasting—mass customization of information Pre-specification profile Select appropriate content Download selection 4 types of push technology Self-service delivery Aggregated delivery Mediated delivery Direct delivery 37
  38. 38. Push Technology (cont.) Push on the Intranet Companies set up their own channels to pointcast important internal information to: their own employees (on intranets) their supply chain partners (on extranets) The Future of Push Technology Drawback: the bandwidth requirements are large Experts’ prediction: the technology will never fly 38
  39. 39. Intelligent Agents Product Brokering Knows the customer’s profile Tailors ads to the customers, or asks them if they would like to receive product information Alerts users to new releases Recommends products based on: Past selections Constraints specified by the buyers 39
  40. 40. Effectiveness and Pricing of Advertisement Methods for measuring advertisement effectiveness, conducting cost benefit analyses, pricing ads Exposure Models Multiple of number of guaranteed ad views Number of hits Click-Through Number of times customers click on banner Only effective for large Interactivity Based on how customer interacts with the ad view How much time was spent viewing the ad Actual Purchase Referral fee based on customers moving to ad site to make a purchase 40
  41. 41. Online Catalogs Evolution of online catalogs Merchants—advertise and promote Customers—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 41
  42. 42. Online Catalogs (cont.) Classifications of catalogs Dynamics of information presentation Static catalogs—textual description and static pictures Dynamic catalogs—motion pictures, graphics, sound Degree of customization Ready-made catalogs: same catalog to all customers Customized Catalogs: customized contents and display depending upon the 42 customers
  43. 43. Online Catalogs (cont.) Electronic catalogs allow integration of Order taking and fulfillment Electronic payment Intranet workflow Inventory and accounting system Suppliers’ extranet Relationship to paper catalogs 43
  44. 44. Customized Catalogs Assembled specifically for: A company An individual shopper Customization systems can: Create branded, value-added capabilities Allows user to compose order May include individualized prices, products, and display formats Automatically identify the characteristics of customers based on the transaction records 44
  45. 45. Special Advertisement Topics How much to advertise Permission advertisement Measuring, auditing, and analyzing Web traffic Self-monitoring of traffic Internet ad standards Localization Internet radio for localization 45
  46. 46. Special Advertisement Topics (cont.) Major Web ad players Advertising agencies and Web site developers Market research providers Traffic measurement and analysis companies Networks/rep firms Order processing and support 46
  47. 47. Managerial Issues Make vs. buy Finding the most visited sites Company research Commitment to Web advertising and coordination with traditional advertisement 47
  48. 48. Managerial Issues (cont.) Integrated marketing campaigns Ethical Issues Integrating advertisement with ordering and other business processes Content is critical 48

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