Chapter 4: Advertisement in Electronic Commerce ppt

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Chapter 4
Advertisement in
Electronic Commerce

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Learning Objectives
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Describe the objectives of Web advertisement,
its types and characteristics
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Describe the major advertisement methods
used on the Web, ranging from banners to chat
rooms
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Describe various Web advertisement strategies
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Describe various types of promotions on the
Web
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Discuss the benefits of push technology and
intelligent agents

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Understand the major economic issues
related to Web advertisement

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Describe the issues involved in measuring
the success of Web advertisement as it
relates to different ad pricing methods
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Compare paper and electronic catalogs and
describe customized catalogs
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Describe Web advertisement implementation
issues ranging from ad agencies to the use
of intelligent agents
Learning Objectives (cont.)

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Opening Vignette :
CD-Max Uses E-mail Lists to Advertise
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CD- Max Enterprises
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A two-person business specializing in CD-ROM
development
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Operates a resource site for information delivery
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Generated an e-mail list of site visitors
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the list is also valuable to other advertisers
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50 lists were created to fit different advertisers

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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
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the list sales “surpassed” the company’s expectations
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selling e-mail lists has become a lucrative business

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Web Advertising
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Advertising is an attempt to disseminate
information in order to affect a buyer-seller
transaction
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Why Internet Advertisement?
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Three-quarters of PC users gave up some
television time
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Internet users are well educated with high-
income, which makes them a desired target for
advertisers
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Ads can be updated any time with a minimal cost;
therefore they are timely and very accurate

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Ads can reach very large numbers of potential
buyers all over the world
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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.
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Web ads can be media rich, including voice and
video
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Web ads can be interactive and targeted
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The use of the Internet is growing very rapidly
Web Advertising (cont.)
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Why Internet Advertisement?

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Internet Advertising Terminology
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Effective Frequency
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Hit
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Impressions
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Reach
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Visit
Web Advertising (cont.)
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Ad views
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Banner
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Clicks (or ad clicks)
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Click Ratio
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Cookie
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CPM

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Interactive Marketing
Web Advertising (cont.)
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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 relationships
Passive
Passive
Active
Food, 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 Marketing

Best outcome
Consumer behavior
Leading products
Market
Nerve center
Preferred
media vehicle
Preferred
technology
Worst outcome Channel surfing Recycling bins Logoff

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Internet is the fastest growing medium in history
Web Advertising (cont.)
Adoption Curves for Various Media - The Web Is Ramping Fast
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Targeted Advertisement (one-to-one)
Web Advertising (cont.)
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The Double Click (DC) Approach
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3M Corp. wants to advertise its $10,000 multimedia
projectors
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DC monitored people browsing the Web sites of
cooperating companies
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then matches them against a database

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then finds those people working for advertising agencies
or using Unix system (potential buyers)
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then builds a dossier on you, your spending, and your
computing habits using “a cookie”
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prepares an ad for 3M projectors
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targeted for people whose profile matches what is needed
for 3M
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Pros of Internet Advertisement
Web Advertising (cont.)
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Internet advertisements are accessed on demand 24
hours a day, 365 days a year, and costs are the same
regardless of audience location
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Accessed primarily because of interest in the content,
so market segmentation opportunity is large
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Opportunity to create one-to-one direct marketing
relationship with the consumer
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Multimedia will increasingly make Web sites more
attractive and compelling

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Distribution costs are low (just technology cost),
so millions of consumers are reached at the
same cost as that of reaching one
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Advertising and content can be updated,
supplemented, or changed at any time, and are
therefore always up-to-date
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Ease of logical navigation — you click when and
where you want, and spend as much time as you
desire there
Web Advertising (cont.)
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Pros of Internet Advertisement

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Advertising Methods
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Banners
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Banners are everywhere
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Keyword banners

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Random banners
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Benefits
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be customized to the target audience
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be customized to one-to-one targeted advertisement
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utilize “force advertising” marketing strategy
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Banner Swapping
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Direct link between one’s site to the other site
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Ad space bartering

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Banner Exchanges
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Swapping is a problem : a match is frequently not possible
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Banner exchange organizations
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a firm submits a banner
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receives credit when shows others’ banners
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can purchase additional display credits
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specify what type of site the banner can be displayed on
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use the credit to advertise on others’ sites
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credit ratio of approximately 2:1
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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.
Advertising Methods (cont.)

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Paid Advertising and Ad Agencies
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Advantage of using banners
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ability to customize them to the target audience
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ability to decide which market segments to focus
on
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be customized to one-to-one targeted
advertisement
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“forced advertising” marketing strategy is utilized
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Splash Screen
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Capture the user’s attention
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Promotion or lead-in
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Major advantage : create innovative multimedia
Advertising Methods (cont.)

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URL (Universal Resource Locators)
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Advantages:
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minimal cost is associated with it
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submit your URL to a search engine and be listed
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keyword search is used
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Disadvantages:
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search engines index their listings differently
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meta tags can be complicated
Advertising Methods (cont.)

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E-mail
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Several million users can be reached directly
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Purchase e-mail addresses
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Send the company information; low cost
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A wide variety of audiences; customer database
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Problem: Junk mail or spamming
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Target a group of people that you know
something about
Advertising Methods (cont.)

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Chat Rooms
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Virtual meeting ground
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Can be added to a business site for free
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Allows advertisers to cycle through messages

and target the chatter again and again
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Advertising can become more thematic
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More effective than banners
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Used in one-to-one connection
Advertising Methods (cont.)

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Advertisement Strategies
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Internet-base Ad Design
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Advertisements should be visually appealing
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Advertisements must be targeted to specific groups
or to individual consumers
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Advertisements must emphasize brands and a firm’s
image
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Advertisements must be part of an overall marketing
strategy
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Advertisements should be seamlessly linked with the
ordering process
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Designing Internet ads involve the following factors:

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Internet-based Ad Design: Important Factors
Advertisement Strategies (cont.)
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Page-Loading Speed
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Graphics and tables should be simple and meaningful.
They need to match standard monitors.
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Thumbnail (icons graphs) are useful.
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Business Content
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Clear and concise text is needed. A compelling page
title and header text is useful.
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The amount of requested information for registration
should be minimal.

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

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Security and Privacy
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Security and privacy must be assured.
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Option for rejecting cookies is a must.
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Marketing/Customer Focus
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Clear terms and conditions of the purchases, including
delivery information, return policy, etc. must be
provided.
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Confirmation page after a purchase, is needed.
Advertisement Strategies (cont.)
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Internet-base Ad Design: Important Factors

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Passive Pull Strategy
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Customer will visit a site if it provides helpful and
attractive contents and display
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Effective and economical way to advertise,
unidentified potential customers worldwide
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Advertising World is a non-commercial site that

can guide the process of finding the customer’s
wish
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Yahoo is a portal search engine site which can
be regarded an effective aid for advertisement
Advertisement Strategies (cont.)

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Active Push Strategy
Advertisement Strategies (cont.)
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Sending e-mails to the relevant people
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Obtaining the mailing list is the process of
identifying target customers
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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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Ad as a Commodity
Advertisement Strategies (cont.)
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CyberGold

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exchange of direct payment made by the
advertisers for viewing ads
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consumers fill out questionnaires
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CyberGold distributes targeted banners
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the reader clicks the banner to read it and, passing
some tests on its content, is paid for the effort

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Implementing the Strategies
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Customized Ad Strategy
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Filtering the irrelevant information by providing
customized ads
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One-to-One advertisement
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Customized ads can be found in PointCast
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personalized news and information by category
(Channel)
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packaged by content providers, assembled by
PointCast, delivered on screen savers or at
prearranged times