Advertisement in Electronic Commerce

Lecture 15

Summary of Previous Lecture Electronic Commerce definition. E-Commerce Infrastructure

Related Definitions

Dimensions of Electronic Commerce Product Process Delivery Agent

Commerce Differences E-Commerce Field

Summary of Previous LecturePeoplePublic PolicyTechnical standards and ProtocolsOrganization

Electronic Market Types of E-Commerce

Business to Consumer Business to BusinessConsumer to Consumer

Summary of Previous LecturePerson to PersonConsumer to BusinessBusiness to EmployeeG2G (Government-to-Government), G2E (Government-to-Employee), G2B (Government-to-Business), B2G (Business-to-Government), G2C (Government-to-Citizen)

Summary of Previous Lecture Types of Inter organizational systems

Electronic data interchange (EDI) Extranets Electronic funds transfer (EFT) Integrated messaging systems Shared databases Electronically-supported supply chain management

Benefits of E-Commerce Benefits to organization Benefit to customers Benefits to society

Limitations of E-Commerce

Today’s Lecture Objectives Web advertisement, its types and characteristics 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

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

Describe Web advertisement implementation issues ranging from ad agencies to the use of intelligent agents

Today’s Lecture Objectives

Where to start?

Web Advertisement: A Way to Make Money out of your Computer

What is Advertisement? Advertising is an attempt to disseminate

information in order to affect a buyer-seller transaction

Internet Advertisement Internet Advertisement is gaining

popularity because, 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

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.

Internet Advertisement 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 Advertisement Example

Advisement banners

Web Advertisement Example

Web Advertisements Terminologies

Terminologies being commonly used areAd viewsBannerClicks (or ad clicks)Click RatioCookie

Web Advertisements Terminologies

CPMEffective FrequencyHit ImpressionsReachVisit

Ad views An ad view, synonymous with ad

impression , is a single ad that appears on a Web page when the page arrives at the viewer's display.

Ad views are what most Web sites sell or prefer to sell. A Web page may offer space for a number of ad views.

Banner A graphic image used on Web sites to

advertise a product or service. Will be discussed later in this lecture.

Web banners

Ad Clicks Action from a user clicking on an

advertisement to get more information. Number of times users click on an ad banner.

“Hit Count” are very useful to determine the demand or interest in any product.

Ad-Clicks statistics Within different Operating Systems

Click Ratio Clickthrough rate (CTR) is a way of measuring

the success of an online advertising campaign for a particular website.

The clickthrough rate of an advertisement is defined as the number of clicks on an ad divided by the number of times the ad is shown (impressions), expressed as a percentage. For example, if a banner ad is delivered 100 times

(100 impressions) and receives one click, then the clickthrough rate for the advertisement would be 1%.

Cookie A cookie, also known as an HTTP cookie, web cookie,

or browser cookie, is usually a small piece of data sent from a website and stored in a user's web browser while a user is browsing a website.

When the user browses the same website in the future, the data stored in the cookie can be retrieved by the website to notify the website of the user's previous activity.

Not this Cookie

Cost per Thousand (CPM) The letter "M" in the abbreviation is the Roman

numeral for one thousand. CPM is used by Internet marketers to price ad

banners. Sites that sell advertising will guarantee an advertiser

a certain number of impressions (number of times an ad banner is downloaded and presumably seen by visitors.), then set a rate based on that guarantee times the CPM rate. A Web site that has a CPM rate of $25 and guarantees advertisers 600,000 impressions will charge $15,000 ($25 x 600) for those advertisers' ad banner.

Effective Frequency An estimated amount of times a person

must see a particular brand awareness commercial on a product in order to change that person’s attitude and awareness about that product.

Hit A hit is a request to a web server for a file

(For example a web page). When a web page is uploaded from a

server the number of "hits" or "page hits" is equal to the number of files requested. Therefore, one page load does not always

equal one hit because often pages are made up of other images and other files which stack up the number of hits counted.

Impressions It is the exact number of times a specific

Web site has been accessed or viewed by a user.A page impression acts as a counter for Web

pages, informing site owners how many times their sites were visited.

Web Reach Web reach is the accessibility of the user

to download a webpage.Pages out of reach are often located on the

servers which are mostly down.

Web Visit Number of users visiting a web page or

website. It is often recorded as a counter.

Different Count formats

Interactive Marketing

Web Advertising

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

Web Advertising

Web Advertising Targeted Advertisement (one-to-one)

The Double Click (DC) Approach 3M Corporation 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 file 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

Web Advertisings 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

Internet Advertising -- ProsDistribution 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

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 exchange

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

Advertising Methods

Banner Exchange organization 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.

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

Advertising Methods

Banner Exchange Website

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

Advertising Methods

E-mailSeveral million users can be reached directlyPurchase e-mail addressesSend the company information; low costA wide variety of audiences; customer databaseProblem: Junk mail or spammingTarget a group of people that you know

something about

Advertising Methods

Chat RoomsVirtual meeting groundCan be added to a business site for freeAllows advertisers to cycle through messages

and target the chatter again and againAdvertising can become more thematicMore effective than bannersUsed in one-to-one connection

Advertising Methods

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:

Advertisement Strategies 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.

Advertisement Strategies 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.

Advertisement Strategies 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

Advertisement Strategies Active Push Strategy

Sending e-mails to the relevant peopleObtaining the mailing list is the process of

identifying target customersMailing list generation is done in companies

by using agent technology and cookies as well as by filling out questionnaires (by customers)

Advertisement Strategies

Ad as a CommodityCyberGold

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

Implementing the Strategies

Filtering the irrelevant information by providing customized ads

One-to-One advertisement

Customized Ad Strategy

ProductDatabase

MallOperator

A

ProductDatabase

MallOperator

B

ProductDatabase

MallOperator

C

Meta-Malls Coordinator

Customer

Meta-MallsCustomer Assistant

Direct Visit

Summaryand IndexDatabase

Implementing the Strategies Comparison Aid as Medium of

Advertisement

Online Events, Promotions and Attractions How to attract 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.

Lucent.com Web attraction

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

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

Intelligent Agents Intelligent Agents are automatic programs, which run

separately and are capable of performing different advertisement related functions. For example,

Product Brokering Agents 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

Today’s Misconception

Summary Today we have been learnt

How to advertise on the Web? Web Advertisement Web Advertisement Terminologies

Ad views Banner Clicks (or ad clicks) Click Ratio

CookieCPM

SummaryEffective FrequencyHit ImpressionsReachVisit

Pros of Internet Advertisement Double Click Approach Advertisement Methods

Banners and Banner ExchangesBanner Swapping

SummaryAdvertisement Strategy

Internet Based Ad Design Passive Pull Strategy Active Push Strategy Ad as a Commodity

Push Technology Implementing Strategy Intelligent Agents