Chapter 5 (with modifications) J Chapter 5 (with modifications) J.Molka-Danielsen Advertisement in Electronic Commerce Prentice Hall, 2002

Learning Objectives Web Advertisement methods Strategies Promotion technologies Economic issues (who pays, what benefits) Implementation issues, catalogs, email Prentice Hall, 2002

Opening Case: Advertisement in the Digital Economy Theknot.com and Wedding411.com Information about planning weddings Assistance selecting vendors Show related vendor ads Promosinmotion.com VW beetle cars painted with Web site logos Real life product shows there is an on-line web site Topbulb.com Online catalog for light bulbs Online displays show there is an off-line business Prentice Hall, 2002

Opening Case: Advertisement in the Digital Economy Toyota When anyone searches altavista.com on cars, the Toyota banner gets displayed. Kelly Blue Book (kbb.com) new car prices has links to Toyota site. 10,000 users in 2 months clicked on the ad. IBM Uses banners linked to college campuses to promote recruitment: “There is life after Boston College: click to see why” (click rate 5-30%) Prentice Hall, 2002

Web Advertisement Terms 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 Prentice Hall, 2002

Visits and Page Views Judith Molka-Danielsen -- Site Summary – 02.02.02 Visits Total ........................ 3,664 Average per Day .................. 9 Average Visit Length .......... 2:32 This Week ...................... 125 Page Views Total ............... 5,751 Average per Day ................. 14 Average per Visit .............. 1.6 This Week ...................... 195 Prentice Hall, 2002

Free & Pay tools for advertisement Prentice Hall, 2002

Visitors by IP address Prentice Hall, 2002

Site Tracking by Timezone Prentice Hall, 2002

Visitors by Operating System Prentice Hall, 2002

Referrals Prentice Hall, 2002

Why Ads on the Web (cont.) Why Internet Advertisement? 3/4 of PC users gave up some TV time Want the educated, high-income Internet users Update any time, at minimal cost Reach a large number of viewers Online ads cheaper than TV, newspaper, or radio ads Prentice Hall, 2002

Why Web Advertisement (cont.) Why Internet Advertisement? Use text, audio, graphics, and animation Combine games, entertainment, and promotions Web TV and Internet radio are attracting more people Web ads can be interactive and targeted Use of the Internet is growing very rapidly Prentice Hall, 2002

Figure 5-1 Adoption Curves for Various Media Source: Morgan Stanley Technology Research. Prentice Hall, 2002

Beginning of Web (History) 1969 ARPAnet established. 1981 BITNET university and research network. First to use LISTSERV software for managing e-mail lists. 1983 the term Internet coined (based on TCP/IP). 1984 Gateways between BITNET and ARPAnet established. Tim Berners-Lee (TBL) wrote the first client-browser (Enquire) and initial specifications for HTTP and HTML. He first envisioned the only thing the client woud do is get a statitc page. (He is called the inventor of the Web.) 1989, (Mar) TBL working at the Swiss Institute for Particle Physics (CERN) wrote "Information Management: A Proposal"  1990, Oct. TBL starts work on a hypertext GUI browser+editor and coins the term WWW, demonstrates it in Dec. 1992, Jan. Line mode browser available by FTP. 1993, (Jan) X and Mac browsers released. 50 known servers. (Feb) NCSA release Andreessen's "Mosaic for X”. (Oct) Over 200 known HTTP servers. 1994, March Marc Andreessen and colleagues leave NCSA to form "Mosaic Communications Corp" (now Netscape). Prentice Hall, 2002

Web Advertising (cont.) Mass Marketing Direct Marketing Interactive Marketing Best outcome Consumer behavior Leading products Market Nerve center Preferred media vehicle Preferred technology Worst outcome Volume sales Customer data Customer relationships 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 Channel surfing Recycling bins Logoff Prentice Hall, 2002

Targeted Ads (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) Prentice Hall, 2002

Targeted Advertisement (cont.) Targeted Advertisement (one-to-one) The Double Click (DC) Approach for 3M Corp. (cont.) Learn about 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 (incentive for 3M allowing the ads, also promote partners) Prentice Hall, 2002

Web Advertisement (cont.) Summary: Pros of Internet Advertisement Internet ads accessed on demand (24/365) costs are the same regardless of audience location (larger geographic spread) Accessed because of INTEREST, so market segmentation opportunity is large Opportunity for one-to-one marketing Multimedia will get better, make web ads better Prentice Hall, 2002

Evaluate the Ad Methods Banners--banners are everywhere Keyword banners Random banners Banner Benefits Can be Customized Use push “force advertising” Direct link to advertiser (shoppers don’t have to search) Multi media capabilities Banner Limitations High cost Declining click ratio— viewers may think its annoying Size of banners is too small (not noticed) Prentice Hall, 2002

Advertisement Methods (pricing schemes.) Banner swapping Direct link between 2 sites. (bartering 1-to-1) Banner exchanges (can be 3rd party) Firm submits a banner Receives credit (less than 1-to-1) when they show others’ banners Can purchase additional display credits Specify what type of site where the banner is displayed (another business, or portal site) Use the credit to advertise on others’ sites (2:1) Prentice Hall, 2002

Evaluate the Ad 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 Prentice Hall, 2002

Evaluate the Ad Methods (cont.) E-mail Same benefits: Access many, low costs, can use databases to target groups. Same Problems: Purchase of e-mail addresses hurts trust Increasing Junk mail Increasing Spamming Prentice Hall, 2002

Cookies can be disabled by the user. Only the information that you provide, can be stored in a cookie. The site cannot know your e-mail name unless you choose to type it. Allowing a Web site to create a cookie does not give it or any other site access to the rest of your computer, and only the site that created the cookie can read it. Prentice Hall, 2002

Cookies after one 30 sec. visit Prentice Hall, 2002

Evaluate the Ad Methods (other opportunities.) Mobile phones Interactive one-to-one ads Location, situation, weather-related ads Splash Screen (better effects) Capture the user’s attention Promotion or lead-in (Molde Jazz Festival, its optional so the viewer can skip it.) Major advantage: create innovative multimedia (Gives more of an experience.) Spot leasing Permanent space on popular portal or Web page Ads may be small and expensive Prentice Hall, 2002

Evaluate the Ad Methods (cont.) URL (Universal Resource Locators) on Search Engines. 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 Prentice Hall, 2002

Evaluate the Ad Methods (cont.) Chat Rooms Virtual meeting ground Free to add this feature to a business site Advertisers can search the messages and target the chatter again and again (but annoying!) Can be more effective than banners Prentice Hall, 2002

Group Presentation next… Prentice Hall, 2002

Gruppe nr. 4 Miriam Agathe Holberg Odd-Geir Brandsæter Inge Martin Karlsvik Per Ove Brandsæter

Øvelse 1 s. 114 Sammenligne produkter og tjenester fra Netgrocer.com og BlueLight.com (= del av Kmart - konsernet) og evaluer deres sjanser for suksess.

Foretakene Netgrocer.com Internettbutikk som tilbyr alt av dagligvarer – bortsett fra ferskvarer som frukt, grønnsaker og lignende. Store sentraliserte lager i stedet for butikkutsalg. BlueLight.com Click – and – mortar foretak (online & offline salg). Tilbyr alt fra dagligvarer til hvitevarer, møbler, musikk, blomster og så videre. Inngår i senterkjeden Kmart.

Foretakene (forts.) Netgrocer.com Ordrene pakkes individuelt og sendes ut til husholdningene ved hjelp av FedEx (transportfirma). Varene leveres innen 1-4 virkedager på døren. BlueLight.com Varene sendes fra et hovedlager (Louisville, Kentucky) direkte til kunden. Leveringstiden varierer noe etter hvilke produkt som bestilles, men ca. 5 virkedager er vanlig.

Foretakene (forts.) Netgrocer.com Vareutvalg: Matvarer Apotek (reseptfrie varer inkl. veiledning) Småelektriske varer Andre husholdningsartikler BlueLight.com Vareutvalg: Matvarer (for storhusholdning) Apotek (resept – utfylling av skjema  bekreftes av lege) Stort utvalg i elektriske artikler (hvit/brun, pc, møbler osv.)

Strategier Netgrocer.com Opererer kun på internett Rabattklubb (prisreduksjoner og billigere frakt) God kundeservice (24/7 - telefonstøtte) Handleliste (over dine kjøpte produkter) BlueLight.com Click - and - mortar online & offline salg) varer kjøpt på nettet kan byttes i vanlige Kmart-butikker og motsatt God kundeservice (24/7 - telefonstøtte)

Strategier (forts.) Netgrocer.com On-demand delivery 30 dagers returrett BlueLight.com 30 dagers returrett Kmart-kart tilbys på nettet (i hensikt å øke salget også i Kmart-butikkene)

Muligheter for å lykkes Netgrocer.com Mer kostbart og arbeidskrevende å få innpass i markedet, da Netgrocer.com ikke kan benytte seg av drahjelp fra allerede veletablerte kjeder Avhenger mer på kundenes vilje til å benytte seg av netthandel Må kunne tilby kunden en ekstraverdi i forhold til tradisjonell handelsform (offline) lav pris, god service i form av info, tidsbesparelser ol.

Muligheter for å lykkes (forts.) Netgrocer.com Alt arbeid i forbindelse med å skaffe til veie leverandører, logistikksystem ol. koster og krever mye da Netgrocer.com alene må bygge opp dette fra start til slutt

Muligheter for å lykkes (forts.) BlueLight.com BlueLight har i utgangspunktet en fordel da de er et click-and-mortar foretak (flere bein å stå på), men dersom Kmart-konsernet skulle få problemer - innvirker dette automatisk på BlueLight.com BlueLight rekker ut til flere kunder  større salg Det kan for kundene virke forvirrende at Kmart på nettet opererer som BlueLight.com. Lojale Kmart-kunder kan derfor utebli fra netthandelen

Muligheter for å lykkes (generelt) Den yngre generasjon kjøpere er mer fortrolig med internetthandel - og øker dermed potensialet for nettsalg. Antall internettbrukere øker med tiden - både blant yngre og eldre

Muligheter for å lykkes(generelt) Trusler Sikkerhet og brukervennlighet må hele tiden optimeres, da uheldige episoder kan føre til at kunder i fremtiden vil sky netthandel. Omtaler av virksomhetene kan publiseres Online handel må gi en ekstra verdi for kunden i forhold til det en offline butikk er i stand til å tilby

Lecture resumes… Prentice Hall, 2002

Advertisement Strategies Tips for Internet-based Ad Design Visually appealing Targeted to specific groups Emphasize brands and a firm’s image Part of an overall marketing strategy Seamlessly linked with the ordering process Prentice Hall, 2002

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 Prentice Hall, 2002

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 Prentice Hall, 2002

Advertisement Strategies (cont.) Pull (Passive) Strategy Site itself provides attractive contents and display Use a non-commercial site that guides the process of finding customer requests Yahoo— portal search engine site as an effective aid for advertisement Push (Active) Strategy Sending e-mails or pop-up ads from collected cookie information. Obtaining mailing lists, cookie files. Mailing list generation—use agents, cookies, questionnaires Prentice Hall, 2002

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 Prentice Hall, 2002

Eudora E-mail on covering the add Prentice Hall, 2002

Ad Payment Strategies (cont.) Ads as a commodity CyberGold (MyPoints.com) Direct payment made by the advertisers for ads viewed CyberGold distributes targeted banners Reader clicks the banner, passes some tests on its content, and is paid for the effort Prentice Hall, 2002

Advertisement Strategies (cont.) Viral marketing—word-of-mouth over the Internet Forwarded e-mail messages from sites “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 Prentice Hall, 2002

Comparison Sites as medium for advertisement Customer learns about alternative products and where to purchase: the least cost place Source: Korean Engine (no longer in business). Prentice Hall, 2002

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 Prentice Hall, 2002

Online Events, Promotions, and Attractions (cont.) Enticing Web surfers to read Internet ads Use real people to help you (Egghead) Uses phone interviews that lead to material and ads sent to your computer (Lucent) Retailers give special offers as shoppers “check out” Run sweepstakes (Netstakes, no skills necessary) Offer free internet access (Netzero), or free samples (freesamples.com) Use company logo as cursor Prentice Hall, 2002

Push Technology (only partly discussed) Push on the Intranet (Push technology I would refer to as pervasive technology. It has greater importance than just marketing. Discuss in a later lecture.) 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 (difficult to implement on the current Internet.) Prentice Hall, 2002

Effectiveness and Pricing of Advertisement Methods for measuring advertisement effectiveness, conducting cost benefit analyses, pricing ads 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 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 corporations Prentice Hall, 2002

Online Catalogs as a form of advertising Evolution of online catalogs Consist of product database, directory and search capability and presentation function Replication of text in paper catalogs –or- More dynamic, customized and integrated Ready-made catalogs: same catalog to all customers Customized Catalogs: customized contents and display depending upon the customers Prentice Hall, 2002

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 Prentice Hall, 2002

Customized Catalogs Create branded, value-added capabilities Customization systems can: Create branded, value-added capabilities Allows user to compose order Individualize prices, products, and display formats Automatically identify the characteristics of customers based on the transaction records Prentice Hall, 2002

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 Prentice Hall, 2002

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 Prentice Hall, 2002

Managerial Issues Where to get attention: Find the most visited sites Company research: make vs. buy Integrated marketing campaigns: Web advertising coordination with traditional advertisement Ethical Issues Integrating advertisement with ordering and other business processes Content is critical Prentice Hall, 2002