ADVERTISING, PR, SELLING
15.823 Internet marketing
Prof. Glen L. Urban
Spring 2001
OUTLINE
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Historical Perspective
Advertising Copy
How Much to Spend on Advertising
Acquisition/Retention Modeling
Role of PR and Selling
HISTORICAL PERSPECTIVE
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TV Model 1950’s
1960s - 80s -- Stable Media Mix
1990’s
– Interactive TV
– Internet Banners
– Push Marketing
Internet 2000
– Eye Ball Race -- Print/TV/Banners
– Click Through Rates Down
– Personalized Ads -- Streaming Video
Current - 2001
– Multi-Channel
– Customer Life Time Value
– Rich Media
ADVERTISING COPY
HOW MUCH SHOULD YOU
SPEND ON ADVERTISING?
APPROACHES
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All You Can Afford
Match Competition
Sales Goal - Short Run - Long Run Share
Profit (Loss Goal)
Reach and Frequency Goals
Response - Sales/Profits
-functions
-flow model
RESPONSE ANALYSIS
Ask what you are getting for your $
Marginal response -- profit
-- sales
-- customer acquisition
Slide #1
SIMPLE FLOW MODEL
UNAWARE
.33
AWARE
.33
VISIT SITE
.03
BUY
.75
LOYALTY
MODEL EXTENSIONS
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Depth of Repeat
Multi-period
Competition
Additional Variables
SALES
REVENUE
PROFIT BEFORE
DOLLARS
ADVERTISING
PROFIT AFTER
ADVERTISING
ADVERTISING
SALES RESPONSE -- MAXIMIZE PROFIT
* SALES
DOLLARS
*
PROFIT BEFORE ADVERTISING
*
PROFIT AFTER ADVERTISING
A0
WHAT WE KNOW
ADVERTISING
ESTIMATION
JUDGMENT
STATISTICS -Sale History
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Nielsen
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Click Stream
EXPERIMENTATION
PERSONAL SELLING
ROLE OF SELLING
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Still need
Complex System Design
Big price
B2B
Communication Mix
FUNCTIONAL SUBSTITUTION
ADVERTISING
ADVERTISING
AWARENESS
SELLING
SELLING
PERCEPTION
SELLING
PREFERENCE
PURCHASE
NEW METHODS
INTERNET
TELEMARKETING
ADVERTISING
AWARENESS
TELEMARKETING
PERCEPTION
TELEMARKETING
SELLING
SELLING
PREFERENCE
SELLING
PURCHASE
NEW METHODS
TELEMARKETING
ADVERTISING
AWARENESS
TELEMARKETING
PERCEPTION
SELLING
PREFERENCE
PURCHASE
SELLING
NEW METHODS
PR
AWARENESS
INTERNET
PERCEPTION
TELEMARKETING
PREFERENCE
PURCHASE
SELLING
PR
• “Free” ads
- actually many pay
- invest in PR (“marketing”) staff
• Believability
• Word of Mouth Transfer -- Community
INTEGRATION
• Behavioral Flow Model
• CLTV Model
Traditional
Media Reach Frequency
Flow
Internet Feature
UNAWARE
Strategy/Data Mining
AWARE
Media Spending
Copy
Copy
Copy
Store
Store
INTEREST
KNOWLEDGE
ATTITUDE
PREFERENCE
CONFIDENCE
Pick up
PURCHASE
Return
USE / LOYALTY
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Browse
WOM – PR
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Visit site
Entertaining/Easy to use site
Dialogue
Personalization
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Information
Fair / Compete
Education
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Personal
Comparison
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Advisor
Configuration
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800/email advise
Overcome objections
EOffer
Trust
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Overlay Channel
Mail / Home Delivery
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WOM -- opinions
Relationship
Service
IMPLICATIONS
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Advertising Goals (budget & copy)
Will Increasingly Become Response
Acquisition Modeling and Loyalty
Communication Mix
- advertising / PR
- multi-channel selling
ILLUSTRATIVE EXAMPLE
SIZE OF MARKET
10,000
NUMBER OF SEGMENTS
5
PRICE OF PRODUCT
$ 16,000
CONTRIBUTION MARGIN
$
FIXED COST
$750,000
COSTS ONE AD
$ 30,000
COST OF PERSONAL VISIT
$
125
COSTS OF ONE TELESELL
$
37.50
ADVERTISING REACH 1 AD
10 ADS
FRACTION READ AD
5,000
.1
.65
.5
RESOURCES
ADVERTISING
PERSONAL SELLING
TELEMARKETING
SEGMENT 1
SEGMENT 2
SEGMENT N
AWARENESS
AWARENESS
AWARENESS
REQUEST
RECOMMEND
PURCHASE
REQUEST
RECOMMEND
PURCHASE
OUTPUT
SALES
SALES / CALL
PROFIT
PROFIT / CALL
REQUEST
RECOMMEND
PURCHASE
Table 8.3
PROBABILITY OF RECOMMEND BY MIX AND SEGMENT
SEGMENT 1
SEGMENT 5
Advertising
ONE
.07
SATURATION
(.25)
ONE
.014
SATURATION
(.05)
Telesell
.09
(.40)
.018
(.08)
Personal Sell
.11
(.5)
.022
(.10)
Ad & Personal
.17
(.6)
.034
(.12)
Personal & Tele
.19
(.8)
.038
(.16)
Ad & Personal
& Tele
.25
(.85)
.05
(.17)
BASE ALL SELLING
SALES FORCE SIZE
NUMBER OF CALLS / YEAR
TOTAL SALES ($)
COMMUNICATION BUDGET ($)
PROFIT ($)
PROFIT / CALL
28
22,000
13,984,000
2,750,000
870,000
39.55
SELLING ALLOCATION
PERSONAL SELLING +
ADVERTISING + TELEMARKETING
ALL
SEGMENT
SELL
1
4
2
4
3
2
4
1
5
0
COLD CALLS
CALLS
(PERSONAL)
(TELESELL)
2
2
2
2
0
0
0
0
0
0
1200
FOLLOW UP
“PRESOLD”
ALL
BEST
BEST WITH
SELL
WITH ADS
TELEMARKETING
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7
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22,000
20,140
11,040
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29,200
13,984
14,056
20,710
2,750
2,727
2,475
870
915
3,215
PROFIT/PERSONAL CALL
40
45
291
PROFIT / COMMUNICATION BUDGET
.32
.34
1.30
PROFIT PER HOUR OF TOTAL SELLING EFFORT
1.97
2.20
8.76
SALES PER HOUR OF TOTAL SELLING EFFORT
316
348
560
NUMBER OF ADS
NUMBER PERSONAL CALLS
NUMBER TELESELL
TOTAL SALES
COMMUNICATION BUDGET
PROFIT