Chapter 5
Advertisement in
Electronic Commerce
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Learning Objectives
Describe the objectives of Web advertisement,
its types and characteristics
Describe the major advertisement methods
used on the Web
Describe various Web advertisement strategies
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Learning Objectives (cont.)
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
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Learning Objectives (cont.)
Describe the issues involved in measuring
the success of Web advertisement as it
relates to different pricing methods
Compare paper and electronic catalogs
and describe customized catalogs
Describe Web advertisement
implementation issues
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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
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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
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Web Advertisement
Advertising is an attempt to disseminate information in
order to affect a buyer-seller transaction
Internet Advertising Terminology
Effective frequency
Hit
Impressions
Reach
Visit
Ad views
Banner
Click (ad click)
Click ratio
Cookie
CPM
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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
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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
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Web Advertisement (cont.)
Internet vs. Traditional methods
Combining advertising media
Internet is the fastest growing medium in history
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Figure 5-1
Adoption Curves for Various Media
Source: Morgan Stanley Technology Research.
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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)
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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)
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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
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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
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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
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Advertisement Methods
Banners--banners are everywhere
Keyword banners
Random banners
Limitations
Benefits
Customized to the target
audience or one-to-one
ads
Utilize “force
advertising” marketing
strategy
Direct link to advertiser
Multi media capabilities
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High cost
Declining click ratio—
viewers have become
immune to banners
Size of banners is too
small
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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Figure 5-3
Illustrative Screen for Product Comparison
Source: Korean Engine (no longer in business).
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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
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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
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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
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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
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Push Technology (cont.)
Pointcasting—mass
customization of
information
4 types of push
technology
Pre-specification
profile
Select appropriate
content
Download selection
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Self-service delivery
Aggregated delivery
Mediated delivery
Direct delivery
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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
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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
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Effectiveness and Pricing of Advertisement
Methods for measuring advertisement
effectiveness, conducting cost benefit analyses,
pricing ads
Interactivity
Exposure Models
Multiple of number of
guaranteed ad views
Based on how customer
interacts with the ad view
Number of hits
How much time was spent
viewing the ad
Click-Through
Number of times
customers click on banner
Only effective for large
corporations
Actual Purchase
Referral fee based on
customers moving to ad site to
make a purchase
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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
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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 customers
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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
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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
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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
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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
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Managerial Issues
Make vs. buy
Finding the most visited sites
Company research
Commitment to Web advertising and
coordination with traditional advertisement
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Managerial Issues (cont.)
Integrated marketing campaigns
Ethical Issues
Integrating advertisement with ordering
and other business processes
Content is critical
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