laudon traver e-commerce4e chapter07.pptmcs/courses/2008_01/... · mixing offline and online...
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E commerceE-commercebusiness. technology. society.Fourth Edition
Kenneth C. Laudon
Carol Guercio Traver
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Chapter 7Chapter 7
E M k ti C i tiE-commerce Marketing Communications
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Vid Ad C B Bli dVideo Ads Cure Banner Blindness:String Master
Class Discussion What advantages do video ads have over What advantages do video ads have over
traditional stationary banner ads?
Where do sites like YouTube fit in to a Where do sites like YouTube fit in to a marketing strategy featuring video ads?
Wh t f th h ll d i k f What are some of the challenges and risks of placing video ads on the Web?
Do you think Internet users will ever develop ‘blindness’ towards video ads as well?
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Actiontuners.com
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Marketing Communications
Online marketing communications: Methods used by online firms to communicate with consumer and create strong brandconsumer and create strong brand expectations
Promotional sales communications: Suggest Promotional sales communications: Suggest consumer “buy now” and make offers to encourage immediate purchase
Branding communications: Focus on extolling differentiable benefits of consuming product or serviceor service
Many forms of online marketing communications: online advertising email
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communications: online advertising, email marketing, public relations, and Web sites
Online Advertising
Paid message on Web site, online service or other interactive medium, such as interactive messaging
2007: $21 4 billion spent expected to grow to $24 7 2007: $21.4 billion spent, expected to grow to $24.7 billion by 2010
Advantages:Advantages: Adults (age 18-34) are using the Internet Ability to target ads to narrow segments and track
performance in almost real timeperformance in almost real time Provide greater opportunity for interactivity
Disadvantages:g Concerns about cost versus benefit Concerns about how to adequately measure results
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Online Advertising from 2000-2011Figure 7.1, Page 419
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SOURCES: Based on data from eMarketer, 2007a, 2005a; IAB/PricewaterhouseCoopers, 2007, 2005; Universal McCann, 2007, 2005.
Forms of Online Advertisements
Display and rich media/video ads Search engine advertising: Paid search Search engine advertising: Paid search
engine inclusion and placement SponsorshipsSpo so s ps Referrals (affiliate relationship marketing) E-mail marketing E-mail marketing Online catalogs Online chat Online chat Blog advertising
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Table 7.2: Online Advertising Spending for Selected Formats
Format 2007 2011 % Change
Paid search $8 624 $16 590 92%Paid search $8,624 $16,590 92%
Rich media/video $1,755 $5,481 212%
Display ads $4,687 $8,190 75%
Classified $3,638 $6,930 90%
Referrals $1,733 $3,675 112%
Sponsorships $535 $504 -6%
E-mail $428 $630 47%
Total $21 400 $42 000 96%Total $21,400 $42,000 96%
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Display Ads
Banners
Display promotional message in a rectangular box on a computer screen
Sometimes feature Flash video and animations or animated GIFsanimated GIFs
Pop-ups and pop-unders
Banners and buttons appearing on screen without user Banners and buttons appearing on screen without user calling for them
Although the most annoying form of marketing g y g gcommunication, twice as effective than normal banner ads in terms of click-through rates, simply because users unintentionally click on the ads while trying to close them
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unintentionally click on the ads while trying to close them.
T f Di l Ad S ifi d bTypes of Display Ads Specified by Interactive Advertising Bureau (IAB)
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Rich Media/Video Ads Rich media/video ads: Employ Flash, DHTML,
Java, streaming audio and/or videoJava, streaming audio and/or video The fastest growing form of online advertising:
about 212% from 2007 to 2011 Advantage: Boost brand awareness (by 10%)
rather than driving sales Interstitial ads Interstitial ads
Placing full-page message between current and destination pages of a userM t ti ll t th t d ft dMove automatically to the requested page after ad is read for some time
Good interstitial ads have option to “skip through” or “ t ” f h ’t i t t d“stop” for users who aren’t interested
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Rich Media/Video Ads Superstitial ads
Off d b Vi i t Offered by Viewpoint
Rich media ad that can be any size up to full screen 900 x 500 and file size up to 600KBscreen 900 x 500, and file size up to 600KB
Differ from interstitials in that they are pre-loaded into browser’s cache and don’t play until fullyinto browser s cache and don t play until fully loaded
After ad is fully downloaded it waits until the user After ad is fully downloaded, it waits until the user clicks to another page before popping up in a separate window
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Table 7.3: Web Sites That US Online Video Viewers Visit to Watch Videos Once a Week or More
Web Site Percentage of Respondents
YouTube 42%YouTube 42%
Television network, e.g., Abc.com 41%
News site, e.g., CNN.com 35%
Yahoo 25%
Google 24%
MySpace 19%
iTunes 7%
Other 19%Other 19%
Total (have watched online video) 74%
Have never watched online 26%
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Search Engine Advertising: Paid Search Engine Inclusion and Placementg
One of fastest growing (from 1% of total online advertising spending in 2000 to >40% in 2007) and most effective forms of online marketing communications
Huge audience: 70 illi A i (>40% f li l ti ) 70 million Americans (>40% of online population) use a search engine daily, almost comparable to email user populationp p
In total, generating around 8 billion searches per month
Can be very effective by responding with ads matching the interests of users, creating click-through rate of 10-12%
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12%
Search Engine Marketing Revenues
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Search Engine Advertising: Paid Search Engine Inclusion and PlacementEngine Inclusion and Placement
Types:P id i l i Paid inclusion
Paid placement Keyword advertising Keyword advertising
Merchants buy keywords through bidding for ranking and visibility of their ads on search g yresult page
Google AdWords, Yahoo PrecisionMatch, Mi ft dC tMicrosoft adCenter
Network keyword advertising: Google AdSense
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Search Engine Advertising: Paid Search Engine Inclusion and Placement (cont’d)g ( )
Google, Yahoo, MSN are leaders in this technology Issues:
Appropriate disclosure of paid inclusion and placement practices
Search engine click fraud Wh tit hi thi d ti t f d l tl li k When competitor hires third parties to fraudulently click on competitor ads to drive up costs)
When site publisher fraudulently clicks on ads posted on their sites to increase ad revenuetheir sites to increase ad revenue One variation is by using “click bots” that
automatically click on ads from hundreds of different IP addresses
Fraudsters call up a search results page where their Fraudsters call up a search results page where their competitor’ ads appear, and do not click on competitor ads, resulting in low ad popularity rank, which can result in their being pushed down the rank order of ads
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Ad nonsense (Google AdSense ads that are inappropriate for content)
Sponsorships and Affiliate Marketing
Sponsorship: Paid effort to tie advertiser’s name to particular information, event, venue i th t i f b d i iti tin way that reinforces brand in positive, yet not overtly commercial manner
E W bMd id li k t it E.g., WebMd.com provides links to its sponsor like Philips’ product such as defibrillatorsdefibrillators
Affiliate relationship: Permits firm to put logo or banner ad on another firm’s Web site fromor banner ad on another firm s Web site from which users of that site can click through to affiliate’s site
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affiliate s site
E-mail Marketing and the Spam Explosion Direct e mail marketing: E mail sent directly Direct e-mail marketing: E-mail sent directly
to interested consumers who “opt-in” or have not “opted-out”pMuch cheaper compared to traditional
direct mail: $5-$10 per 1,000 VS $500-$700 1 000$700 per 1,000
Spam: Unsolicited commercial e-mail Spam is exploding out of control 70% 80% of all Spam is exploding out of control—70%–80% of all
e-mail purportedly is spam Efforts to control spam:p
• Technology (Filtering software) (only partly effective)• Government regulation (CAN-SPAM and state laws)
(largely unsuccessful)
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( g y )• Self-regulation by industry (ineffective)• Volunteer efforts (not enough)
Percentage of E-mail That Is SpamFigure 7.6, Page 434
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SOURCE: Based on data from MessageLabs.com, 2007.
Spam CategoriesFigure 7.7, Page 435Figure 7.7, Page 435
Copyright © 2007 Pearson Education, Inc. Slide 7-23SOURCE: Symantec, 2007.
Other Forms of Online Marketing Communications Online catalog
Provides equivalent of paper-based catalog Provides equivalent of paper based catalog Was popular in early years, but quickly went out
because pages took so long to load Recently has gained back in popularity due to 54% of
online households now own broadband high-speed connections in 2007connections in 2007
Blog advertising: Online ads related to content of blogs Social network advertising: Ads on MySpace Facebook Social network advertising: Ads on MySpace, Facebook,
YouTube, etc. Game advertising: downloadable ‘advergames’, placing
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g g p gbrand-name products within games
Targeted Marketing: Getting PersonalTargeted Marketing: Getting Personal
Behavioral targeting efforts increasing; one of f t t i li k ti t h ifastest growing online marketing techniques.
Recent acquisitions by Google, Yahoo, Microsoft of firms engaged in this type of marketing have raised concerns
Privacy groups, FTC are examining issues raised by targeted methodsy g
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Mixing Offline and Online Marketing CommunicationsCommunications
The original idea of moving all traditional marketing based on mass media toward onlinemarketing based on mass media toward online approach did not happen
Traditional offline consumer-oriented industries Traditional offline consumer oriented industries have learned to use Web to extend brand images and sales campaigns
Online companies have learned how to use traditional marketing communications (printed
di d TV) t d i l t W b itmedia and TV) to drive sales to Web site Most successful marketing campaigns
incorporate both online and offline tactics
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incorporate both online and offline tactics
Online Marketing Metrics: Lexicon Metrics that focus on success of Web site in Metrics that focus on success of Web site in
achieving audience or market share Impressions – no. of times an ad is served Click through rate (CTR) % times an ad is clicked Click-through rate (CTR) – % times an ad is clicked View-through rate (VTR) – % times an ad is not clicked
immediately but Web site is visited within 30 days Hits – no of http requests Hits – no. of http requests Page views – no. of pages viewed Stickiness (duration) – average length of stay at a Web
sitesite Unique visitors – no. of unique visitors in a period Loyalty – no. of pages viewed, frequency of single user
visits to the site % customers who return to site in a yearvisits to the site, % customers who return to site in a year Reach – % site visitors who are potential buyers or % total
market buyers who buy at a site Recency – time elapsed since last action taken by a buyer,
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Recency time elapsed since last action taken by a buyer, e.g., site visit or purchase
Online Marketing Metrics: Lexicon (cont’d) Metrics that focus on conversion of visitor toMetrics that focus on conversion of visitor to
customer Acquisition rate – % visitors who register or visit product’s
pagespages Conversion rate – % visitors who make purchase Browse-to-buy-ratio – ratio of items purchased to item views View-to-cart ratio – ratio of “Add to Cart” clicks to product View-to-cart ratio ratio of Add to Cart clicks to product
views Cart conversion rate – ratio of actual orders to “Add to Cart”
clicks Checkout conversion rate – ratio of actual orders to
checkouts started Abandonment rate – % shoppers who add to cart but leave pp
the site Retention rate – % existing customers who continue to buy
regularly (similar to loyalty)
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Attrition rate – % customers who do not return during next year after first purchase
Online Marketing Metrics: Lexicon (cont’d)
E-mail metricsO t % il i i t h d th il Open rate – % email recipients who read the email message
Delivery rate – % email recipients who received the Delivery rate – % email recipients who received the email
Click-through rate (e-mail) – % recipients who clicked g ( ) pthrough to offers
Bounce-back rate – % emails that couldn’t be delivered
Unsubscribe rate – % recipients who click unsubscribe
Conversion rate (e-mail) – % recipients who actually buy
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buy
An Online Consumer Purchasing ModelFigure 7.9, Page 452
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How Well Does Online Advertising Work?
What’s the most effective kind of online ads? How does online ad compare to offline one? How does online ad compare to offline one? These depend on goals of campaign, nature of
product, quality of Web site, and what you p q y ymeasure.
Click-through rates may be low, but this is just one measure of effectivenessone measure of effectiveness
From the next figure, as consumers become more accustomed to new online advertising gformats, click-through rates (for display ads and email) tend to fall.
However this is not true of video and rich media
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However, this is not true of video and rich media
Click-through Rates by Format 2000–2005Figure 7.10, Page 454
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SOURCE: SOURCES: Doubleclick, 2007a, b; eMarketer, Inc., 2007c; author estimates.
How Effective is Online Advertising Compared to Offline Advertising?Compared to Offline Advertising?
From the next figure, online channels f bl ith t diti l h lcompare favorably with traditional channels
Search engine has grown to be the most cost effective form of marketing communications
Cost effectiveness of targeted opt-in email g premains very strong
Research indicates that most powerful Research indicates that most powerful marketing campaigns include both online and offline advertisingoffline advertising
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Comparative Returns on Investment
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The Costs of Online Advertising
Cost per thousand (CPM): Advertiser pays for impressions in 1,000 unit lots
Cost per click (CPC): Advertiser pays pre-negotiated fee for each click an ad receives
Cost per action (CPA): Advertiser pays pre-negotiated amount only when user performs a specific action, e.g., register or purchase
Hybrid: Two or more of the above models used together
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Average Cost Per Customer Acquisition for Select Media in the US, 2006
Internet search $8 50Internet search $8.50
Yellow pages $20.00
O li di l d $50 00Online display ads $50.00
E-Mail $60.00
Direct mail $70.00
Newspaper $25.00
Magazine $19.00
Television $17.00
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Software for Measuring Online Marketing ResultsMarketing Results
WebTrends: Software program that automatically calculates activities at site, such as abandonment rate, conversion rate, etc.
Visual Sciences: Web service that assists marketing managersg g
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Web Site Activity AnalysisFigure 7.12, Page 459
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The Web Site as a Marketing Communications ToolCommunications Tool
Web site can be viewed as extended online advertisement
Domain name First communication e-commerce site has with
prospective customerprospective customer Should be short, memorable, not easily confused
with others, difficult to misspell Search engine optimization: Search engine optimization:
Register with as many search engines as possible Ensure that keywords used in Web site description match
keywords likely to be used as search terms by userkeywords likely to be used as search terms by user Place keywords in metatag and page title Link site to as many other sites as possible (creating ads,
Web sites, entering into affiliate relationships with other sites)
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sites) Get professional help
Web Site Functionality
Factors affecting effectiveness of a software interface: Utility (useful)
Ease of use
Factors in credibility of Web sites: Design lookg
Information design/structure
Information focus
Responsiveness
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Factors in the Credibility ofCredibility of Web SitesFigure 7 13 Page 464Figure 7.13, Page 464
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SOURCE: Based on data from Fogg, et al, 2002.