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ADVERTISING, PR, SELLING

ADVERTISING, PR, SELLING. 15.823 Internet marketing Prof. Glen L. Urban Spring 2001. OUTLINE. Historical Perspective Advertising Copy How Much to Spend on Advertising Acquisition/Retention Modeling Role of PR and Selling. HISTORICAL PERSPECTIVE. TV Model 1950’s

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ADVERTISING, PR, SELLING

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  1. ADVERTISING, PR, SELLING 15.823 Internet marketing Prof. Glen L. Urban Spring 2001

  2. OUTLINE • Historical Perspective • Advertising Copy • How Much to Spend on Advertising • Acquisition/Retention Modeling • Role of PR and Selling

  3. HISTORICAL PERSPECTIVE • 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

  4. ADVERTISING COPY

  5. HOW MUCH SHOULD YOUSPEND ON ADVERTISING?

  6. APPROACHES • 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

  7. RESPONSE ANALYSIS Ask what you are getting for your $ Marginal response -- profit -- sales -- customer acquisition

  8. Slide #1 SIMPLE FLOW MODEL UNAWARE .33 AWARE .33 VISIT SITE .03 BUY .75 LOYALTY

  9. MODEL EXTENSIONS • Depth of Repeat • Multi-period • Competition • Additional Variables

  10. SALES REVENUE PROFIT BEFORE ADVERTISING DOLLARS PROFIT AFTER ADVERTISING ADVERTISING SALES RESPONSE -- MAXIMIZE PROFIT

  11. SALES * DOLLARS PROFIT BEFORE ADVERTISING * * PROFIT AFTER ADVERTISING A ADVERTISING 0 WHAT WE KNOW

  12. ESTIMATION JUDGMENT STATISTICS - Sale History - Nielsen - Click Stream EXPERIMENTATION

  13. PERSONAL SELLING

  14. ROLE OF SELLING • Still need • Complex System Design • Big price • B2B • Communication Mix

  15. FUNCTIONAL SUBSTITUTION ADVERTISING ADVERTISING AWARENESS SELLING SELLING PERCEPTION SELLING PREFERENCE PURCHASE

  16. NEW METHODS INTERNET TELEMARKETING ADVERTISING AWARENESS TELEMARKETING PERCEPTION TELEMARKETING SELLING SELLING PREFERENCE SELLING PURCHASE

  17. NEW METHODS TELEMARKETING ADVERTISING AWARENESS TELEMARKETING PERCEPTION SELLING SELLING PREFERENCE PURCHASE

  18. NEW METHODS PR AWARENESS INTERNET PERCEPTION TELEMARKETING PREFERENCE SELLING PURCHASE

  19. PR • “Free” ads - actually many pay - invest in PR (“marketing”) staff • Believability • Word of Mouth Transfer -- Community

  20. INTEGRATION • Behavioral Flow Model • CLTV Model

  21. IMPLICATIONS • Advertising Goals (budget & copy) • Will Increasingly Become Response • Acquisition Modeling and Loyalty • Communication Mix - advertising / PR - multi-channel selling

  22. ILLUSTRATIVE EXAMPLE SIZE OF MARKET 10,000 NUMBER OF SEGMENTS 5 PRICE OF PRODUCT $ 16,000 CONTRIBUTION MARGIN $ 5,000 FIXED COST $750,000 COSTS ONE AD $ 30,000 COST OF PERSONAL VISIT $ 125 COSTS OF ONE TELESELL $ 37.50 ADVERTISING REACH 1 AD .1 10 ADS .65 FRACTION READ AD .5

  23. MODEL RESOURCES ADVERTISING PERSONAL SELLING TELEMARKETING MODEL SEGMENT N SEGMENT 1 SEGMENT 2 AWARENESS AWARENESS AWARENESS REQUEST REQUEST REQUEST RECOMMEND RECOMMEND RECOMMEND PURCHASE PURCHASE PURCHASE OUTPUT SALES SALES / CALL PROFIT PROFIT / CALL

  24. BASE - ALL SELLING SALES FORCE SIZE 28 NUMBER OF CALLS / YEAR 22,000 TOTAL SALES ($) 13,984,000 COMMUNICATION BUDGET ($) 2,750,000 PROFIT ($) 870,000 PROFIT / CALL 39.55

  25. SELLING ALLOCATION PERSONAL SELLING + ADVERTISING + TELEMARKETING COLD CALLS (PERSONAL) 2 2 0 0 0 1200 CALLS (TELESELL) 2 2 0 0 0 SEGMENT 1 2 3 4 5 ALL SELL 4 4 2 1 0 FOLLOW UP “PRESOLD”

  26. ALL BEST BEST WITH SELL WITH ADS TELEMARKETING NUMBER OF ADS - 7 - NUMBER PERSONAL CALLS 22,000 20,140 11,040 NUMBER TELESELL - - 29,200 TOTAL SALES 13,984 14,056 20,710 COMMUNICATION BUDGET 2,750 2,727 2,475 PROFIT 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

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