E-Marketing

1. E-Marketing Lecture 6 Sandeep Krishnamurthy

2. Trends • The Internet Advertising Bureau recently reported that Internet advertising revenues hit $1.92 billion in 1998, more than double the $907 million spent in 1997. • Internet advertising has hit a record level of expenditure for each of the last twelve consecutive quarters. • Fifth largest medium- larger than outdoor.

3. Types of Products Advertised • In the fourth quarter of 1998, the top categories were- • Non-computer retail (29%) • Computing (20%) • Financial services (19%) • Telecom (8%) • New media (7%) • Procter & Gamble is now advertising 30 brands online -- including Crest, Tide and Cover Girl

4. Three Promises of Internet Advt. • Sophisticated Audience • Sophisticated Message • Sophisticated Targeting

5. Sophisticated Audience • All users of the Internet, by definition, should know how to use a computer. Hence, the audience tends to be sophisticated. • In 1998, the median age of an Internet user was 33, the average household income was $59,000 and 57% of them had a college education. • Thus, the user profile is mainly a young, well-educated and well-off professional with a significant disposable income.

6. Sophisticated Targeting • The lament with most media has been that “half of your advertising dollars are wasted. The problem is, you don’t know which half.” • The reason for this is that most media are not very sophisticated in their targeting. • The promise of the Internet is narrowcasting rather than broadcasting. • Advertisements can be shown only to consumers who are interested in a product or activity.

7. Types of Ad Targeting • Content Targeting • Behavioral Targeting • User Targeting • Tech Targeting

8. Content Targeting • Content Targeting involves delivering ads based on the content of a web site or a interest category chosen by a consumer. • For example, an advertisement for a HP printer might be displayed on the search results page when a user types “printer” in a search engine.

9. Behavioral Targeting • It involves delivering ads based on how and when a visitor uses the Web. • Psychographic targeting • Ads can be shown to consumers matching a certain psychographic profile. • Frequency control • Ads can be delivered such that every consumer sees it 3-4 times- no more and no less.

10. Behavioral Targeting Contd. • Time control • Ads for a product can be shown at a time at when it is most likely to have the highest impact. • For example, a McDonalds banner can be shown at around 11 a.m. when individuals are starting to think of lunch

11. User Targeting • User Targeting involves delivering ads based on specific traits of a visitor. • An advertisement might be shown only to persons within a certain geographic location, within a certain industry or who use a certain domain name. • e.g., ads can be shown to North American users visiting your site from org domain names.

12. Tech Targeting • Tech Targeting involves delivering ads based on the visitor’s browser type, operating system or Internet access provider. • e.g., Apple might target ads for a new product only to consumers using Macintosh computers.

13. Sophisticated Message • One of the frustrations with media such as TV and radio is that there is no room to make a long, rational and complicated argument. • On the other hand, the goal of a large proportion of Internet advertising is to direct consumer traffic to an information-rich website. This allows advertisers to communicate rational arguments.

14. Reasons to advertise on the Internet • To build traffic to their site or off-line store. • To create consumer interest and excitement. • To introduce a new website. • To introduce modifications to an existing website. • To introduce a new product or service. • To match competitors’ advertising efforts. • To enhance short-term sales. • To announce special price promotions. • To announce special events. • To build a stronger brand.

15. What are the different options? • Banner Advertising (56%) • E-mail (1%) • Sponsorships (30%)

16. Banner Advertising • Banners are small rectangles that appear on the top, bottom and sides of the content in a website. • When a user clicks on a banner, he or she is automatically taken to a website that has been picked by the sponsor. • This could be the main page of the sponsor’s website, one specific section of the sponsor’s website or a new specially created site.

17. Types of Banner Ads • Standard banner • Streaming banner • Daughter windows • Interstitial banner ad • Pop-up ad

18. Sponsorships • Constant display model. • Modified content model.

19. E-mail • Unsolicited (spam) • Solicited with incentives • www.cybergold.com • www.mypoints.com • www.free-pc.com • www.epipo.com • Solicited without incentives • Postmaster direct

20. Problems with Banners • It is not clear to advertisers if the number of impressions is equal to the number of people who actually viewed the commercial message. • Banner ads have remained a text-only advertising medium.

21. Problems with Banners • More complicated ad formats such as interstitials may actually lead to the site crashing. • There may be limited standardization across viewers due to differences in the equipment used.

22. Understanding the Click • Are ads that consumers click-on necessarily successful? • Are ads that consumers do not click on failures?

23. Are ads that consumers click-on necessarily successful? • No. Because • Consumers may have been tricked into clicking through by gimmicks. • Consumers may have clicked by mistake. • There may be no clear post-click call for action leading to no meaningful action.

24. Are ads that consumers do not click on failures? • No. Because- • It may have improved brand awareness, knowledge, image. • It may lead to clicks in the future. • It may lead to purchase in the future.

25. Bottom Line • Pre-click excitement is a prerequisite. Without this, the ad is a dud. • But, if the click is important, post-click call for action must be addressed.

26. Problems with Banners? • 1999 Q1 and Q2 Conversion Rate: • Text Links (1.80%) • Storefront Links (1.43%) • E-mail Links (1.31%) • Product Links (2.18%) • Banner Links (1.12%) • Search Box Links(1.22%).

27. Problems with Solicited E-mail Advertising Models • Consumers opt-in to broad categories leading to poor targeting. • Consumers do not update their opt-in scheme often. • Many paid ad models make you wait for incentives.

28. Problems with Solicited E-mail Advertising Models • Ad streaming around the corners can never beat banners. • Given the nature of tasks involved, these models are likely to attract customers with a lot of disposable time- but not a lot of disposable income.

29. Placing the Ads • High-traffic approach • Placing ads on high-traffic sites leads to greater visibility. • Consolidation • Brokers place your ads on hundreds of smaller websites. • Barter • Two websites exchange banners.

30. Top 5 traffic sites in May (unique visitors in 1000s) 1 AOL Network 46,243 2 Microsoft Sites 32,389 3 Yahoo Sites 31,299 4 Lycos 29,963 5 Go Network 20,864

31. Types of Placement Technology • Each site with own ad server. • Advertising network (e.g. Doubleclick). • Each buyer empowered with networking software.

32. Paying for Banners • Barter • CPM • Cost per click • Cost per action • Cost per sale

33. Advertising Avoidance • Ad avoidance is observed in many media. • For example, TV viewers can zip (i.e., fast forward ads on a taped program) or zap (i.e., change the channel when an ad comes on). • Avoidance techniques for internet advertising have also emerged.

34. Avoiding Banner Ads • Banner ad filters work by setting themselves between the browser and the Web, screening out images they recognize as ads and blocking cookies or any other animation the individual does not want to see. • A filtered Web page shows either a broken icon or a blank box in place of the ad. • E.g., Intermute, AtGuard and AdsOff.

35. Spam avoidance • First, a blacklist of spammers is maintained at several sites. • Second, consumers are asked to let their Internet Service Provider (ISP) know every time they receive spam. This helps the ISP filter out such e-mails. • Finally, many Internet Service Providers now routinely eliminate spam even before it reaches individuals accounts.

36. Should advertising be blended with site content? • Pros: • Banners jerk consumers away from what they came to do. Integration helps keep the flow. • Cons: • Should advertisers determine editorial content and news? • Will consumers understand where the content ends and the ad begins?

37. Content and Advertising

38. Privacy Concerns • Advertisers now have sophisticated targeting capabilities. • In many cases, this is done by obtaining customer information through cookies. • Hence, many customers have expressed their concerns at marketers obtaining detailed information about their behavior.

39. Privacy Concerns • However, these concerns may be overblown in many cases. • Consumers do not fully understand the technology being used. • In many cases, reputable advertising companies maintain strict policies on privacy and make these policies known on their websites.

40. Governmental guidelines • Data gatherers must disclose- • Why they are collecting the information. • For what purposes they expect to use the information. • What steps will be taken to protect the confidentiality, quality and integrity of information collected. • The consequences of providing or withholding information. • Any rights of redress that are available to individuals for wrongful or inaccurate disclosure of their information.