Online Advertising Speaker: Jerry Gao Ph.D.San Jose State Universityemail: firstname.lastname@example.orgURL: http://www.engr.sjsu.edu/gaojerryDec., 2000
Introduction to Web Advertising • Introduction to Advertising • Introduction to Web Advertising • Web Advertising Methods • Web Advertising Business Models • Web Advertising Technologies • Web Advertising Tools • Web Advertising Business Companies • Samples of Business Financial Information
Introduction to Advertising Definition of advertising: - Advertising is a form of mass communication, it is also nonpersonal. - Advertising is paid nonpersonal communication from an identified sponsor using mass media to persuade or influence an audience. - Advertising is one of the four marketing techniques (advertising, sales promotion, public relations, personal selling) Types of Advertising: Brand advertising Retail advertising Political advertising Directory advertising Direct-response advertising Business-to-business advertising Institutional advertising Public service advertising
Introduction to Advertising Types of advertising: - Brand Advertising: (Irrand advertising) - The most visible type of advertising is national consumer advertising. - It focuses on the development of a long-term brand identity and image. - Retail Advertising: - It is local and focuses on the store where a variety of products can be purchased or where a service is offered. Retail advertising emphasizes price, availability, location, and hours of operation. - Political Advertising: - It is used by politicians to persuade people to vote for them and therefore is an important part of the political process in democratic countries. - Directory advertising: (such as yellow pages) - It is used to help people to find out how (where) to buy a product or service.
Introduction to Advertising Types of advertising: - Direct-response advertising: - It can use any advertising medium, including direct mail, but the message is different from that of national and retail advertising in that it tries to simulate a sale directly. - Business-to-business advertising: - It includes messages directed at retailers, wholesalers, and distributors, as well as industrial purchasers and professionals such as lawyers and physicians. - Institutional advertising: (corporate advertising) - It focuses on establishing a corporate identity or winning the public over to the organization’s point of view. - Public service advertising (PSA): - PSA communicates a message on behalf of some good cause. - These advertisements are created for free by advertising professionals, and the space and time are donated by the media.
Introduction to Advertising • Four Major Roles of Advertising: • Marketing Role • - target market, marketing communication • Communication Role • - a form of mass communication. It transmits different types of market • information to match buyers and sellers in the marketplace. • Economic Role • - two major schools of thought concerning the effects of advertising on • the economy: a) market power, b) market competition. • - market power school • “as a persuasive communication tool to distract consumers’ attention from the price of product.” • - market competition school • “ as a source of information that increases consumers’ price sensitivity and stimulates competition.” • Societal Role • - inform us about new improved products • - teach us how to use these innovations • - help us compare products and features • - make informed consumer decisions.
Introduction to Advertising • Functions of Advertising: • Direct action versus indirect action • - Direct-action advertising is intended to produce a quick response. • Such as, coupon with an expiration date, or a sale with expiration date, 800 number, a mail-in-order. • - Indirect-action advertising is designed to stimulate demand over a longer period of time. • Primary versus selective • - Primary advertising aims to promote demand for a generic product. • - Selective advertising attempts to create demand for a particular brand. • Commercial versus noncommercial • - Commercial advertising promotes a product with the intent of making a profit. • - Noncommercial advertising tends to be sponsored by organizations that are not in business to make money.
Introduction to Advertising • The Four Major Players on Advertising: • The advertiser - the individual or organization that usually initiates the advertising process. He/She makes the final decisions on: • - where, whom the Ad will be directed to • - the used media • - the budget, size and location • - the Ad schedule and duration • The advertising agency • The media • The vendor • The Types of Advertisers: • Manufactures - product makers • Resellers - wholesalers or retailers • Individuals - individual advertisers • Institutions - institutions, government agencies, and social groups.
Introduction to Advertising • The Four Major Players on Advertising: • The advertiser - the individual or organization that usually initiates the advertising process. He/She makes the final decisions on: • - where, whom the Ad will be directed to • - the used media • - the budget, size and location • - the Ad schedule and duration • The advertising agency • The media • The vendor
Introduction to Web Advertising The Web Advertising Industry • Forester Research, Inc. estimates $1.5 billion was spent on Internet advertising worldwide in 1998. $5.5 billion will be spent in 2002, and that amount will increase to $22 billion in 2004.
Standard Banner Size for Web Advertising 468 * 60 pixels Full Banner 397 * 72 pixels Full Banner / Vertical Navigation Bar 234 * 60 pixels Half Banner 125 * 125 pixels Square Button 120 * 240 pixels Vertical Banner 120 * 90 pixels Button #1 120 * 60 pixels Button #2 88 * 31
Web Advertising Methods • AD Email • AD Banner • Directed AD • Dynamic AD • Promotional Programs • Push ADs • Membership • Search Engine or Portal • Rich Media AD • Superstitial AD • Transitional • Multi-player Games
Web Advertising Business Models • Ad Serving: • - Providing a systematic process and services for businesses to publish advertisements on the web • Ad Networking: • -Ad Networks are third parties that take a portion of the advertising inventory and sell it monthly to appropriate sites.
Web Advertising Business Models • Classified AD: • - Providing a systematic process and services for businesses to publish their advertisements on the web in web sites. • Ad Exchange: • - An AD brokerage marketplace is set to support AD space exchanges and service over the Internet between different web sites. • Media Auction Sites: • - Providing online trading service for businesses to offer the remaining advertising inventory to the highest bidder over the Internet
Web Advertising Solutions • For Businesses: • Advertising Process Management: • AD Inventory Management • AD Process Management • AD Planing & Scheduling • AD Tracking & Reporting • AD Performance Analysis • Advertising Services: • AD generation service • AD campaign and placement service • AD delivery, monitor, and tracking
Web Advertising Solutions • For Publishers: • AD Space Management: • AD Inventory Management • AD Space Process Management • AD Space Planing & Scheduling • AD Space Tracking & Reporting • AD Space Trading: • AD Space for Sell and for Rental • AD Space Campaign • AD Space Auction &Negotiation
Web Advertising Solutions • For Advertising Agency: • AD Marketing Process Management: • AD Marketing Plan • Advertising Process Management • Advertising Community Support: • Search or AD Space Search • AD Service Business Search • Advertising Yellow Page • AD Business Association Support • AD/AD Space Brokerage: • AD or AD Space Champing • AD or AD Space Auction
Billing Methods A. Cost Per Impression (CPM) Banner B. Cost Per Click (CPC) Banner C. Pay Per Sales (Affiliate Web Sites) D. Pay Per Period (Online Sponsorship)
Sample Ad Rate Guide -Sample rates as of June, 2000 Nat’l Newspaper Site E-Mail Newsletters Search Engine/Portal
Major Players in Web Advertising • AD Serving Players: • Accipiter • AdForce • AdKnowledge • DoubleClick • Net Gravity • Real Media’s Open AdStream • AD Networking Players: • 24/7 Media • AdForce • AdKnowledge • DoubleClick • Flycast • MatchLogic • Media Auction Site Players: • AdAuction • AdOutlet
Financial Status of Web AD Companies Company 3 Month Period Ended in 4/00 V.S. DoubleClick 240% increase Engage 1,188% increase 24/7 Media 287% increase VaueClick 400% increase Cost of Revenue Revenue Company 3 Month Period Ended in 4/00 V.S. DoubleClick 179% increase Engage 1,033% increase 24/7 Media 229% increase VaueClick 450% increase Operating Expenses Company 3 Month Period Ended in 4/00 V.S. DoubleClick 171% increase Engage 1,330% increase 24/7 Media 372% increase VaueClick 665% increase
Web Advertising - Problems and Issues • Problems: • How to measure of effectiveness of online advertising? • - Evaluation formula and metrics. • How to track, measure, and analyze the AD viewers? • - AD targeting • - Measurement and analysis of AD viewers • Standardization of web advertising: • - Standardization of web advertising protocols • - Standardization of web advertising management processes • - Standardization of web AD in different technologies • New technologies and methods to support web advertising in: • - AD display and presentation • - AD tracking and analysis • - AD management and control