Lecture 4: Advertising Lecture Outline Web Advertisement Terminology Why Internet Advertisement?

1. CS5038 The Electronic Society • Lecture 4: Advertising • Lecture Outline • Web Advertisement Terminology • Why Internet Advertisement? • Advertisement Methods • Considerations in Internet Ad Design • Advertisement Strategies • Effectiveness and Pricing of Advertisement • Online Catalogues and Customisation

2. Ad views or Impressions Banner Click (ad click) Click ratio = clicks/views Cookie – stored on user HD CPM – cost per 1000 views Hit – request data from webpage, counts every part (images etc.) Pageview – count entire page as a whole – more informative Reach – number of people or households exposed Visit – after last request if timeout is 15-30 mins then it is a new visit Web Advertisement • Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction. Internet Advertising Terminology

3. Targeted Advertisement (one-to-one) • The DoubleClick (DC) Approach—3M, 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) • 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

4. Why Internet Advertisement? • Ads can be updated any time with a minimal cost • Ads reach large number of buyers all over the world, accessed 24 hours, 365 days • Target is Well educated and high-income • Accessed primarily because of interest in the content • Market segmentation opportunity is large • Web ads can be targeted at specific interest groups • Opportunity to create one-to-one direct marketing relationship with the consumer • Can measure effectiveness as never before • Effectively use text, audio, graphics, and animation • Easily combine games, entertainment, and promotions • Cheaper than television, newspaper, or radio ads • 3/4 of PC users gave up some television time for Internet

5. Internet Growth Prentice Hall, 2002 Prentice Hall, 2002

6. Advertisement Methods • Banners - Keyword banners, Random banners • Customized to the target audience or one-to-one ads • “force advertising” – must wait for banner to load • Direct link to advertiser • Multi media capabilities - Flash • Banner swapping, banner exchanges - bcentral.com • Disadvantage: High Cost • Standard sizes (5) larger than banner, links inside - nytimes • E-mail – can purchase targeted lists • Mobile phones – Interactive one-to-one, context specific • Splash Screen – good for multimedia • Spot leasing - permanent spot on popular portal or Web page • Submit URL to a search engine and be listed • Chat Rooms – users spend longer time, can cycle messages

7. Considerations in Internet Ad Design • Visually appealing – e.g. Flash • Targeted to specific groups or to individual consumers • Emphasise brands and a firm’s image (what’s distinct) • Part of an overall marketing strategy - coordinated • Seamlessly linked with the ordering process • Page-loading speed - graphics simple and meaningful • Business content - clear and concise • Navigation efficiency (links) and compatibility • Links—well-labeled, accurate and meaningful • Security and privacy - option for rejecting cookies • Marketing Customer Focus • Clear terms/conditions of the purchases - delivery information, return policy, etc.

8. Advertisement Strategies • Pull (Passive) Strategy – e.g. Yahoo portal search engine site • Effective site provides helpful and attractive contents • Push (Active) Strategy – e.g. targeted spamming • Associated Ad Display Strategy – e.g. Keyword banners • Associate the content of a Web page with a related ad • Ads as a commodity – pay consumer to watch ad • e.g. MyPoints.com - Consumers fill out questionnaires • Viral marketing — word-of-mouth over the Internet • “Advocacy marketing” — hotmail.com includes free invite • E-mail game/picture to friend • Comparisons as medium for advertisement – pay to be listed • Customised ad strategy - Personalised news and information • Users select specific categories they want to receive • Webcasting – personalised news and information • Online Events, Promotions, and Attractions - freesamples

9. Exposure Models Multiple of number of guaranteed ad views Click-Through Number of times customers click on banner (1-3% of views) Interactivity Based on how customer interacts with the ad view – duration, clicks Actual Purchase Effectiveness and Pricing of Advertisement How to measure effectiveness and price ads

10. Online Catalogs • Information can be dynamic - motion pictures, graphics, sound • Information can be customised - depending on the customer profile • Allows user to compose order • Individualised prices, products, and display formats • Automatically identify the characteristics of customers based on the transaction records • Adds to customer experience  brand loyalty • Electronic catalogs allow integration of • Search Capability • Order taking and fulfillment • Electronic payment • Intranet workflow software and systems • Inventory and accounting system • Suppliers’ or customer’s extranet • Relationship to paper catalogs

11. Summary • Web Advertisement Terminology • Why Internet Advertisement? – cheap, targeted, accessible • Advertisement Methods – banners, standard ads, e-mail • Considerations in Internet Ad Design • Advertisement Strategies – pull, push, associated, viral • How to Measure Effectiveness and Price Ads • Online Catalogues and Customisation

12. Quiz 5

13. Managerial Issues: • Should we advertise anywhere but our own site? • How to consider all facets of advertising strategy. • How to coordinate with offline advertising. • How to integrate online and offline campaigns? • Ethical issues to consider? • Has advertising been integrated with ordering and other business processes? • How important is branding? • What is the right amount of advertising? • How to assess success?