E-Commerce

1. E-Commerce BBA (Hons) 5th (Advertisement in E-Commerce) Lecture Week 13,14,15 By: Farhan Mir

2. Learning Objectives • Describe the objectives of Web advertisement, its types and characteristics • Describe the major advertisement methods used on the Web, ranging from banners to chat rooms • Describe various Web advertisement strategies • Describe various types of promotions on the Web • Discuss the benefits of push technology and intelligent agents

3. Learning Objectives (cont.) • Understand the major economic issues related to Web advertisement • Describe the issues involved in measuring the success of Web advertisement as it relates to different ad pricing methods • Compare paper and electronic catalogs and describe customized catalogs • Describe Web advertisement implementation issues ranging from ad agencies to the use of intelligent agents

4. A Framework for EC

5. Advertising • An attempt to disseminate information in order to affect buyer-seller transactions • Companies must: • Deliver ads in an appropriate manner that will ‘stick’ in the minds of consumers • Ensure goods and services are those that meet the needs of consumers • Ensure that advertising is not annoying and does not have a negative impact

6. History The world wide web was invented by a British scientist in a research and development lab in 1993. Internet Marketing began one year later, with advertising in 1994 when Hotwired.com sold the first banner ad.

7. Online Advertising • The Internet is the fastest growing communication media • Each year, the percentage of the advertising industry captured by the online market is growing • Utilizes ‘interactive marketing’ as it allows advertisers to interact directly with consumers

8. Web Advertising (cont.) • Internet is the fastest growing medium in history Adoption Curves for Various Media - The Web Is Ramping Fast

9. Internet advertising is the fastest growing marketing channel. Percentage of Media Budget Allocated to Online Ads: 2001: 5.25% 2004: 8.35% 2007: 17.00%

10. Online Advertising and Revenue Generation • Advertising revenue remains a significant source of income for many Internet-based organizations • Advertising revenue on the Internet was $8.2 billion in the United States • Many dot-com failures were a result of relying on online advertising revenue as the only revenue source • Yahoo.com currently relies on its advertising revenue as its major revenue source

12. Opening Case :CD-Max Uses E-mail Lists to Advertise • A two-person business specializing in CD-ROM development • Operates a resource site for information delivery • Generated an e-mail list of site visitors • the list is also valuable to other advertisers • 50 lists were created to fit different advertisers • outsourced the job of creating and maintaining the lists, and selling them to potential advertisers, to NetCreation which developed 275 lists from the names collected at CD-Max • the list sales “surpassed” the company’s expectations • selling e-mail lists has become a lucrative business since then • CD- Max Enterprises

14. Web Advertising • Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction • Why Internet Advertisement? • Three-quarters of PC users gave up some television time • Internet users are well educated with high-income, which makes them a desired target for advertisers • Ads can be updated any time with a minimal cost; therefore they are timely and very accurate

15. Web Advertising (cont.) • Why Internet Advertisement? • Ads can reach very large numbers of potential buyers all over the world • Online ads are much cheaper in comparison to television, newspaper, or radio ads. Such ads are expensive since they are determined by space occupied, how many days (times) they are shown, and on how many national and local television stations and newspapers they are posted. • Web ads can be media rich, including voice and video • Web ads can be interactive and targeted • The use of the Internet is growing very rapidly

16. Mass Marketing Interactive Marketing Direct Marketing Best outcome Volume sales Customer relationships Customer data Consumer behavior Passive Active Passive Food, personal-care products, autos apparel, travel, financial services, autos Credit cards, travel, autos Leading products Market High volume Targeted individuals Targeted goods Preferred media vehicle Television, magazines Online services Mailing lists Servers, onscreen navigators, the Web Preferred technology Storyboards Databases Worst outcome Channel surfing Recycling bins Logoff Web Advertising • Consumer can click with his/her mouse on an ad for more information or send an e-mail to ask a question • Interactive Marketing

17. Advertising Methods • Banners • Banners are everywhere • Keyword banners • Random banners • Benefits • be customized to the target audience • be customized to one-to-one targeted advertisement • Banner Swapping • Direct link between one’s site to the other site • Ad space (a source of revenue for many companies)

18. Banner Advertising • Most common form of online advertising • So prevalent many users have developed “banner blindness” • Banners can be distributed in a variety of ways • Banner success is most often measured by “click through rate” • Banners build brand awareness and increase purchase probability

19. Advertising Methods (cont.) • Splash Screen • Capture the user’s attention • Promotion purpose • Major advantage : create innovative multimedia

20. Advertising Methods (cont.) • E-mail • Several million users can be reached directly • Purchase e-mail addresses • Send the company information; low cost • A wide variety of audiences; customer database • Problem: Junk mail or spamming • Target a group of people that you know something about

21. Advertising Methods (cont.) • Chat Rooms • Virtual meeting ground • Can be added to a business site for free • Allows advertisers to cycle through messages and target the chatter again and again • More effective than banners • Used in one-to-one connection

22. Pop Ups • Pop ups are becoming increasing popular (and frustrating! In other situations….solution in the last lines) • Very intrusive form of adverting • Variety of methods used to attract and keep user’s attention • Internet users and ISPs can provide software packages to block pop ups (Pop-Up Stopper)

23. Advertising Methods (cont.) • URL (Universal Resource Locators) • Advantages: • minimal cost is associated with it • submit your URL to a search engine and be listed • keyword search is used • Disadvantages: • search engines index their listings differently • But still very useful method to advertise

24. Keyword Search • Currently the fastest growing venue for internet marketing • Control $1.3 billion marketing dollars ~Jupiter Research • Search engines are now full-fledged media companies

28. Advertisement Strategies • Internet-base Ad Design • Advertisements should be visually appealing • Advertisements must be targeted to specific groups or to individual consumers • Advertisements must emphasize brands and a firm’s image • Advertisements must be part of an overall marketing strategy • Advertisements should be seamlessly linked with the ordering process • Designing Internet ads involve the following factors:

29. Advertisement Strategies (cont.) • Internet-based Ad Design: Important Factors • Page-Loading Speed • Graphics and tables should be simple and meaningful. They need to match standard monitors. • Thumbnail (icons graphs) are useful. • Business Content • Clear and concise text is needed. A compelling page title and header text is useful. • The amount of requested information for registration should be minimal.

30. Advertisement Strategies (cont.) • Internet-base Ad Design: Important Factors • Navigation Efficiency • Well-labeled, accurate, meaningful links are a must. • Site must be compatible with browsers, software, etc.

31. Online Events, Promotions and Attractions (cont.) CyberGold (www.cybergold.com), Goldmine (www.goldmine.com) and others connect you with advertisers who pay you real money to read ads and explore the Web. Netstakes runs sweepstakes that requires no skills; in contrast with contests. You register only once and can randomly win prizes (see http://webstakes.com). Prizes are given away in different categories. The site is divided into channels, each has several sponsors. They pay Netstakes to send them traffic. Netstakes runs online ads both on the Web and in several hundred thousand e-mail lists that people requested to be on. Free PCs will be given soon in exchange for obligation to read ads.

32. Push Technology • Benefit : instead of spending hours searching the Web, people can have the information they are interested in delivered automatically to their desktop via Web technology and the Internet • Pre-specification profile, selection of appropriate content, and download selection

33. Push Technology (cont.) • Also known as “Pointcasting” • Analogous to mass customization • Transmits the most relevant information directly to the user • Push on the Intranet • Companies use push technology to set up their own channels to pointcast important internal information to either their own employees (on intranets) and/or their supply chain partners (on extranets) • The Future of Push Technology • Drawback : the bandwidth requirements are large • Experts’ prediction : the technology will never fly

34. Online Catalogs • To merchants, the objective of catalogs is advertisement and promotion • The purpose of catalogs to customers is providing a source of information and price comparisons • Consist of product database, directory and search capability and presentation function • Replication of text in paper catalogs • More dynamic, customized and integrated

35. Online Catalogs (cont.) 1) Dynamics of information presentation • Static Catalogs: The catalog is presented in textual description and static pictures. • Dynamic Catalogs: The catalog is presented in motion pictures and graphics and possibly sound. 2) Customization • Ready-made Catalogs: Merchants offer the same catalog to any customer. • Customized Catalogs: Deliver customized contents and display depending upon the characteristics of customers.

36. Customized Catalog • Identify the interesting parts out of the whole catalog • Tool for aiding customers to concentrate on their needs • LiveCommerce • creating catalogs with branded, value-added capabilities • locate the information • compose their order • individualized prices, products, and display formats • Let the system automatically identify the characteristics of customers based on the transaction records • Customized, Interactive and Dynamic Catalogs (Remember the Ford Company Website!)

38. Is There a Negative Side to Online Advertising? • Pressure to create new online advertising formats came following the dot-com crash • Result was an explosion of creative ways to engage users in the ads using sound, animation, etc. • User experience began to decline

39. Managerial Issues • Make Vs. Buy (Ad agencies) • Finding the Most Visited Sites • Company Research • Ethical Issues