Chapter 8 Internet market promotion 8.1 Introduction, category and function of Internet Marketing 8.1.1 Internet marketing conception and characteristic 1. Internet marketing What is Internet marketing? Internet marketing or Internet-based marketing can be defined as the use of the Internet and related digital technologies to achieve marketing objectives and support the modern marketing concept. These technologies include the Internet media and other digital media such as wireless mobile media, cable and satellite In practice, Internet marketing will include the use of a company web site in conjunction with online promotional techniques such as search engines, banner advertising direct e-mail and links or services from other web sites to acquire new customers and provide services to existing customers that help develop the customer relationship. However, for Internet marketing to be successful there is a necessity of integration with traditional media such as Print and TV 2. What benefits does the Internet provide for the marketer? The marketing opportunities of using the Internet can be appreciated by applying the strategic marketing grid for exploring opportunities for new markets and products. The Internet can potentially be used to achieve each of the four strategic directions as follows 1)Market penetration. The Internet can be used to sell more existing products into existing markets. This can be achieved by using the power of the Internet for advertising products to increase awareness of products and the profile of a company amongst potential customers in an existing market. This is a relatively conservative use of the Internet. (2) Market development. Here the Internet is used to sell into new markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure in the customers'country. This is a relatively conservative use of the Internet but it does require the overcoming of the barriers to becoming an exporter or operating in a greater number of countries the(3)Product development. New products or services are developed which can be delivered by Internet These are typically information products such as market reports which can b purchased using electronic commerce. This is innovative use of the Internet 8.1.2 Internet marketing classify New products are developed which are sold into new markets. Companies can use the Internet to adopt new approaches to selling products which involve positioning in one part of the grid presented. The Internet provides Guinness with the opportunity to provide non-core merchandising activity at a relatively low cost The lure of new sales and the threat of market share erosion has driven many companies on to the Internet, but there are many other benefits of establishing an Internet presence. Consider the example of the parcel courier companies. These companies now provide a range of customer services over the Internet which were traditionally delivered by telephone operators, thus reducing operating costs. In such situations, the online services may give better 24 hour, 7days a week, 365 days of the year customer service if measured by convenience, but some customers will want the option of the personal touch, and phone services must be provided for this type of customer. Many companies will also reduce the costs of the printing and distribution of promotional material, price lists and other marketing communications. In addition to increased sales and reduced costs, the Internet can be used to advantage in all of the marketing functions, for example (1)Sales: Achieved through increasing awareness of brands and products, supporting buying
Chapter 8 Internet Market Promotion 8.1 Introduction, category and function of Internet Marketing 8.1.1 Internet marketing conception and characteristic 1. Internet marketing What is Internet marketing? Internet marketing or Internet-based marketing can be defined as the use of the Internet and related digital technologies to achieve marketing objectives and support the modern marketing concept. These technologies include the Internet media and other digital media such as wireless mobile media, cable and satellite. In practice, Internet marketing will include the use of a company web site in conjunction with online promotional techniques such as search engines, banner advertising, direct e-mail and links or services from other web sites to acquire new customers and provide services to existing customers that help develop the customer relationship. However, for Internet marketing to be successful there is a necessity of integration with traditional media such as Print and TV. 2. What benefits does the Internet provide for the marketer? The marketing opportunities of using the Internet can be appreciated by applying the strategic marketing grid for exploring opportunities for new markets and products. The Internet can potentially be used to achieve each of the four strategic directions as follows: (1) Market penetration.The Internet can be used to sell more existing products into existing markets. This can be achieved by using the power of the Internet for advertising products to increase awareness of products and the profile of a company amongst potential customers in an existing market. This is a relatively conservative use of the Internet. (2) Market development.Here the Internet is used to sell into new markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure in the customers’ country. This is a relatively conservative use of the Internet, but it does require the overcoming of the barriers to becoming an exporter or operating in a greater number of countries. (3) Product development. New products or services are developed which can be delivered by the Internet. These are typically information products such as market reports which can be purchased using electronic commerce. This is innovative use of the Internet. 8.1.2 Internet marketing classify New products are developed which are sold into new markets. Companies can use the Internet to adopt new approaches to selling products which involve positioning in one part of the grid presented .The Internet provides Guinness with the opportunity to provide non-core merchandising activity at a relatively low cost. The lure of new sales and the threat of market share erosion has driven many companies on to the Internet, but there are many other benefits of establishing an Internet presence. Consider the example of the parcel courier companies. These companies now provide a range of customer services over the Internet which were traditionally delivered by telephone operators, thus reducing operating costs. In such situations, the online services may give better 24 hour, 7days a week, 365 days of the year customer service if measured by convenience, but some customers will want the option of the personal touch, and phone services must be provided for this type of customer. Many companies will also reduce the costs of the printing and distribution of promotional material, price lists and other marketing communications. In addition to increased sales and reduced costs, the Internet can be used to advantage in all of the marketing functions, for example: (1) Sales: Achieved through increasing awareness of brands and products, supporting buying
decisions and enabling online purchase Co(2)Marketing communications: The use of the web site for the range of marketing mmunication is described Customer service: Supplementing phone operators with information available online and other techniques described (4)Public relations: The Internet can be used as a new channel for public relations(PR)and provides the opportunity to publish the latest news on products, markets and people (5)Marketing research: Through search engines and e-mail alert services, the Internet enables more efficient techniques for finding a range of market information It also enables new method for collecting primary research online through focus groups and online questionnaires 8.1.3 How do Internet marketing communications differ from traditional marketing communication 1. Traditional marketing communications Internet marketing differs from conventional marketing communications because of the digital medium used for communications. The Internet and other digital media such as digital television, satellite and mobile phones create new forms and models for information exchange. A useful summary of the differences between these new media and traditional media has been developed by McDonald and Wilson(1999)which they describe as the 6ls of the e-marketing mix. Note that these can be used as a strategic analysis tool, but they are not used in this context ere. The 6ls are useful since they highlight factors that apply to practical aspects of Internet marketing such as personalization, direct response and marketing research, but also strategic issues of industry restructuring and integrated channel communications. By considering each of these facets of the new media, marketing managers can develop marketing plans that accommodate the characteristics of the new media. This presentation of the 6ls, is an interpretation of these factors using new examples and diagrams to illustrate these concepts 2. Interactivity Deighton was one of the first authors to summarize the key characteristics of the Internet. He identifies the following characteristics inherent in a digital medium the customer initiates contact the customer is seeking information(pull) keter will have 100 attention when he or she is viewing a web site a company can gather and store the response of the individual individual needs of the customer can be addressed and taken into account in future dialogues Traditional media are predominantly push media where the marketing message is broadcast from company to customer and other stakeholders. During this process, there is limited interaction with the customer, although interaction is encouraged in some cases such as the direct response advert or mail-order campaign. On the Internet, it is usually a customer who initiates contact and is seeking information on a web site. In other words it is a pull mechanism unless e-mail is used ( this can be considered as a push technique). The Internet should be used to encourage two-way communication. These may be extensions of the direct-response approach. For example, FMCG supplierssuchasNestle(www.nescafe.co.uk)usetheirwebsiteasamethodofgenerating interaction by providing incentives such as competitions and sales promotions to encourage the customer to respond with their names, addresses and profile information such as age and sex. 8.1.4 Function of Internet marketing Intelligence The Internet can be used as a relatively low cost method of collecting marketing research particularly about customer perceptions of products and services. In the competitions referred to above Nescafe are able to profile their customers on the basis of the infomation received in
decisions and enabling online purchase. (2) Marketing communications: The use of the web site for the range of marketing communication is described. (3) Customer service: Supplementing phone operators with information available online and other techniques described. (4) Public relations: The Internet can be used as a new channel for public relations (PR) and provides the opportunity to publish the latest news on products, markets and people. (5) Marketing research: Through search engines and e-mail alert services, the Internet enables more efficient techniques for finding a range of market information. It also enables new methods for collecting primary research online through focus groups and online questionnaires. 8.1.3 How do Internet marketing communications differ from traditional marketing communications? 1. Traditional marketing communications Internet marketing differs from conventional marketing communications because of the digital medium used for communications. The Internet and other digital media such as digital television, satellite and mobile phones create new forms and models for information exchange. A useful summary of the differences between these new media and traditional media has been developed by McDonald and Wilson (1999) which they describe as the ’6Is of the e-marketing mix’. Note that these can be used as a strategic analysis tool, but they are not used in this context here. The 6Is are useful since they highlight factors that apply to practical aspects of Internet marketing such as personalization, direct response and marketing research, but also strategic issues of industry restructuring and integrated channel communications. By considering each of these facets of the new media, marketing managers can develop marketing plans that accommodate the characteristics of the new media. This presentation of the ‘6Is’, is an interpretation of these factors using new examples and diagrams to illustrate these concepts. 2. Interactivity Deighton was one of the first authors to summarize the key characteristics of the Internet. He identifies the following characteristics inherent in a digital medium: ▪ the customer initiates contact; ▪ the customer is seeking information (pull); ▪ it is a high intensity medium – the marketer will have 100 per cent of the individual’ attention when he or she is viewing a web site; ▪ a company can gather and store the response of the individual; ▪ individual needs of the customer can be addressed and taken into account in future dialogues. Traditional media are predominantly push media where the marketing message is broadcast from company to customer and other stakeholders. During this process, there is limited interaction with the customer, although interaction is encouraged in some cases such as the direct response advert or mail-order campaign. On the Internet, it is usually a customer who initiates contact and is seeking information on a web site. In other words it is a ‘pull’ mechanism unless e-mail is used (this can be considered as a push technique). The Internet should be used to encourage two-way communication. These may be extensions of the direct-response approach. For example, FMCG suppliers such as Nestle (www.nescafe.co.uk) use their web site as a method of generating interaction by providing incentives such as competitions and sales promotions to encourage the customer to respond with their names, addresses and profile information such as age and sex. 8.1.4 Function of Internet marketing 1. Intelligence The Internet can be used as a relatively low cost method of collecting marketing research, particularly about customer perceptions of products and services. In the competitions referred to above Nescafe are able to profile their customers on the basis of the information received in
questionnaires. The Internet can be used to create two-way feedback which does not usually occur inothermediaFinancialservicesproviderEgg(www.egg.com)collectsinformationabouttheir online service levels through a questionnaire that is continuously available in the customer service part of their site. What is significant is that the company responds via the website to the main concerns from customer; if the length of time it takes to reply to customer service e-mails is seen as a problem it will explain what the organization is trying to do to resolve this problem 2. Individualization thar x another important feature of the interactive marketing communications referred to above is they can be tailored to the individual unlike traditional media where the same message tends to be broadcast to everyone. The process of tailoring is also referred to as personalization and is an important aspect of achieving customer relationship management online. Personalization is often achieved through extranets which are set up with key accounts to manage the buying and after-salesprocessesDell(www.dell.com/premierpages)hassetuppreMierPages'forkey accounts such as the Abbey National where special offers and bespoke customer support are delivered. Another example of personalization is that achieved by business-to-business e-tailor RS Components(www.rswww.com).Everycustomerwhoaccessestheirsystemisprofiledaccording to their area of product interest and information describing their role in the buying unit When they next visit the site information will be displayed relevant to their product interest, for example office products and promotions if this is what was selected. This is an example of what is known as mass customization where generic customer information is supplied for particular segments i.e the information is not unique to individuals, but to those with a common interest. The online booksellerssuchasAmazon(www.amazon.co.uk)usethisapproachtocommunicatenewbooks to groups of customers. Gardeners for instance, who have previously purchased a gardening book, will receive a standard e-mail advertising the latest gardening tome. This is again mass 3. Integratio The Internet provides further scope for integrated marketing communications. When assessing the success of a web site, the role of the Internet in communicating with customers and other partners can best be considered from two perspectives. First organization to customer direction, how does the Internet complement other channels in communication of proposition for the company's products and services to new and existing customers with a view to generating new leads and retaining existing customers? Second customer to organization, how can the Internet complement other channels to deliver customer service to these customers? Many companies are now considering how they integrate e-mail response and web-Site call-back into their existing call-centre or customer service operation. This may require a substantial investment in training and new software 4. Industry restructuring Disintermediation and reintermediation are key concepts of industry restructuring that should be considered by any company developing an e-marketing strategy. For the marketer defining their companies communications strategy it becomes very important to consider a companies representation on these intermediary sites by answering questions such as which intermediaries should we be represented on? 'and how do our offerings e to those of competitors in terms of features, benefits and price? Independence of location Electronic media also introduce the possibility to increase the reach of company communications to the global market. This gives opportunities to sell into international markets thatmaynothavebeenpreviouslypossibleScottBader(www.scottbader.com business-to-business supplier of polymers and chemicals for the paints and coatings industry, can now target countries beyond the 40 or so it has traditionally sold to via a network of local agents and franchises. The Internet makes it possible to sell to a country without a local sales or customer service force(although this may still be necessary for some products). In such situations and with the restructuring in conjunction with disintermediation and reintermediation, strategists also need
questionnaires. The Internet can be used to create two-way feedback which does not usually occur in other media. Financial services provider Egg (www.egg.com) collects information about their online service levels through a questionnaire that is continuously available in the customer service part of their site. What is significant is that the company responds via the website to the main concerns from customer; if the length of time it takes to reply to customer service e-mails is seen as a problem it will explain what the organization is trying to do to resolve this problem. 2. Individualization Another important feature of the interactive marketing communications referred to above is that they can be tailored to the individual unlike traditional media where the same message tends to be broadcast to everyone. The process of tailoring is also referred to as personalization and is an important aspect of achieving customer relationship management online. Personalization is often achieved through extranets which are set up with key accounts to manage the buying and after-sales processes. Dell (www.dell.com/premierpages) has set up ‘Premier Pages’ for key accounts such as the Abbey National where special offers and bespoke customer support are delivered. Another example of personalization is that achieved by business-to-business e-tailor RS Components (www.rswww.com). Every customer who accesses their system is profiled according to their area of product interest and information describing their role in the buying unit. When they next visit the site information will be displayed relevant to their product interest, for example office products and promotions if this is what was selected. This is an example of what is known as mass customization where generic customer information is supplied for particular segments i.e. the information is not unique to individuals, but to those with a common interest. The online booksellers such as Amazon (www.amazon.co.uk) use this approach to communicate new books to groups of customers. Gardeners for instance, who have previously purchased a gardening book, will receive a standard e-mail advertising the latest gardening tome. This is again mass customization. 3. Integration The Internet provides further scope for integrated marketing communications. When assessing the success of a web site, the role of the Internet in communicating with customers and other partners can best be considered from two perspectives. First organization to customer direction, how does the Internet complement other channels in communication of proposition for the company’ s products and services to new and existing customers with a view to generating new leads and retaining existing customers? Second customer to organization, how can the Internet complement other channels to deliver customer service to these customers? Many companies are now considering how they integrate e-mail response and web-site call-back into their existing call-centre or customer service operation. This may require a substantial investment in training and new software. 4. Industry restructuring Disintermediation and reintermediation are key concepts of industry restructuring that should be considered by any company developing an e-marketing strategy. For the marketer defining their companies communications strategy it becomes very important to consider a companies representation on these intermediary sites by answering questions such as ‘which intermediaries should we be represented on?’ and ‘how do our offerings compare to those of competitors in terms of features, benefits and price?’ 5. Independence of location Electronic media also introduce the possibility to increase the reach of company communications to the global market. This gives opportunities to sell into international markets that may not have been previously possible. Scott Bader (www.scottbader.com), a business-to-business supplier of polymers and chemicals for the paints and coatings industry, can now target countries beyond the 40 or so it has traditionally sold to via a network of local agents and franchises. The Internet makes it possible to sell to a country without a local sales or customer service force (although this may still be necessary for some products). In such situations and with the restructuring in conjunction with disintermediation and reintermediation, strategists also need
to carefully consider channel conflicts that may arise. If a customer is buying direct from a company in another country rather than via the agent, this will marginalize the business of the local agent who may want some recompense for sales efforts or may look to partner with 8.2. Strategy of Internet marketing 8.2. 1 Define the objection Developing a successful Internet marketing strategy is an essential part of your online success. In order to succeed, you must develop and implement a strategic plan that includes all of the following A great product a website specifically designed to sell a killer marketing strategy Dor Each step plays an important role in your overall strategy and must be developed to its fullest ential. If even one step fails, your chances of success will be minimal 8. 2.2 Design content 1. Developing Your Product Your first step will be to develop a great product. You're probably thinking that's easier said than done, but it's really not The absolute best product is one that you can develop yourself and deliver over the Internet. With today's technology, there is absolutely no reason why you cant create your own product. The knowledge you have within your own mind is extremely valuable Everybody is good at something, has a special talent or some specialized knowledge. Use this nowledge to create a product The key to developing a great product is exclusiveness. Your product should be unique and not be in competition with hundreds of other similar products. You must give your potential customers exactly what they want Another consideration of great importance is your target market. Keep in mind, the Internet is marketplace. Develop a product with a large geographic target and a wide appeal. A great will fulfill a need or desire and provide instant gratification e a few of the top sellers a Software nformation de before you develop your product, do some research --find out exactly what people want and develop your product accordingly The most important consideration when developing your product is quality. Your product should not only deliver what you promise, but should go above and beyond the expected and over deliver. Your customers'satisfaction is of the utmost importance 2. Developing Your Website Once you've developed a great product, your next step will be to develop a great websi ur website must be specifically designed to sell your produc Everything within your website should have one purpose- getting your visitor to take action Words are the most powerful marketing tool you have. The right words will turn your visitors into customers. The wrong words will cause them to click away and never return Your words are the entire foundation of your business. Your product, your website and your marketing strategies all depend upon your words. Fancy graphics don't make sales-- words de Every word, sentence and headline should have one specific purpose -to lead your potential customer to your order page. Write your website copy as if you are talking to just one person Identify a problem and validate that one visitors need for a solution. Continue to write and explain why your product is the solution to their problem. Tell them exactly what your product will do for them -why it will solve their problems and how. Pack your copy with benefits and more benefits. Write to persuade -thats the bottom line
to carefully consider channel conflicts that may arise. If a customer is buying direct from a company in another country rather than via the agent, this will marginalize the business of the local agent who may want some recompense for sales efforts or may look to partner with competitors. 8.2. Strategy of Internet Marketing 8.2.1 Define the objection Developing a successful Internet marketing strategy is an essential part of your online success. In order to succeed, you must develop and implement a strategic plan that includes all of the following: ▪ A great product. ▪ A website specifically designed to sell. ▪ A killer marketing strategy. Each step plays an important role in your overall strategy and must be developed to its fullest potential. If even one step fails, your chances of success will be minimal. 8.2.2 Design content 1. Developing Your Product Your first step will be to develop a great product. You're probably thinking that's easier said than done, but it's really not. The absolute best product is one that you can develop yourself and deliver over the Internet. With today's technology, there is absolutely no reason why you can't create your own product. The knowledge you have within your own mind is extremely valuable. Everybody is good at something, has a special talent or some specialized knowledge. Use this knowledge to create a product. The key to developing a great product is exclusiveness. Your product should be unique and not be in competition with hundreds of other similar products. You must give your potential customers exactly what they want. Another consideration of great importance is your target market. Keep in mind, the Internet is a global marketplace. Develop a product with a large geographic target and a wide appeal. A great product will fulfill a need or desire and provide instant gratification. Here are a few of the top sellers: ▪ Software. ▪ Information. ▪ Private sites. ▪ Internet services. Before you develop your product, do some research -- find out exactly what people want and develop your product accordingly. The most important consideration when developing your product is quality. Your product should not only deliver what you promise, but should go above and beyond the expected and over deliver. Your customers’ satisfaction is of the utmost importance. 2. Developing Your Website Once you've developed a great product, your next step will be to develop a great website. Your website must be specifically designed to sell your product. Everything within your website should have one purpose -- getting your visitor to take action. Words are the most powerful marketing tool you have. The right words will turn your visitors into customers. The wrong words will cause them to click away and never return. Your words are the entire foundation of your business. Your product, your website and your marketing strategies all depend upon your words. Fancy graphics don't make sales -- words do. Every word, sentence and headline should have one specific purpose – to lead your potential customer to your order page. Write your website copy as if you are talking to just one person. Identify a problem and validate that one visitor’s need for a solution. Continue to write and explain why your product is the solution to their problem. Tell them exactly what your product will do for them – why it will solve their problems and how. Pack your copy with benefits and more benefits. Write to persuade – that’s the bottom line
8.2.3 Decide the marketing strategy 1. Developing Your Marketing strategie Your marketing strategy is the final process of your plan. Your plan must include both short-term and long-term strategies in order to succeed Short term marketing strategies are those that bring you a temporary boost in traffic Although these techniques are very important to your over-all plan, they are only a temporary traffic source and must not be solely relied upon Short term marketing strategies include Bulletin boards Long term marketing strategies are those that bring you a steady stream of targeted traffic over time. These strategies will continue to produce results even years down the road Long term marketing strate By creating and implementing a balanced marketing strategy, using both short-term and long-term strategies, you will drive a steady stream of targeted traffic to your website 8.3 Internet Advertisement Marketing 8.3. 1 Summary of Internet Ads Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction Interactive marketing-marketing that allows a consumer to interact with an online seller Two-way communication and e-mail capabilities; Vendors also can target specific groups and individuals 1. Internet Advertising Terminology Ad views number of times users call up a page that has a banner on it during a specific time period; known as impressions or page views Button: a small banner that is linked to a Web site Page: hTmL document Click: a count made each time a visitor clicks on an advertising banner to access the advertisers Web site(ad clicks and click through) CPM(cost per thousand impressions): fee an advertiser pays for each 1, 000 times a page with a banner ad is viewed Hit: request for data from a Web page or file 2. Why Internet advertisement? 3/4 of PC users gave up some television time Well educated, high-income Internet users are a desired target for advertisers Internet is by far the fastest growing communication medium Advertisers are interested in a medium with such potential reach, both locally and globally Cost: Online ads are cheaper than those in other media, Ads can be updated at any time with minimal cost Richness of format Use of text, audio, graphics, and animation, Games, entertainment, and promotions are easily combined in online ads Personalization see Figure 8.1
8.2.3 Decide the marketing strategy 1. Developing Your Marketing strategies Your marketing strategy is the final process of your plan. Your plan must include both short-term and long-term strategies in order to succeed. Short term marketing strategies are those that bring you a temporary boost in traffic. Although these techniques are very important to your over-all plan, they are only a temporary traffic source and must not be solely relied upon. Short term marketing strategies include: ▪ Purchasing advertising. ▪ Bulletin Boards. ▪ Search Engines. Long term marketing strategies are those that bring you a steady stream of targeted traffic over time. These strategies will continue to produce results even years down the road. Long term marketing strategies include: ▪ Opt-in Lists. ▪ Freebies. ▪ Content. By creating and implementing a balanced marketing strategy, using both short-term and long-term strategies, you will drive a steady stream of targeted traffic to your website. 8.3 Internet Advertisement Marketing 8.3.1 Summary of Internet Ads Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction. Interactive marketing—marketing that allows a consumer to interact with an online seller ▪ Two-way communication and e-mail capabilities; ▪ Vendors also can target specific groups and individuals; ▪ Enables truly one-to-one advertising. 1. Internet Advertising Terminology Ad views: number of times users call up a page that has a banner on it during a specific time period; known as impressions or page views; ▪ Button: a small banner that is linked to a Web site; ▪ Page: HTML document; ▪ Click: a count made each time a visitor clicks on an advertising banner to access the advertiser‘s Web site (ad clicks and click through); ▪ CPM (cost per thousand impressions) : fee an advertiser pays for each 1,000 times a page with a banner ad is viewed; ▪ Hit: request for data from a Web page or file. 2. Why Internet Advertisement? ▪ 3/4 of PC users gave up some television time ▪ Well educated, high-income Internet users are a desired target for advertisers ▪ Internet is by far the fastest growing communication medium ▪ Advertisers are interested in a medium with such potential reach, both locally and globally ▪ Cost: Online ads are cheaper than those in other media, Ads can be updated at any time with minimal cost. ▪ Richness of format: Use of text, audio, graphics, and animation, Games, entertainment, and promotions are easily combined in online ads. ▪ Personalization: see Figure 8.1
Radio 192219301938194619541962197019781986194200 Figure 8-1 8.3. 2 Price level of Internet ads 1. Exposure models that are based on CPMs Traditional pricing has been based on CPMs. So far, this model had been the standard advertising rate-pricing tool for Web sites as well. Why CPM changes on the web very widely, on average they have been at higher levels than they are in most other media because of the small supply of highly trafficked Web sites Since advertisers pay an agreed-upon multiply of the number of"guaranteed"impressions (page views), it is very important that impressions are measured accurately in the context of the dvertising business model. This limits the site's responsibility for ad delivery, and the ad revenue generated is simply the product of the traffic volume times a multiply, which is generally priced in terms of CPM, which can range from $10 to $100(in 1999). The price charged is different for different search engines and other popular sites. For example, in 1999 Excite charged $68 per CPM and Lycos charged $50 to $60 per CPM. Generally, CPMs seem to average on the order of $45, resulting in a fairy low cost of$.045 per impression viewed The wide price spread suggests that the Web can function both as a mass medium and a direct-marketing vehicle and that context, audience, technology, and anticipated results all play a part in determining what price an advertiser will pay. A few well-branded sites in a very broad nge of categories(such as news, entertainments and sports)will dominate, and these sites will be able to charge a premium for ad space Some companies, such as USA Today, charge their clients according to the number of hits(about 3 cents per hit in 1999). As explained earlier, there could be several hits in one 2. Click-through char. Ad pricing based upon click-through is an attempt to develop a more accountable way of agingforWebadvertising(seehttp:/www.pawluk.com/pages.htm).Thepaymentforabanner ad is based on the number of times a visitor actually clicks on it. However, a relatively small proportion of those exposed to a banner ad actually click on the banner. Double Click Inc. reports that only 4 percent of visitors who are exposed to a banner ad the first time click on the ad. Thus payment based upon click-through guarantees not only that visitor was exposed to the banner ad but actively decided to click on the banner and become exposed to the target ad(Hoffman and Novak 1996). Space providers object to this method, claiming that viewing an ad itself may lead to a purchase later or to an offline purchase
Figure 8-1 8.3.2 Price level of Internet ads 1. Exposure models that are based on CPMs Traditional pricing has been based on CPMs. So far, this model had been the standard advertising rate-pricing tool for Web sites as well. Why CPM changes on the web very widely, on average they have been at higher levels than they are in most other media because of the small supply of highly trafficked Web sites. Since advertisers pay an agreed-upon multiply of the number of “guaranteed” impressions (page views), it is very important that impressions are measured accurately in the context of the advertising business model. This limits the site’s responsibility for ad delivery, and the ad revenue generated is simply the product of the traffic volume times a multiply, which is generally priced in terms of CPM, which can range from $10 to $100 (in 1999). The price charged is different for different search engines and other popular sites. For example, in 1999 Excite charged $68 per CPM and Lycos charged $50 to $60 per CPM. Generally, CPMs seem to average on the order of $45, resulting in a fairy low cost of $0.045 per impression viewed. The wide price spread suggests that the Web can function both as a mass medium and a direct-marketing vehicle and that context, audience, technology, and anticipated results all play a part in determining what price an advertiser will pay. A few well-branded sites in a very broad range of categories (such as news, entertainments and sports) will dominate, and these sites will be able to charge a premium for ad space. Some companies, such as USA Today, charge their clients according to the number of hits(about 3 cents per hit in 1999). As explained earlier, there could be several hits in one impression. 2. Click-through Ad pricing based upon click-through is an attempt to develop a more accountable way of charging for Web advertising (see http://www.pawluk.com/pages.htm). The payment for a banner ad is based on the number of times a visitor actually clicks on it. However, a relatively small proportion of those exposed to a banner ad actually click on the banner. DoubleClick Inc. reports that only 4 percent of visitors who are exposed to a banner ad the first time click on the ad. Thus payment based upon click-through guarantees not only that visitor was exposed to the banner ad but actively decided to click on the banner and become exposed to the target ad (Hoffman and Novak 1996). Space providers object to this method, claiming that viewing an ad itself may lead to a purchase later or to an offline purchase
3.0th Several other methods exist. such as se of In a purchase ecording some form of users registration or identification( to overcome the problem of one user paying several visits to one site). An ad placed in such a site has a great potential of attracting a but there is no guarantee that a purchase will be made Many advertisers charge a fixed monthly fee, regardless of the traffic. Others use a hybrid approach; some combination of the above An interesting approach is to let the market determine prices. This is done via auctions Bothwww.onsale.comandwww.adauction.comscheduleauctionsforads.Publisherspost information about available space and buyers bid on it 8.3.3 Basic thought of Internet advertisement 1. Banner On a Web page, a graphic advertising display linked to the advertiser's Web page, includer keyword banners and random banners Benefits of banner ads Customized to the target audience or one-to-one ads Utilize "force advertising"marketing strategy irect link to advertiser Multi media capabilities Limitations of banner ads High cost Click ratio: the ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ac Declining click ratio: viewers have become immune to banners Banner swapping: an agreement between two companies to each display the others banner ad on its Web site Banner exchanges: markets in which companies can trade or exchange placement of banner ads on each other's Web sites(bcentral. com) Pop-under ad: an ad that appears underneath the current browser window so when the user closes the active window, they see the ad Interstitials: an initial Web page or a portion of it that is used to capture the users attention for a short time while other content is loading Standardized ads: on February 26, 2001, the Internet Advertising Bureau, an industry trade group, adopted five standard ad sizes for the Internet Skyscraper ad: full column-deep Classified ad like ad 2. URL (Universal Resource Locators) Minimal cost is associated with it. Submit your URL to a search engine and be listed; eyword search is used. Disadvantages Search engines index their listings differently; Meta tags can be complicated 3. Advertising in chat rooms Adversarial: an advertisement"disguised"to look like an editorial or general information
3. Other methods Several other methods exist, such as: ▪ The use of the gross number of visits (occasions on which a user looks up a site) as a possible measure of effectiveness is also inadequate. (Visiting and entertaining site may not result in a purchase). ▪ The number of “unique users” at a site during a specific time can be calculated by recording some form of users registration or identification ( to overcome the problem of one user paying several visits to one site). An ad placed in such a site has a great potential of attracting a viewer, but there is no guarantee that a purchase will be made. ▪ Many advertisers charge a fixed monthly fee, regardless of the traffic. Others use a hybrid approach; some combination of the above. ▪ An interesting approach is to let the market determine prices. This is done via auctions. Both www.onsale.com and www.adauction.com schedule auctions for ads. Publishers post information about available space and buyers bid on it. 8.3.3 Basic thought of Internet advertisement 1. Banner On a Web page, a graphic advertising display linked to the advertiser’s Web page, including keyword banners and random banners. Benefits of banner ads: ▪ Customized to the target audience or one-to-one ads ▪ Utilize “force advertising” marketing strategy ▪ Direct link to advertiser ▪ Multi media capabilities Limitations of banner ads: ▪ High cost ▪ Click ratio: the ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad ▪ Declining click ratio: viewers have become immune to banners ▪ Banner swapping: an agreement between two companies to each display the other’s banner ad on its Web site. ▪ Banner exchanges: markets in which companies can trade or exchange placement of banner ads on each other’s Web sites (bcentral.com). ▪ Pop-under ad: an ad that appears underneath the current browser window, so when the user closes the active window, they see the ad. ▪ Interstitials: an initial Web page or a portion of it that is used to capture the user’s attention for a short time while other content is loading. ▪ E-mail. ▪ Standardized ads: on February 26, 2001, the Internet Advertising Bureau, an industry trade group, adopted five standard ad sizes for the Internet. ▪ Skyscraper ad: full column-deep. ▪ Classified ad: a newspaper-like ad. 2. 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; ▪ Meta tags can be complicated. 3. Advertising in chat rooms Adversarial: an advertisement “disguised” to look like an editorial or general information
8.3. 4 Economics and Effectiveness of Advertisement Justifying ad on the Internet is more difficult than for conventional ad. One of the major reasons for this is the difficulty in measuring the results of advertising. Several methods are available for measuring ad, conducting cost-benefit analysis, and for pricing ads. They are discussed below. 1. Advertising Strategies and Promotions Associated ad display (text links) an advertising strategy that displays a banner ad related to a term entered in a search engine Ads as a commodity direct payment made by the advertisers for ads viewed Viral marketing(advocacy marketing): word-of-mouth marketing by which customers promote a product or service by telling others about it customizing ads: one-to-one advertisement ( Web casting) 2. Online events, promotions, and attractions Promotions designed to attract visitors are regular events on thousands of Web sites Bargains on the Internet Free samples, give-aways, and sweepstakes 3. Major considerations when implementing an online ad campaign: Clearly understood online surfers as target audience Powerful enough server prepared to handle the expected volume of traffic Assuming the promotion is successful, what will the result be? Consider co-branding-bring together two or more powerful partners 4. Advertisement Strategies Several advertisement strategies can be used over the internet. Before we describe will be useful to present some important considerations in Internet-based ad design 5. Passive Pull Strategy sually, customers will look for a site and visit it only if it provides helpful and attractive contents and display. This strategy when Web pages are waiting for a customers passive access, is referred to as passive pull strategy. The passive pull strategy is effective and economical when advertising to open, unidentified potential customers worldwide. However, since there are so many Web pages open to all customers, there is a need for a directory that can guide customers to targetedsitesForinstancerefertothesiteAdvertisingWorld(http:advertisingutexas.edu/word) This is a noncommercial site that can guide customers. In this sense, portal search engine sites like Yahoo can be regarded as an effective aid for advertisement. There sites are all equipped with directories for the registered sites A site may be either a pure advertisement site( which means it does not offer order entry and payment capabilities) or a complete retailing storefront (like Amazon) as described in chapter 2 The ads in the latter case can be directly linked to sales. In this case, the ad can be regarded as the first step of sales activity on the Internet. When the site is an e-mail, we can see its own director and search engines, which help find the desired products and services. In this sense, the directory in the e-mail can be regarded as the second step in the passive pull strategy 6. Active Push Strategy If customers do not visit the merchants'sites voluntarily, merchants need to actively advertise to the targeted customers. One option of this strategy is sending e-mail to the relevant people. The first issue to be considered by merchants adopting this strategy is how to obtain the mailing list of thetargetcustomersCompanieslikeDoubleclick(www.doubleclickcomhavestartedto generate mailing lists to meet this need. For a comprehensive list of such companies, refer to the directmarketingmenuinAdvertisingWorld(http://www.advertisingutexs.edu/world).Foracase
8.3.4 Economics and Effectiveness of Advertisement Justifying ad on the Internet is more difficult than for conventional ad. One of the major reasons for this is the difficulty in measuring the results of advertising. Several methods are available for measuring ad, conducting cost-benefit analysis, and for pricing ads. They are discussed below. 1. Advertising Strategies and Promotions ▪ Associated ad display (text links): an advertising strategy that displays a banner ad related to a term entered in a search engine. ▪ Ads as a commodity: direct payment made by the advertisers for ads viewed. ▪ Viral marketing (advocacy marketing): word-of-mouth marketing by which customers promote a product or service by telling others about it. ▪ customizing ads: one-to-one advertisement (Web casting). 2. Online events, promotions, and attractions ▪ Promotions designed to attract visitors are regular events on thousands of Web sites; ▪ Bargains on the Internet; ▪ Lottery; ▪ Free samples, give-aways, and sweepstakes. 3. Major considerations when implementing an online ad campaign: ▪ Clearly understood online surfers as target audience; ▪ Powerful enough server prepared to handle the expected volume of traffic; ▪ Assuming the promotion is successful, what will the result be? Consider co-branding—bring together two or more powerful partners. 4. Advertisement Strategies Several advertisement strategies can be used over the internet. Before we describe them, it will be useful to present some important considerations in Internet-based ad design. 5. Passive Pull Strategy Usually, customers will look for a site and visit it only if it provides helpful and attractive contents and display. This strategy when Web pages are waiting for a customer’s passive access, is referred to as passive pull strategy. The passive pull strategy is effective and economical when advertising to open, unidentified potential customers worldwide. However, since there are so many Web pages open to all customers, there is a need for a directory that can guide customers to targeted sites. For instance, refer to the site Advertising World (http://advertising.utexas.edu/word). This is a noncommercial site that can guide customers. In this sense, portal search engine sites like Yahoo can be regarded as an effective aid for advertisement. There sites are all equipped with directories for the registered sites. A site may be either a pure advertisement site (which means it does not offer order entry and payment capabilities) or a complete retailing storefront (like Amazon) as described in chapter 2. The ads in the latter case can be directly linked to sales. In this case, the ad can be regarded as the first step of sales activity on the Internet. When the site is an e-mail, we can see its own directory and search engines, which help find the desired products and services. In this sense, the directory in the e-mail can be regarded as the second step in the passive pull strategy. 6. Active Push Strategy If customers do not visit the merchants’ sites voluntarily, merchants need to actively advertise to the targeted customers. One option of this strategy is sending e-mail to the relevant people. The first issue to be considered by merchants adopting this strategy is how to obtain the mailing list of the target customers. Companies like DoubleClick (www.doubleclick.com) have started to generate mailing lists to meet this need. For a comprehensive list of such companies, refer to the direct marketing menu in Advertising World (http://www.advertising.utexs.edu/world). For a case
study of utilizing the mailing list service from Double Click, refer to Application Box 4.2. Mailing list generation is done in different ways, as was shown in the opening vignette Companies are also using agent technology and coolies, as well will discuss in sections 4. 5 and 4.8 7. Associated Ad Display Strategy With a banner, a display may be organized independently of who reads it and what is read. If the merchant can identify the person and the characteristics of accessed pages, displaying an associated ad can be a very effective advertisement. Let us call this the associated ad display strategyForexampleinusingMapquest(www.mapquest.com),whichsupportshotel reservations, the user may select an indexed category such as"lodging"within a city. Then,a Radisson ad may be displayed. These kinds of targeted ads cost about $40per thousand impressions, compared with $25 per thousand impressions for other ads. Another example of associated ad display can be found at Amazon. When the customers read about a book, a list of books under the title"Customers who bought this book also bought.. is displayed. To support this kind of service, Amazons system must have the capability of data mining from past records and storage in the database. The ad display can be directly ordered seamlessly. In this sense, this rategy can be regarded as just-in-time strategy 8. Ads as a Commodity According to this strategy, an ad is sold as a product, using the approach of Cyber Gold (www.cvbergold.com)andothersInterestedconsumersreadtheadsinexchangefordirect payment made by the advertisers. Consumers fill out data on personal interests, then Cyber Gold distributes targeted banners based on the personal profiles. Each banner is denoted with the amount of payment for reading it If interested, the reader clicks the banner to read it and, passing some tests on its contents, is paid for the effort. Readers can sort and choose what they read, and the advertisers can vary the payment level reflecting the frequency and desirability of readers Payments can be cash ($I per banner) or discounts on the products sold. Also see 8.3.5 Implementing the internet ads The following issues are related to the implementation of the above advertisement strategies 1. Customizing Ads There is too much information on the Internet for customers to view So filtering the irrelevant information by providing customized ads can be a way to reduce the information overload. Broad Vision's Web site is an example of a customized ad service platform (www.broadvision.com).ThesoftwareOne-toOneallowstherapidcreationandalterationof secure and robust visitor-centric Web sites. The heart of One-to-One is a customer database. with registration data and information gleaned from site visits. Marketing staff can use One-to-One their own desktops to set up and modify rules about how the site should react. Using this feature,a marketing manager can customize display ads based on users' profiles AnothermodelofcustomizedadcanbefoundinPointcast(www.pointcast.com),afree Internet news service that broadcasts personalized news and information. A user establishes the information you want, and you may get some information that you do not need may tock quotes, Point Cast system and selects the desired information, such as sports, news, headlines, etc. The information described must be selected from the menu; therefore, you may not get all the A salesman expert system provides a special example of advertisement. The sys tem CYBER-SES (Lee et al. 1998) seeks the compatible items and parts when a purchase requires a set of compatible components. Being displayed as a compatible option provides an opportunity for vertisemer 2. Interactive Ads strategies The ads on the Internet can be passive(view only)or interactive. Interaction may be executed online using chatting and call center service or asynchronously using Web screens and e-mails These interactions can be used to supplement passive Web pages. One of the major advantages of the Web is the ability to provide various types of interactive options at a reasonable cost
study of utilizing the mailing list service from Double Click, refer to Application Box 4.2. Mailing list generation is done in different ways, as was shown in the opening vignette. Companies are also using agent technology and coolies, as well will discuss in sections 4.5 and 4.8. 7. Associated Ad Display Strategy With a banner, a display may be organized independently of who reads it and what is read. If the merchant can identify the person and the characteristics of accessed pages, displaying an associated ad can be a very effective advertisement. Let us call this the associated ad display strategy. For example, in using MapQuest (www.mapquest.com), which supports hotel reservations, the user may select an indexed category such as “lodging” within a city. Then, a Radisson ad may be displayed. These kinds of targeted ads cost about $40per thousand impressions, compared with $25 per thousand impressions for other ads. Another example of associated ad display can be found at Amazon. When the customers read about a book, a list of books under the title “Customers who bought this book also bought…” is displayed. To support this kind of service, Amazon’s system must have the capability of data mining from past records and storage in the database. The ad display can be directly ordered seamlessly. In this sense, this strategy can be regarded as just-in-time strategy. 8. Ads as a Commodity According to this strategy, an ad is sold as a product, using the approach of CyberGold (www.cybergold.com) and others. Interested consumers read the ads in exchange for direct payment made by the advertisers. Consumers fill out data on personal interests, then CyberGold distributes targeted banners based on the personal profiles. Each banner is denoted with the amount of payment for reading it. If interested, the reader clicks the banner to read it and, passing some tests on its contents, is paid for the effort. Readers can sort and choose what they read, and the advertisers can vary the payment level reflecting the frequency and desirability of readers. Payments can be cash ($1 per banner) or discounts on the products sold. Also see www.gotoworld.com. 8.3.5 Implementing the internet ads The following issues are related to the implementation of the above advertisement strategies. 1. Customizing Ads There is too much information on the Internet for customers to view. So filtering the irrelevant information by providing customized ads can be a way to reduce the information overload. BroadVision’s Web site is an example of a customized ad service platform (www.broadvision.com). The software One-to One allows the rapid creation and alteration of secure and robust visitor-centric Web sites. The heart of One-to-One is a customer database, with registration data and information gleaned from site visits. Marketing staff can use One-to-One their own desktops to set up and modify rules about how the site should react. Using this feature, a marketing manager can customize display ads based on users’ profiles. Another model of customized ad can be found in PointCast (www.pointcast.com), a free Internet news service that broadcasts personalized news and information. A user establishes the PointCast system and selects the desired information, such as sports, news, headlines, stock quotes, etc. The information described must be selected from the menu; therefore, you may not get all the information you want, and you may get some information that you do not need. A salesman expert system provides a special example of advertisement. The sys tem CYBER-SES (Lee et al. 1998) seeks the compatible items and parts when a purchase requires a set of compatible components. Being displayed as a compatible option provides an opportunity for advertisement. 2. Interactive Ads Strategies The ads on the Internet can be passive (view only) or interactive. Interaction may be executed online using chatting and call center service or asynchronously using Web screens and e-mails. These interactions can be used to supplement passive Web pages. One of the major advantages of the Web is the ability to provide various types of interactive options at a reasonable cost
3. Comparison Ads as a Medium of Advertisement Customers need to compare many alternative products and services. Suppose you want to buy a television and have found a product in a Web catalog or e-mail. Then you would like to find the least expensive place to buy the TV. a issue here is who provides the information for the ads. One possible policy is to let the e-mail managers provide such information as a free service for the brands listed in a mall without any specific request. The other policy is to generate the comparisons as a replay to a request of"Compare"for a designated product. In this process, the competitors have an incentive to pay for the comparing ad. The Meta-Malls Architecture(Lee and Lee 1998)has pursued the provision of such comparison service not only in one mall but over 8. 4 Web sites marketing Making your web site perform means knowing how to market your business on the world wide web. Multimedia specializes in web site marketing, advertising, promotions, and designs web sites that are both"user"friendly and"search engine"friendly. Most of your web site traffic will come from either an internet search engine, web directory or from a link Some of the best graphically"designed web sites in the world are not delivering optimum internet performance Search engine not driving enough traffic to your site? Need to get customers to your site sooner than the months it can take your site to reach the first page of the search listings? You may need to market your site. Luckily, advertising on the web does not need to cost a lot of money. You can control exactly how much you spend and with web analysis tools, you'll be able to measure how much the traffic to your site has increased There are several different types of web advertising Search engines( Google, Yahoo, and others) offer pay per click advertising. When a user types keywords you choose, your ad shows up next to or inside the search results- you pay only if the user clicks your ad. Costs can be as low as 5 cents per click Banner Ads let you show your company's name and message along with high quality Link Exchanges where you agree to link to someone else's site if they agree to link to yours. Link exchange programs help you find people to exchange links with Email Marketing is a low cost way to communicate with your existing customers and encourage them to return to your site Pay per impression advertising: including pop-up and pop-under ads that appear when a user navigates to or away from a specific website Pay per click advertising on websites related to your business-contact the website you're interested in directly to set something up 8.5 Customer Service E-Mail Can Compromise sales e-mail 8.5.1 E-mail Ads function We've all received e-mail order confirmations. Some of us have even received confirmations via e-mail when a gift is delivered. Implementing the tools to send such messages is easy. Still consumers want improvements in e-mail communications after the order is placed Jupiter Research(a Jupiter media Corp. division) recently reported consumers demand improvements in many online ordering areas, including e-mail. It surveyed 2, 798 consumers. Here are some highlights 58 percent want improved updates on delivery delays 56 percent want faster e-mail response 45 percent want multiple contact methods 38 percent want updates on earlier inquiries Bottom line: You spend money to acquire each customer. Whether via search, TV, print, direct mail, or any other method, each customer comes with a cost. Sometimes, you make a profit on the first order. Often, you dont. Most direct response businesses rely on additional purchases to turn a profit
3. Comparison Ads as a Medium of Advertisement Customers need to compare many alternative products and services. Suppose you want to buy a television and have found a product in a Web catalog or e-mail. Then you would like to find the least expensive place to buy the TV. A issue here is who provides the information for the ads. One possible policy is to let the e-mail managers provide such information as a free service for the brands listed in a mall without any specific request. The other policy is to generate the comparisons as a replay to a request of “Compare” for a designated product. In this process, the competitors have an incentive to pay for the comparing ad. The Meta-Malls Architecture (Lee and Lee 1998) has pursued the provision of such comparison service not only in one mall but over multiple independent e-mail. 8.4 Web sites marketing Making your web site perform means knowing how to market your business on the world wide web. Multimedia specializes in web site marketing, advertising, promotions, and designs web sites that are both "user" friendly and "search engine" friendly. Most of your web site traffic will come from either an internet search engine, web directory or from a link. Some of the best "graphically" designed web sites in the world are not delivering optimum internet performance. Search engine not driving enough traffic to your site? Need to get customers to your site sooner than the months it can take your site to reach the first page of the search listings? You may need to market your site. Luckily, advertising on the web does not need to cost a lot of money. You can control exactly how much you spend and with web analysis tools, you'll be able to measure how much the traffic to your site has increased. There are several different types of web advertising: ▪ Search engines (Google, Yahoo, and others) offer pay per click advertising. When a user types keywords you choose, your ad shows up next to or inside the search results - you pay only if the user clicks your ad. Costs can be as low as 5 cents per click. ▪ Banner Ads let you show your company's name and message along with high quality visual images. ▪ Link Exchanges where you agree to link to someone else's site if they agree to link to yours. Link exchange programs help you find people to exchange links with ▪ Email Marketing is a low cost way to communicate with your existing customers and encourage them to return to your site ▪ Pay per impression advertising: including pop-up and pop-under ads that appear when a user navigates to or away from a specific website ▪ Pay per click advertising on websites related to your business - contact the website you're interested in directly to set something up. 8.5 Customer Service E-Mail Can Compromise Sales E-Mail 8.5.1 E-mail Ads Function We've all received e-mail order confirmations. Some of us have even received confirmations via e-mail when a gift is delivered. Implementing the tools to send such messages is easy. Still, consumers want improvements in e-mail communications after the order is placed. Jupiter Research (a Jupiter media Corp. division) recently reported consumers demand improvements in many online ordering areas, including e-mail. It surveyed 2,798 consumers. Here are some highlights: ▪ 58 percent want improved updates on delivery delays. ▪ 56 percent want faster e-mail response. ▪ 45 percent want multiple contact methods. ▪ 38 percent want updates on earlier inquiries. Bottom line: You spend money to acquire each customer. Whether via search, TV, print, direct mail, or any other method, each customer comes with a cost. Sometimes, you make a profit on the first order. Often, you don't. Most direct response businesses rely on additional purchases to turn a profit
