E-commerce

Lecture 7
E-commerce Marketing Communications

Slide 7-2

Video Ads Cure Banner Blindness: String Master

Class Discussion

What advantages do video ads have over traditional banner ads? Where do sites such as YouTube fit in to a marketing strategy featuring video ads? What are some of the challenges and risks of placing video ads on the Web? Do you think Internet users will ever develop blindness towards video ads as well?
Slide 7-3

Marketing Communications
Online marketing communications:
Methods used by online firms to communicate with consumer and create strong brand expectations

Promotional sales communications:

Suggest consumer buy now and make offers to encourage immediate purchase

Branding communications:
Focus on extolling differentiable benefits of consuming product or service
Slide 7-4

Online Advertising
$24.5 billion in 2009 15% of all advertising by 2013 Advantages:
Internet is where audience is moving Ad targeting Greater opportunities for interactivity

Disadvantages:
Cost versus benefit How to adequately measure results Supply of good venues to display ads
Slide 7-5

Online Advertising from 20022013

SOURCES: Based on data from eMarketer, 2009a.

Slide 7-6

Forms of Online Advertisements

Display ads Rich media Video ads Search engine advertising In-game ads

Social network, blog, and game advertising

Sponsorships Referrals (affiliate relationship marketing)

E-mail marketing
Online catalogs
Slide 7-7

Display Ads
Banner ads
Rectangular box linking to advertisers Web site
IAB guidelines
E.g., full banner is 468 x 60 pixels, 13K

Pop-up ads
Appear without user calling for them Provoke negative consumer sentiment

Twice as effective as normal banner ads

Pop-under ads: open beneath browser window
Slide 7-8

Rich Media Ads

Use Flash, DHTML, Java, JavaScript

About 7% of all online advertising expenditures

Tend to be more about branding Boost brand awareness by 10% IAB standards limit length Interstitials Superstitials
Slide 7-9

Video Ads
Fastest growing form of online advertisement IAB standards
Linear video ad Non-linear video ad In-banner video ad In-text video ad

Formats: pre-roll, mid-roll, post-roll Ad placement

Video advertising networks
Advertising exchanges
Slide 7-10

Search Engine Advertising

Almost 50% of online ad spending in 2009

Types:
Paid inclusion or rank
Inclusion in search results Sponsored link areas

Keyword advertising
E.g., Google AdWords

Network keyword advertising (context advertising)

E.g., Google AdSense

Slide 7-11

Search Engine Advertising

Issues:
Appropriate disclosure of paid inclusion and placement practices Search engine click fraud Ad nonsense

Slide 7-12

Sponsorships and Referrals

Sponsorships
Paid effort to tie advertisers name to particular information, event, venue in way that reinforces brand in positive yet not overtly commercial manner

Referrals
Affiliate relationship marketing Permits firm to put logo or banner ad on another firms Web site from which users of that site can click through to affiliates site
Slide 7-13

E-mail Marketing and the Spam Explosion

Direct e-mail marketing
Low cost method Primary cost is purchasing addresses

Spam: unsolicited commercial e-mail

80%90% of all e-mail purportedly is spam Efforts to control spam:
Technology (filtering software)

Government regulation (CAN-SPAM and state laws)

Voluntary self-regulation by industries DMA
Slide 7-14

Percentage of E-mail That Is Spam

SOURCE: MessageLabs.com, 2009.

Slide 7-15

Spam Categories

SOURCE: Symantec, 2009. Slide 7-16

Online Catalogs
Equivalent of paper-based catalogs

Graphics-intense; use increasing with increase in broadband use

Two types:
1. Full-page spreads, e.g., Landsend.com 2. Grid displays, e.g., Amazon

In general, online and offline catalogs complement each other

Slide 7-17

Social Marketing
Many-to-many model

Uses digitally enabled networks to spread ads

Blog advertising
Online ads related to content of blogs

Social network advertising

Ads on MySpace, Facebook, YouTube, etc.

Game advertising
Downloadable advergames Placing brand-name products within games
Slide 7-18

Insight on Society

Marketing to Children of the Web in the Age of Social Networks

Class Discussion

Why is online marketing to children a controversial practice? What is the Childrens Online Privacy Protection Act (COPPA) and how does it protect the privacy of children? How do companies verify the age of online users? Should companies be allowed to target marketing efforts to children under the age of 13?

Slide 7-19

Behavioral Targeting
Web as Database of Intentions Behavioral targeting
Combines real-time information on visitors online behavior with offline identity, consumptive information Data analyzed to develop profiles Ads delivered based on profile Hundreds of versions of ad for different profile groups

One of fastest growing online marketing techniques Raises privacy concerns

Slide 7-20

Mixing Offline and Online Marketing Communications

Most successful marketing campaigns incorporate both online and offline tactics
Offline marketing
Drive traffic to Web sites
Increase awareness and build brand equity

Consumer behavior increasingly multi-channel

60% of consumers research online before buying offline
Slide 7-21

Insight on Business

Are the Very Rich Different from You and Me?

Class Discussion

Why have online luxury retailers had a difficult time translating their brands and the look and feel of luxury shops into Web sites? Why did Neiman Marcus first effort fail? Why did Tiffanys first effort fail?

Visit the Armani Web site. What do you find there?

Slide 7-22

Online Marketing Metrics: Lexicon

Measuring audience size or market share
Impressions Click-through rate (CTR) View-through rate (VTR) Hits Page views Stickiness (duration) Unique visitors Loyalty Reach Recency
Slide 7-23

Online Marketing Metrics

Conversion of visitor to customer
Acquisition rate Conversion rate Browse-to-buy-ratio View-to-cart ratio Cart conversion rate Checkout conversion rate Abandonment rate Retention rate Attrition rate
Slide 7-24

E-mail metrics
Open rate Delivery rate Click-through rate (e-mail) Bounce-back rate

An Online Consumer Purchasing Model

Slide 7-25

How Well Does Online Advertising Work?

Ultimately measured by ROI on ad campaign
Highest click-through rates: search engine ads, permission e-mail campaigns

Rich media, video interaction rates high

Online channels compare favorably with traditional channels Most powerful marketing campaigns use multiple channels, including online, catalog, TV, radio, newspapers, stores
Slide 7-26

Comparative Returns on Investment

SOURCE: Industry sources; author estimates. Slide 7-27

The Costs of Online Advertising

Pricing models
Barter Cost per thousand (CPM) Cost per click (CPC) Cost per action (CPA)

Online revenues only

Sales can be directly correlated

Both online/offline revenues

Offline purchases cannot always be directly related to online campaign

In general, online marketing more expensive on CPM basis, but more effective
Slide 7-28

Web Site Activity Analysis

Slide 7-29

Insight on Technology

Its 10 P.M. Do You Know Who Is on Your Web Site?

Class Discussion

What are some of the services offered by Omnitures SiteCatalyst? Why would you as a Webmaster be interested in these services? Why is site analysis and customer tracking so important to online marketing? How did HP use SiteCatalyst?
Slide 7-30

The Web Site as a Marketing Communications Tool

Web site as extended online advertisement Domain name:
First communication e-commerce site has with prospective customer Register with as many search engines as possible Ensure keywords used in site description match keywords likely to be used as search terms by user Link site to as many other sites as possible Get professional help
Slide 7-31

Search engine optimization:

Web Site Functionality

Main factors in effectiveness of interface
Utility Ease of use

Top factors in credibility of Web sites

Design look Information design/structure Information focus

Organization is important for first-time users, but declines in importance

Information content becomes major factor attracting further visits
Slide 7-32

Factors in the Credibility of Web Sites

SOURCE: Based on data from Fogg, et al, 2003. Slide 7-33

Slide 7-34