Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENT THOMSON BUSINESS and ECONOMICS 5109 Natorp Boulevard Mason, OH 45040 Phone: (800) 423-0563

Part Two: Chapter Eight Traffic Building “A wealth of information creates a poverty of attention (注意力不足).” Herbert Simon, Designing Organizations for an Information-rich World

Value and Scarcity Online Volume of online content is growing far faster than the number of Web users

Value and Scarcity Online Volume of online content is growing far faster than the number of Web users Every site faces unique challenges to attract new visitors

Value and Scarcity Online Volume of online content is growing far faster than the number of Web users Every site faces unique challenges to attract new visitors As Web users grow more experienced, they are less likely to explore new sites

Value and Scarcity Online Volume of online content is growing far faster than the number of Web users Every site faces unique challenges to attract new visitors As Web users grow more experienced, they are less likely to explore new sites The true scarcity online: user attention

Value and Scarcity Online

Rethink NYT?

Planning for Maximum Traffic Drawing more visitors to a site requires a thoughtful web traffic plan Web traffic plans should consider each of the five main traffic categories:

Planning for Maximum Traffic Drawing more visitors to a site requires a thoughtful web traffic plan Web traffic plans should consider each of the five main traffic categories: Branding decisions (e.g. domain name) Search engine marketing Affiliate networks Online banner advertising Publicity and word of mouth(口語) +VC?

Planning for Valuable Traffic Effective traffic plans assess the volume and quality of traffic generated Spotting broad use patterns through visualization tools helps calculate the cost and productivity of new visits Key tool for traffic-building analysis is cost-per-action: the number of visits that end in a particular action divided by the cost of the campaign

Planning for Valuable Traffic At each stage, visitors decline and costs rise

Traffic-Building Goals Basic goal: best traffic at lowest cost But how to define best traffic?

Traffic-Building Goals Basic goal: best traffic at lowest cost But how to define best traffic? Maximum Profit Minimum Cost-per-Action Best Traffic with Least Cost Maximize Actions

Traffic-Building Goals Profit guidelines that include web site branding; ignore ad branding impact: Spend on traffic sources that maximize difference between unified visit value and cost per visit Acquire traffic as long as the cost per visit is less than the unified visit value (指含網站品牌，其他廣告品牌效益不計, but still not clearly defined)

Traffic-Building Goals Profit guidelines that ignore branding and all other impacts: Spend on traffic sources that maximize difference between customer lifetime value and web customer acquisition cost Acquire traffic as long as online customer value exceeds acquisition cost (For new customers only) (指不含品牌與其他效益, but still not clearly defined)

Traffic-Building Goals Variation in Average Customer Acquisition Costs for Four Net Companies Company Time Period Acquired Customers Customer Acq. Cost e-Commerce firms Amazon.com 3/1997->3/2002 33,800,000 $7.70 eBay 12/1996->3/2002 46,100,000 $11.26 Online brokerages Ameritrade 9/1997->3/2002 1,877,000 $203.44 E*Trade 12/1997->3/2002 4,117,370 $391.00 SOURCE: Gupta, Lehmann, Stuart: “Valuing Customers,” Journal of Marketing Research 41, no. 1 (Feb. 2004)

Search Engine Search engine optimization Keyword advertisement

Search Engine Optimization The power of landing “Above the Fold(報紙的頭版上面)” SOURCE: FPG/Getty Images

Search Engine Optimization Top placement in search returns is key to generating organic Web traffic

Search Engine Optimization Top placement in search returns is key to generating organic Web traffic User’s willingness to investigate falls sharply as items drop on the return list

Search Engine Optimization Top placement in search returns is key to generating organic Web traffic User’s willingness to investigate falls sharply as items drop on the return list Higher click rate on top-rated items Few users go beyond first page or two

Search Engine Optimization (SEO) Improving search engine placement Get indexed on main search engines Use meta-tags and develop content with appropriate keywords that trigger higher search engine rankings Structure site content and navigation to reinforce search engine algorithms Cultivate(培養) links from appropriate sites

Keyword Advertising Clickable, text-based ads bring in billions of dollars of ad revenue Ads steer traffic to an organization web site; fee charged only if click occurs Competitive bidding process determines a keyword’s value

Keyword Advertising Evaluating keyword portfolios Identify a site’s most relevant keywords Test and expand list, based on conversion and click-through rates

Keyword Advertising Evaluating keyword portfolios Bidding and tracking Identify a site’s most relevant keywords Test and expand list, based on conversion and click-through rates Bidding and tracking Higher bids increase chance at higher keyword position No click costs more than maximum bid Price charged depends on intensity of competition

Keyword Advertising Collecting Keyword Data Keyword Phrases Clicks Conversions Cost per click to hold position Conversion rate Skylark fuel pump Position 1 62 6 $0.10 9.68% GM fuel pump Position 2 148 18 $0.20 12.16% Buick parts 1246 48 $0.25 3.85% Used Buick Skylark Position 1 8678 95 $0.23 1.09% Buick Position 3 362 15 $1.37 4.14% Used car parts 17265 98 $0.34 0.57%

Traffic by Association In traditional advertising, marketers put a company’s message where consumers work, live, play

Traffic by Association In traditional advertising, marketers put a company’s message where consumers work, live, play Same concept holds true online

Traffic by Association In traditional advertising, marketers put a company’s message where consumers work, live, play Same concept holds true online Banner advertising URL (Uniform Resource Locator) placement on shopping bags, billboards, monthly statements Sponsorship and co-branding