IN ADVERTISING AND PROMOTION INTEGRATED MARKETING COMMUNICATIONS IN ADVERTISING AND PROMOTION CHAPTER 13 Internet Advertising © 2010 South-Western, a part of Cengage Learning All rights reserved.

Chapter Objectives After reading this chapter you should be able to: Appreciate the magnitude, nature, and potential for Internet advertising. Be familiar with the two key features of Internet advertising: individualization and interactivity. Understand how Internet advertising differs from advertising in conventional mass-oriented advertising media, as well as how the same fundamentals apply to both general categories of ad media. Understand the various forms of Internet advertising: display ads, rich media, e-mail advertising, Web logs, search engine advertising, and advertising via behavioral targeting. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 13–2

Chapter Objectives (cont’d) After reading this chapter you should be able to: Appreciate the importance of measuring Internet advertising effectiveness and the various metrics used for this purpose. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 13–3

The Internet As an Advertising Medium The Internet’s Evolving IMC Roles Building demand Conducting transactions Filling orders Providing customer service Serving as an advertising medium Issues and Concerns Increasing flow of advertising revenue to the Internet Consumer control of information received Versatility and effectiveness of Internet communications in targeting and reaching customers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

The Two i’s of the Internet: Individualization and Interactivity Recognizes that the Internet user has control over the flow of information Interactivity: The capabilities that the Internet gives users to select the information that they perceive as relevant The capabilities that the Internet gives brand managers to build relationships with customers via two-way communication © 2010 South-Western, a part of Cengage Learning. All rights reserved.

The Internet Compared with Other Ad Media Interactivity as a Disadvantage Internet users are highly involved and goal driven (“leaning forward”) when connecting to the Internet, making them more apt to actively avoid unsolicited advertisements as clutter. Traditional media users are more casually involved (”leaning back”), making them more receptive to advertisements embedded in the media. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Internet Advertising Formats Table 13.1 Internet Advertising Formats Web Sites Display or Banner Ads Rich Media Formats Pop-Ups Interstitials Superstitials Video Ads Blogs, Podcasts, and Social Networks Blogs Podcasts Social Networks E-mail Opt-in Versus Spam E-zines Wireless E-mail Advertising Mobile Phone Advertising Search Engine Advertising Keyword-Matching Advertising Content-Targeted Advertising Advertising via Behavioral Targeting © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Web Sites Uses for Web Sites Well-Designed Web Sites As an advertisement for the company As a venue for generating and transacting exchanges between organizations and their customers As a link to other integrated marcom communications Well-Designed Web Sites Are easy to navigate Provide useful information Are visually attractive Offer entertainment value Are perceived as trustworthy © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Display or Banner Ads Click-through Rates (CTRs) Banner Ad Benefits Rates are less than 0.3%—exposure is not equivalent to attention B2B rates are higher than B2C rates CTRs are a function of brand familiarity: Known-brand CTRs decrease with multiple exposures while unknown-brand CTRs increase with multiple exposures Banner Ad Benefits Top-of–mind (TOMA) awareness for established brands increases brand equity Increased probability of purchasing behavior by consumers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Types and Sizes of Internet Marketing Units (IMUs) Table 13.2 Types and Sizes of Internet Marketing Units (IMUs) © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Rich Media on the Internet Pop-Ups Interstitials Superstitials Video Ads and Webisodes Rich Media Advertising Formats © 2010 South-Western, a part of Cengage Learning. All rights reserved. 11

Blogs, Podcasts, and Social Networks Are written by individuals to exchange their views on issues (e.g., products and brands ) with others in online forums Are citizen journalism—online word-of-mouth Are an interactive medium that businesses can use to connect with customers and appear more credible. Podcasts Are self-produced radio-style online programs to which consumers can subscribe Enable advertisers to target consumers who have self-selected programs of interest to them © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Blogs, Podcasts, and Social Networks Allow users to interact with “friends,” share opinions and information, and create online communities Developed by businesses enable consumers to learn from one another and to share their experiences P&G’s “The People’s Choice” Mattel’s Barbiegirls.com Are presently unproven marcom tool © 2010 South-Western, a part of Cengage Learning. All rights reserved.

E-mail Advertising E-mail as a Effective Marcom Tool Opt-In E-mailing + Delivering advertising messages + Providing sales incentives to mass audiences or targeted groups – Sending junk mail (spamming) and phishing Opt-In E-mailing Is the process of marketers asking for permission to send messages to consumers Avoids the flow of irrelevant inbound messages Allows marketers to provide targeted information that is of interest to the receiver © 2010 South-Western, a part of Cengage Learning. All rights reserved.

E-mail Advertising (cont’d) E-mail magazines (E-zines) Are free magazine-like publications that deliver specialized content and credible advertising messages to targeted audiences Wireless E-mail Advertising (WiFi) Allows users to connect to the Internet through WiFi hotspots Offers significant marcom potential in its ability to message consumers with pertinent offers from stores close to their location. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

The Special Case of Mobile Phones Cellular Phones as the Third Screen Mobility and universal coverage WiFi technology for Internet Access Short Messaging System (SMS) for text messaging Multimedia Messaging Service for graphics and sounds Music, game, video, and ringtone downloads Marcom Issues Invasion of privacy—negative consumer responses to unsolicited messages Limited advertising space on cell screens Gaining consumer acceptance of opt-in advertising © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Search Engine Advertising (SEA) Is fastest growing form of Internet advertising—about 40% of online advertising spending Includes a variety of well-known services (e.g.; Google, MSN Search, and Yahoo!) that people use when seeking information Attempts to place messages in front of people when their natural search efforts indicate they are interested in buying a particular good or service Makes use of paid keywords to increase the odds that a firm’s product or service will be included in the search results and appear as a sponsored link © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Figure 13.1 The Role of Keywords in Increasing the Odds That Ready Consumers Encounter Your Ad Step 1: Prospective purchasers of a specific good or service perform natural search using one or more search engines to locate that item. Step 2: Matches to Internet shopper’s search are generated by Google or another search engine. Step 3: Alongside the matches are sponsored links that correspond to the keyword(s) entered by the shopper. Step 4: These sponsored links appear because companies offering the searched item purchased corresponding keywords from the search engine company. Step 5: Shoppers may click through to a sponsored Web site and purchase a desired item or, at least, consider this Web site for future purchases. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Purchasing Keywords and Selecting Content-Oriented Web Sites Keyword Matching Advertising Advertisers bid for keywords by indicating how much they are willing to pay each time an Internet shopper clicks (cost per click, CPC) on a sponsored link to reach their website as a result of a search. Content-Targeted Advertising (AdSense) A Google program that enables advertisers to run ads on sites with content related to their products or services Google acts as an ad agency placing ads and receiving a commission © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Purchasing Keywords and Selecting Content-Oriented Web Sites (cont’d) Click Fraud Occurs when a competitor or other party clicks on a sponsored link repeatedly in order to harm the other advertiser. Occurs when employees of content-oriented websites click on links to advertised Web sites to increase revenue. Fraud estimates range from 5% to 20% © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Advertising via Behavioral Targeting Involves directing online advertisements only to consumers showing an interest in a particular product or service by their site-selection behaviors. Involves the use of “cookies” that record the activities of visitors to web sites—regarded by some users as an invasion of their privacy © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Brand Name Fundamentals Distinguishable from competitors Compatible with desired image Facilitates consumer learning Memorable and pronounceable Suitable for global use © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Measuring Internet Ad Effectiveness How many people clicked through a particular Web ad? What actions were taken following click throughs or site visits? What are the demographic characteristics of these people? Is this form of online advertising yielding a suitable return on investment? Questions to Ask How many visited a particular Web site? © 2010 South-Western, a part of Cengage Learning. All rights reserved. 23

Metrics for Measuring Internet Ad Performance Exposure value or popularity of Web site or Internet ad Number of users exposed to an ad Number of unique visitors Click-through rate Ability of site to attract and hold users’ attention and the quality of customer relationships Average time per visit Number of visits by unique visitors Average interval between user visits Usefulness of Web site Proportion of repeat visitors Ability to target users Profile of Web-site visitors Visitors’ previous Web-site search behavior © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Metrics for Measuring Internet Ad Performance Click-through Rate (CTR) The percentage of people who are exposed to an Internet-delivered ad and actually clicked on it Cost per Thousand Impressions (CPM) Assesses how much (on a per-thousand-impressions basis) it costs to place an online ad Measures when an ad comes on to the eyeballs of the user (opportunity-to-see, OTS) but provides no real information about the actual effect of the advertisement © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Metrics for Measuring Internet Ad Performance (cont’d) Cost per Action (CPA) The number of users who actually click on a display or rich-media ad to visit a brand’s Web site, register their names on the brand’s web site, and purchase the advertised brand © 2010 South-Western, a part of Cengage Learning. All rights reserved.