© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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 Phone: (800)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Value and Scarcity Online Volume of online content is growing far faster than the number of Web users

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Value and Scarcity Online

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Rethink NYT?

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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:

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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?

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Planning for Valuable Traffic At each stage, visitors decline and costs rise

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Traffic-Building Goals Basic goal: best traffic at lowest cost But how to define best traffic?

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Traffic-Building Goals Basic goal: best traffic at lowest cost But how to define best traffic? Best Traffic with Least Cost Maximum Profit Minimum Cost-per-Action Maximize Actions

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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 ( 指不含品牌與其他效益, but still not clearly defined) (For new customers only)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Traffic-Building Goals Variation in Average Customer Acquisition Costs for Four Net Companies CompanyTime PeriodAcquired CustomersCustomer Acq. Cost e-Commerce firms Amazon.com3/1997->3/200233,800,000$7.70 eBay12/1996->3/200246,100,000$11.26 Online brokerages Ameritrade9/1997->3/20021,877,000$ E*Trade12/1997->3/20024,117,370$ SOURCE: Gupta, Lehmann, Stuart: “Valuing Customers,” Journal of Marketing Research 41, no. 1 (Feb. 2004)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Search Engine Optimization The power of landing “Above the Fold( 報紙的頭版上面 )” SOURCE: FPG/Getty Images

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Search Engine Optimization Top placement in search returns is key to generating organic Web traffic

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Keyword Advertising Evaluating keyword portfolios –Identify a site’s most relevant keywords –Test and expand list, based on conversion and click-through rates

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Keyword Advertising Evaluating keyword portfolios –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

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Keyword Advertising Collecting Keyword Data Keyword PhrasesClicksConversions Cost per click to hold position Conversion rate Skylark fuel pump Position 1 626$ % GM fuel pump Position $ % Buick parts Position $ % Used Buick Skylark Position $ % Buick Position $ % Used car parts Position $ %

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Traffic by Association In traditional advertising, marketers put a company’s message where consumers work, live, play

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Traffic by Association In traditional advertising, marketers put a company’s message where consumers work, live, play Same concept holds true online

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation 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