MD253 - E-Commerce Module 6: Advertising & E-Commerce Spring 2003

Topics Covered Profiling - how does it work? Advertising Networks Comparing Media Models Improving Results Rich Media & Other Examples Problems & Challenges

Cookies stored in a text file on your hard drive usage –track users (unique ID) –save passwords / prefs. –temporary storage (shopping basket) each cookie can only be accessed by the domain that placed it (ads have own domain) may be disabled (prefs) a cookie  single user

Targeting Targeting Options site categorization visitor frequency geography domain name service provider SIC codes company size (emp, $) browser type operating system click stream

Comparing Media Effectiveness –Internet banner ad click through (‘ %; ‘99 1%; ‘02.3%) –Direct mail response = 1-2% –Print ads response =.5-.75% CPM (cost per 1000 impressions) –Niche magazines - $ –Consumer magazines - $30-40 –Web sites: (‘98 $20-30; ‘99 $17; ‘02 $2-$34) –Network TV $6-15 –National radio: $4-$8 sources: Morgan Stanley, eCompany Now

Media Buy Models CPM –cost per thousand impressions Click-Thru (Cost Per Click) –advertisers pay only when users click an ad Affiliate (Cost Per Sale / Lead) –advertisers pay per sale or lead/inquiry Exclusives & Sponsorships Barter –trading space with another site

Internet Ad Response Rates Improving click-through rates –audio (+300%) –placement (lower rt. +228%; 1/3 down +77%) –interstitials (+44%) –animation (+25%) –cryptic messages (+18%) –posing a question (+16%) –calls to action (+15%) e.g. “see us now” –matching/targeting ( % or more) sources: Grey Interactive, DoubleClick, webreference.com, Internet Profiles, AudioNet, BusinessWeek

Challenges for Net Advertising Excess Inventory –roughly 80% unsold, punished for efficiency, caching Decreasing Effectiveness –Click- throughs plummeting “Deboning” –ad blocking, third-party cookie blocking The Agency’s Goal / Result Conflict