1 Lecture 4: Advertising Lecture Outline Web Advertisement Terminology Why Internet Advertisement? Advertisement Methods Considerations in Internet Ad Design Advertisement Strategies Effectiveness and Pricing of Advertisement Online Catalogues and Customisation CS5038 The Electronic Society

2 Web Advertisement Ad views or Impressions Banner Click (ad click) Click ratio = clicks/views Cookie – stored on user HD CPM – cost per 1000 views Hit – request data from webpage, counts every part (images etc.) Pageview – count entire page as a whole – more informative Reach – number of people or households exposed Visit – after last request if timeout is mins then it is a new visit Internet Advertising Terminology Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction.

3 Targeted Advertisement (one-to-one) The DoubleClick (DC) Approach3M, wants to advertise its $10,000 multimedia projectors DC monitors people browsing the Web sites of cooperating companies Matches them against a database Finds those people working for advertising agencies or using Unix system (potential buyers) Builds a dossier on you, your spending, and your computing habits using a cookie Prepares an ad for 3M projectors targeted for people whose profile matches what is needed for 3M DoubleClick shares revenue with cooperating partners

4 Why Internet Advertisement? 1.Ads can be updated any time with a minimal cost 2.Ads reach large number of buyers all over the world, accessed 24 hours, 365 days 3.Target is Well educated and high-income 4.Accessed primarily because of interest in the content Market segmentation opportunity is large 5.Web ads can be targeted at specific interest groups Opportunity to create one-to-one direct marketing relationship with the consumer 6.Can measure effectiveness as never before 7.Effectively use text, audio, graphics, and animation 8.Easily combine games, entertainment, and promotions 9.Cheaper than television, newspaper, or radio ads 10.3/4 of PC users gave up some television time for Internet

5 Prentice Hall, 2002 Internet Growth

6 Advertisement Methods Banners - Keyword banners, Random banners Customized to the target audience or one-to-one ads force advertising – must wait for banner to load Direct link to advertiser Multi media capabilities - Flash Banner swapping, banner exchanges - bcentral.com Disadvantage: High Cost Standard sizes (5) larger than banner, links inside - nytimesnytimes – can purchase targeted lists Mobile phones – Interactive one-to-one, context specific Splash Screen – good for multimedia Spot leasing - permanent spot on popular portal or Web page Submit URL to a search engine and be listed Chat Rooms – users spend longer time, can cycle messages

7 Considerations in Internet Ad Design 1.Visually appealing – e.g. FlashFlash 2.Targeted to specific groups or to individual consumers 3.Emphasise brands and a firms image (whats distinct) 4.Part of an overall marketing strategy - coordinated 5.Seamlessly linked with the ordering process 6.Page-loading speed - graphics simple and meaningful 7.Business content - clear and concise 8.Navigation efficiency (links) and compatibility Linkswell-labeled, accurate and meaningful 9.Security and privacy - option for rejecting cookies 10.Marketing Customer Focus Clear terms/conditions of the purchases - delivery information, return policy, etc.

8 Advertisement Strategies Pull (Passive) Strategy – e.g. Yahoo portal search engine site Effective site provides helpful and attractive contents Push (Active) Strategy – e.g. targeted spamming Associated Ad Display Strategy – e.g. Keyword banners Associate the content of a Web page with a related ad Ads as a commodity – pay consumer to watch ad e.g. MyPoints.com - Consumers fill out questionnaires Viral marketing word-of-mouth over the Internet Advocacy marketing hotmail.com includes free invite game/picture to friend Comparisons as medium for advertisement – pay to be listed Customised ad strategy - Personalised news and information Users select specific categories they want to receive Webcasting – personalised news and information Online Events, Promotions, and Attractions - freesamples

9 Effectiveness and Pricing of Advertisement 1.Exposure Models Multiple of number of guaranteed ad views 2.Click-Through Number of times customers click on banner (1-3% of views) 3.Interactivity Based on how customer interacts with the ad view – duration, clicks 4.Actual Purchase How to measure effectiveness and price ads

10 Online Catalogs Information can be dynamic - motion pictures, graphics, sound Information can be customised - depending on the customer profile Allows user to compose order Individualised prices, products, and display formats Automatically identify the characteristics of customers based on the transaction records Adds to customer experience brand loyalty Electronic catalogs allow integration of Search Capability Order taking and fulfillment Electronic payment Intranet workflow software and systems Inventory and accounting system Suppliers or customers extranet Relationship to paper catalogs

11 Summary Web Advertisement Terminology Why Internet Advertisement? – cheap, targeted, accessible Advertisement Methods – banners, standard ads, Considerations in Internet Ad Design Advertisement Strategies – pull, push, associated, viral How to Measure Effectiveness and Price Ads Online Catalogues and Customisation

12 Quiz 5

13 Managerial Issues: Should we advertise anywhere but our own site? How to consider all facets of advertising strategy. How to coordinate with offline advertising. How to integrate online and offline campaigns? Ethical issues to consider? Has advertising been integrated with ordering and other business processes? How important is branding? What is the right amount of advertising? How to assess success?