1. E-commerce business. technology. society. Kenneth C. Laudon
Second Edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2004 Pearson Education, Inc.

2. Chapter 8 E-commerce Marketing Communications
Copyright © 2004 Pearson Education, Inc.

3. Learning Objectives
Identify the major forms of online marketing communications
Understand the costs and benefits of online marketing communications
Discuss the ways in which a Web site can be used as a marketing communications tool
Copyright © 2004 Pearson Education, Inc.

4. ESPN Motion: TV Ads to the Internet
ESPN Motion: Leading-edge multimedia form of advertising
System sends packets of video at slow bit rate; when entire video has been downloaded, it is playable
Enables delivery of very high quality video over Internet
Also delivers second advertising clips either before or after video
Higher quality than streaming video, causes less Internet congestion
Copyright © 2004 Pearson Education, Inc.

5. ESPN Motion: TV Ads to the Internet
Page 441
Copyright © 2004 Pearson Education, Inc.

6. Marketing Communications
Online marketing communications: Methods used by online firms to communicate with consumer and create strong brand expectations
Promotional sales communications: Suggest consumer “buy now” and make offers to encourage immediate purchase
Branding communications: Focus on extolling differentiable benefits of consuming product or service
Copyright © 2004 Pearson Education, Inc.

7. Online Advertising
Paid message on a Web site, online service or other interactive medium, such as interactive messaging
2002: $6.3 billion spent, expected to grow to $9.1 billion by 2007
Advantages:
Ability to target ads to narrow segments and track performance in almost real time
Provide greater opportunity for interactivity
Disadvantages:
Concerns about cost versus benefit
Concerns about how to adequately measure results
Copyright © 2004 Pearson Education, Inc.

8. Online Advertising from 2000-2007
Figure 8.1, Page 445
Copyright © 2004 Pearson Education, Inc.

9. Online Advertising by Industry-2002
Figure 8.2, Page 446
Copyright © 2004 Pearson Education, Inc.

10. Forms of Online Advertisements
Banners, pop-ups and rich media ads
Search engine marketing: Paid search engine inclusion and placement
Sponsorships
Affiliate relationships
Copyright © 2004 Pearson Education, Inc.

11. Banners, Pop-ups and Rich Media Ads
Banners: Display promotional message in a rectangular box at top or bottom of computer screen
Pop-ups: Appear on screen without user calling for them
Pop-unders: Open underneath user’s active browser window and do not appear until user closes active window
Rich media ads: Employ Flash, DHTML, Java, streaming audio and/or video
Interstitials: Provide way of placing a full-page message between current and destination pages of user
Superstitials: Rich media ad that is pre-loaded into browser’s cache and does not play until fully loaded and user clicks to another page
Copyright © 2004 Pearson Education, Inc.

12. Types of Banner Ads Figure 8.3, Page 447
Copyright © 2004 Pearson Education, Inc.

13. Online Advertising Placement Methods
Banner swapping: Arrangements among firms allow each firm to have its banners displayed on other affiliate sites for no cost
Banner exchanges: Arrange for banner swapping among firms
Advertising networks: Act as brokers between advertisers and publishers, placing ads and tracking all activity related to the ad
Copyright © 2004 Pearson Education, Inc.

14. Online Advertising Vehicles
Table 8.1, Page 450
Copyright © 2004 Pearson Education, Inc.

15. Most Popular Online Marketing Methods
Figure 8.4, Page 450
Copyright © 2004 Pearson Education, Inc.

16. Search Engine Marketing: Paid Search Engine Inclusion and Placement
Search engine marketing one of fastest growing and most effective forms of online marketing communications
Paid inclusion – firms pay for inclusion in search engine index
Paid placement – firms pay for a guarantee that it will appear prominently in results of relevant searches
Overture.com and Google leaders in this technology
Appropriate disclosure of paid inclusion and placement practices an issue
Copyright © 2004 Pearson Education, Inc.

17. A Paid Listing on Overture.com
Figure 8.5, Page 452
Copyright © 2004 Pearson Education, Inc.

18. Search Engine Policies on Paid Placement and Inclusion
Table 8.2, Page 453
Copyright © 2004 Pearson Education, Inc.

19. Sponsorships and Affiliate Marketing
Sponsorship: Paid effort to tie an advertiser’s name to particular information, event, venue in way that reinforces brand in a positive, yet not overtly commercial manner
Advertorial a common form
Affiliate relationship: Permits a firm to put its logo or banner ad on another firm’s Web site from which users of that site can click through to the affiliate’s site
Sometimes called tenancy deals
Amazon/ToysRUs an example
Customer hijacking an issue
Copyright © 2004 Pearson Education, Inc.

20. Insight on Society: Targeting Children
Marketers now migrating to Web where estimated 20 million children in U.S. between ages 2-17 are active online
Children’s Online Privacy Protection Act (COPPA) prohibits collection of personal information from children under age 13
Compliance has been generally good; however some companies have been fined by FTC for violations
Copyright © 2004 Pearson Education, Inc.

21. Direct E-mail Marketing and the Spam Explosion
Direct marketing: marketing messages sent directly to interested consumers who “opt-in” or have not “opted-out”
Spam: Unsolicited commercial
Spam is exploding out of control – March 2003, 45% of all Internet purportedly was spam
Efforts to control spam:
Filtering software (only partly effective)
Self-regulation by industry (ineffective)
Government regulation (no Federal legislation yet)
Copyright © 2004 Pearson Education, Inc.

22. Spam Categories Figure 8.6, Page 459
Copyright © 2004 Pearson Education, Inc.

23. You’ve Got Spam Figure 8.7, Page 460
Copyright © 2004 Pearson Education, Inc.

24. Other Forms of Online Marketing Communications
Online catalog: Provide equivalent of paper-based catalog
Online chat: Provides equivalent of help from sales representative
Public relations: Involves communicating with target audiences, or publics, using methods other than advertising
Copyright © 2004 Pearson Education, Inc.

25. Beval’s Online Catalog
Figure 8.8,
Page 461
Copyright © 2004 Pearson Education, Inc.

26. Mixing Offline and Online Marketing Communications
Traditional offline consumer-oriented industries have learned to use Web to extend brand images and sales campaigns
Online companies have learned how to use traditional marketing communications to drive sales to Web site
Most successful marketing campaigns incorporate both online and offline tactics
Copyright © 2004 Pearson Education, Inc.

27. The Mix of Online and Offline Marketing Communications
Figure 8.9, Page 463
Copyright © 2004 Pearson Education, Inc.

28. In contrast, Nordstrom seems to have found right mix
Insight on Business: The Very Rich are Different From You and Me: Neiman Marcus, Nordstrom and Tiffany & Co.
Online luxury retailers have had a difficult time translating their brands and look and feel of luxury shops into Web site that masses will see
Cases in point: Nieman Marcus/Kate Spade and John Hardy Web site boutiques; Tiffany
In contrast, Nordstrom seems to have found right mix
Copyright © 2004 Pearson Education, Inc.

29. Online Marketing Metrics: Lexicon
Impressions: Number of times an ad is served
Clickthrough rate (CTR): Percentage of people who actually click on ad
Hits: Number of http requests
Page views: Number of pages requested by visitors
Stickiness (duration): Average length of time visitors remain at site
Unique visitors: Number of distinct unique visitors to site
Loyalty: Percentage of visitors who return in a year
Reach: Percentage of total number of consumers in a market who visit site
Recency: Average number of days elapsed between visits
Copyright © 2004 Pearson Education, Inc.

30. Online Marketing Metrics: Lexicon (cont’d)
Open rate: In campaign, number of customers who open mail
Acquisition rate: Percentage of visitors who register or visit product pages
Conversion rate: Percentage of visitors who actually purchase something
Attrition rate: Percentage of customers who purchase once, but never return within a year
Abandonment rate: Percentage of shoppers who begin a shopping cart but then fail to complete the form and leave the site
Retention rate: Percentage of existing customers who continue to buy on a regular basis
Copyright © 2004 Pearson Education, Inc.

31. Marketing Metrics Lexicon
Table 8.3, Page 467
Copyright © 2004 Pearson Education, Inc.

32. An Online Consumer Purchasing Model
Figure 8.10, Page 470
Copyright © 2004 Pearson Education, Inc.

33. Customer Tracking and Marketing Strategies Used by U.S. Companies
Figure 8.11, Page 471
Copyright © 2004 Pearson Education, Inc.

34. Does Online Advertising Work?
True that clickthrough rates may be low, but these are just one measure of effectiveness
Research indicates that most powerful marketing campaigns include both online and offline advertising
Copyright © 2004 Pearson Education, Inc.

35. Online Marketing Communications: Typical Clickthrough Rates
Table 8.4, Page 471
Copyright © 2004 Pearson Education, Inc.

36. Clickthrough Rates by Format
Figure 8.12, Page 472
Copyright © 2004 Pearson Education, Inc.

37. Costs of Online Advertising
Cost per thousand (CPM): Advertiser pays for impressions in 1,000 unit lots
Cost per click (CPC): Advertiser pays pre-negotiated fee for each click ad receives
Cost per action (CPA): Advertiser pays pre-negotiated amount only when user performs a specific action
Copyright © 2004 Pearson Education, Inc.

38. Different Pricing Models for Online Advertisements
Table 8.5, Page 473
Copyright © 2004 Pearson Education, Inc.

39. Traditional and Online Advertising Costs Compared
Table 8.6,
Page 474
Copyright © 2004 Pearson Education, Inc.

40. Software for Measuring Online Marketing Results
WebTrends: Software program that automatically calculates activities at site, such as abandonment rate, conversion rate, etc.
WebSideStory: Web service that assists marketing managers
Copyright © 2004 Pearson Education, Inc.

41. Web Site Activity Analysis
Figure 8.13, Page 475
Copyright © 2004 Pearson Education, Inc.

42. Insight on Technology: Web Site Metrics by WebSideStory
WebSideStory.com: ASP that sells Web site analytics and optimization services to other firms
Allows Webmasters to monitor and analyze Web traffic in real time, collect visitor intelligence, and enable faster adjustments to underperforming pages
Major product: HitBox, which provides real-time traffic analysis
Copyright © 2004 Pearson Education, Inc.

43. The Web Site as a Marketing Communications Tool
Web site can be viewed as an extended online advertisement
Domain name: First communication an e-commerce site has with a prospective customer
Search engine optimization:
Register with as many search engines as possible
Ensure that keywords used in Web site description match keywords likely to be used as search terms by user
Link site to as many other sites as possible
Get professional help
Copyright © 2004 Pearson Education, Inc.

44. Search Engine Ranking Criteria
Table 8.7, Page 479
Copyright © 2004 Pearson Education, Inc.

45. Web Site Functionality
Factors affecting effectiveness of a software interface:
Utility
Ease of use
Factors in credibility of Web sites:
Design look
Information design/structure
Information focus
Responsiveness
Copyright © 2004 Pearson Education, Inc.

46. Factors in the Credibility of Web Sites
Table 8.14, Page 480
Copyright © 2004 Pearson Education, Inc.

47. Site Design Features that Impact Online Purchasing
Table 8.8, Page 482
Copyright © 2004 Pearson Education, Inc.

48. Case Study: Ad Bombs, Ambush Marketing, Customer Hijacking and Other Invasive Marketing Techniques Grow on the Web
Ad bomb (Ad-ware): Any computer program that is surreptitiously downloaded on a client computer for the purpose of calling for unwanted advertising without the user’s consent or intervention
Ambush advertising: Gator.com’s mini-billboard
Customer hijacking: self-executing programs downloaded onto client computers that permit a company to “hijack” customers of affiliate marketing sites, and redirect affiliate commission to hijacker
Copyright © 2004 Pearson Education, Inc.