2. Copyright © 2010 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Slide 7-1 Chapter 7 E-commerce Marketing Communications

3. Copyright © 2007 Pearson Education, Inc. Slide 8-2 Marketing Communications Online marketing communications: Promotional Methods used by online firms to communicate with target consumers  Promotional sales communications: Suggest consumer “buy now”; offers to encourage immediate purchase  Branding communications: Focus on demonstrating differentiable benefits of consuming product or service  Online Advertising: $24.5 billion in 2009 15% of all advertising by 2013

4. Copyright © 2007 Pearson Education, Inc. Slide 8-3 Online Advertising Advantages:  Ability to target ads to narrow segments  Ability to personalize messages to individuals  Can track performance in almost real time  Provide greater opportunity for interactivity Disadvantages:  Concerns about cost versus benefit  Concerns about how to adequately measure results  Lack of valuable sites to run ads

5. Copyright © 2010 Pearson Education, Inc. Online Advertising from 2002–2013 Figure 7.1, Page 430 Slide 7-4 SOURCES: Based on data from eMarketer, 2009a.

6. Copyright © 2007 Pearson Education, Inc. Slide 8-5 Online Advertising by Industry SOURCE: Based on data from eMarketer, Inc., 2004a, 2005c; authors’ estimates.

7. Copyright © 2010 Pearson Education, Inc. Forms of Online Advertisements 1. Display ads 2. Rich media 3. Video ads 4. Search engine advertising 5. “Social Marketing” - Social networks and blog advertising 6. Referrals (aka “affiliate relationship marketing”) 7. E-mail marketing 8. Online catalogs Slide 7-6

8. Copyright © 2010 Pearson Education, Inc. 1. Display Ads Banner ads Rectangular box linking to advertiser’s Web site IAB guidelines - full banner is 468 x 60 pixels, 13K Pop-up ads Appear without user calling for them Provoke negative consumer sentiment Twice as effective as normal banner ads Pop-under ads open beneath browser window (see it when you close browser window) Slide 7-7

9. Copyright © 2010 Pearson Education, Inc. 2. Rich Media Ads Use Flash, DHTML, Java, JavaScript Often attempt interactivity with consumers About 7% of all online advertising expenditures Boost brand awareness by 10% Slide 7-8

10. Copyright © 2010 Pearson Education, Inc. 3. Video Ads Appear as in-page video commercial Fastest growing form of online advertisement $1B last year, though expected to triple by 2013 “Pre-roll” – www.MSNBC.comwww.MSNBC.com Ad placement Video advertising networks like DoubleClick Advertising exchanges – swapping between companies Slide 7-9

11. Copyright © 2007 Pearson Education, Inc. Slide 8-10 4. Search Engine Advertising One of fastest growing and most effective forms of online marketing communications Almost 50% of online ad spending in 2009 Organic Search – unbiased by $ Types of advertising: Paid inclusion – to appear somewhere in search results Keyword Advertising – companies purchase key words (individual or grouped) via purchase or bidding process Sponsored links – pay to appear at top or on side (ex: Google Search on BMW)

12. Copyright © 2007 Pearson Education, Inc. Slide 8-11 Search Engine Advertising Search engine click fraud - when company hires third parties to fraudulently click on competitor ads to drive up costs or their own ads to drive up search frequency rankings

13. Copyright © 2010 Pearson Education, Inc. 5. Social Marketing “Many-to-many” model Relies on social networks to spread the word, not traditional company to consumer communication Blog advertising  Online ads related to content of blogs  Readers tend to be highly targeted & influential Social network advertising  Ads on MySpace, Facebook, YouTube, etc. Slide 7-12

14. Copyright © 2010 Pearson Education, Inc. 6. Referrals Referrals – aka “Affiliate relationship marketing” One company places its logo, banner ad, or weblink on another company’s website  Can be paid for or via swapping  Companies can be under the same umbrella, have partnerships, or just identify a good opportunity Slide 7-13

15. Copyright © 2007 Pearson Education, Inc. Slide 8-14 7. E-mail Marketing Direct e-mail marketing: E-mail marketing messages sent directly to interested consumers who “opt-in” or have not “opted-out”  Response rates to legit campaigns average 6%  Biggest cost is list purchase  1,000 names for $1.00  Total campaign cost would be $5 - $10 per 1,000 vs. $500 - $1000 per 1,000 for direct mail (paper)

16. Copyright © 2007 Pearson Education, Inc. Slide 8-15 E-mail Marketing Spam: Unsolicited commercial e-mail  Spam is huge business - Estimated 80%–90% of all e-mail purportedly is spam!  10B Spam message per day in the U.S.!  Efforts to control spam: Technology (Filtering software) Government regulation (CAN-SPAM and state laws) Self-regulation by industry

17. Copyright © 2010 Pearson Education, Inc. Spam Categories Figure 7.7, Page 445 Slide 7-16 SOURCE: Symantec, 2009.

18. Copyright © 2010 Pearson Education, Inc. 8. Online Catalogs Equivalent of paper-based catalogs Graphics-intense; use increasing with increase in broadband use Two types: 1. Full-page spreads, e.g., Landsend.com 2. Grid displays, e.g., Amazon In general, online and offline catalogs complement each other Slide 7-17

19. Copyright © 2007 Pearson Education, Inc. Slide 8-18 Mixing Offline & Online Marketing Communications Traditional offline consumer-oriented industries have learned to use Web to extend brand images and sales campaigns. Ex: http://www.radioshack.com/home/index.jsphttp://www.radioshack.com/home/index.jsp Predominantly online companies have learned how to use offline media (newspapers, TV, radio) to drive consumers to their sites and increase Brand Awareness. Ex: http://www.youtube.com/watch?v=C50YPxT21OIhttp://www.youtube.com/watch?v=C50YPxT21OI Most successful marketing campaigns use consistent messages and branding online and offline: http://www.progressive.com/ http://www.youtube.com/watch?v=RzToNo7A-94 * Punch line - consumer behavior is increasingly multi-channel

20. Copyright © 2007 Pearson Education, Inc. Slide 8-19 Online Marketing Metrics (page 462) Metrics that focus on success of Web site in achieving audience or market share Impressions Click-through rate (CTR) Stickiness (duration) Unique visitors Reach Recency Q. How could knowing each of these metrics benefit a company’s online operations

21. Copyright © 2007 Pearson Education, Inc. Slide 8-20 Online Marketing Metrics Metrics that focus on conversion of visitor to customer Conversion rate Browse-to-buy-ratio Cart conversion rate Abandonment rate Attrition rate Q. How could knowing each of these metrics benefit a company’s online operations

22. Copyright © 2010 Pearson Education, Inc. Web Site Activity Analysis Figure 7.11, Page 472 Slide 7-21

23. Copyright © 2007 Pearson Education, Inc. Slide 8-22 Online Marketing Metrics E-mail metrics (page 463) Open rate Delivery rate Click-through rate (e-mail) Unsubscribe rate Conversion rate (e-mail) Q. How could knowing each of these metrics benefit a company’s online operations

24. Copyright © 2007 Pearson Education, Inc. Slide 8-23 The 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 (such as purchase) Hybrid: Two or more of the above models used together Note - Offline Purchases can’t be directly correlated

25. Copyright © 2007 Pearson Education, Inc. Slide 8-24 How Well Does Online Promotion Work? Click-through rates may be low, but these are just 1 measure of effectiveness (see long list of metrics) Need to assess the ROI for each campaign, though true ROI is hard to measure due to “browsers” who shop online and buy offline (next slide takes a stab) Brand equity may be increased, though can’t directly be measured Multi-channel marketing is essential – each consumer’s behavior varies by product/need and the more touch-points the better

26. Copyright © 2010 Pearson Education, Inc. Comparative Returns on Investment Figure 7.10, Page 467 Slide 7-25 SOURCE: Industry sources; author estimates.

27. Copyright © 2007 Pearson Education, Inc. Slide 8-26 The Web Site as a Marketing Communications Tool A company’s own web site can be viewed as an ongoing online ad The following marketing elements must be optimized: 1. Domain Name 2. Search Engine Optimization 3. Website Functionality

28. Copyright © 2007 Pearson Education, Inc. Slide 8-27 The Web Site as a Marketing Communications Tool 1. Domain name May be the first communication an e-commerce site has with a prospective customer May be the company’s primary or sole venue for customer interaction and/or commerce Domain naming rules follow Branding Elements rules

29. 28 Brand element choice criteria 6 criteria in choosing brand elements: 1. Memorability – gain attention, easy to remember 2. Meaningfulness – suggest something about product or product category 3. Likeability – sounds pleasant/fun/intriguing 4. Transferability – works across broad product line-up and works across international boundaries 5. Adaptability 6. Protectability

30. 29 Some Domain Name Guidelines 1. Keep it as simple as possible (short and hard to misspell) 2. Avoid clichés (net, tech, cyber, etc) 3. Create a unique personality 4. Coin new words 5. Ensure that your brand delivers what the your domain names states or implies that it will

31. Copyright © 2007 Pearson Education, Inc. Slide 8-30 The Web Site as a Marketing Communications Tool 2. Search engine optimization Register with as many search engines as possible Ensure keywords used in 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

32. Copyright © 2007 Pearson Education, Inc. Slide 8-31 The Web Site as a Marketing Communications Tool 3. Web Site Functionality  Utility – usefulness of content/offerings  Ease of use – important more so for newer users  Perceived credibility and trust – design is essential  Compelling experience – fun, interactive  Ease of purchasing – the fewer clicks the better  Fast downloads  Customer choice agents – recommendations specific to user’s needs

33. Copyright © 2010 Pearson Education, Inc. Slide 7-32 Table 7.9, Page 478