1. Copyright © 2006 Thomson Business and Economics. All rights reserved. Chapter 16 Media Planning: Advertising and IBP on the Internet

2. 16–2Copyright © 2006 Thomson Business and Economics. All rights reserved. Introductory Scenario: No Wires Means No Rules New technology will change Internet advertising opportunities –WiFi became popular in 2004 because it provided wireless Internet access connections reaching out about 300 feet. –WiMax and WiFi both create wireless “hot spots” but iMax has a range of 25-30 miles! –Mobile-Fi is similar to WiMax but adds the capability of accessing the Net while the user is moving in a car or a train. –Ultrabroadband is a technology that will allow people to move extremely large files quickly over short distances.

3. 16–3Copyright © 2006 Thomson Business and Economics. All rights reserved. Role of the Internet in the Advertising Process Internet will not replace traditional media. Advertisers will discover ways to use the Internet as a key component of integrated brand promotions.

4. 16–4Copyright © 2006 Thomson Business and Economics. All rights reserved. The (R)evolution of the Internet Connected consumer experiences community, empowerment, liberation –In 1994 advertisers began venturing on the Internet, retreated in 2000 and returned in 2004. –At present: 1 billion users Ad revenues of $14 billion in 2007

5. 16–5Copyright © 2006 Thomson Business and Economics. All rights reserved. An Overview of Cyberspace The Internet is a global collection of computer networks linking both public and private computer systems. –Originally designed by the U.S. military to be a decentralized, highly redundant, and thus reliable communications system in the event of a national emergency.

6. 16–6Copyright © 2006 Thomson Business and Economics. All rights reserved. Basic Components of the Internet Electronic mail (e-mail) –In 2000 more than 1.5 trillion e- mails were sent from U.S. Internet relay chat (IRC) Usenet World Wide Web (WWW)

7. 16–7Copyright © 2006 Thomson Business and Economics. All rights reserved. Internet Media E-Mail Opt-in E-mail Electronic mailing lists Usenet World Wide Web –Greatest opportunity for advertisers –Supports detail and graphics

8. 16–8Copyright © 2006 Thomson Business and Economics. All rights reserved. Search Engines: Surfing the World Wide Web Four distinct styles of search engines: –Hierarchical Search Engines All sites fit into categories –Collection Search Engines Use “spiders,” automated programs that collect information –Concept Search Engines Search using concept rather than word –Robot Search Engines “Bots” comb the web searching for information

9. 16–9Copyright © 2006 Thomson Business and Economics. All rights reserved. The “Portal” A starting point for Web access and search and channeling surfers to particular sites –Portals can be vertical—serving specialized markets. –Portals can be horizontal—providing links across many industries. –Portals also can be ethnic or community based.

10. 16–10Copyright © 2006 Thomson Business and Economics. All rights reserved. Advertising on the Internet Annual Advertising Expenditures: –1995$54.7 billion –2004about $10 billion –2007estimated at $14 billion Advantages: –Target market selectivity –Tracking –Deliverability and flexibility –Interactivity –Cost –Integration

11. 16–11Copyright © 2006 Thomson Business and Economics. All rights reserved. Advantages of Advertising on the Internet Target Market Selectivity. Tracking. Deliverability and Flexibility. Interactivity. –Click-through Cost. Integration.

12. 16–12Copyright © 2006 Thomson Business and Economics. All rights reserved. Who Advertises on the Internet? Top 10 Internet Advertisers* –Time Warner –Microsoft –Qwest –Bank One Corp. –Netstock Investment –AmeriTrade Holdings –eDiets.com –Yahoo –Bartlesmann –USA Internactive * ranked by impressions

13. 16–13Copyright © 2006 Thomson Business and Economics. All rights reserved. Types of Advertising on the Internet Banner ads Sponsorship Pop-under (new and annoying) E-mail communication –Permission marketing –Viral marketing Streaming video and audio Corporate home pages Virtual malls

14. 16–14Copyright © 2006 Thomson Business and Economics. All rights reserved. Issues in Establishing a Web Site Costs can be high –$1 million to develop –$4.9 million to launch –$1 million to maintain Make the site “sticky” through “rational branding” Purchase keywords and a domain name Promoting the site to attract visitors

15. 16–15Copyright © 2006 Thomson Business and Economics. All rights reserved. Making the Site “Sticky” Incorporate engaging, interactive features –Weather, late breaking news, stock reports –Online games or videos Practice rational branding –Give visitors unique informational resources that justify visiting the site

16. 16–16Copyright © 2006 Thomson Business and Economics. All rights reserved. Security and Privacy Issues Web users can download text, images, and graphics from the Web. –No viable policing of this practice is possible yet. –Consumers are worried companies will use personal information. DoubleClick.com –Cookies allow clients to track buying habits and traffic patterns of web visitors.

17. 16–17Copyright © 2006 Thomson Business and Economics. All rights reserved. Measuring Internet Advertising Effectiveness TermDefinition HitsNumber of elements requested from a page PagesNumber of pages sent to the requesting site VisitsOccasions that user “x” interacted with site “y” after “z” time has elapsed UsersNumber of different people visiting a site Log Analysis Software Allows for tracking of web site usage

18. 16–18Copyright © 2006 Thomson Business and Economics. All rights reserved. Measuring Internet Advertising Effectiveness Technical aspects of the Internet measurement problem The caching complication Internet measurement and payment

19. 16–19Copyright © 2006 Thomson Business and Economics. All rights reserved. Managing the Brand in an E-Community Consumers have new ways of communicating with each other Some users form online communities Dealing with brand communities is a challenge

20. 16–20Copyright © 2006 Thomson Business and Economics. All rights reserved. Future of Advertising and the Internet Introduction of new technologies such as wireless communication and streaming video—Broadcast Web Mergers and partnerships Merging traditional and new media Developing a new advertising revenue model