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2. Chapter 6 E-commerce Marketing and Advertising
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3. Video Ads: Shoot, Click, Buy
What advantages do video ads have over traditional banner ads?
Where do sites such as YouTube fit in to a marketing strategy featuring video ads?
What are some of the challenges and risks of placing video ads online?
Do you think Internet users will ever develop “blindness” toward video ads as well?
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4. Consumers Online: The Internet Audience and Consumer Behavior
Almost 75% (90 million) U.S. households have broadband Internet access in 2014
Growth rate has slowed
Intensity and scope of use both increasing
Some demographic groups have much higher percentages of online usage than others
Income, education, age, ethnic dimensions
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5. Consumers Online (cont.)
Broadband and mobile
Significant inequalities in broadband access
Older adults, lower income, lower educational levels
Non-broadband household still accesses Internet via mobile or other locations
Neighborhood effects
Role of social emulation in consumption decisions
“Connectedness”
Top 10–15% are more independent
Middle 50% share more purchase patterns of friends
Recommender systems - co-purchase networks
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6. Consumers Online (cont.)
Study of consumer behavior
Social science discipline
Attempts to explain what consumers purchase and where, when, how much, and why they buy
Consumer behavior models
Attempt to predict or explain wide range of consumer decisions
Based on background demographic factors and other intervening, more immediate variables
Profiles of online consumers
Consumers shop online primarily for convenience
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7. A General Model of Consumer Behavior
Figure 6.1, Page 375
SOURCE: Adapted from Kotler and Armstrong, 2009.
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8. The Online Purchasing Decision
Five stages in consumer decision process
Awareness of need
Search for more information
Evaluation of alternatives
Actual purchase decision
Post-purchase contact with firm
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9. The Consumer Decision Process and Supporting Communications
Figure 6.2, Page 376
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10. The Online Purchasing Decision (cont.)
Decision process similar for online and offline behavior
General online behavior model
User characteristics
Product characteristics
Web site features: latency, usability, security
Attitudes toward online purchasing
Perceptions about control over Web environment
Clickstream behavior
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11. A Model of Online Consumer Behavior
Figure 6.3, Page 377
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12. Shoppers: Browsers and Buyers
Shoppers: Almost 90% of Internet users
74% buyers
16% browsers (purchase offline)
One-third of offline retail purchases influenced by online activities
Online traffic also influenced by offline brands and shopping
E-commerce and traditional commerce are coupled: Part of a continuum of consuming behavior
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13. What Consumers Shop for and Buy Online
Big ticket items ($1000 or more)
Travel, computer hardware, electronics
Consumers now more confident in purchasing costlier items
Small ticket items ($100 or less)
Apparel, books, office supplies, software, and so on
Types of purchases depend on level of experience with the Web
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14. How Consumers Shop How shoppers find online vendors
Highly intentional, goal-oriented
Search engines
Marketplaces (Amazon, eBay)
Specific retail site
10% of Internet users don’t shop online
Trust factor
Hassle factors (shipping costs, returns, etc.)
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15. Trust, Utility, and Opportunism in Online Markets
Two most important factors shaping decision to purchase online:
Utility:
Better prices, convenience, speed
Trust:
Most important factors: Perception of credibility, ease of use, perceived risk
Sellers can develop trust by building strong reputations for honesty, fairness, delivery
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16. Digital Commerce Marketing and Advertising: Strategies and Tools
Internet marketing (vs. traditional)
More personalized
More participatory
More peer-to-peer
More communal
The most effective Internet marketing has all four features
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17. Multi-Channel Marketing Plan
Web site
Traditional online marketing
Search engine, display, , affiliate
Social marketing
Social networks, blogs, video, game
Mobile marketing
Mobile/tablet sites, apps
Offline marketing
Television, radio, newspapers
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18. Strategic Issues and Questions
Which part of the marketing plan should you focus on first?
How do you integrate the different platforms for a coherent message?
How do you allocate resources?
How do you measure and compare metrics from different platforms?
How do you link each to sales revenues?
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19. Establishing the Customer Relationship
Web site functions to:
Establish brand identity and customer expectations
Differentiating product
Anchor the brand online
Central point for all marketing messages
Inform and educate customer
Shape customer experience
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20. Online Advertising Online advertising
Display, search, mobile messaging, sponsorships, classifieds, lead generation,
Fastest growing form of advertising
Advantages:
18–34 audience is online
Ad targeting
Price discrimination
Personalization
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21. Traditional Online Marketing and Advertising Tools
Search engine marketing and advertising
Display ad marketing
marketing
Affiliate marketing
Viral marketing
Lead generation marketing
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22. Search Engine Marketing and Advertising
Search engine marketing (SEM)
Use of search engines for branding
Search engine advertising
Use of search engines to support direct sales
Types of search engine advertising
Sponsored links (keyword paid inclusion)
Keyword advertising
Network keyword advertising (context advertising)
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23. Search Engine Marketing (cont.)
Search engine optimization (SEO)
Google search engine algorithms
Panda, Penguin, Hummingbird, Knowledge Graph
Social search
Utilizes social contacts and social graph to provide fewer and more relevant results
Search engine issues
Paid inclusion and placement practices
Link farms, content farms
Click fraud
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24. Display Ad Marketing Banner ads Rich media ads Video ads Sponsorships
Interstitial ads
Video ads
Far more effective than other display formats
Sponsorships
Native advertising
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25. Display Ad Marketing (cont.)
Advertising networks
Programmatic advertising
Real-time bidding process (RTB)
Ad exchanges
Display advertising issues
Ad fraud
Viewability
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26. How an Advertising Network Such as DoubleClick Works
Figure 6.7, Page 395
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27. E-mail Marketing Three main challenges Direct e-mail marketing
Messages sent directly to interested users
Benefits include
Inexpensive
Average over 6% click-throughs for in-house lists
Measuring and tracking responses
Personalization of messages and offers
Three main challenges
Spam
Anti-spam software
Poorly targeted purchased lists
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28. Spam Unsolicited commercial e-mail Around 60% of all e-mail in 2014
Most originates from bot networks
Efforts to control spam have largely failed:
Government regulation (CAN-SPAM)
State laws
Voluntary self-regulation by industries (DMA )
Canada’s stringent anti-spam laws
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29. Other Types of Traditional Online Marketing
Affiliate marketing
Commission fee paid to other Web sites for sending customers to their Web site
Viral marketing
Marketing designed to inspire customers to pass message to others
Lead generation marketing
Services and tools for collecting, managing, and converting leads
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30. Social, Mobile, and Local Marketing and Advertising
Social marketing/advertising
Fastest growing type of online marketing
Enormous audiences of social networks
Four features driving growth
Social sign-on
Collaborative shopping
Network notification
Social search (recommendation)
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31. Social Marketing/Advertising (cont.)
Blog marketing
Educated, higher-income audience
Ideal platform to start viral campaign
Game marketing
Large audiences for social and mobile games
Used for branding and driving customers to purchase moments at restaurants and retail stores
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32. Mobile Marketing and Advertising
35% of online marketing, growing rapidly
Major formats:
Display, rich media, video
Games
Text messaging (SMS)
In-store messaging
Quick Response (QR) codes
Couponing
App marketing
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33. Local Marketing Geared to user’s geographic location
Advertisers expected to spend around $32 billion on online local ads in 2014
Most common local marketing tools
Geotargeting with Google Maps
Display ads in hyperlocal publications
Daily deals
Coupons
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34. Multi-Channel Marketing
Average American spends more than 45% of media time on digital media channels
Consumers also multitask, using several media
Internet campaigns strengthened by using other channels
Most effective are campaigns using consistent imagery throughout channels
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35. Are the Very Rich Different from You and Me?
What distinguishes luxury marketing from ordinary retail marketing?
What challenges do luxury retailers have in translating their brands and the look and feel of luxury shops into Web sites?
How has social media affected luxury marketing?
Visit the Armani Web site. What do you find there?
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36. Other Online Marketing Strategies
Several strategies are more focused than traditional online and newer strategies
Customer retention strategies
Pricing strategies
Long Tail marketing
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37. Other Online Marketing Strategies
Customer retention strategies
Personalization and one-to-one marketing (interest-based advertising)
Retargeting
Behavioral targeting
Based on data from search engine queries, clickstream history, social network data, and integration of offline personal data and records
Effectiveness still inconclusive
Privacy issues
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38. Other Online Marketing Strategies (cont.)
Customization
Changing the product
Information goods ideal for differentiation
Customer co-production
Customers help create product
Customer service
FAQs
Real-time customer chat systems
Automated response systems
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39. Pricing Strategies Pricing Price discrimination
Integral part of marketing strategy
Traditionally pricing based on
Fixed cost
Variable costs
Demand curve
Price discrimination
Selling products to different people and groups based on willingness to pay
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40. Pricing Strategies (cont.)
Free and freemium
Can be used to build market awareness
Versioning
Creating multiple versions of product and selling essentially same product to different market segments at different prices
Bundling
Offers consumers two or more goods for one price
Dynamic pricing
Auctions
Yield management: Amazon
Surge pricing: Uber
Flash marketing: Rue La La, HauteLook, Gilt Groupe
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41. Long Tail Marketing
Internet allows for sales of obscure products with little demand
Substantial revenue because
Near zero inventory costs
Little marketing costs
Search and recommendation engines
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42. The Long Tail: Big Hits and Big Misses
What are “recommender systems”? Give an example of one you have used.
What is the “Long Tail” and how do recommender systems support sales of items in the Long Tail?
How can human editors, including consumers, make recommender systems more helpful?
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43. Internet Marketing Technologies
Internet’s main impacts on marketing:
Scope of marketing communications broadened
Richness of marketing communications increased
Information intensity of marketplace expanded
Always-on mobile environment expands marketing opportunities
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44. Web Transaction Logs Built into Web server software
Record user activity at Web site
Provides much marketing data, especially combined with:
Registration forms
Shopping cart database
Answers questions such as:
What are major patterns of interest and purchase?
After home page, where do users go first? Second?
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45. Tracking Files Users’ browsing tracked as they move from site to site
Four types of tracking files
Cookies
Small text file placed by Web site
Allows Web marketers to gather data
Flash cookies
Beacons (“bugs”)
Apps
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46. Every Move You Make, Every Click You Make, We’ll Be Tracking You
Are beacons innocuous? Or are they an invasion of personal privacy?
Do you think your Web browsing should be known to marketers?
What are the Privacy Foundation guidelines for Web beacons?
Should online shopping be allowed to be a private activity?
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47. Databases Enable profiling Store records and attributes
Database management system (DBMS):
Software used to create, maintain, and access databases
SQL (Structured Query Language):
Industry-standard database query and manipulation language used in a relational database
Relational database:
Represents data as two-dimensional tables with records organized in rows and attributes in columns; data within different tables can be flexibly related as long as the tables share a common data element
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48. Data Warehouses and Data Mining
Collects firm’s transactional and customer data in single location for offline analysis by marketers and site managers
Data mining:
Analytical techniques to find patterns in data, model behavior of customers, develop customer profiles
Query-driven data mining
Model-driven data mining
Rule-based data mining
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49. Hadoop and the Challenge of Big Data
Web traffic, , social media content
Traditional DBMS unable to process the volumes—petabytes and exabytes
Hadoop
Open-source software solution
Processes any type of data, including unstructured and semi-structured
Distributed processing
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50. Marketing Automation and Customer Relationship Management (CRM) Systems
Marketing automation systems
Track steps in lead generation from product awareness to purchase
CRM systems
Manage relationship with customers once purchase is made
Create customer profiles:
Product and usage summary data, demographic and psychographic data, profitability measures, contact history, marketing and sales information
Customer data used to:
Develop and sell additional products
Identify profitable customers
Optimize service delivery, and so on
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51. A CRM System Figure 6.10, Page 432
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52. Online Marketing Metrics: Lexicon
Audience size or market share
Impressions
Click-through rate (CTR)
View-through rate (VTR)
Hits
Page views
Viewability rate
Stickiness (duration)
Unique visitors
Loyalty
Reach
Recency
Conversion to customer
Acquisition rate
Conversion rate
Browse-to-buy ratio
View-to-cart ratio
Cart conversion rate
Checkout conversion rate
Abandonment rate
Retention rate
Attrition rate
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53. Online Marketing Metrics (cont.)
Social marketing
Conversation ratio
Applause ratio
Amplification
Sentiment ratio
metrics
Open rate
Delivery rate
Click-through rate ( )
Bounce-back rate
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54. An Online Consumer Purchasing Model
Figure 6.11, Page 437
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55. How Well Does Online Advertising Work?
Use ROI to measure ad campaign
Highest click-through rates: Search engine ads, permission campaigns
Rich media, video interaction rates high
Online channels compare favorably with traditional
Most powerful marketing campaigns use multiple channels, including online, catalog, TV, radio, newspapers, stores
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56. The Costs of Online Advertising
Pricing models
Barter
Cost per thousand (CPM)
Cost per click (CPC)
Cost per action (CPA)
Hybrid
Sponsorship
Measuring issues
Online marketing/online sales can be correlated
Offline purchases cannot always be directly related to online campaign
In general, online marketing is more expensive on CPM basis, but more efficient in producing sales
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57. Web Analytics
Software that analyzes data at each stage of the customer conversion process
Awareness
Engagement
Interaction
Purchase
Loyalty and post-purchase
Helps managers
Optimize ROI on Web site and marketing efforts
Build detailed customer profiles
Measure impact of marketing campaigns
Google Analytics, Adobe Analytics, IBM Digital Analytics, Webtrends
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58. Web Analytics and the Online Purchasing Process
Figure 6.12, Page 442
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