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Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

27

CHAPTER 3

ADVERTISEMENT IN

ELECTRONIC COMMERCE


Objective:

In this unit,
the objectives of Web advertisement, its types and characteristics,

the major advertisement methods used on the Web will be discussed. Besides that, you
will be introduced to various
Web advertisement strategies and types of promotions on
the Web. In the same time, you will be aware of what is the benefits of push technology
and intelligent agents, understand the major economic issues related to web
advertisement, compare paper and ele
ctronic catalogs.


3.1

Why Internet Advertisement?


Ads can be updated any time with a minimal cost; making them timely and very
accurate


Ads reach very large number of potential buyers all over the world


Online ads are much cheaper in comparison to televis
ion, newspaper, or radio ads


Web ads effectively use text, audio, graphics, and animation


Ads easily combine games, entertainment, and promotions


Web ads can be interactive and targeted




Internet vs. Traditional methods



Combining advertising media



Interne
t is the fastest growing medium in history


Objectives and growth of Internet advertisement

persuade customers to buy a
certain product or service


Targeted Advertisement (one
-
to
-
one)



Customize ads to fit individuals

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

28



Can be expensive as well as rewarding



Gai
n cost effectiveness by targeting groups (based on segmentation)


Pros of Internet Advertisement



Internet advertisements are accessed on demand 24 hours a day, 365 days
a year, and costs are the same regardless of audience location



Accessed primarily becaus
e of interest in the content, so market
segmentation opportunity is large



Opportunity to create one
-
to
-
one direct marketing relationship with the
consumer



Multimedia will increasingly make Web sites more attractive and
compelling


3.2

Advertisement Methods


Benefits



Customized to the target audience or one
-
to
-
one ads



Utilize “force advertising” marketing strategy



Direct link to advertiser



Multi media capabilities


Limitations



High cost



Declining click ratio

viewers have become immune to banners



Size of banner
s is too small


3.3

Advertisement Methods


Banner swapping



Direct link between one site to the other site



Ad space bartering


Banner exchanges



Firm submits a banner



Receives credit when shows others’ banners



Can purchase additional display credits

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

29



Specify wh
at type of site where the banner is displayed



Use the credit to advertise on others’ sites


Standard (pop up boxes that look like newspaper or magazine ads) and
classified ads



Micro
-
sites



5 advertising sizes larger than banners



Pop
-
up boxes at sites they ar
e linked to



Classified ads



Special sites (classifieds2000.com)



Free or for fee depending upon size


E
-
mail



Several million users may be reached directly



Purchase e
-
mail addresses



Send the company information (low cost)



A wide variety of audiences (customer
database)



Target a group of people that you know something about



Problems:



Junk mail



Spamming


URL (Universal Resource Locators)



Advantages:



Minimal cost is associated with it



Submit your URL to a search engine and be listed



Keyword search is used



Disadva
ntages:



Search engines index their listings differently



Meta tags can be complicated



Chat Rooms



Virtual meeting ground



Free addition to a business site

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

30



Allows advertisers to cycle through messages and target the chatter again
and again



Advertising can bec
ome more thematic



More effective than banners



Used for one
-
to
-
one connections


Evolution of online catalogs



Merchants

advertise and promote



Customers

source of information and price comparisons



Consist of product database, directory and search capability a
nd
presentation function



Replication of text in paper catalogs



More dynamic, customized and integrated


Classifications of catalogs



Dynamics of information presentation



Static catalogs

textual description and static pictures



Dynamic catalogs

motion pictures
, graphics, sound



Degree of customization



Ready
-
made catalogs: same catalog to all customers



Customized Catalogs: customized contents and display
depending upon the customers


3.4

Advertisement Strategies


Internet
-
based Ad Design

strategy



Visually appealin
g



Targeted to specific groups or to individual consumers



Emphasize brands and a firm’s image



Part of an overall marketing strategy



Seamlessly linked with the ordering process


Internet
-
based ad design: important factors



Page
-
loading speed

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

31



Graphics and table
s

simple, meaningful, and match standard
monitors



Thumbnail (icon, graphs) are useful



Business content



Clear and concise text with compelling page title and header
text



Minimal amount of information requested for registration



Navigation efficiency and comp
atibility



Links

well
-
labeled, accurate, meaningful



Site

compatible with browsers, software, etc.



Security and privacy



Security and privacy must be assured



Must provide option for rejecting cookies



Marketing Customer Focus



Clear terms/conditions of the pur
chases

delivery information,
return policy, etc.



Confirmation page after a purchase



Pull (Passive) Strategy



Effective site provides helpful and attractive contents and display



Effective and economical way to advertise, unidentified potential
customers wo
rldwide



Advertising World

non
-
commercial site that guides the process of
finding customer’s requests



Yahoo

portal search engine site regarded as effective aid for
advertisement


Push (Active) Strategy



Sending e
-
mails to relevant people



Obtaining mailing lis
t

process of identifying target customers



Mailing list generation

uses agent technology, cookies, and
questionnaires (filled out by customer)

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

32


Associated Ad Display Strategy



Associate the content of a Web page with a related ad like:



Search Yahoo on a topic
, a banner pops up offering “search for books
at”


Amazon.com


Barnesandnoble.com



Keyword banners


Just
-
in
-
time strategy


Ads as a commodity



CyberGold (MyPoints.com)



Direct payment made by the advertisers for ads viewed



Consumers fill out questionnaires



CyberG
old distributes targeted banners



Reader clicks the banner, passes some tests on its content, and is paid
for the effort


Viral marketing

word
-
of
-
mouth over the Internet



Easily forwarded e
-
mail messages from sites



Forward sites by filling out e
-
mail addresse
s



“Advocacy marketing”

hotmail.com



Each e
-
mail sent invited free hotmail service



Company grew from 0 to 12 million in 18 months



Downsides



E
-
mail hoaxes



Spread of viruses


3.5

Implementing the Strategies


Customized ad strategy



Filtering the irrelevant informati
on by providing customized ads



One
-
to
-
one advertisement


Custo
mized ads in Webcasting



Personalized news and information by category

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

33



Users select specific categories they want to receive


Comparisons as medium for advertisement



Customer compares alternative p
roducts and services



Finds the least expensive place to purchase the item



Uses the comparison site that lists vendors and their prices for the product


3.7

What is Push Technology?


Benefits



Requested information they delivered automatically to their deskto
p via
Web technology and the Internet



Decreases the number of hours used to search the Web


Pointcasting

mass customization of information



Pre
-
specification profile



Select appropriate content



Download selection


4 types of push technology



Self
-
service delive
ry



Aggregated delivery



Mediated delivery



Direct delivery


Push on the Intranet



Companies set up their own channels to pointcast important internal
information to:



their own employees (on intranets)



their supply chain partners (on extranets)


3.8

Intelligen
t Agents


Product Brokering



Knows the customer’s profile



Tailors ads to the customers, or asks them if they would like to receive
product information

Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

34



Alerts users to new releases



Recommends products based on:



Past selections



Constraints specified by the bu
yers


3.9

Effectiveness and Pricing of Advertisement


Exposure Models



Multiple of number of guaranteed ad views



Number of hits


Click
-
Through



Number of times customers click on banner



Only effective for large corporations


Interactivity



Based on how customer
interacts with the ad view



How much time was spent viewing the ad


Actual Purchase



Referral fee based on customers moving to ad site to make a purchase


Managerial Issues



Finding the most visited sites



Commitment to Web advertising and coordination with tra
ditional advertisement



Integrated marketing campaigns



Ethical Issues



Integrating advertisement with ordering and other business processes



Content is critical





Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

35

SUMMARY


1.

Web advertisement attempts to attract surfers to advertiser’s sites where they
can re
ceive lots of information, interact with the sellers and in many cases place
an order.

2.

While banners are the most popular method, other methods are frequently used.
Notable are those involving search engines, e
-
mail, registration of the URL,
splash screens
, newsgroups and spot leasing.

3.

The major advertisement strategies are: pull, push, ads associated with search
results.

4.

Push technology allows the collection and deliver of desired information and
sending it to customers including advertisement on demand.

T
he customization
of information saves time and energy for users. When information is sent for
free, it is usually supplemented by banner ads. Intelligent agents are used to
identify customer profiles and to tailor ads to these customers.

5.

The major advantag
es of electronic catalogs over paper ones are the lower cost,
high speed of preparing customized catalogs and the possible inclusion of
animation, video and audio. Online catalogs area also easy to update and can be
integrated with other ordering , invento
ry and payment processing. Finally,
creating customized catalogs becomes economically feasible.

6.

The traditional concept pf paying for exposure (by CPM) is used on the internet
but it is being challenged. Space sellers like CPM approach. Advertisers like to

pay for act
-
ins such as click through. Paying commissions for electronic
referrals is becoming a popular method.








Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

36

Tutorial


1.

Define internet advertisement.

2.

List the advantages of Internet advertisement.

3.

What is a banner ad?

4.

List the major methods of
internet advertisement.

5.

Describe the role of intelligent agents in advertisement.

6.

List the advantages of electronic catalogs over paper catalogs.

7.

Describe push technology and its benefits.

8.

List the major measures of advertisement success.

9.

Explain banner sw
apping and banner exchanges.

10.

Define viral marketing.

11.

Why is the pull technology a passive strategy?

12.

Where can a company obtain e
-
mail lists of consumers?

13.

How can we escape from the flood of junk e
-
mails?

14.

What is the associated ad display strategy?

15.

How can
ads be sold as a commodity?

16.

What is the typical model of customized ad strategy?

17.

How can the product comparison process be used as an opportunity for
advertisement?












Chapter 3 Advertise
ment in Electronic Commerce


ITS2333

Cybernetics International College of Technology

37

Lab exercise chapter 3


1

Go to
priceline.com
. Review the strategies used to attract and retain customers.
What additional efforts could this site exercise to retain its customers?

2

Survey two department store Web sites, such as JCPenney (
jcpenny.com
), Marks
& Spencer (
marksandspencer.com
), or Sears (
sears.com
). Write a report that
highlights the different ways they provide custo
mer service online.

3

Examine a market research Web site (such as
acnielsen.com
). Discuss what might
motivate a consumer to provide answers to market research questions.

4

Enter
mysimon.com

and share your experiences about how the information you
provide might be used by the company for marketing in a specific industry (e.g.,
the clothing market).

5

Enter
na
tiveminds.com

and
extempo.com
. Find information about the "virtual
representative," and check demos and customers' stories. Prepare a report that
compares the two sites.