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E-commerce 2013

Kenneth C. Laudon

Carol Guercio Traver

business. technology. society.

ninth edition

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Chapter 7

E-commerce Marketing Communications

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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 on the Web?
Do you think Internet users will ever develop “blindness” toward video ads as well?

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Class Discussion

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Marketing Communications

Two main purposes:

Sales—promotional sales communications
Branding—branding communications

Online marketing communications

Takes many forms
Online ads, e-mail, public relations, Web sites

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Online Advertising

$37.3 billion in 2012
Advantages:

Internet is where audience is moving
Ad targeting
Greater opportunities for interactivity

Disadvantages:

Cost vs. benefit
How to adequately measure results
Supply of good venues to display ads

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Online Advertising from 2004–2016

Figure 7.1, Page 428

SOURCES: Based on data from eMarketer, Inc., 2012a, 2012b

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Forms of Online Advertisements

Display ads
Rich media
Video ads
Search engine advertising
Mobile and local advertising
Social network advertising: social networks, blogs, and games
Sponsorships
Referrals
E-mail marketing
Online catalogs

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Display Ads

Banner ads

May include animation
Link to advertiser’s Web site
Can track user
IAB guidelines

Pop-up ads

Appear without user calling for them
Provoke negative consumer sentiment
Twice as effective as normal banner ads

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Rich Media Ads

Use Flash, HTML5, Java, JavaScript
About 5% of online advertising expenditures
Tend to be more about branding
Boost brand awareness by 10%
Far more effective than banner ads
Interstitials

Full-page ad between Web pages

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Video Ads

Fastest growing form of online advertising
IAB standards

Linear video ad
Non-linear video ad
In-banner video ad
In-text video ad

Specialized video advertising networks
Retail sites are largest users of video ads

Zappos—created video for each of 100,000 product

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Search Engine Advertising

46.5% of online ad spending in 2012
Types:

Keyword paid inclusion
Advertising keywords
Network keyword advertising or context advertising

Nearly ideal targeted marketing

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Search Engine Advertising (cont.)

Social search

Reviews friends recommendations, searches, Likes, and Web site visits

Search engine issues:

Paid inclusion and placement practices
Link farms
Content farms
Click fraud

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Mobile and Local Advertising

122 million users access Internet from smartphones, tablets

Messaging

Very effective for local advertising

Display ads
Search
Video

Local advertising

Enabled by mobile platform
50% of mobile advertising

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Social Advertising

Social advertising

Uses social graph to promote message
Many-to-many model

Social network advertising

Social network sites are advertising platforms

Corporate Facebook pages
Twitter ads

Promoted tweets
Promoted trends
Promoted accounts

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Social Advertising (cont.)

Blog advertising

Top tactic
72 million read blogs
Blog readers are ideal demographic

Game advertising

In-game billboard display ads
Branded virtual goods
Sponsored banners
Branded games “advergames”

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Sponsorships and Referrals

Sponsorships

Paid effort to tie advertiser’s name to particular information, event, and venue in a way that reinforces brand in positive yet not overtly commercial manner

Referrals

Affiliate relationship marketing
Permits firm to put logo or banner ad on another firm’s Web site from which users of that site can click through to affiliate’s site

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Marketing to Children of the Web in the �Age of Social Networks

Why is online marketing to children a controversial practice?
What is the Children’s Online Privacy Protection Act (COPPA) and how does it protect the privacy of children?
How do companies verify the age of online users?
Should companies be allowed to target marketing efforts to children under the age of 13?

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Insight on Society: Class Discussion

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E-mail Marketing and the �Spam Explosion

Direct e-mail marketing

Primary cost is purchasing addresses

Spam: Unsolicited commercial e-mail

Approximately 72% of all e-mail
Efforts to control spam:

Technology (filtering software)
Government regulation (CAN-SPAM and state laws)
Voluntary self-regulation by industries (DMA )

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Percentage of E-mail That Is Spam

Figure 7.5, Page 450

SOURCE: Based on data from Symantec, 2012.

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Behavioral Targeting

Using consumer offline and online behavior to modify advertising message
Personal information sold to third party advertisers, who deliver ads based on profile

Search engine queries, browsing history, social network data, offline data

Ad exchanges:

Enable advertisers to retarget ads at users as they browse

75% of U.S. advertisers employ some form of behavioral targeting

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Mixing Offline and Online�Marketing Communications

Most successful marketing campaigns incorporate both online and offline tactics
Offline marketing

Drives traffic to Web sites
Increases awareness and builds brand equity

Consumer behavior increasingly multi-channel

80% consumers research online before buying offline

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Are the Very Rich Different �from You and Me?

Why have online luxury retailers had a difficult time translating their brands and the look and feel of luxury shops into Web sites?
Why did Neiman Marcus’ first effort fail?
Why did Tiffany’s first effort fail?
Visit the Armani Web site. What do you find there?

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Insight on Business: Class Discussion

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Online Marketing Metrics: Lexicon

Audience size or market share

Impressions
Click-through rate (CTR)
View-through rate (VTR)
Hits
Page views
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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Online Marketing Metrics (cont.)

Social marketing

Gross rating points
Applause ratio
Conversation ratio
Amplification
Sentiment ratio
Duration of engagement

E-mail metrics

Open rate
Delivery rate
Click-through rate �(e-mail)
Bounce-back rate
Unsubscribe rate
Conversion rate (e-mail)

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An Online Consumer Purchasing Model

Figure 7.6, Page 463

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How Well Does Online �Advertising Work?

Use ROI to measure ad campaign
Highest click-through rates: Search engine ads, permission e-mail 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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Comparative Returns on Investment

Figure 7.7, Page 465

SOURCES: Industry sources; authors’ estimates

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The Costs of Online Advertising

Pricing models

Barter
Cost per thousand (CPM)
Cost per click (CPC)
Cost per action (CPA)

Online revenues only

Sales can be directly correlated

Both online/offline revenues

Offline purchases cannot always be directly related to online campaign

In general, online marketing more expensive on CPM basis, but more effective

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Web Site Activity Analysis

Figure 7.8, Page 469

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It’s 10 P.M. Do You Know Who Is �on Your Web Site?

What are some of the services offered by Adobe’s SiteCatalyst?
Why would you as a webmaster be interested in these services?
Why is site analysis and customer tracking so important to online marketing?
How did NBC Universal use SiteCatalyst to its benefit?

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Insight on Technology: Class Discussion

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The Web Site As a Marketing Communications Tool

Effective use requires

Appropriate domain name
Proper Web site design
Search engine optimization

Search engines registration
Keywords in Web site description
Metatags and page title keywords
Links to other sites

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Web Site Functionality

Main factors in effectiveness of interface

Utility
Ease of use

Top factors in credibility of Web sites

Design look
Information design/structure
Information focus

For first-time users, organization is key
For return users: Information is major factor

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Factors in the Credibility of Web Sites

Figure 7.10, Page 475

SOURCE: Based on data from Fogg, et al., 2003.

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Table 7.9, Page 476

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