Download Introduction to Marketing

E-Marketing
Lecture 6
Sandeep Krishnamurthy
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Trends
The Internet Advertising Bureau
recently reported that Internet
advertising revenues hit $1.92 billion in
1998, more than double the $907
million spent in 1997.
 Internet advertising has hit a record
level of expenditure for each of the last
twelve consecutive quarters.
 Fifth largest medium- larger than
outdoor.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Types of Products Advertised

In the fourth quarter of 1998, the top
categories were–
–
–
–
–

Non-computer retail (29%)
Computing (20%)
Financial services (19%)
Telecom (8%)
New media (7%)
Procter & Gamble is now advertising 30
brands online -- including Crest, Tide
and Cover Girl
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Three Promises of Internet Advt.

Sophisticated Audience

Sophisticated Message

Sophisticated Targeting
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Sophisticated Audience
All users of the Internet, by definition,
should know how to use a computer.
Hence, the audience tends to be
sophisticated.
 In 1998, the median age of an Internet
user was 33, the average household
income was $59,000 and 57% of them had
a college education.
 Thus, the user profile is mainly a young,
well-educated and well-off professional
with a significant disposable income.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Sophisticated Targeting




The lament with most media has been that
“half of your advertising dollars are wasted.
The problem is, you don’t know which half.”
The reason for this is that most media are not
very sophisticated in their targeting.
The promise of the Internet is narrowcasting
rather than broadcasting.
Advertisements can be shown only to
consumers who are interested in a product or
activity.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Types of Ad Targeting
Content Targeting
 Behavioral Targeting
 User Targeting
 Tech Targeting

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Content Targeting
Content Targeting involves delivering
ads based on the content of a web site
or a interest category chosen by a
consumer.
 For example, an advertisement for a HP
printer might be displayed on the
search results page when a user types
“printer” in a search engine.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Behavioral Targeting
It involves delivering ads based on how
and when a visitor uses the Web.
 Psychographic targeting

– Ads can be shown to consumers matching a
certain psychographic profile.

Frequency control
– Ads can be delivered such that every
consumer sees it 3-4 times- no more and
no less.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Behavioral Targeting Contd.

Time control
– Ads for a product can be shown at a time at
when it is most likely to have the highest
impact.
– For example, a McDonalds banner can be
shown at around 11 a.m. when individuals
are starting to think of lunch
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
User Targeting
User Targeting involves delivering ads
based on specific traits of a visitor.
 An advertisement might be shown only
to persons within a certain geographic
location, within a certain industry or
who use a certain domain name.
 e.g., ads can be shown to North
American users visiting your site from
org domain names.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Tech Targeting
Tech Targeting involves delivering ads
based on the visitor’s browser type,
operating system or Internet access
provider.
 e.g., Apple might target ads for a new
product only to consumers using
Macintosh computers.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Sophisticated Message
One of the frustrations with media such
as TV and radio is that there is no room
to make a long, rational and
complicated argument.
 On the other hand, the goal of a large
proportion of Internet advertising is to
direct consumer traffic to an
information-rich website. This allows
advertisers to communicate rational
arguments.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Reasons to advertise on the
Internet
–
–
–
–
–
–
–
–
–
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To build traffic to their site or off-line store.
To create consumer interest and excitement.
To introduce a new website.
To introduce modifications to an existing
website.
To introduce a new product or service.
To match competitors’ advertising efforts.
To enhance short-term sales.
To announce special price promotions.
To announce special events.
To build a stronger brand.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
What are the different options?
Banner Advertising (56%)
 E-mail (1%)
 Sponsorships (30%)

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Banner Advertising
Banners are small rectangles that
appear on the top, bottom and sides of
the content in a website.
 When a user clicks on a banner, he or
she is automatically taken to a website
that has been picked by the sponsor.
 This could be the main page of the
sponsor’s website, one specific section
of the sponsor’s website or a new
specially created site.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Types of Banner Ads
Standard banner
 Streaming banner
 Daughter windows
 Interstitial banner ad
 Pop-up ad

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Sponsorships

Constant display model.

Modified content model.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
E-mail
Unsolicited (spam)
 Solicited with incentives

–
–
–
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
www.cybergold.com
www.mypoints.com
www.free-pc.com
www.epipo.com
Solicited without incentives
– Postmaster direct
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Problems with Banners

It is not clear to advertisers if the
number of impressions is equal to the
number of people who actually viewed
the commercial message.
 Banner
ads have remained a text-only
advertising medium.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Problems with Banners
 More
complicated ad formats such as
interstitials may actually lead to the site
crashing.

There may be limited standardization
across viewers due to differences in the
equipment used.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Understanding the Click

Are ads that consumers click-on
necessarily successful?

Are ads that consumers do not click on
failures?
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Are ads that consumers click-on
necessarily successful?

No. Because
– Consumers may have been tricked into
clicking through by gimmicks.
– Consumers may have clicked by mistake.
– There may be no clear post-click call for
action leading to no meaningful action.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Are ads that consumers do not
click on failures?

No. Because– It may have improved brand awareness,
knowledge, image.
– It may lead to clicks in the future.
– It may lead to purchase in the future.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Bottom Line

Pre-click excitement is a prerequisite.
Without this, the ad is a dud.

But, if the click is important, post-click
call for action must be addressed.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Problems with Banners?

1999 Q1 and Q2 Conversion Rate:
–
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Text Links (1.80%)
Storefront Links (1.43%)
E-mail Links (1.31%)
Product Links (2.18%)
Banner Links (1.12%)
Search Box Links(1.22%).
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Problems with Solicited E-mail
Advertising Models

Consumers opt-in to broad categories
leading to poor targeting.

Consumers do not update their opt-in
scheme often.

Many paid ad models make you wait for
incentives.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Problems with Solicited E-mail
Advertising Models

Ad streaming around the corners can
never beat banners.

Given the nature of tasks involved,
these models are likely to attract
customers with a lot of disposable timebut not a lot of disposable income.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Placing the Ads

High-traffic approach
– Placing ads on high-traffic sites leads to
greater visibility.

Consolidation
– Brokers place your ads on hundreds of
smaller websites.

Barter
– Two websites exchange banners.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Top 5 traffic sites in May (unique
visitors in 1000s)
1
2
3
4
5
AOL Network
Microsoft Sites
Yahoo Sites
Lycos
Go Network
46,243
32,389
31,299
29,963
20,864
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Types of Placement Technology

Each site with own ad server.

Advertising network (e.g. Doubleclick).

Each buyer empowered with networking
software.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Paying for Banners
Barter
 CPM
 Cost per click
 Cost per action
 Cost per sale

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Advertising Avoidance
Ad avoidance is observed in many
media.
 For example, TV viewers can zip (i.e.,
fast forward ads on a taped program)
or zap (i.e., change the channel when
an ad comes on).


Avoidance techniques for internet
advertising have also emerged.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Avoiding Banner Ads
Banner ad filters work by setting
themselves between the browser and
the Web, screening out images they
recognize as ads and blocking cookies
or any other animation the individual
does not want to see.
 A filtered Web page shows either a
broken icon or a blank box in place of
the ad.
 E.g., Intermute, AtGuard and AdsOff.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Spam avoidance
First, a blacklist of spammers is
maintained at several sites.
 Second, consumers are asked to let
their Internet Service Provider (ISP)
know every time they receive spam.
This helps the ISP filter out such emails.
 Finally, many Internet Service Providers
now routinely eliminate spam even
before it reaches individuals accounts.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Should advertising be blended
with site content?

Pros:
– Banners jerk consumers away from what
they came to do. Integration helps keep
the flow.

Cons:
– Should advertisers determine editorial
content and news?
– Will consumers understand where the
content ends and the ad begins?
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Content and Advertising
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Privacy Concerns
Advertisers now have sophisticated
targeting capabilities.
 In many cases, this is done by
obtaining customer information through
cookies.
 Hence, many customers have
expressed their concerns at marketers
obtaining detailed information about
their behavior.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Privacy Concerns
However, these concerns may be
overblown in many cases.
 Consumers do not fully understand the
technology being used.
 In many cases, reputable advertising
companies maintain strict policies on
privacy and make these policies known
on their websites.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved.
Governmental guidelines

Data gatherers must disclose– Why they are collecting the information.
– For what purposes they expect to use the
information.
– What steps will be taken to protect the
confidentiality, quality and integrity of
information collected.
– The consequences of providing or withholding
information.
– Any rights of redress that are available to
individuals for wrongful or inaccurate disclosure
of their information.
Copyright  1999, Sandeep Krishnamurthy. All rights reserved.