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E-commerce

business. technology. society.


Third Edition Chapter 8
E-commerce Marketing Communications

Kenneth C. Laudon
Carol Guercio Traver

Copyright © 2007 Pearson Education, Inc. Slide 8-1 Copyright © 2007 Pearson Education, Inc. Slide 8-2

ESPN Motion: Targeting the 18-to-34 Males Marketing Communications


Class Discussion
„ Online marketing communications: Methods
„ How does the ESPN Motion system differ from
used by online firms to communicate with
ordinary video streaming?
consumer and create strong brand
„ What is the benefit of this new systems to consumers expectations
and to advertisers?
„ Promotional sales communications: Suggest
„ How does this system avoid Internet congestion?
consumer “buy now” and make offers to
„ Why would sports fans want to watch video encourage immediate purchase
advertising that’s “just like TV?”
„ Branding communications: Focus on extolling
„ Why is user control important on the Internet (or on
differentiable benefits of consuming product
TV)?
or service

Copyright © 2007 Pearson Education, Inc. Slide 8-3 Copyright © 2007 Pearson Education, Inc. Slide 8-4

Online Advertising Online Advertising from 2000-2010


Figure 8.1, Page 441
„ Paid message on a Web site, online service or other
interactive medium, such as interactive messaging
„ 2005: $12.9 billion spent, expected to grow to $24.7
billion by 2010
„ Advantages:
ƒ Ability to target ads to narrow segments and track
performance in almost real time
ƒ Provide greater opportunity for interactivity
„ Disadvantages:
ƒ Concerns about cost versus benefit
ƒ Concerns about how to adequately measure
results SOURCE: Based on data from Pricewaterhouse Coopers, 2005; eMarketer, Inc., 2005a;
Universal McCann, 2005; authors’ estimates.

Copyright © 2007 Pearson Education, Inc. Slide 8-5 Copyright © 2007 Pearson Education, Inc. Slide 8-6

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Online Forms of Online Advertisements
Advertising
„ Display and rich media ads
by Industry
„ Search engine advertising: Paid search engine
Figure 8.2, Page 442 inclusion and placement
„ Sponsorships
„ Referrals (affiliate relationship marketing)
„ E-mail marketing
„ Online catalogs
„ Online chat
„ Blog advertising
SOURCE: Based on data
from eMarketer, Inc., 2004a,
2005c; authors’ estimates.

Copyright © 2007 Pearson Education, Inc. Slide 8-7 Copyright © 2007 Pearson Education, Inc. Slide 8-8

Display and Rich Media Ads Types of


Display Ads
„ Display ads
Figure 8.3, Page 445
„ Banners

„ Pop-ups and pop-unders

„ Rich media ads: Employ Flash, DHTML, Java,


streaming audio and/or video
„ Interstitials

„ Superstitials

SOURCE: Interactive
Advertising Bureau, 2005.

Copyright © 2007 Pearson Education, Inc. Slide 8-9 Copyright © 2007 Pearson Education, Inc. Slide 8-10

Online Advertising Placement Methods Search Engine Advertising: Paid Search


Engine Inclusion and Placement
„ Banner swapping: Arrangements among „ One of fastest growing and most effective forms
firms allow each firm to have its banners of online marketing communications
displayed on other affiliate sites for no cost
„ Types:
„ Banner exchanges: Arrange for banner
„ Paid inclusion
swapping among firms
„ Paid placement
„ Advertising networks: Act as brokers between
„ Keyword advertising
advertisers and publishers, placing ads and
tracking all activity related to the ad „ Network keyword advertising

Copyright © 2007 Pearson Education, Inc. Slide 8-11 Copyright © 2007 Pearson Education, Inc. Slide 8-12

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Search Engine Advertising: Paid Search Sponsorships and Affiliate Marketing
Engine Inclusion and Placement (cont’d)
„ Sponsorship: Paid effort to tie an advertiser’s name
„ Google and Yahoo (Overture.com) leaders in this to particular information, event, venue in way that
technology reinforces brand in a positive, yet not overtly
commercial manner
„ Issues
ƒ Advertorial a common form
„ Appropriate disclosure of paid inclusion and
„ Affiliate relationship: Permits a firm to put its logo or
placement practices
banner ad on another firm’s Web site from which
„ Search engine click fraud (when competitor hires users of that site can click through to the affiliate’s
third parties to fraudulently click on competitor ads site
to drive up costs) ƒ Sometimes called tenancy deals
„ Ad nonsense (Google AdSense ads that are ƒ Amazon/Toys “R” Us an example
inappropriate for content) ƒ Customer hijacking an issue

Copyright © 2007 Pearson Education, Inc. Slide 8-13 Copyright © 2007 Pearson Education, Inc. Slide 8-14

Insight on Society: Marketing to Children: E-mail Marketing and the Spam Explosion
The Digital Culture
„ Direct e-mail marketing: E-mail marketing messages
Class Discussion sent directly to interested consumers who “opt-in” or
„ Why is online marketing to children a controversial have not “opted-out”
practice? „ Spam: Unsolicited commercial e-mail
ƒ Spam is exploding out of control—Estimated
„ What is the Children’s Online Privacy Protection Act
60%–70% of all Internet e-mail purportedly was
(COPPA) and how does it protect the privacy of
spam
children?
ƒ Efforts to control spam:
„ How do companies verify the age of online users?
• Technology (Filtering software) (only partly
„ Should companies be allowed to target marketing effective)
efforts to children under the age of 13? • Government regulation (CAN-SPAM and state
laws) (largely unsuccessful)
• Self-regulation by industry (ineffective)
Slide 8-15
• Volunteer efforts (not enough) Slide 8-16
Copyright © 2007 Pearson Education, Inc. Copyright © 2007 Pearson Education, Inc.

Percentage of E-mail That Is Spam Spam Categories


Figure 8.7, Page 460
Figure 8.8, Page 461

SOURCE: Based on data from MessageLabs.com, 2005.


SOURCE: Based on data from Symatec, 2005b, 2005c; Dunn, 2005. MID-POINT
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3
The Mix of Online and Offline Marketing
Other Forms of Online Marketing Communications
Communications Figure 8.10, Page 467

„ Online catalog: Provide equivalent of paper-


based catalog
„ Online chat: Provides equivalent of help from
sales representative
„ Blog advertising: Online ads related to
content of blogs

2nd half! SOURCE: Based on data from Pricewaterhouse Coopers, 2005; eMarketer, Inc., 2004d,
2005b; authors’ estimates.
Copyright © 2007 Pearson Education, Inc. Slide 8-19 Copyright © 2007 Pearson Education, Inc. Slide 8-20

Online Marketing Metrics: Lexicon Online Marketing Metrics: Lexicon (cont’d)


„ Metrics that focus on success of Web site in achieving
audience or market share „ Metrics that focus on conversion of visitor to
customer
„ Impressions
„ Acquisition rate
„ Click-through rate (CTR)
„ Conversion rate
„ View-through rate (VTR)
„ Browse-to-buy-ratio
„ Hits
„ View-to-cart ratio
„ Page views
„ Cart conversion rate
„ Stickiness (duration)
„ Checkout conversion rate
„ Unique visitors
„ Abandonment rate
„ Loyalty
„ Retention rate
„ Reach
„ Attrition rate
„ Recency

Copyright © 2007 Pearson Education, Inc. Slide 8-21 Copyright © 2007 Pearson Education, Inc. Slide 8-22

How Well Does Online Advertising Work? Click-through Rates by Format 2000–2005
Figure 8.12, Page 475

„ Click-through rates may be low, but these are


just one measure of effectiveness
„ Research indicates that most powerful
marketing campaigns include both online and
offline advertising

SOURCE: Based on data from DoubleClick, 2005, 2004; eMarketer, Inc., 2005h, 2004;
authors’ estimates.

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The Costs of Online Advertising Software for Measuring Online
Marketing Results
„ Cost per thousand (CPM): Advertiser pays for
impressions in 1,000 unit lots „ WebTrends: Software program that
„ Cost per click (CPC): Advertiser pays pre- automatically calculates activities at site, such
negotiated fee for each click ad receives as abandonment rate, conversion rate, etc.
„ Cost per action (CPA): Advertiser pays pre- „ WebSideStory: Web service that assists
negotiated amount only when user performs marketing managers
a specific action
„ Hybrid: Two or more of the above models
used together

Copyright © 2007 Pearson Education, Inc. Slide 8-25 Copyright © 2007 Pearson Education, Inc. Slide 8-26

Web Site Activity Analysis Insight on Technology: It’s 10 P.M. Do


Figure 8.14, Page 480 You Know Who Is On Your Web Site?
Class Discussion
„ What are some of the services offered by
WebSideStory’s HBX Analytics products?
„ Why would you as a webmaster be interested
in these services?
„ Why is “real time” analysis and action so
important to online marketing?
„ How did CBS Sportsline use HBX Analytics?

Copyright © 2007 Pearson Education, Inc. Slide 8-27 Copyright © 2007 Pearson Education, Inc. Slide 8-28

The Web Site as a Marketing Factors in the


Communications Tool Credibility of
Web Sites
„ Web site can be viewed as an extended online
advertisement Figure 8.15, Page 486

„ Domain name: First communication an e-commerce


site has with a prospective customer
„ Search engine optimization:
ƒ Register with as many search engines as possible
ƒ Ensure that keywords used in Web site description
match keywords likely to be used as search terms
by user
ƒ Link site to as many other sites as possible
ƒ Get professional help
SOURCE: Based on data from Fogg, et al, 2002.

Copyright © 2007 Pearson Education, Inc. Slide 8-29 Copyright © 2007 Pearson Education, Inc. Slide 8-30