KCCMS THE BUSINESS SCHOOL

K.C. College of Management Studies

PGCAM
Semester III
2010 – 2011
RESEARCH METHODOLOGY
PROF: - GAUTAM CHITANIS
 GROUP MEMBERS

ROLL NO. NAME EMAIL ID

01 Alisha Aggarwal [email protected]
04 Sneha Amin [email protected]
07 Anand Barai [email protected]
12 Richa Dani [email protected]
18 Swapnil Gupta [email protected]
25 Ali Akbar Katka [email protected]
44 Kruti Sanghrajka [email protected]
45 Kaushik Shah [email protected]
47 Nikhil Shirsat [email protected]
53 Vidhi Kotecha [email protected]
54 Mamata Parab [email protected]
 A RESEARCH
REPORT
ON

“EFFECTIVENESS OF ONLINE ADVERTISING”

EXECUTIVE SUMMARY

Internet is fast emerging as a powerful medium of advertising in the new millennium. With
the number of Internet users increasing manifold, the new medium is viewed as the
advertiser's dream. The Internet is the fastest growing medium in the 2000’s with millions of
users and an average estimated growth of 124% annually. Internet advertising is becoming a
part of some companies marketing strategy- however it requires new strategies and thinking.

The benefits of Internet advertising is its ability to cover people from different geographical
area with varied tastes and preferences. This study is descriptive study and the sampling
technique here used is convenience sampling. The sample size is 75 selected from the
population of Mumbai City. The data is collected with the help of structured questionnaire,
which includes open end and close-ended questions.

Here the Hypothesis Testing is done with the help of the Chi square test, this is to test the
relationship between the two attributes. The next step in the research process is analysis and
interpretation of the Data collected from the respondents. This analysis and interpretation is
done with the help of graphs and tabulation.
With the help of analysis and interpretation the findings are drawn which includes whether
consumers are influenced through online advertisement, do online advertisement effect their
purchase behaviour. With the critical analysis and interpretation the suggestions are drawn on
how to improve online Advertisement in order to attract much of the viewership and to
increase the purchasing efficiency and also to improve the methods of online advertisement.
Finally a conclusion, where the briefing and the topic aspects is been given with few
suggestions.
THEORETICAL BACKGROUND

Marketing is more than just distributing goods from the manufacturer to the final customer. It
comprises all the stages from creation of the product and the after- market, which follows the
eventual sales, advertising plays a very important role in this process. The product or service
itself, its meaning, packaging, pricing and distribution, are all reflected in advertising, which
has been called the lifeblood of an Organisation. Without advertising, the products or services
cannot flow to the distributor or sellers end on to the consumer or user. The need for
advertising developed with the expansion of population and the flow of towns with their
shops and large stores, mass production in factories, infrastructure to deliver goods &
services and increasing level education. Advertising grew with the development of media,
such as the coffeehouse, newspapers and the arrival of advertising agencies.

Definition: - The institution of practitioners in advertising defines "advertising presents the

most persuasive possible selling message to the right prospects for the product or service at
the lowest possible cost".

What is Online Advertising?

Online advertising is similar to other forms of communication except for one critical
difference that is Internet. Consumer behaviour follows a model radically different from
traditional advertising media. This model can be explained as the progression 'Awareness -
Interest - Desire - Action'. All these activities occur simultaneously in Internet advertising.
Online advertising entails, placing of electronic messages on a web site or email platform
which achieves the following purpose-
• Generates awareness for the brand.
• Stimulates interest /preference for a product or service.
• Provides the means to contact the advertiser for information or to make a purchase.
HISTORY OF INTERNET ADVERTISING

Advertising has faithfully served the print industry for 200 years, and was applied to the
Internet with every expectation of success. Web advertising began with Center and Siegegl’s
in famous Green Card Lottery message on the Usenet site in April 1994 and was followed in
October by advertising placements for AT&T, MCI, Sprint, and Volvo on Hot-wired and the
idea caught on. The advertisement grew in sophistication, and today there are static, rotating,
scrolling, animated, flash and interstitial banner ads all which are designed to generate traffic,
increase brand awareness and generate leads and sales. Internet companies were founded on
advertising revenues, and for some years the companies prospered.

Rate depended on -
i. The Type of advertisement.
ii. Where it appeared on the WebPages.
iii. How it integrated with content.
iv. How well it matched the advertiser’s target audience
Online advertising has to offer –

1. Scalability - Like television commercials, it doesn't cost very much to increase the
reach of an online ad campaign. There is no need to print additional copies of a
magazine, or to create and mail direct-mail pieces.

2. Hot demographics - The online community is more affluent, better educated, and
younger and more willing to spend than the population at large. More and more
people go online and the number is ever increasing.

3. Targeted messages - Unlike broadcast and print media, the Internet allows
advertisers to target exactly who will see their ads, and in what context. Web
publications serve every conceivable audience, from the mass market obscure niche
groups. Beyond that, the technology leads target customers by their computing
platform (PCs or Macintoshes), Web browser (specific versions of Netscape
Navigator or Microsoft Internet Explorer), domain type (. com, .edu, .gov, .mil, or
.net) or individual domains (America Online, IBM, Prodigy).

4. Broad and flexible reach - While the Net cannot yet match television's market
penetration, the size of the online audience is growing very quickly. More
importantly, because you buy online ads by the impression, you can buy as much or
as little of that audience as you desire. And that's true no matter how popular or
specialized the site on which your ads run- as a rule, advertising costs depend on how
many impressions you buy, not on the size of a site's audience.

5. Cost-effective - Partly because you pay only for exactly what you're getting, online
advertising can be extremely competitive with other forms of advertising. If you buy
1,000 ad impressions, for example, you know that exactly 1,000 people will see your
ad.
 6. Detailed tracking and measurement - Compared to online advertising, traditional
media advertising is like shooting in the dark. The Web allows advertisers to gather
detailed information on who saw an ad, when, in what context, how many times and
so on. Better still; you get this information instantly, not weeks later when it's too late
to adjust your campaign. Of course, not every site currently provides this level of
feedback, and not every advertiser knows what to do with it. Over a period of time,
however, this is likely to become one of Web advertising's most important
competitive advantages.

7. The ability to extend the transaction- Traditionally, advertising was a one-way

mechanism. Apart from techniques like toll-free numbers pitched in infomercials and
mail-in coupons in print publications, there was no way for customers to act on the
information in the ad. On the Web, though, interested customers can click, learn more,
and actually buy on the spot. There's simply nothing more powerful.

8. Good Creativity - Creative Design of home page is very important for the surfer to
get hooked on to the site. Within seconds the user should get an idea about the site
and where to go within it. If the opportunity is missed the user many never return.

Hence, Content is King. Content is the most important element of a site. Content rich Web
pages lure users. The value on the web is information. The beauty and challenge of the Web
is that it gives the user, the ability to personalize non-static information and choose exactly
what she sees.
Unlike commercials or print ads, a Web ad banner is only the beginning of the process. While
your banner may present only your branding message, interested prospects can always click
on it to go directly to your web site. Once there, they can access as much material on your
company and products as you care to present. Graphics & the visual elements also play an
important role in the users’ decision to stay or leave. Use of creative concepts, colours,
movement & sound enhance the chances of the user staying longer on the site.
In addition to all this the creators of web sites & online advertising must take into
consideration the factors like,
a) How fast does the site download?
b) How easily navigable the site is?
c) What is the domain name?
d) What are the other publicity & advertising activities which building traffic to the site?

If all such parameters are considered while selecting the web sites for online advertising, the
impact of such advertising will definitely be felt. Online advertising is one medium, which
helps to generate awareness about the brand being advertised, it can help in creating an
image, it helps in educating the audience and also builds interactivity & direct response. No
other traditional medium has the ability to give all of this. We are still at the experimental
stage but many clients have already started allocating a budget towards online advertising &
web is being considered not only as an advertising medium but also as a marketing tool.
Hence online advertising, though slow to take off, will definitely be a medium of the future.
PROBLEM STATEMENT

Internet ads influence buyer behaviour and boost sales.

Internet is one of the important mediums that own all kinds of features, which implies a great
potential and powerful advertising medium in the future. In addition, Internet has a better
impact than traditional media in the features like Format Variety, Affinity, and Preservability.
Furthermore, Internet is the only medium so far which owns the feature of interactivity. That
creates lots of new communication opportunities and possibilities that were unable to be
achieved in the past because of the limitation of media technologies. In spite of these whether
the online advertisement is effective in influencing the Potential Buyers in modern era.

OBJECTIVE OF THE STUDY:

• To ascertain the importance of online advertising as a promotional tool.
• To assess the effectiveness of online advertising on purchasing behaviour.

REVIEW OF LITRATURE
Purpose:
Review of literature refers to identifying already existing literature in the area of consumer
behaviour and marketing strategies, to find out what contribution has already been made so
that it can serve a valuable base for further expanding the literature. The researcher while
choosing the relevant literature of this study, has taken extreme care not to omit any literature
pertaining to the effectiveness of Online advertisement The chapter revolves around the
various relevant literatures screened to formulate the subject matter of the proposed study
• To broaden the perspective about the research work
• To gain new and varied ideas
• To acquire more knowledge along with the direct experience
• To know the current issues with respect to the research area
METHODOLOGY

For the purpose of literature survey, a sample survey was adopted through the Structured
Questionnaire, and information was gathered by those who had conducted study, The
information was also searched in libraries in various reports, journals and internet sites were
also scanned for the authenticities of the subject matter.

DEFINITION OF RESEARCH DESIGN:

“It is a basic plan, which guides the data collection and analysis phases of the project. It is a
frame work, which specifies the type of information to be collected, the resources of data
collection procedure.”
- Thomas Kinnear

A research design is a market plan or model for conduction a formal investigation. It is a

specification of methods and procedures for acquiring the information needed for solving of
any problem. Research design is the strategy for a study and the plan by which the
strategy is to be carried out. It specifies the methods and procedures for the collection,
measurement and analysis of data. Unfortunately, there is no simple classification of research
designs that covers the variation found in practice.

SAMPLING METHOD
The sampling procedure used was convenience and judgment sampling, questionnaires were
administered at places like the railway stations, college campuses, residential areas.
Tools for data collection
Interaction with Respondents was in the form of face-to-face interviews with the help of
questionnaire. The questionnaire consisted of a set of questions, asked to the respondent for
his/her response; the questionnaire was structured and non-disguised. It was done in a
prearranged order and the object of the research was revealed to the respondent. The
questionnaire consisted of combination of open ended and close-ended question.

Primary Data
The primary data was generated through extensive use of a structured questionnaire, which
had both the open end and close-ended questions. They were conducted in Mumbai and the
data collected was used for the purpose of analysis and interpretation.

Secondary Data
The second data was collected from the following sources:
• Books
• Magazines
• Website
• Journals

Sample Size
A total of seventy five respondents were interviewed during the survey. The input from these
respondents which was collected in Mumbai formed the primary data for the study.

Areas Covered
• Fort Area
• Churchgate
• Colaba
PRODUCT PROFILE
Some of the important products offered by Web Advertising are listed below:

Web banner and panel ads

These are small rectangular graphic images that usually have a call to action (Like "Click
here"). These banners are placed on other high traffic web sites like Yahoo, AOL etc so as to
get an opportunity To See (OTS). They can be placed at the top or bottom of a page. Or
anywhere you like them to be.

Interstitial
Another model of Web advertising is a short-lived, usually animated ad that pops up in the
browser window for about 5-10 seconds while a page is downloading and then disappears.

Inline Advertisements
Inline ads provide a way for sponsors to generate leads or deliver rich brand building
messages. Similar to print adversarial, inline ads integrate within site content, ensuring that a
site visitor will see them for sure. Example: When you search using Metacrawler and get
results, you will see such inline ad in between search results.

Pop-Up Windows
A pop-up window delivers the advertisement in a new window on top of the site content.
When you visit Homepages on Tripod.com or Geocities.com (Advertisement supported free
homepage sites), a secondary window automatically pops up continuously rotating
advertisement of sponsors.

Website sponsorships
Here, the entire Website is sponsored by an advertiser. These sites are usually content or
service based and has a very high traffic because of their utility value.

Classifieds
Similar to classifieds in the real world, advertisers in Cyberspace can pay for their
advertisements to be listed in online classifieds. From products and services to headhunting
and matrimonial, any subject is covered.

Mailing list ads

Mailing lists are e-mails sent to group of subscribers at regular intervals focusing on a
particular topic. These e-mails can contains tips, hints or even jokes for free and are sustained
by advertisements that are interspersed throughout the body of the e-mail. Ads are usually in
6-8 line of text instead of graphics and animations like banner ads.

Ads on Chat
Chat is a service available on the net for two or more people to converse with one another
through their keyboards. Companies that offer these chat services for free, earn their revenue
from advertisements that are displayed to everyone using these chat services. So, Web
marketing and e-Business, both are new concept of doing the business and are inter-combined
and are irreplaceable part of the cyber world.

.
ONLINE ADVERTISING
Operational Definition:
Advertising Network - A group of websites, which share a common banner server typically, a
sales organization, which manages the commerce and reporting. An ad network has the
ability to deliver unique combinations of targeted audiences because they serve your banner
or ad across multiple sites.

Ad view - An ad view, synonymous with ad impression, is a single ad that appears (usually in

full view without scrolling) on a Web page when the page arrives at the viewer’s display. Ad
views are what most Web sites sell or prefer to sell. A Web page may offer space for a
number of ad views. In general, the term impression is more commonly used.

Affiliate marketing - Affiliate marketing is the use by a Web site that sells products of other
Web sites, called affiliates, to help market the products. Amazon.com, the bookseller, created
the first large-scale affiliate program and hundreds of other companies have followed since.

Bandwidth - The amount of information that can be transmitted over communications lines at
one time. The higher the bandwidth, the faster the Web page loads. Limited bandwidth is the
main reason for keeping pictures small. Just as it seems we will never have fast enough
computers, it feels like we will never have enough bandwidth. The amount of research and
development money being thrown at this problem should yield surprising results before long.

Click - According to ad industry recommended guidelines from FAST, a click is 'when a

visitor interacts with an advertisement.' This does not apparently mean simple interacting
with a rich media ad, but actually clicking on it so that the visitor is headed toward the
advertiser’s destination. (It also does not mean that the visitor actually waits to fully arrive at
the destination, but just that the visitor started going there).
Click streams - The electronic path a user takes while navigating from site to site, and within
site, from page to page.

Click Through - The act of clicking on a banner or other ad, which takes the use through to
the advertiser's Web site. Used as a counter point to impressions to judge the response-
inducing power of the banner.

Click Through Rate (CTR) - The response rate of an online advertisement typically
expressed as a percentage and calculated by taking the number of click through the ad
received, dividing that number by the number of impressions and multiplying by 100 to
obtain a percentage - Example – 20 clicks / 1,000 impressions = .02 x 100 = 2% CTR

CPA - Cost Per Action - The price paid by an advertiser for each 'action' that a content site
delivers. 'Action' may be a sale, a lead, a successful form fill-out, a download of a software
program or an e-commerce sale of a product. The action, price and terms of a CPA purchase
are mutually agreed upon by the advertiser and content site and such a purchase typically
involves a back end tracking system provided by the advertiser that allows the content site to
view clicks and actions every 24 hours if they choose to do so.

CPC - Cost Per Click - The price paid by an advertiser to a content site. When buying on a
Cost Per Click model, the advertiser and content site have mutually agreed that the content
site will continue to display the advertiser’s ad creative until X number of clicks have been
delivered - the amount purchased. As with other forms of online advertising, s dependent on
content, audience reached and targeted delivery - Untargeted being owner priced, targeted to
an affluent audience being at the high end of the rate scale.

CPM - Cost Per Thousand (Roman Numeral) impressions - The price paid by an
advertiser for a content site displaying their banner 1,000 times.

CPS - Cost Per Sale - The price paid by an advertiser to a content site for each sale that
results from a visitor who is referred from the content site to the advertiser’s site. This type of
buying model is typically tracked with cookies, where the cookie is offered on the content
site and read on the advertiser’s site at the success page after successful completion of one
transaction/sale. Typical rates/bounties range between 5% and 25% of the retail price of the
product or service being sold. See also CPA above.

Cookies - Client-side text file that is used by Web servers to store information about the site
visitor and visitor behaviour. Information pertaining to a site can only be ready the side that
wrote the information. Used to identify repeat visitors and track visitor behaviour.

Effective Frequency - The number of times an ad should be shown to one person to realize
the highest impact of the ad without wasting impressions on that individual.

Frequency - The number of times a given person will see an ad in a given time period. Gross
Exposures/Gross Impressions - The total number of times an ad is shown, including duplicate
showings to the same person.

Hits - Every time a file is sent by a server, be it text, graphic, video, and so on, it is recorded
as a hit. Not a reliable gauge to compare different sites, as one page with five graphic
elements will register six hits when viewed, while a page with no graphics will only register
one hit.

Impression - The Opportunity To See (OTS) a banner or other ad by a surfer. When a page
that includes a banner is viewed, it is considered an impression. Inventory - The amount of
available space for banners on a Website that can be delivered in a given time period. Also
known as the amount of gross impressions per month (or clicks if the publishers is selling on
a Cost Per Click rate model) available for sale to advertisers by a Web publisher.

Link - A hypertext connection between two documents, image maps, graphics, and the like.
Page view - When a Web page is requested by somebody through a browser. Page views are
often used to track the number of impressions a banner gets.

Run-of-network - A run-of-network ad is one that is placed to run on all sites within a given
network of sites. Ad sales firms such as Latitude90 handle run-of-network insertion orders in
such a way as to optimize results for the buyer consistent with higher priority ad
commitments.
Run-of-site - A run-of-site ad is one that is placed to rotate on all non-featured ad spaces on a
site. CPM rates for run-of-site ads are usually less than for rates for specially-placed ads or
sponsorships.

Spam - Originally posting an ad to multiple newsgroups, now used to describe unsolicited

email advertising. Named after a skit by Monty Python, spam is one marketing and
advertising technique to avoid at all costs.

Unique visitor - A unique visitor is someone with a unique address who is entering a Web
site for the first time that day (or some other specified period). Thus, a visitor that returns
within the same day is not counted twice.
A unique visitor’s count tells you how many different people there are in your audience
during the time period, but not how much they used the site during the period.

View - A view is, depending on what’s meant either an ad view or a page view. Usually an ad
view is what’s meant. There can be multiple ad views per page views. View counting should
consider that a small percentage of users choose to turn the graphics off (not display the
images) in their browser.

Visit - A visit is a Web user with a unique address entering a Web site at some page for the
first time that day (or for the first time in a lesser time period). The number of visits is
roughly equivalent to the number of different people that visit a site. This term is ambiguous
unless the user defines it, since it could mean a user session or it could mean a unique visitor
that day.
HYPOTHESIS
It is usually considered as the principal instrument in the research, it may be defined as a
proposition or a set of propositions set forth as an explanation for the occurrence of some
specified group of phenomenon either asserted merely as a provisional conjecture to guide
some investigation or accepted as highly probable in the light of established facts.

Testing of hypothesis
Techniques of hypothesis testing are used if we have an idea about the value of the parameter
in question. The modern theory of probability plays a vital role in decision making and the
branch of statistics with helps in arriving at the criteria for such decision is known as testing
of hypothesis.

Chi-square Test
Chi-square test statistically determines significance in the analysis of frequency distribution.
The logic involved in the chi-square test is that of comparing the observed frequencies and
the expected frequencies. It is called a non-parametric test because it is based wholly on
sample observations and does not require any value corresponding to a population parameter
it is defined as Chi-square test.

Null Hypothesis: H0
There is a significant influence of Internet ads on buyers’ behaviour.

Alternative Hypothesis: H1
There is no significant influence of Internet ads on buyers’ behaviour.
Significance Level:
The critical probability is choosing between the null and alternative hypothesis. The exact
level of significance is largely determined by how much risk one variable is willing to take
and its effect on the other variable.

LIMITATIONS OF THE STUDY –

1. The sample size is limited to 75 Internet users hence the result of the study cannot be
taken as universal.

2. Findings of the survey are based on the assumption that the respondents have given
correct information.

3. Since the respondents had to fill the questionnaire while busy with their hectic
schedule, many people were reluctant to answer.

4. The study was conducted only in Mumbai City ( Fort, Churchgate & Colaba) and
therefore, several other potential samples in & outside the city were neglected.
Degree of Freedom:
It refers to the number of observations that can be varied without changing the constraints or
assumptions associated with a numerical system.

Observed Table

Buying Viewed in Influence

Online detail consumer to
buy from outlet Total

Attractiveness 16 11 10 37

Visibility 3 12 9 24

Informative 5 1 8 14

Total 24 24 27 75
 Observed Expected O-E (O-E)2 (O-E)2/E

16 11.84 4.16 17.3056 1.46

11 11.84 - 0.84 0.7056 0.06

10 13.32 - 3.32 11.0224 0.83

3 7.68 - 4.68 21.9024 2.85

12 7.68 4.32 18.6624 2.43

9 8.64 0.36 0.1296 0.015

5 4.48 0.52 0.2704 0.06

1 4.48 3.48 12.1104 2.7

8 5.04 2.96 8.7616 1.74

Total 12.145

Degree of freedom = (C-1) (r-1) = (3-1) (3-1) = 4

Predetermined alpha level of significance is 0.05 i.e. 95% confidence level.

X2 (Corrected Value) = 12.145

X2 (Table Value)
= 9.49

X2 (Corrected Value) < X2 (Table Value)

Hence H0 is rejected.

Our assumption that consumer is influenced by online advertising is wrong.

 DATA ANALYSIS AND INTERPRETATION

1) Do you check online ads while browsing?

Yes No Not Really

Clicks

22.66% 34.66%

Yes

No

Not Really
42.66%

As shown in the figure, 34.66% check online ads, 42.66% don’t check online ads and 22.66%
may or may not check. So from this data we conclude that majority of the sample size don’t
check online ads. Therefore we learn from this that online ads aren’t that effective enough to
grab the attention of the viewers.

2) Which sites according to you consists of more ads?

Yahoo Sify Rediff MSN Indiatimes
Others

From this statement and graph it is clear that most of the respondents i.e.(54.66%) of them
has stated that yahoo is the best in providing all sorts of information and in providing
Advertisements together with services on Net ,followed by Indiatimes with (14.66%) and
Rediff with (12%) then comes MSN with (9.33%) ,and least with Sify 2.66%

This analysis provides the information that most of the viewers prefer Yahoo so it is
preferable for the advertiser to place his ads in this site, if not the advertiser could go for
Indiatimes which is ranked 2nd, and other sites are less preferred compared to these top two
sites.

3) Ads relating to which products are you interested in?

 Purchasing Entertainment Financial Loans Academic Jobs
Others

As observed from the Above table and Graph it clearly indicates that main aspects of surfing
the web is for Entertainment purpose which comes to 44%, followed by Purchasing i.e. about
12%, jobs related sites which is nearly 26.66%. Finally academic with 12% and financial
loans 4% respectively.
This clearly indicates that even if the Respondents are aware of online Advertisements they
view mainly for entertainment than for Purchasing of the Products.
 4) How often do you purchase online?

Very Frequently Frequently Rarely Never

5.33
8

VeryFrequently
61.33 25.33
Frequently
Rarely
No

From this data we see that 61.33% haven’t purchased online yet, 25.33% purchase rarely,8%
purchase frequently and finally 5.33% purchase most of the time. So since 61.33 % don’t
purchase online we can say that consumers haven’t accepted online buying as a medium for
buying products.

5) Do you think online advertising can influence buyers to purchase from outside?
 Yes No Not Really

From this data we see that 66.66% are influenced by internet ads to buy products,18.66% are
not influenced to buy products and finally 14.66% are not sure whether they buy products
being influenced by online ads. So we can say that online ads act as a medium for increasing
sales of a company.

CONCLUSION

From the research that we have conducted, we conclude that online advertising influences the
consumer to buy the product but it doesn’t necessarily imply that the consumer would buy the
product online.

Relatively, intangible products are bought online more frequently.