E-commerce 2013

business. technology. society.

ninth edition

Kenneth C. Laudon
Carol Guercio Traver
 Chapter 7
E-commerce Marketing Communications

Copyright © 2013 Pearson Education, Inc.

 Class Discussion

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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 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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 Insight on Society: Class Discussion

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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 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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 Insight on Business: Class Discussion

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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 Online Marketing Metrics: Lexicon
 Audience size or market  Conversion to customer
share  Acquisition rate
 Impressions  Conversion rate
 Click-through rate (CTR)  Browse-to-buy-ratio
 View-through rate (VTR)  View-to-cart ratio
 Hits  Cart conversion rate
 Page views  Checkout conversion rate
 Stickiness (duration)  Abandonment rate
 Unique visitors  Retention rate
 Loyalty  Attrition rate
 Reach
 Recency

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 Online Marketing Metrics (cont.)
 Social marketing  E-mail metrics
 Gross rating points  Open rate
 Applause ratio  Delivery rate
 Conversation ratio  Click-through rate
 Amplification (e-mail)
 Sentiment ratio  Bounce-back rate

 Duration of engagement  Unsubscribe rate

 Conversion rate (e-mail)

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 An Online Consumer Purchasing Model

Figure 7.6, Page 463

Copyright © 2013 Pearson Education, Inc. Slide 7-25

 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

Copyright © 2013 Pearson Education, Inc. Slide 7-27

 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

Copyright © 2013 Pearson Education, Inc. Slide 7-29

 Insight on Technology: Class Discussion

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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 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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