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Consumer Behavior towards Online Advertising

Submitted in partial fulfillment for the award of Degree







This is to certify that the project report titled CONSUMER BEHAVIOR TOWARDS ONLINE ADVERTISEMENT carried out by Rafat Jamil Siddique has been accomplished under my guidance & supervision as a duly registered PGPBM/MBA student of the Kohinoor Business School, Khandala. This project is being submitted by him in the partial fulfillment of the requirements for the award of the Post Graduation Program in Business Management (PGPBM) from Kohinoor Business School, Khandala.

His dissertation represents his original work and is worthy of consideration for the award of the degree of Post Graduation Program in Business Management (PGPBM).

___________________________________ (Name & Signature of the Faculty Advisor) Date:

I, Rafat Jamil Siddique, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.

Rafat Jamil Siddique Roll No. 9137


Pursuing Post Graduation Program in Business Management (PGPBM) degree is like dream coming true. The Final Research Project, which is there in the course, is very helpful in providing the practical exposure to the students. I have done my project on the topic .Consumer Behavior towards Online Advertising.

I would like to use this opportunity in expressing my deepest gratitude to all those, who in one way or other helped me in making endeavors a success. Words are not sufficient to reflect my thankfulness and respect towards those persons for their significant contribution in the completion of my report.

I give my profound thanks, as I cherish these inspiring ideas; constant encouragement and earnest interest shown by my Project In charge Prof Jayaseelan, Kohinoor Business School and his valuable suggestions and moral support during the preparation of this report.

I would also like to take the opportunity to thank the professionals and Businessmen, who devoted their precious time for providing their valuable opinions on the topic.

I appreciate the encouragement render by my friends. I am grateful to my friends who have rendered freely their time to make my efforts visible and consummate. I am indeed very thankful to all of them.

Table of Contents
S. No. 1 Particulars Introduction 1.1 Online Advertisement 1.2 Competitive Advantage Over Traditional Advertising 1.3 Types of Online Advertising 1.4 Ad Server Market Structure 1.5 Market Share of Ad Serving Martket 1.6 Revenue Model 1.7 Consumers buying process Literature Review 2.1 Changing trends of online advertising 2.2 Technology that will drive the future 2.3 Latest Trends in Online Advertising Objective Research Methodology 4.1 Research Design 4.2 Research Approaches 4.3 Data Source State of the Art 5.1 Effectiveness of Internet Advertising 5.2 Online advertising 'affects consumer behaviour' 5.3 Few facts about online shopping 5.4 Perception of customers toward online advertising 5.5 Case Study 5.6 State of Online Display Advertising in India 5.7 Online Shopping in India 5.8 Factors that boost online shopping in India 6 Conclusion/Findings References and Bibliography 26 27 Page No. 6


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1.1 Online Advertisement
Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, Rich Media Ads, Social network advertising, interstitial ads, online classified advertising, advertising networks and e-mail marketing, including e-mail spam.

1.2 Competitive Advantage Over Traditional Advertising

One major benefit of online advertising is the immediate publishing of information and content that is not limited by geography or time. To that end, the emerging area of interactive advertising presents fresh challenges for advertisers who have hitherto adopted an interruptive strategy. The cost per exposure is less in the case of online advertisement. Another benefit is the efficiency of advertiser's investment. Online advertising allows for the customization of advertisements, including content and posted websites. For example, AdWords, Yahoo! Search Marketing and AdSense enable ads shown on relevant webpages or aside of search results of pre-chosen keywords. Another is the payment method. Whatever purchasing variation is selected, the payment is usually relative with audiences' response.

1.3 Types of Online Advertising

E-mail Advertising Legitimate Email advertising or E-mail marketing is often known as "opt-in e-mail advertising" to distinguish it from spam. Affiliate Marketing Affiliate marketing is a form of online advertising where advertisers place campaigns with a potentially large number of small (and large) publishers, whom are only paid media fees when traffic to the advertiser is garnered, and usually upon a specific measurable campaign result (a form, a sale, a sign-up, etc). Contextual Advertising Many advertising networks display graphical or text-only ads that correspond to the keywords of an Internet search or to the content of the page on which the ad is shown. These ads are believed to have a greater chance of attracting a user, because they tend to share a similar context as the user's search query. For example, a search query for "flowers" might return an advertisement for a florist's website.

Behavioral Targeting In addition to contextual targeting, online advertising can be targeted based on a user's past clickstream. For example, if a user is known to have recently visited a number of automotive shopping / comparison sites based on clickstream analysis enabled by cookies stored on the user's computer, that user can then be served auto-related ads when they visit other, non-automotive sites.

Semantic Advertising Semantic advertising applies semantic analysis techniques to web pages. The process is meant to accurately interpret and classify the meaning and/or main subject of the page and then populate it with targeted advertising spots. By closely linking content to advertising, it is assumed that the viewer will be more likely to show an interest (i.e., through engagement) in the advertised product or service

1.4 Ad Server Market Structure

Presented below is the list consisting of names of the top ad server vendors as per data collected in 2008. It also presents details such as the number of viewers on each of the online ad server. There is no doubt that Google is the undisputed king of the online ad server market and since 2008 it have a control of over 69% of the online advertising market.

Vendor Google DoubleClick (Google) Yahoo! AOL MSN (Microsoft) Adbrite Total

Ad Viewers (millions) 1,118 1,079 362 156 309 73 3,087

Table 1.4 Ad Server Market Structure Source-Wikipedia

Ad Server Market Share Breakdown for Selected Content Categories

Figure 1.4.1 Automotive Sites

Source: Attributor 2008

Figure 1.4.2 Blogs

1.5 Market Share of Ad Serving Martket

Yahoo lost share in the ad-serving market from 9.7 percent at the end of 2008 to 4.39 percent, according to the latest report from Attributor, Media Post reported. Yahoo, although still outranking MSN and ValueClick, has fallen behind AOL and Revenue Science, which own 7.15 percent and 6.83 percent of the market, respectively. The market leaders still go to Google and DoubleClick, with a combined 65 percent share. Compared to last survey conducted in December 2008, the combined share of Google and DoubleClick has increased by about 9 percent, while Yahoo's dropped by more than 5 percent, or even half of its previous share, according to Attributor. Among smaller sites with less than 1 million views, Google is the sole dominator, although it shares almost the same market share with DoubleClick on the larger sites. According to the report, AOL gained market share partly because it acquired Adtech, which is strong on European Web sites, including Sky Network sites like and, Media Post reported.

Figure 1.5 Market Share


1.6 Revenue Models

The three most common ways in which online advertising is purchased are CPM, CPC, and CPA. CPM (Cost Per Mille), also called "Cost Per Thousand (CPT), is where advertisers pay for exposure of their message to a specific audience. "Per mille" means per thousand impressions, or loads of an advertisement. CPV (Cost Per Visitor) is where advertisers pay for the delivery of a Targeted Visitor to the advertisers website. CPV (Cost Per View) is when an advertiser pays for each unique user view of an advertisement or website (usually used with pop-ups, pop-unders and interstitial ads). CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers pay each time a user clicks on their listing and is redirected to their website. This system allows advertising specialists to refine searches and gain information about their market. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site. CPA (Cost Per Action) or (Cost Per Acquisition) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This is the best type of rate to pay for banner advertisements and the worst type of rate to charge. CPO (Cost Per Order) advertising is based on each time an order is transacted. CPE (Cost Per Engagement) is a form of Cost Per Action pricing, differing from cost-per-impression or cost-per-click models, a CPE model means advertising impressions are free and advertisers pay only when a user engages with their specific ad unit. Cost Per Conversion Describes the cost of acquiring a customer, typically calculated by dividing the total cost of an ad campaign by the number of conversions. The definition of "Conversion" varies depending on the situation: it is sometimes considered to be a lead, a sale, or a purchase


1.7 Consumers buying process

Problem identification, information search, selection of alternative, purchase decision and post purchase decision.

1.7.1Technology Acceptance Model

People learn and refine their shopping skills throughout their lives. Learning to shop on the internet however, means developing a very specific set of skills and competencies, with relation to a specific set of technologies. The most common model used in this regard has been the Technology Acceptance Model (TAM) (Davis 1985, 1989). The TAM is a specific application of the Theory of Reasoned Action (TRA) to the case of technology usage. The main factors of the TAM are Perceived Ease of Use (defined by Davis as 'the degree to which a person believes that using a particular system would enhance his or her job performance'), and Perceived Usefulness (defined by Davis as 'the particular degree to which a person believes that using a particular system would be free of effort'). The model states that the likelihood of technology being used is directly related to these two factors

Figure 1.7.1 TAM Model The TAM has been used both in its original form and in a form variously modified for use specifically in the study of online shopping behaviour. Dishaw and Strong (1999) combined the TAM with the Task-Technology Fit model (TTF), which states that technology will be more likely to be used, the closer it supports ('fits') the activities of the user.


2.0 Literature Review 2.1 Changing trends of online advertising

If you are a netizen, then it is assumed that Online Advertising has played a major role in all the activities that you have performed on the web. One shouldnt be a scientist or a researcher to understand that there has been changes in the form online advertising has taken place over the last couple of decades. The 1990s The 1990s saw Online Advertising primarily focused on email marketing, classifieds and banner ads. Come the new millennium, there happened a change with contextual advertising in the form of text ads taking the numero uno position. 2005 and beyond Soon after 2005, Online advertising practically exploded with displays (static, rich media and pop-ups), rich content multimedia and search engines. This latest trend has gathered the maximum revenue and has grown in leaps and bounds.

2.2 Technology that will drive the future

Going into the technical specifications, Online advertising is done by keeping two factors in consideration users demographic information and online behaviour. This is studied by understanding the the users gender, age, location, income bracket, browsing history etc. With the changing trends, the online preferences of users go through varying degrees of change. As media buyers, the study of the following areas which are doing pretty good nowadays will help strategize for the future 1. Mobile Technology The drastic decrease in rates of 3G phones have made them affordable for the common man. With figures indicating increase in data services from mobile phones, there lies a scope of building up a partnership between media buyers and mobile content providers. The future holds good here because presently a few companies have successfully followed this in recent times with the introduction of mobile coupons, product campaigns, click to call services etc.

2. Virtual Communities The plethora of social networking communities have started acting as a paradise for online advertisers because these communities bridge the distances between old friends, bring together people with same interests etc. People keep on coming back to these sites and therein the advertiser extends the scope of its services and generates revenue. 3. Spreading the word This is purely intentional in nature and is deliberately done to increase the target audience. This is also termed as Viral Marketing and occurs through word of mouth which results in a buzz being created about the ad. The first step in advertising i.e. attracting your audience takes place through this and then after the chances of a sale increase significantly. 4. Ad Customization The biggies in this space will soon implement this personalization of ad concept to specific users. Extensive data analytics can reveal the details about a prospective user and thus the advertiser can customize its ad services keeping in mind the users needs, wants and desires. In early 2008, Julie Ruvolo wrote, Some of the trends in Online Advertising that people talked about were (a) Content versus community ad-targeting emerging as a major debate (b). The gap widening between the proportion of people online, and the proportion of ad dollars spent online. These concerns are very genuine and our national advertisers should be able to address this issue beforehand so that it does not become a problem for the parties involed. For sure, Online Advertising is here to say and can only grow big. It is also expected to change its way to reach the masses as it has done thrice over the last two decades.


2.3 Latest Trends in Online Advertising

Our world is full of fads, and the internet isn't an exception. The thing is that, after Go ogle, internet advertising trends have shown the world that they work. If this wasn't the case then Google wouldn't have been able to earn US$ 7 billion in revenue. The art of mastering internet advertising involves having both the technology and the knowledge of the market. Even for free online advertising.

What Is Hip Right Now?

In the past, prior to the dot com burst, advertisers were charged for the amount of time an ad appeared, quite similar to the scheme used in other media like TV and radio. But this didn't work. Internet required a new way of doing things. Now, advertisers are charged for the number of times that a user clicks on their ads. Is this method better than the old online web site advertising? Sure it is. The main benefit is that the advertiser will know how many times his ad is clicked. This means that he can evaluate his propaganda and apply a performance evaluation to it. No more marketing campaigns with unclear results. This new approach has empowered companies and provides them with valuable information on the market and their clients. So, the latest internet advertising trend is empowering companies with instantaneous information. Although Google benefited from it from their Ad Words and Ad Sense programs, there are many other companies who have exploited this new advertising trend. For example, there is Web Side Story, which gives to its clients' information on incoming traffic. Bankrate is another company. They dedicate themselves to research data in the financial industry and process it for their clients. Unfortunately, besides the positive, legal and moneymaking trends in online advertising, there is also a negative, illegal trend in online ads. Its name is click fraud. In click fraud, a person or an automated program is used for making clicks on an ad so the person or the author of the software can benefit from it. Although some laws exist against it and some companies have started to offer services for fighting click fraud, it seems that this cancer will not disappear from the internet advertising trends.



1 Consumer attitude & awareness towards online advertising as a promotional tool. 2 Confidence about the reliability and security of the online advertisement among customers. 3 Trend of online advertising in India and its impact on Indian consumers.



4.1 Research Design
Descriptive research design-This research design include a brief and overall study of the problem and giving a descriptive study about that particular problem or study. It study the just problem based study and include the aspects like attitude and behavior or the preferences of the consumers. The most suitable research design that we used for our study is descriptive research design because descriptive research design provides us information about the effects on consumers, their purchasing behavior and their preferences regarding the online advertising.

4.2 Research Approaches

Qualitative research approach - This research approach enables us to study the qualitative aspects of the study. As the consumer behavior, attitude, influences, preferences regarding the online advertising. This can be recorded through coding.

4.3 Data sources

Secondary Data a) Websites and Internet b) Newspaper article c) Blogs


5.0 STATE OF THE ART 5.1 Effectiveness of Internet Advertising

That internet advertising is effective, no one can deny, however, as is the case with almost any advertising medium, some is much more effective than others. The effectiveness of internet advertising can be shown in several ways. It reaches a larger audience than traditional advertising. Almost everyone in the 1st world countries and many in third world countries have access to one or more computers. An advertisement placed on the internet can be seen by literally billions of people. It is less expensive that traditional forms of advertisingwhile some of the free web page sites are viewed with an air of condescension, the fact remains that free web sites are available, and are proven examples of the effectiveness of internet advertising. It is more user-friendly than traditional forms of advertisingFor only a few dollars of expenditure, a computer-literate individual can go online, determine ad copy, decide where to place the ad, pay for fees or expenses with a credit or debit card and monitor the results of an advertising campaign reaching millions of potential buyers, for little or no money out of his own pocket. Mentally compare this process with the procedure of placing a similar ad in one of the national magazine with a readership of 50,000. There would be costs of creating the advertisement and purchasing space within the magazine, running into thousands of dollars. All work on the advertisement at the national magazine would be done by another person or company, with very little input or approval rights. It is more targeted than traditional forms of advertisingby using such techniques as pay per click where you bid on keyword rankings, you are able to aim your message at specific groups of people who are searching for specific key words. You can tailor the effectiveness of internet advertising you purchase by the words you use in your ad copy. You can track internet advertising better than you can track traditional forms of advertising because of the sophisticated software which allows you to record and analyze visitor patterns such as whether their visit is a first time, what they looked at in terms of your web site pages and for how long, what pages or offers they responded to by providing information and what they requested in terms of free or paid offers. All this information can be used by you for future campaigns and better advertising methods.

5.2 Online advertising 'affects consumer behaviour'

Advertising online helps drive sales in stores, according to new research from internet giant Yahoo! and online ratings agency .comScore. The study found that sales in the stores of five major US retailers were boosted by consumers being exposed to online advertising, even if they didnt then make a purchase online. This group of pre-shoppers who research likely purchases on the internet but prefer to buy in person found that those who had been engaged by online advertising spent on average 41 per cent more in-store. According to the study, close to 90 per cent of the incremental sales caused by online advertising are in stores rather than online, suggesting that a powerful online presence and successful internet advertising is also important for traditional offline retailers. "Although recent research cites 89 per cent of consumers shop for information about products online, less than seven per cent of retail sales actually take place online," said Amy Vener, senior retail director at Yahoo!. Source: Equi Media Ltd

5.3 Few Facts About Online Shopping

The figures from IAMAI show that the internet users in India will grow to 200 million by 2010. Around 25% of regular shoppers in India are in the 18-25 age groups, and 46% are in the 26-35-year range. Indian online matrimonial sector is worth around $230 million. Worldwide e-commerce is only growing at the rate of 28%, since India being a younger market, the growth of e-commerce is expected at 51% in the coming years. Inline with global trends finally India has also started shopping online these days. As per the study by IAMAI online shopping in India has rose from $11million in 1999-2000 to $522 million in 2007 and it is expected to rise above $700 million by end March 2010.

Indians are also Shopaholics like other Asians. There is a strong booming young adult population in India with good levels of disposable income.

5.4 Perception of customers toward online advertising


Are people receptive to Online Advertising? At first glance, it might appear that they are not receptive
But in reality, people are responsive to Online ads.

An overwherlming majority of people are willing to share their email address But people are reluctant to share social media information online

Figure 5.4.1 Response of respondents towads Online Advertising And this reluctance to share social media information is consistent across all age groups. Not more than 15% of the total population using the internet provided the social media information across. Its been found from the research, that E-Mail is the Key to building trust. i.e. from the

brand/company that we hear from often and which offers personalized deals or information is more trust worthy.

Figure 5.4.2 Email is Key to build trust

Building a relationship in the social networking space is not very different from building a relationship in the real world. Once marketers have built relationship and trust through e-mail, they then engage consumers in relevant ways on social networking sites -Zephrin Lasker, CEO & Co-founder, Pontiflex


5.5 Case Study

How Huggies deployed a Social Marketing Campaign through the E-Mail Inbox What Huggies did? Built Relationship Through E-Mail Networks Engaged on Social

Process through which Huggies deployed a Social Marketing Campaign Step 1: Collect E-Mail Address Consumer signed up for HUGGIES newsletter Step 2: Send weekly mails Weekly mails with relevant contents Step 3: Engage via Social Networks Pregnancy Countdown Widget Step 1 Step 2

Step 3

Figure 5.5.1 Process through which Huggies deployed Marketing Campaign

Pregnancy Countdown Widget

Figure 5.5.2 Pregnancy Countdown Widget Results ROI increased by 50% Elevated Brand Awareness 1000+ Viral Downloads


5.6 State of Online Display Advertising in India

A viable Internet user base with healthy e-commerce transactions is a good sign for marketers to invest in online advertising. In India, Internet ad revenue account for only 3% of the total advertising market and is considered as younger and niche on volume basis. However, it is set to grow at a healthy pace of 32% in the next five years betting on the growth of Internet usage and e-commerce, according to PricewaterhouseCoopers (PwC). Display advertising is a major segment of growth in the Indian Internet marketing space. The segment climbed 38 % in 2008-09 from the financial year 2007-08, according to a study by IMAI and IMRB Research. Display advertising constitutes of banner ads, images, brand logos, flash or .gif multimedia images that catch the eye of the viewers using aesthetics. 5.3.1 Internet and E Commerce Growth Internet is a very useful medium for marketers to reach their specific target audience. However, it needs the support of a good number of active users, marketers, and transactions. India is continuously witnessing growth in Internet adoption. Users are not only seeing Internet as information source but also using it for communication, leisure, and shopping activities. ComScore states that India has about 35.81 million Internet users as on September 2009. It grew 17% from 30.71 million Internet users in 2008. In 2008-09, Global online shopping growth rate is nearly 8% to 10 %. But in India, it is more than 30 % with total e-commerce market in the country estimated to be around Rs.9,500 crore, according to eBay India. With nearly 36 million Internet users and e commerce market around Rs. 10,000 crores, India is among fastest growing Internet markets in the world encouraging online ad spending. 5.3.2 Growth of Online Display Advertising Internet and Mobile Association of India (IMAI) estimates that online ad revenue in 2008 was around Rs.500 crore. Of this amount, a major portion is through online display advertising. The online display advertising industry reached Rs. 325 crore in 2008-09 from Rs. 235 crore in 2007-08, according to a study by IMAI and IMRB Research. 5.3.3 Industries Contributing To Online Display Advertising The Banking, Financial Services & Insurance (BFSI) sector is an active contributor to online display advertising though it fell from 25% in 2008 to 17 % in 2009. It is expected to decline further in 2010 to 15%. Online publishers are the major contributors with 26% whose share is expected to remain stable or decline marginally in the next year. Others, which include political parties, general, merchandise companies and real estate players contributed to 4% of ad spending in 2008-09. The IT/Telecom industry and FMCG sectors contributed 15 % and 10 % respectively in 2009 and are expected to increase in 2011. 5.3.4 Absolute Numbers Not As Big As Percentages The growth percentages of the Internet users, e-commerce, and Internet advertising are in double digits but the actual market situation is quite different. As already stated, Internet advertising in India contributes to a mere 3% of the total advertising market and it the smallest segment of the market. If we consider display advertising specifically, it will be much smaller in the lot. Similar case is with e-commerce. It is heavily dependent on the traveling and banking sectors. And regarding Internet users, there is a lot of ambiguity about the actual number of the Internet users in India. India is a younger and unexplored market for Internet, e-commerce, and support services. The industry experts are very much optimistic about the growth potential of the Internet advertising market quoting its continues growth


streak. However, it has a long way to go to become viable for all the parties and it is too early to rejoice on the growth percentages.
Source: 07. Jan, 2010 by Search marketer in Internet India

5.7 Online Shopping in India

It is a fact that a great online shopping revolution is expected in India in the coming years. There is a huge purchasing power of a youth population aged 18-40 in the urban area.

Figure 5.7.1 Growth of Indian Online Transaction Source-Scribd If we observe the growth of Indian online transactions from the above graph, it is getting doubled year by year. The usage of internet in India is only 4% of the total population. This is also getting increased day by day as the costs of computers are decreasing and net penetration is increasing. The cost of internet usage is also getting lower, with good competition among the providers. With the increase of latest technology such as Wi-Fi & Wimax the usage goes more on wireless internet. Indians are proving everytime that they can beat the world when it comes to figures of online shopping. More and more Indians are going to online shopping and the frequency of Indias online buying is crossing the overall global averages.

5.8 FACTORS THAT BOOST ONLINE SHOPPING IN INDIA Rapid growth of cybercafs across India Access to Information The increase in number of computer users and GPRS Introduction of 2G and 3G enabled services Reach to net services through broadband

Middle-class population with spending power is growing. There are about 200 million of middle-class population good spending powers. These people have very little time to spend for shopping. Many of them have started to depend on internet to satisfy their shopping desires.


6.0 Conclusion/Findings
Our project research is in regard to study the consumer behavior towards the online advertisement. Through the secondary research and analyzing the data and theories through different secondary sources such as Articles, Internet, Blogs etc we found that :Almost all the groups under demographics are daily user of the internet with the emergence of technology and its availability With reference to the study, most of the user belongs to the office people and professionals It is found from the survey, that almost all the users of internet observes or watch the online advertisement. Maximun online purchases is for the books, music , healthcare and matrimonial. Almost 68% people think that it is a secure source of shopping. Out of these we found that almost 52% are satisfied from the online advertisements and online shopping. Maximun people go for online shopping nowdays because they think that it is much convenient and faster way for shopping. A strong group of people feel that online advertisement is good promotional tool for awareness of the global brands and local brands also. Thus they think that online advertisement should be more promoted. Thus as per our study we found that online advertisement is good and trustworthy and a convenient tool for promotion as well as shopping in this modern era. Thus companies are putting more emphasis on online shopping as the cost per exposure is much less for these advertisements. Also various tie ups with the social networking sites are enhanced as online advertisement regarded as much effective promotional tool.


References and Bibliography (Introduction) http://www.scribd .com/Consumer_Perception =309&VName=PQD =309&VName=PQD (research methodology)