ADVERTISEME

NT IN
ELECTRONIC
COMMERCE
MKTMAN8 Presentation
TTh 12:30-2:00

WEB ADVERTISEMENT

In the beginning, "advertising" on the Internet meant "banner ads" -ads you see at the top of almost all Web pages today.

History of Web Advertising

In 1998 or so, banner advertising was a profitable business. Popular sites

like Yahoo could charge $30, $50, even $100 per thousand impressions
to run banner ads on their pages.
At some point, advertisers came to the conclusion that banner ads were

not as effective as full-page magazine ads or 30-second TV commercials.

Thousands of sites had a million or more page impressions available per

month rates began to plummet.

SIDEBAR AD
A sidebar ad is similar to a banner ad, but it

is vertically oriented rather than horizontally.

A typical sidebar ad has a click-through rate
of 1 percent (10 clicks per 1,000
impressions)
Advertisers will typically pay $1.00 to $1.50
per 1,000 run-of-site impressions for sidebar
ad placement.

SMALL AD
Sites don't get paid much for smaller

ads
Click-through rates are low. But by
putting 10 ads on the page, it can add
up to $2 per 1,000 page impressions.

POP UP AD
Annoy many users because they clutter up

the desktop and take time to close.

Much more effective than banner ads.
Average 30 clicks per thousand impressions.
Typically, a pop-up ad will pay the Web site
four to 10 times more than a banner ads.
That is why you see so many pop-up ads on
the Web today.

FLOATING AD
These are ads that appear when you first go to a Web

page, and they "float" or "fly" over the page for anywhere
from 5 to 30 seconds.
While they are on the screen, they obscure your view of

the page you are trying to read, and they often block
mouse input as well.
The high click-through rate means that advertisers will

pay a lot more for a floating ad -- anywhere from $3 to

$30 per 1,000 impressions depending on the advertiser
and the ads.

UNICAST AD
A Unicast ad is basically a TV commercial that runs in a

pop-up window.
The ads can last anywhere from 10 to 30 seconds.
5-percent click-through rate (50 clicks per 1,000

impressions of the ad) is not uncommon.

Because Unicast ads have branding power and because

people click on them, $30 per 1,000 impressions is a

common rate paid to Web sites.

TYPES OF ADS
Create advertisements by visiting

'create content' on your website and

choosing 'X advertisement' as the
content type in where X can be:
1. Text
2. Image
3. Flash

TEXT ADS
Text ads are very simple, requiring that you fill out only 3

fields of information.
Destination URL where you want people to be redirected

when they click on your text ads.

The header that links to the Destination URL.
Finally, you need to specify the body of your ads.

IMAGE ADS
Image ads depend on the dual core

Upload module for managing the

actual images.
We need to specify the Destination
URL where you want people to be
redirected when they click on your
image ads.

AD GROUPS
Ads can be organized into groups.
When displaying ads, you typically tell

the ad module to display ads from a

certain group and then the ad module
randomly selects an active ad from the
specified group.
Each ad can be a member of any
number of groups.

AD STATUS
Pending state is one that has recently

been uploaded and is waiting to be

approved by a privileged user.
Approved state is one that has been
approved by a privileged user but is not
actively being displayed, the ad could be
waiting on an auto activation event.
Active state is being actively displayed.
Offline state is approved but is currently

ADVERTISEMENT METHODS
1.

Banner

Most commonly used form of advertising

On a Web page, a graphic advertising display linked to the

advertisers Web page

Contains a short text or graphical message to promote a product

Keyword Banners
Banner ads that appear when a predetermined word is queried from
a search engine.

Random Banners
Banner ads that appear at random, not as the result of the users
action.

*Banner Swapping
An agreement between two companies to each display the others
banner ad on its Web site.
*Banner Exchanges
Markets in which companies can trade or exchange placement of
banner ads on each others Web sites.
2.

Pop-up Ad

An ad that appears in a separate window before, after, or during

Internet surfing or when reading e-mail.

3. Pop-under Ad
An ad that appears underneath the current browser window, so when

the user closes the active window the ad is still on the screen
4. Splash Screen / Interstitial Ad
An initial Web site page or a portion of it that is used to capture the

users attention for a short time while other content is loading or to tell
what kind of browser or software they need to view the site.
5. Spot Leasing
Search engines provide space (spot) in their home page for leasing
Duration depends upon contract agreements

8.

Universal Resource Locators (URL)

A free advertising tool used by submitting a URL to a search

engine and be listed

9.

Search Engine Optimization

The process of affecting the visibility of a website or a web page

in a search engines search result

10. E-Mail
11. Advertising in Chat Rooms, Blogs, and Social Networks

Banner

Spot Leasing
Splash Screen /
Interstitial

ADVERTISEMENT STRATEGIES
PASSIVE PULL STRATEGY
Effective and economical when

advertising to open, unidentified

potential customers worldwide.
However, there are so many Web pages
pen to all customers; there is a need for
a directory that can guide customers
targeted sites.

ACTIVE PUSH STRATEGY

If customers do not visit the

merchants sites voluntary,

merchants need to actively
advertise to the targeted
customers.
One option is sending emails to
relevant people.

ASSOCIATED AD DISPLAY STRATEGY

With a banner, a display may be

organized independently of who reads

it and when is read.
If the merchant can identify the person
and the characteristics of accessed
pages, displaying an associated ad can
be a very effective advertisement.

ADS AS A COMMODITY
An ad is sold as a product, using the

approach of cyber gold and others.

Interested consumers read the ads
in exchange for direct payment
made by the advertisers.

IMPLEMENTING THE STRATEGIES:

CUSTOMIZING ADS

There is too much information on the

interest for customers to view.

Filtering the irrelevant information by
providing customized ads can be way to
reduce the information overload.
The software One to One allows the
rapid creation and alteration of secure
and robust visitor centric websites.

IMPLEMENTING THE STRATEGIES:

INTERACTIVE AD STRATEGIES

The ads on the internet can be passive

(view only) or interactive.

Interaction maybe executed online
using chatting and calls centres
service or synchronously using web
screens and emails.

PUSH TECHNOLOGY
Push technology allows the direct

delivery of information to an
individuals computer desktop.

IMPLEMENTING THE STRATEGIES:

COMPARISON ADS AS A MEDIUM OF ADVERTISEMENT

Customers need to compare many

alternative products and services

Comparisons with competitive
vendors by providing information
for the ads

PUSH TECHNOLOGY AND

INTELLIGENT AGENTS
Push-Pull Technology
Currently, one of the most fashionable
technologies within the Internet is Push
technology.
Contrary to the Pull' world of web pages
where users request data from another
program or computer, via a web browser,
Push enables services to be targeted at
the user, without them having to initiate
the information collection activity.

PUSH-PULL TECHNOLOGY
Allows you to become an integral part of

your customers daily lives by enforcing

your brands and services directly to
them every day.
Push amplifies and extends your
current Web presence while providing
new and valuable services.

INTELLIGENT AGENTS
It is collecting information about customers.
The purpose of such collections is to create a

customers profile.
If the company knows the profile, it can tailor
an ad to the customer or ask the customer if
he or she would like to receive product
information.
This type of agent is called product brokering.

HOW LARGE IS THE MARKET

FOR E-COMMERCE?
On-line retail sales were more than $2 billions

in 1997 and are expected to reach $17 billions

in 2001.
On-line business-to-business sales were $8
billions in 1997 and are expected to reach
$327 billions by 2002. (from Forrester
Research & Yankee Group 1997)
The percentage of revenue obtained in
business to business sales on the Internet is
expected to increase from 15% in 1997 to
42% in 2000. (from Hambrecht & Quist survey
1997)

ESSENTIAL FUNCTIONS OF
MARKETS AND AGENTS

Yannis Bakos (CACM 1998) has identified the following

essential functions of a market:
1.

matching buyers and sellers (determination of

product offerings, search of buyers for sellers and
sellers for buyers, price discovery);

2.

facilitating transactions (logistics, settlement,

trust);

3.

providing institutional infrastucture (legal,

regulatory).

Existing software agents mostly help to search for

product and price information, negotiation

mechanisms are limited to auctions.

STAGES OF CONSUMER BUYING BEHAVIOR

AND REPRESENTATIVE AGENTS
1.

Identification of need.

2.

Information retrieval and product brokering.

Examples: PersonalLogic, Firefly.

3.

Brokering of merchant.

Examples: Bargainfinder from Anderson Consulting, Excite's

Jango.
4.

Negotiation.

Examples: Kasbah and Tete-a-Tete (MIT Media Lab), AuctionBot

(University of Michigan), Magnet (University of Minnesota)
5.

Purchase and delivery.

6.

Service and evaluation.

ECONOMICS AND EFFECTIVENESS OF ADVERTISEMENT

Methods for measuring advertisement,

conducting cost-benefit analysis, and for pricing
ads:
1. Exposure models that are based on CPMs
CPM stands for the cost per thousand people.
CPM chargers on the Web vary widely, on

average they have been at higher levels than

they are in most other media because of small
supply of highly trafficked Web sites.

Methods for measuring advertisement, conducting cost-benefit

analysis, and for pricing ads:
2.

Click-through

The payment for a banner advertisement is based on the

number of times a visitor actually clicks on it.

DoubleClick Inc. reports that only 4% of visitors exposed to

the banner advertisement the first time click on the

advertisement.
Payment based upon click-through guarantees not only that

the visitor was exposed to the banner advertisement but

actively decided to click and become exposed to the target
advertisement (Hoffman & Novak, 2000)

Methods for measuring advertisement, conducting cost-benefit

analysis, and for pricing ads:
3.

Interactivity

An interactivity measure could be based on the duration of

time spent viewing the advertisement, the number of pages

of the target advertisement accessed, or the number of
repeat visits to the target advertisements.
4.

Actual purchase

The ultimate outcome of an advertisement is a purchase.

Web advertising begins by specifying exactly what the

marketer would like the target advertising to do.

Other Methods:
1. The use of the gross number of visits as a possible
measure of effectiveness is also inadequate.
2. The number of unique users at a site during a
specific time can be calculated by recording some
form of user registration or identification.
3. Many advertisers charge a fixed monthly fee,
regardless of the traffic.
4. An interesting approach is to let the market
determine prices.

ONLINE CATALOGS
A catalogue of goods for sale that is
displayed on a computer screen and from
which you can order goods using your
computer
Internet-based presentation of a set of items
available for purchase, including description,
price, and ordering information;
Also called cyber catalog, electronic catalog,
and web catalog.

ONLINE CATALOGS
Objective is to advertise and promote products
and services, whereas the purpose to the
customer is to provide a source of information
on the products and services
Can be classified according to dimensions:
1. The dynamic of the information presentation
2. The degree of customization
3. The degree of integration of catalogs with
business processess

 A catalogue layout properly designed must

show your companys products or services

arranged neatly, so that they can be easily
recognized;
At the same time, it must look attractive to
improve your sales.
In addition, the catalogue layout must be
strategically arranged in order to give more
importance to certain items or to make the
catalogue look more eye-catching.
Finally, the visual coherence on which a
companys corporate image is supported must
be kept.

ADVANTAGES OF E-CATALOGS
1. Improved processing and lower administrative
2.
3.
4.
5.
6.
7.
8.

costs
Improved reliability, updating and relevance of
Product data in circulation
Elimination of time spent inputting Product data
Fewer non-quality costs relating to input errors
Substantial cost reductions for data processing
operations
Time-saving with respect to data exchanges
Improved ordering procedures (e-procurement
system)
Simplified supplies management (e-procurement
system),

CUSTOMIZED CATALOG
Is a catalog assembled specifically for

a company, usually a customer of the

catalog owner.
It can be tailored to individual

shoppers in some cases as well.

E-CATALOG EXAMPLE

SPECIAL ADVERTISEMENT
TOPICS
1. How Much to Advertise?
It is important that companies know what their

advertisement objectives are.

To decide on how much to spend on internet

advertisement, the management needs to understand

what the Web is and how it works, and they must realize
the need for long term commitment to the medium and
short term dynamics in information display.

SPECIAL ADVERTISEMENT
TOPICS
2. Auditing and Analyzing Web Traffic

It is important to know that the number of hits,

click-throughs, or other data are legitimate because
the potential manipulation of data is large.

An impartial, external analysis and review is crucial

to advertisers to verify the accuracy of the page
impression counted by the site.

SPECIAL ADVERTISEMENT
TOPICS
3. Internet Standards

The Web should be standardized and regulated

Proposed standard focuses on the use of cookie

A cookie is a mechanism that allows a web site to

record a users access usually without its
knowledge or consent.

SPECIAL ADVERTISEMENT
TOPICS
3. Localization

Is the process of converting media products

developed in one country to form culturally
and linguistically acceptable in countries
outside the original target market.

Aspects include: Web page translation,

Localization from customer preferences, etc.

SPECIAL ADVERTISEMENT
TOPICS
4. Major Web Ad Player

Advertising Agencies and Website Developers

- involved in the generation of internet advertising
campaigns.

Finding Market Research Providers

- tracking the evolution of internet technology by

finding real date of current occurrences and trends.

SPECIAL ADVERTISEMENT
TOPICS
4. Major Web Ad Player (cont.)

Traffic Measurement and Analysis Companies

- Advertisers need to justify and verify the investment
they make in order to validate advertising media buys.

Networks/rep firms

- Companies that provide value-added services for web

advertisers and publishers by brockering the distribution of
advertisements and overseeing their delivery.

SPECIAL ADVERTISEMENT
TOPICS
4. Major Web Ad Player (cont.)

Order Processing and Support

- companies that provide outsourcing services
to Internet publishers and service providers.

Sources:
Book: Electronic-commerce
http://www.slideshare.net/amlincms/economic-effects-ofadvertisements
http://books.google.com.ph/books?
id=nCXOKPG841gC&pg=PA337&lpg=PA337&dq=cost+benefi
t+analysis+for+internet+advertising&source=bl&ots=UlsPlawM2&sig=QFuYx40KUbWo81cDgeGaJvf950Q&hl=en&sa=X&e
i=TvdLVKyTLYHNmwXvgIL4Aw&sqi=2&ved=0CCoQ6AEwAg#
v=onepage&q=cost%20benefit%20analysis%20for
%20internet%20advertising&f=false
http://www.manipalitdubai.com/material/Lecture_Notes/ETM3
01/Module_6_eCommerce_Advertisements.pdf