Chapter 4

E-commerce Marketing
and Advertising
CLO3 : Propose and e-commerce website to market
product or service using Online advertising strategies and
tools.
 Video Ads: Shoot, Click, Buy
Class Discussion

 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?

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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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 The Consumer Decision Process
and Supporting Communications

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 Online Advertising

 Advantages:
 Internet is where audience is moving
 Ad targeting
 Greater opportunities for interactivity
 Disadvantages:
 Cost versus benefit
 How to adequately measure results
 Supply of good venues to display ads
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 Forms of Online Advertisements

 Display ads
 Rich media
 Video ads
 Search engine advertising
 Social network, blog, and game advertising
 Sponsorships
 Referrals (affiliate relationship marketing)
 E-mail marketing
 Online catalogs

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 Display Ads

 Banner ads
 Rectangular box linking to advertiser’s Web site
 Interactive Advertising Bureau (IAB) guidelines
 e.g. Full banner is 468 x 60 pixels, 13K
 Pop-up ads
 Appear without user calling for them
 Provoke negative consumer sentiment
 Twice as effective as normal banner ads
 Pop-under ads: Open beneath browser window

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 Types of Display Ads

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 Rich Media Ads

 Use Flash, DHTML, Java, JavaScript

 About 7% of all online advertising expenditures
 Tend to be more about branding
 Boost brand awareness by 10%
 IAB standards limit length
 Interstitials
 Superstitials

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 Video Ads

 Fastest growing form of online advertisement

 IAB standards
 Linear video ad
 Non-linear video ad
 In-banner video ad
 In-text video ad
Ad placement
 Advertising networks
 Advertising exchanges
 Banner swapping

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 Types of Video Ads

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 Search Engine Advertising

 Types:
 Paid inclusion or rank
 Inclusion in search results
 Sponsored link areas

 Keyword advertising
 e.g. Google AdWords

 Network keyword advertising (context advertising)

 e.g. Google AdSense

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 Search Engine Advertising
(cont’d)

 Nearly ideal targeted marketing

 Issues:
 Disclosure of paid inclusion and placement
practices
 Click fraud
 Ad nonsense

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 Mobile Advertising

 Mobile marketing involves the use of mobile devices such as

smartphones and tablet computers.

 Half of U.S. Internet users access Internet with mobile devices

 Currently small market, but fastest growing platform (35%)

 Google and Apple in race to develop mobile advertising

platform

 AdMob, iAd

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 Sponsorships and Referrals

 Sponsorships
 Paid effort to tie advertiser’s name to particular
information, event, 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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 E-mail Marketing and the
Spam Explosion

 Direct e-mail marketing

 Low cost, primary cost is purchasing addresses
 Spam: Unsolicited commercial e-mail
 Approx. 90% of all e-mail
 Efforts to control spam:
 Technology (filtering software)
 Government regulation (CAN-SPAM and state laws)
 Voluntary self-regulation by industries (DMA )
 Volunteer efforts

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 Online Catalogs

 Equivalent of paper-based catalogs

 Graphics-intense; use increasing with increase in broadband
use
 Two types:
1. Full-page spreads, e.g. Landsend.com
2. Grid displays, e.g. Amazon
 In general, online and offline catalogs complement each
other

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 Social Marketing

 “Many-to-many” model
 Uses digitally enabled networks to spread ads
 Blog advertising
 Online ads related to content of blogs
 Social network advertising:
 Ads on MySpace, Facebook, YouTube, etc.
 Game advertising:
 Downloadable “advergames”
 Placing brand-name products within games

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 Behavioral Targeting

 Interest-based advertising
 Data aggregators develop profiles
 Search engine queries
 Online browsing history
 Offline data (income, education, etc.)
 Information sold to 3rd party advertisers, who deliver ads based on
profile
 Ad exchanges
 Privacy concerns
 Consumer resistance
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 Web Site Design Features that
Impact Online Purchasing

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Privacy and
Information Rights
 Privacy and Information Rights
 Privacy
 Moral right of individuals to be left alone, free from
surveillance, or interference from other individuals or
organizations
 Information privacy
 The “right to be forgotten”
 Claims:
 Certain information should not be collected at all
 Individuals should control the use of whatever information is
collected about them
 Behavioral tracking on the Internet, social sites, and
mobile devices
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Privacy and Information Rights (cont.)
 Threats to privacy
 Personal information collected by commercial
Web sites
 Personal information collected by government
authorities
 Impact of mobile devices
 Tracking people's locations and movements
 Tracking personal behavior

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 Information Collected at
E-commerce Sites
 Data collected includes
 Personally identifiable information (PII)
 Anonymous information

 Types of data collected

 Name, address, phone, e-mail, social security
 Bank and credit accounts, gender, age, occupation,
education
 Preference data, transaction data, clickstream data,
browser type

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 Social Networks and Privacy
 Social networks
 Encourage sharing personal details
 Pose unique challenge to maintaining privacy

 Facebook's facial recognition technology

and tagging
 Personal control over personal
information vs. organization's desire to
monetize social network
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 Mobile and Location-Based
Privacy Issues
 Smartphone apps
 Funnel personal information to mobile advertisers for
targeting ads
 Track and store user locations
 Track users’ use of other apps

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 Profiling and Behavioral Targeting
 Profiling
 Creation of digital images that characterize online
individual and group behavior
 Anonymous profiles
 Personal profiles

 Advertising networks
 Track consumer and browsing behavior on Web
 Dynamically adjust what user sees on screen
 Build and refresh profiles of consumers

 Google's AdWords program

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Profiling and Behavioral Targeting (cont.)
 Facial recognition tools
 Deep packet inspection
 Business perspective:
 Increases effectiveness of advertising, subsidizes
content
 Enables sensing of demand for new products

 Critics' perspective:
 Undermines expectation of anonymity and privacy
 Enables price discrimination

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Customer Relationship
Management and
Technology
 Definition of CRM

“CRM is concerned with the creation,

development and enhancement of
individualised customer relationships with
carefully targeted customers and customer
groups resulting in maximizing their total
customer life-time value”.
 The purpose of CRM
• “The focus [of CRM] is on creating value for the
customer and the company over the longer
term” .
• When customers value the customer service
that they receive from suppliers, they are less
likely to look to alternative suppliers for their
needs .
• CRM enables organizations to gain
‘competitive advantage’ over competitors that
supply similar products or services
 Why is CRM important?
• “Today’s businesses compete with multi-
product offerings created and delivered by
networks, alliances and partnerships of many
kinds. Both retaining customers and building
relationships with other value-adding allies is
critical to corporate performance” .

• “The adoption of C.R.M. is being fueled by a

recognition that long-term relationships with
customers are one of the most important
assets of an organization”
 What does CRM involve?

CRM involves the following :

• Organisations must become customer focused

• Organisations must be prepared to adapt so that
it take customer needs into account and delivers
them
• Market research must be undertaken to assess
customer needs and satisfaction
“Strategically significant customers”

• “Customer relationship management

focuses on strategically significant
markets. Not all customers are equally
important” .
• Therefore, relationships should be built
with customers that are likely to provide
value for services
• Building relationships with customers
that will provide little value could result in
a loss of time, staff and financial
resources
 Markers of strategically significant customers

• Strategically significant customers need to satisfy at

least one of three conditions :

1. Customers with high life-time values (i.e. customers

that will repeatedly use the service in the long-term
e.g. Nurses in a hospital library)
2. Customers who serve as benchmarks for other
customers e.g. In a hospital library consultants who
teach on academic courses
3. Customers who inspire change in the supplier
 Benefits of CRM
Benefits of CRM include :
• reduced costs, because the right things are being done
(ie., effective and efficient operation)
• increased customer satisfaction, because they are
getting exactly what they want (ie. meeting and
exceeding expectations)
• ensuring that the focus of the organisation is external
• growth in numbers of customers
• maximisation of opportunities (eg. increased services,
referrals, etc.)
• increased access to a source of market and competitor
information
• highlighting poor operational processes
• long term profitability and sustainability
FIGURE 6.9 ACUSTOMER RELATIONSHIP
MANAGEMENT SYSTEM

Business intelligence
Data mining
Analysis and reporting
Modeling AA
Data aggregation
Data cleaning
Customer database
Marketing campaign management
Data warehouse Advertising campaign management
Behavioral targeting

Transaction processing
Operational data collection

d
Telephone Sales force Website In-store Social networks Mail
Customer Touch Pointss