MD253 - E-Commerce

Module 6: Advertising & E-Commerce

Spring 2003

Topics Covered

• Profiling - how does it work?

• Advertising Networks

• Comparing Media Models

• Improving Results

• Rich Media & Other Examples

• Problems & Challenges

Cookies• stored in a text file on your hard drive• usage

– track users (unique ID)– save passwords / prefs.– temporary storage (shopping

basket)• each cookie can only be accessed by

the domain that placed it (ads have own domain)

• may be disabled (prefs) • a cookie single user

TargetingTargeting Options• site categorization• visitor frequency• geography• domain name• service provider• SIC codes• company size (emp, $)• browser type• operating system• click stream

Comparing Media• Effectiveness

– Internet banner ad click through (‘98 2.11%; ‘99 1%; ‘02 .3%)– Direct mail response = 1-2%– Print ads response = .5-.75%

• CPM (cost per 1000 impressions)– Niche magazines - $75-150– Consumer magazines - $30-40– Web sites: (‘98 $20-30; ‘99 $17; ‘02 $2-$34)– Network TV $6-15– National radio: $4-$8

sources: Morgan Stanley, Inter@ctiveeCompany Now

Media Buy Models• CPM

– cost per thousand impressions

• Click-Thru (Cost Per Click)– advertisers pay only when users click an ad

• Affiliate (Cost Per Sale / Lead)– advertisers pay per sale or lead/inquiry

• Exclusives & Sponsorships• Barter

– trading space with another site

Internet Ad Response Rates• Improving click-through rates

– audio (+300%)– placement (lower rt. +228%; 1/3 down +77%)– interstitials (+44%) – animation (+25%)– cryptic messages (+18%)– posing a question (+16%)– calls to action (+15%) e.g. “see us now”– matching/targeting (+400-600% or more)

sources: Grey Interactive, DoubleClick, webreference.com, Internet Profiles, AudioNet, BusinessWeek

Challenges for Net Advertising

• Excess Inventory– roughly 80% unsold, punished for efficiency,

caching

• Decreasing Effectiveness– Click- throughs plummeting

• “Deboning”– ad blocking, third-party cookie blocking

• The Agency’s Goal / Result Conflict