Chapter 6

E-commerce Marketing and Advertising Concepts

 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 online?
■ Do you think Internet users will ever develop
“blindness” toward video ads as well?
 Consumers Online: The
Internet
■ Around 70% (85
Audience and ) U.S. households have
Consumer
million
broadband Internet access in 2013
Behavior
■ Growth rate has slowed
■ Intensity and scope of use both increasing
■ Some demographic groups have much higher
percentages of online usage than others
❖ Income, education, age, ethnic dimensions
 Consumer Behavior

■ Study of consumer behavior

❖ Attempts to explain what consumers
purchase and where, when, how much,
and why they buy
■ Consumer behavior models
❖ Attempt to predict or explain wide range
of consumer behaviors or decisions
❖ Based on background demographic
factors, marketing stimuli, social network
factors, and community factors
■ Profiles of Online Consumers
A General Model of Consumer Behavior
 The Online Purchasing
Decision
■ Five stages in consumer
decision process
❖ Awareness of need
❖ Search for more information
❖ Evaluation of alternatives
❖ Actual purchase decision
❖ Post-purchase contact with firm
 The Online Purchasing Decision (cont.)

■ Decision process similar for online and offline

behavior
■ General online behavior model includes
❖ Web site features (delay, usability, and security)
❖ Consumer skills regarding online purchasing
❖ Product characteristics (prod desc, ability to be shipped
over the internet)
❖ Attitudes toward online purchasing
❖ Perceptions about control over Web environment
 The Online Purchasing Decision (cont.)

■ Clickstream behavior refers to the transaction

log that consumers establish as they move
about the web from search engine to
websites, to pages, to the decision to buy
A Model of Online Consumer Behavior
 Shoppers: Browsers and
■ Shoppers: 89%Buyers
of Internet users
❖ 73% buyers
❖ 16% browsers (purchase offline)
■ One-third of offline retail purchases influenced by
online activities
■ Online traffic also influenced by offline brands
and shopping
■ E-commerce and traditional commerce are
coupled: Part of a continuum of consumer
behavior
 How Consumers Shop

■ How shoppers find online

vendors
❖ Search engines
❖ Marketplaces (Amazon, eBay)
❖ Specific retail site

■ 27% of Internet users don’t

shop online
❖ Trust factor
 Trust, Utility, and
Opportunism
■ Two most important
in Online factors shaping
Markets
decision to purchase online:
❖ Utility:
■ Better prices, convenience, speed
❖ Trust:
■ Most important factors: Perception of credibility,
ease of use, perceived risk
■ Sellers can develop trust by building strong
reputations for honesty, fairness, delivery
 Multi-Channel Marketing Plan
1. Web site
2. Traditional online marketing
❖ Search engine, display, e-mail, affiliate
3. Social marketing
❖ Social networks, blogs, video, game
4. Mobile marketing
❖ Mobile/tablet sites, apps
5. Offline marketing
❖ Television, radio, newspapers
 Traditional Online Marketing and
Advertising Tools
■ Search engine marketing and advertising
■ Display ad marketing
■ E-mail marketing
■ Affiliate marketing
■ Viral marketing
■ Lead generation marketing
■ Social, mobile, and local marketing and
advertising
 Search Engine Marketing and Advertising
■ Search engine marketing (SEM)
❖ Use of search engines for branding
■ [Link]

■ Search engine advertising

❖ Use of search engines to support direct sales
■ Types of search engine advertising
❖ Sponsored links or paid inclusion(A paid advertisement in the form
of a hypertext link that shows up on search results pages)
❖ Keyword advertising (purchase key words by bidding at search sites)
❖ Network keyword advertising (publisher accepts ads placed on its
site and receive a fee for any click-throughs from the ad)
 Display Ad Marketing
■ Banner ads take customers to advertiser web site
■ Rich media ads employ animation & sound
■ Video ads
■ Sponsorships ads (sponsoring an event)
■ Advertising networks help companies take
advantage of internet marketing/advertising
■ Advertising exchanges and real-time bidding
❖ [Link]
How an Advertising Network
Such as DoubleClick Works
 E-mail Marketing
■ Direct e-mail marketing
❖ Messages sent directly to interested users
❖ Benefits include
■ Inexpensive
■ Average more than 7% click-throughs for in-house lists
■ Measuring and tracking responses
■ Personalization of messages and offers
■ Three main challenges
❖ Users hate Spam
❖ Anti-spam software prevent spam email from getting
through
❖ Poorly targeted purchased e-mail lists
 Spam
■ Unsolicited commercial e-mail
■ 65–70% of all e-mail
■ Most originates from bot networks
■ Efforts to control spam have largely failed:
❖ Government regulation (CAN-SPAM)
❖ State laws
❖ Voluntary self-regulation by industries (DMA )
 Other Types of Traditional Online Marketing
■ Affiliate marketing
❖ Commission fee paid to other Web sites for sending
customers to their Web site
■ Viral marketing
❖ Marketing designed to inspire customers to pass
message to others
■ Lead generation marketing
❖ Services and tools for collecting, managing, and
converting leads into purchases
 Social Marketing and Advertising
■ Involves the use of social networks to build brands
and drive revenue
■ Fastest growing type of online marketing
■ Targets the enormous audiences of social networks
■ Four features driving growth
■ Social sign-on (Facebook & twitter links to login to site)
■ Collaborative shopping (friends chat online about prods)
■ Network notification (consumers share their
approval/disapproval of prods)
■ Social search (recommendations advice from friends and family)
 Social Marketing and Advertising (cont.)
■ Blog marketing (reaching business' prospects
through the use of blogs)
❖ Educated, higher-income audience
❖ Ideal platform to start viral campaign

■ Game marketing
❖ Large audiences for social games (FarmVille,
Words with Friends)
❖ Used for branding and driving customers to
purchase at restaurants and retail stores
 Mobile Marketing and Advertising
■ 7% of online marketing, growing rapidly
■ Major formats:
❖ Display, rich media, video
❖ Games
❖ E-mail
❖ Text messaging (SMS)
❖ In-store messaging
❖ Quick Response (QR) codes
❖ Couponing
■ Mobile app marketing
❖ Using App Store Optimization to create an App Store listing that draws
new users in and makes your app findable
❖ Aims to drive more revenue and engagement from the people who
already use your app
 Other Online Marketing Strategies
■ In addition to traditional online
advertising and marketing strategies
(search engine, display, etc.), several
other strategies are more focused than
“traditional” online strategies
❖ Customer retention
❖ Pricing
❖ The “long tail” (next slide)
 Other Online Marketing Strategies

■ The “long tail” is a graph

showing popularity ranking. To
the right (yellow) is the long
tail; to the left (green) are the
few that dominate. In statistics,
a long tail of some
distributions of numbers is the
portion of the distribution
having a large number of
occurrences far from the
"head" or central part of the
distribution.
 Long-Tail Marketing
■ Internet allows for sales of
obscure products with little ■ Long tail curve
demand, the long tale
■ Long tail marketing concentrates
on these less popular products,
developing a business sales model
based upon products in the “long
tail.”
■ Substantial revenue because
❖ Near zero inventory costs
❖ Little marketing costs
❖ Search and recommendation engines
 Pricing Strategies

■ Pricing
❖ Integral part of marketing strategy
❖ Traditionally based on:
■ Fixed cost
■ Variable costs
■ Demand curve

■ Price discrimination
❖ Selling products to different people
and groups based on willingness to
 Pricing Strategies (cont.)
■ Free and freemium
❖ Can be used to build market awareness
❖ Freemium is where you get a free basic service and the premium
version is not
■ Versioning
❖ Creating multiple versions of product and selling essentially same
product to different market segments at different prices
■ Bundling
❖ Offers consumers two or more goods for one price
■ Dynamic pricing:
❖ Auctions
❖ Yield management (selling excess capacity)
❖ Flash marketing (flash sale)
 Internet Marketing
Technologies
■ Internet’s main impacts on
marketing:
❖ Increase in scope of marketing
communications
❖ Increase in the richness of
marketing communications
❖ Expand information intensity of
marketplace
❖ Always-on mobile environment
 Databases

■ Database: Stores records and

attributes
■ Database management system
(DBMS):
❖ Software used to create, maintain, and access
databases
■ SQL (Structured Query Language):
❖ Industry-standard database query and
manipulation language used in a relational
database
■ Relational database:
 Data Warehouses and Data
Mining
■ Data warehouse:
❖ Collects firm’s transactional and
customer data in single location for
offline analysis by marketers and site
managers
■ Data mining:
❖ Analytical techniques to find patterns in
data, model behavior of customers,
develop customer profiles
■ Query-driven data mining
■ Model-driven data mining
Hadoop and the Challenge of Big Data
■ “Big data”
❖ Web traffic, e-mail, social media content
■ Traditional DBMS unable to process the
volumes—petabytes (1 000 000 000 000 000
bytes) and exabytes (1 000 000 000 000 000 000
bytes)
■ Hadoop is an open-source software solution by
Apachie that enables distributed computing of
huge amounts of data including unstructured
and semi-structured on thousands of
inexpensive computers
 Web Analytics
■ Software that analyzes and presents data on each
stage of the customer conversion process
❖ Awareness (new visitors)
❖ Engagement (page views, duration, content views)
❖ Interaction (posts, likes, comments, etc)
❖ Purchase (purchase, enter cart pg, register, abandon cart)
❖ Loyalty and post-purchase (repeat cust, service request, etc)
■ Helps managers
❖ Optimize ROI on Web site and marketing efforts
❖ Build detailed customer profiles
❖ Measure impact of marketing campaigns
■ Google Analytics, IBM Coremetrics, Adobe Analytics
Web Analytics and the Online
Purchasing Process