write 4 page summary after reading
Reminders
Quiz #2 on Nov 7 (on W9, which is two weeks from now)
1.5 hr, In-class, open book, open note, no laptop, no smartphone
No need to memorize the concepts but make sure you read textbook chapters and lecture slides upfront and thoroughly understand the concepts.
You can bring only hard copies of lecture slides and your notes
Multiple question and short essay
Coverage: Textbook Ch 6, 7, 11, Lecture slides W7, W8
Ch 6. E-commerce marketing and advertising concepts
communication
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Learning objectives
Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.
Identify and describe the basic digital commerce marketing and advertising strategies and tools.
Identify and describe the main technologies that support online marketing.
Understand the costs and benefits of online marketing communications.
Starting case study and discussion – Ad Block
6.1 Online consumer behavior
6.2 Digital commerce marketing and advertising
Starting Discussion: Ad block or not to Ad block, that is the question
With the release of iOS9 and new Safari Web browser in 2015, Apple surprised many industry analysts by offering new support for “content filters” (Ad blockers)
Ad blockers identify and eliminate content based on its IP address, functioning much like a firewall
$21.8 billion in lost advertising revenue in 2015
AdBlock Plus (extension to all major web browsers), used by 15% of Internet users. In France, 30%
Ad block, Chrome extension
Crystal, mobile ad blocker app
What Adblock does
Make websites look nicer and streamlined
Reduce battery usage and data consumption
Stop tracking cookies that advertisers use to keep your activities
If too many users use ad blocks, your favorite sites won’t be able to provide the free contents, as ads are their revenue model
Drawbacks
Crystal, mobile ad blocker app
What’s going on in the market
In 2015, an ad-blocking app entitled “Peace” rocketed to the top of Apple’s App Store
But its creator, Marco Arment, soon took it down and had Apple refund its buyers (in Sept 18, 2015)
With concerns that it was hurting smaller content providers
Another ad blocker named Crystal immediately ascended to the top spot.
Marco Arment (Founder of Peace app)
Some argue: Ad blocking is “unethical”
People often argue that running ad-blocking software is violating an implied contract between the reader and the publisher
“the publisher offers the page content to the reader for free, in exchange for the reader seeing the publisher’s ads.”
Justification: Ads are the primary driver of the services (eg. Facebook, Google) and any web contents (eg. Online newspapers, Blogs)
Counter argument: The “ethics” of modern web ad blocking
“The ethics of modern web ad-blocking” by Marco Arment
https://marco.org/2015/08/11/ad-blocking-ethics
Traditional ad environment:
“Ad was a hopeful gamble, not required consumption.”
Web-based ad environment:
Web ads are software, running arbitrary code on users’ computer
Collect and send data about users
Involuntary data collection: No opportunity for disclosure or reconsideration
In the last few years:
Transition of web ads from Banners to Pop-up ads Even higher intrusiveness
Dominance of low-quality ad networks
Increased share of mobile browsing (which is far less lucrative for ads, and more sensitive to ad intrusiveness) than PC
Marco Arment (Founder of Peace app)
Artricle addresses the logic behind Arment’s app development
Traditional ad environment:
“Ads was a hopeful gamble, not required consumption.”
People Changed channels, got up during TV commercials, skipped ads in newspapers and magazines
Advertisers and publishers’ job to try to show you an ad and hope you see and care about it
The burden was on the advertisers and publishers to create catchy ads
Web ad environment:
Rather than just being printed on paper or inserted into a broadcast, web ads are software.
Good thing about Web is that it supports two-way communication, however in the ad context, it may be an unwanted communication.
There’s no opportunity for disclosure, negotiation, or reconsideration and data collection is involuntary
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Discussion
Read Case 6.2
Why are algorithmic ad technologies increasingly important to advertisers?
Do you think it is ethical for consumers to use ad blockers?
Is it OK for contents providers to block ad blocks?
Cat and mouse game
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How do we end this fight…
Potential and fundamental way to end this “cat and mouse” game is to have advertisers and publishers:
To create high quality and catchy ads that consumers are willing to watch
Sites containing annoying ads will be abandoned soon anyway
It must be advertisers and publishers’ job to try to show you an ad and hope you see and care about it…
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How do we end this fight…
Eg) Google’s successful Ad revenue model
Text ads
Shortened loading time
Their goal: Shorten the time that people remain in Google site and have people proceed to the sites they want ASAP
Changing environment
More app-based browsing Disables Google to directly collect consumer data
Facebook as strongest competitor
Google provides service platforms for businesses: Adwords, Adsense, Doubleclick
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Figure 6.7: How an Advertising Network connects publishers and advertisers
Figure 6.7, Page 363.
Millions of publishers have audiences to sell, and pages to fill with ads. Thousands of advertisers are looking for audiences. Ad networks are intermediaries that connect publishers with marketers.
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6.1 Online consumer behavior
Shoppers: 90% of Internet users
77% buyers
13.8% browsers (purchase offline)
Research estimates web-influenced retail sales will generate over $1.3 trillion of purchases in 2016 (Forrester Research, 2016).
Online traffic and offline retailers interact
Temporary Pop-up stores of online-only retailers
Order online pickup at store (eg. Amazon Lockers)
Return in stores (eg. Most fashion brands)
O2O (Online to Offline – eg. Groupon)
About 9% of Internet users don’t shop online
Trust factor (perceived risk of security, delivery)
Hassle factors (shipping costs, returns, etc.)
6.2 Digital commerce marketing communication and advertising
Use of two or more channels Multi-channel marketing
Online ad spendings
Google search results
Images
Youtube
Animation, interactivity
Power bloggers
Initiating consumer interests eg. subscription
Short newspaper ads
AKA Spam mail…
By 2018, online advertising expenditures will exceed TV advertising
-Advantages on online ad:
18–34 audience is online
Ad personalized to individuals
Price discrimination (eg. Online coupons, student discounts)
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Search advertising : Highest spending
Search Engine Optimization (SEO)
To increase the visibility of website in unpaid search results
To increase quality and quantity of traffic that travels from search engine to our website
The earlier (or higher ranked) the search result pops up, more likely that users will enter our website Converted into customers
SEO considers:
how search engines work,
the algorithms which dictate search engine behavior,
what people search for,
the actual search keywords typed into search engines,
which search engines are preferred by their targeted audience.. (Instagram)
In a long term, more cost-efficient than CPC (Cost Per Click) advertising method
Once you achieve maximum search engine optimization, no more additional cost.
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Other types of online marketing
Affiliate marketing
Commission fee paid to other websites for sending customers to their website
Eg) Kayak
Viral marketing
Marketing designed to inspire customers to pass message to others
Eg) Youtube
Lead generation marketing
Services and tools for collecting, managing, and converting leads
Eg) Newsletter subscription
Impressions : served – regardless of clicks or views.
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Lexicons cont’d
Online ad pricing model
Measuring challenges
Difficult to find the correlation between online marketing and on/offline sales
In general, online marketing is more expensive on CPM basis
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6.5 Case study – Programmatic advertising
Read Textbook page 413
https:// www.youtube.com/watch?v=86qHw2w0rPc – Programmatic ad
https ://www.youtube.com/watch?v=- DiIsrJUsRU – RTB
Developed upon criticism of CPM (Cost per thousand impression) method, which makes advertisers pay the same fee for different customers Provide less value for advertisers
Auction-based Real time bidding (RTB)
A means by which advertising inventory (eg. banner space on a website) is bought and sold on a per-impression basis, via auction
Efficient distribution of ads, as advertisers who are willing to pay maximum will use the ad space.
