Overview Of Web Advertising Marketing Essay

Published Date: 23 Mar 2015

Note that as customers move from site to site, they establish their KT clickstream behavior KT, a pattern of their movements on the Internet, which can be seen in their transaction logs. Both ISPs and individual websites are capable of tracking a user's clickstream (see coming discussion of clickstream analysis).

<H4>Cookies, Web Bugs, and Spyware.</H4> Cookies and Web bugs can be used to supplement transaction-log methods. Cookies allow a website to store data on the user's PC; when the customer returns to the site, the cookies can be used to find what the customer did in the past (see 'cookies' at <URL>marketingtimes.com</URL>). Cookies are frequently combined with <KT>Web bugs</KT>-tiny graphics files embedded in e-mail messages and on websites. Web bugs transmit information about the user and his or her movements to a monitoring site.

<KT>Spyware</KT> is software that gathers user information through an Internet connection without the user's knowledge. Originally designed to allow freeware authors to make money on their products, spyware applications are typically bundled together with freeware that is downloaded onto users' machines. Many users do not realize that they are downloading spyware with the freeware. Sometimes the freeware provider may indicate that other programs will be loaded onto the user's computer in the licensing agreement (e.g., "may include software that occasionally notifies users of important news"). Spyware stays on the user's hard drive and continually tracks the user's actions, periodically sending information on the user's activities to the owner of the spyware. It typically is used to gather information for advertising purposes. Users cannot control what data are sent via the spyware, and unless they use special tools, they often cannot uninstall the spyware, even if the software it was bundled with is removed from the system. Effective tools for fighting spyware include Ad-Aware see Ad-Aware at<URL>lavasoft.com</URL> and see 'Webwasher Spyware from Secure Computing' at <URL>securecomputing.com<URL>; now owned by McAffee).

The use of cookies and Web bugs is controversial. Many believe that they invade the customer's privacy see 'customer privacy' at <URL>privacyfoundation.org</URL>. Tracking customers' activities without their knowledge or permission may be unethical or even illegal.

<H4>Web Analytics and Mining.</H4> Web analytics deals with the monitoring collection, measuring and evaluating, and reporting tasks related to Internet data and activities. Web analytics help us to understand and optimize Web usage. Such analysis is done for example, retailers for market research. For example, see 'software from Coremetrics' at <URL>coremetrics.com</URL>; now part of IBM Enterprise Marketing Management) enables retailers manage online marketing campaigns and e-commerce initiatives, and track customer satisfaction. Also, a company can use Web analysis to improve its website look and operation. Web analytics can provide quick feedback from customers to help marketers decide which products to promote. For tutorials on data mining and Web mining, see 'tutorials on data mining and Web mining' at <URL>autonlab.org/tutorials</URL>, also watch the video "Beginning Analytics" at <URL>youtube.com</URL>.

For details and methods used see at Wikipedia and Clifton(2012). A special type of Web Analytics is clickstream analysis or just click analysis.

<H4>Clickstream Analysis.</H4> <KT>Clickstream data</KT> are data that describe the users' activities in specific websites, (on-site) including time spent and the sequence of activities, including those in the e-mails. By analyzing clickstream data, which can be maintained in a special database or data warehouse, a firm can find out, for example, which promotions are effective and which population segments are interested in specific products. The list of information provided by clickstream data is available in <OLINK>Online File W9.5</OLINK>. For technologies, metrics see wikipedia.

Several companies offer tools that enable such an analysis. For example, Analytics 10 and higher (from Webtrends, Inc.) features several advanced tools for analyzing clickstream data (e.g., see 'analyzing clickstream data' at <URL>webtrends.com</URL>). Finally Google Analytics can be used for such analysis.

<H4>Web Mining.</H4> <KT>Web mining</KT> refers to the use of data mining techniques for discovering and extracting information from Web documents. Web mining explores both Web content and Web usage. The usage analysis is derived from clickstream data. Web mining has the potential to change the way we access and use the information available on the Web.

<H2>LIMITATIONS OF ONLINE MARKET RESEARCH AND HOW TO OVERCOME THEM

One problem with online market research is that too much data may be available. To use data properly, one needs to organize, edit, condense, and summarize it. However, such a task may be expensive and time-consuming. One solution to this problem is to automate the process by using data warehousing and data mining. The essentials of this process, known as business intelligence, are provided in Online File W8.2, and in Turban et al. (2011).

Some of the limitations of online research methods are accuracy of responses, loss of respondents because of equipment problems, and the ethics and legality of Web tracking. In addition, focus group responses can lose something in the translation from an in-person group to an online group. A researcher may get people online to talk to each other and play off of each other's comments, but eye contact and body language are two interactions of traditional focus group research that are lost in the online world. However, just as it hinders the two-way assessment of visual cues, Web research can actually offer some participants the anonymity necessary to elicit an unguarded response. Finally, a major limitation of online market research is the difficulty in obtaining truly representative samples.

Concerns have been expressed over the potential lack of representativeness in samples of online users. Online shoppers tend to be wealthy, employed, and well educated. Although this may be a desirable audience for some products and services, the research results may not be extendable to other markets. Although the Web-user demographic is rapidly diversifying, it is still skewed toward certain population groups, such as those with convenient Internet access (at home or work). Another important issue concerns the lack of clear understanding of the online communication process and how online respondents think and interact in cyberspace.

It is important for a company to identify the intended target audience or demographic so that the right kind of sampling can be performed. Web-based surveys typically have a lower response rate than e-mail surveys, and there is no respondent control for public surveys. If target respondents are allowed to be anonymous, it may encourage them to be more truthful in their opinions. However, anonymity may result in the loss of valuable information about the demographics and characteristics of the respondents. Finally, there are still concerns about the security of the information transmitted, which also may have an impact on the respondents' truthfulness. To overcome some of the limitations of online market research, companies may outsource their market research to large and experienced companies that have specialized market research departments and expertise.

<H2>BIOMETRIC MARKETING

One problem with Web analytics, Web mining, clickstream data, and so on is the representativeness. That is, we observe and follow a computer, not knowing who is actually moving the mouse. Many households have several users; thus, the data collected may not represent any one person's preferences (unless, of course, we are sure that there is one and only one user, as in the case of smart cell phones). A potential solution is suggested by Pons (2006) in the form of biometric marketing.

A<KT>biometric</KT> is one of an individual's unique physical or behavioral characteristics that can be used to identify an individual precisely (e.g., fingerprints; see list in Chapter 9). By applying the technology to computer users, we can improve security and learn about the user's profile precisely. The question is how to do it. Indeed, there are programs by which users identify themselves to the computer by biometrics, and these are spreading rapidly. Utilizing the technology for marketing involves social and legal acceptability. For these reasons, advertisers are using methods that target individuals without knowing their profiles. An example is search engine-based methods, such as Adwords used by Google (see Section 9.8).

<H6>Section 9.6 Ÿ Review Questions

<GENQ>1. Describe the objectives of market research.

2. Define and describe market segmentation.

3. Describe how market research is done online and the methods used by comScore.

4. Describe the role of Weblogs and clickstream analysis.

5. Define cookies, Web bugs, and spyware, and describe how they can be used in market research.

6. Describe how the issue of privacy relates to online market research.

7. Describe the limitations of online market research.

8. Describe how biometrics and cell phones can improve market research and advertising. </GENQ>

<H1>9.7 Web Advertising

Advertising on the Web plays an extremely important activity in e-commerce. Internet advertising is growing very rapidly, especially in B2C, and companies are changing their advertising strategies to gain a competitive edge. Since the Internet provides interactivity, online ads are also useful for brand building directly through response ads. Online ad revenue reached a record high of $15 billion in the second quarter of 2011 in the United States alone, which is a 23 percent increase from the previous year (reported by Rao 2011). Spending is expected to increase rapidly on all types of online advertising methods, including in social networks (e.g., of the $6 billion spent in 2011, Facebook accounted for about $4 billion [Hof 2011]).. In this chapter we concentrate on generic Web advertising. We will cover social networking advertising in <OLINK>Chapter 7</OLINK>. For more information, see Fox (2012).

<H2>Overview of Web Advertising

Advertising is an attempt to disseminate information in order to influence people to buy. Traditional advertising was impersonal, one-way mass communication that was paid for by sponsors. Telemarketing and direct mail ads were attempts to personalize advertising to make it more effective. These direct marketing approaches worked fairly well but were expensive and slow and seldom truly one-to-one interactive. The cost-benefit was poor. For example, say a direct mail campaign costs about $1 per person and has a response rate of only 1 to 3 percent. This makes the cost per responding person in the range of $33 (for a 3 percent response) to $100. Such an expense can be justified only for high-ticket items (e.g., cars).

One of the problems with direct mail advertising was that the advertisers knew very little about the recipients. Market segmentation by various characteristics (e.g., age, income, gender) helped a bit but did not solve the problem. The concept of <KT>interactive marketing</KT>, enables marketers and advertisers to interact directly with customers.

On the Internet, a consumer can click an ad to obtain more information or send an e-mail to ask a question. The customer can conduct live chat with the merchant (person or avatar), or with peers in a social network chat room. The Internet enables truly one-to-one advertising. A comparison of mass advertising, direct mail advertising, and interactive online advertising is shown in <OLINK>Online File W9.6</OLINK>.

The two major business models for advertising online are (1) using the Web as a channel to advertise a firm's own products and services and (2) making a firm's site a public portal site and using captive audiences to advertise products offered by other firms (usually using affiliate marketing, see <OLINK>Chapter 1</OLINK> and <LINK>Section 9.7</LINK>). For example, the audience might come to a P&G website to learn about Tide, but they might also get additional ads for products made by Coca-Cola.

<H3>The Advertising Cycle

With closed-loop campaign management, companies are treating advertising as a cyclical process, as shown in <LINK>Exhibit 9.4</LINK>. The cyclical process entails carefully planning a campaign to determine who the target audience is and how to reach that audience. Then, analyzing a campaign after its completion assists a company in understanding the campaign's success. This new knowledge is then used when planning future campaigns.

[Insert Exhibit 9.8 here]

Before we describe the various steps in the cycle as it is implemented in Web advertising, let's learn some basic advertising terminology.

<H2>Some Basic Internet Advertising Terminology

The following list of terms and their definitions in the marginal glossary will be of use as you read about Web advertising.

<BL> ƒ˜ <KT>Ad views</KT>

ƒ˜ <KT>Button</KT>

ƒ˜ <KT>Page</KT>

ƒ˜ <KT>Click (ad click)</KT>

ƒ˜ <KT>CPM (cost per mille, i.e., thousand impressions)</KT>

ƒ˜ <KT>Conversion rate</KT>

ƒ˜ <KT>Click-through rate/ratio (CTR)</KT>

ƒ˜ <KT>Hit</KT>

ƒ˜ <KT>Visit</KT>

ƒ˜ <KT>Unique visit</KT>

ƒ˜ <KT>Stickiness</KT></BL>

<H2>Why Internet Advertising?

The major traditional advertising media are television, newspapers, magazines, and radio. However, the market is changing as many consumers are spending more time on the Internet (about 25 percent annual growth) and using mobile devices. Internet advertising is getting more attention. The estimates for 2011 range from $42 billion to $106 billion, depending on how you define what you measure.

<H3>Advertising Online and Its Advantages

The major advantages of using the Internet over mass advertising are precise targeting, interactivity, rich media (grabs attention), cost reduction, efficiency, and better customer acquisition. In comparison to traditional media, the Internet is the fastest growing communication medium by far. Worldwide, the number of Internet users surpassed 1 billion in 2005; and 2 billion in 2011, see the updated information at <URL>physorg.com</URL>.Of course, advertisers are interested in a medium with such potential reach, both locally and globally.

Other reasons why Web advertising is growing rapidly include:

<BL>ƒ˜ Cost. Online ads are sometimes cheaper than those in other media. In addition, ads can be updated at any time with minimal cost.

ƒ˜ Richness of media. Web ads can effectively use a combination of text, audio, graphics, video, and animation. In addition, games, entertainment, and promotions can be easily integrated in online advertisements.

ƒ˜ Personalization. Web ads can be interactive and targeted to specific interest groups and/or individuals; the Web is a much more focused medium.

ƒ˜ Timeliness. Internet ads can be fresh and up-to-the-minute.

ƒ˜ Location-based. Using wireless technology and GPS, Web advertising can be location based; Internet ads can be sent to consumers whenever they are in a specific time and location (e.g., near a restaurant or a theater providing customers with discount coupons).

ƒ˜ Linking to shopping. It is easy to link from an online ad to a storefront-one click does it.

</BL>

[Comp: please shade the bullet list]

<H3>Traditional Versus Online Advertisement

Each advertising medium, including the Internet, has its advantages and limitations. <OLINK>Online File W9.7</OLINK> compares the advantages and limitations of Internet advertising against traditional advertising media. Pfeiffer and Zinnbauer (2010) compared traditional advertising against Internet advertising (including social networks). They concluded that not only is Internet advertising more cost efficient, but the business impact of Internet ads is larger than traditional ads.

<H6>Section 9.7 Ÿ Review Questions

<GENQ>1. Define Web advertising and the major terms associated with it.

2. Describe the reasons for the growth in Web advertising.

3. Describe emerging Internet advertising approaches.

4. List the major benefits of Web advertising.

5. Draw and explain the advertising cycle.

6. What is the impact of online advertising on newspapers, TV, and billboard viability?</GENQ>

<H1>9.8 Online Advertising Methods and Strategies

A large number of online advertising methods exist. For a list and description please see Wikipedia. Next, we discuss a few major categories of ads.

<H2>Major Categories of Ads

Ads can be classified into three major categories: classified, display, and interactive.

<H3>Classified Ads

These usually use text, but lately may include photos. The ads are grouped according to classification (e.g., cars, rentals). They are the least expensive.

Classified ads can be found on special sites (e.g., see classified ads at <URL>craigslist.org</URL> and <URL>superpages.com</URL>), as well as on online newspapers, e-markets, and portals. In many cases, posting regular-size classified ads is free, but placing them in a larger size, in color, or with some other noticeable features is done for a fee. For examples, see more information at <URL>traderonline.com</URL> and <URL>advertising.microsoft.com</URL>.

<H3>Display Ads

These use graphics, logos, colors, or special designs. They are an illustrated advertisement. The ads are usually not classified, but they can be combined. Display ads are popular offline in billboards, yellow pages, and movies. They are becoming very popular on the Internet as well. All major search advertising companies (e.g., Google, Yahoo!, Microsoft, AOL) are leveraging their online positions in search advertising into the display ad business.

<H3>Interactive Ads

These use online or offline interactive media to interact with consumers and to promote products, brands, and services. This is most commonly performed through the Internet; often using video content as a delivery medium.

In each of these categories there are several variations. For example, banner ads are a type of display ad. Some methods can be listed in more than one category. The major methods are presented next.

<H2>Banners

A <KT>banner</KT> is a graphic display that is used for advertising on a Web page (embedded in the page). A banner ad is frequently linked to an advertiser's Web page. When users "click" the banner, they are transferred to the advertiser's site. A banner must be designed to catch consumers' attention. Banners often include video clips and sound. Banner advertising including pop-up banners is the most commonly used form of advertising on the Internet.

There are several sizes and types of banners. The sizes are standardized by IAB and they are measured in pixels. For examples and details, see Wikipedia. <KT>Keyword banners</KT> appear when a predetermined word is queried from a search engine. They are effective for companies that want to narrow their target audience. <KT>Random banners</KT> appear randomly, not as a result of some action by the viewer. Companies that want to introduce their new products (e.g., a new movie or CD) or promote their brand use random banners. Static banners are always on the Web page. Finally, pop-up banners appear when least expected, as will be described later.

If an advertiser knows something about a visitor, such as the visitor's user profile, or area of interest, the advertiser will try to match a specific banner with that visitor. Obviously, such targeted, personalized banners are usually most effective.

Amazon.com greets return customers and offers them products of their interest. Such personalized banners are being developed, for example, by Dotomi see 'personalized banners' at <URL>dotomi.com</URL>. Dotomi delivers ads to consumers who opt-in to view its system. Initial results show a 14 percent click-through rate, which measures the success of a banner in attracting visitors to click, versus 3 to 5 percent with nonpersonalized ads.

<KT>Live banners</KT> are ads that can be created at the time they pop up with variable content that can be modified at will instead of being preprogrammed like banner ads. They usually are media rich. For details and examples, see the Wikipedia.

<H3>Benefits and Limitations of Banner Ads

The major benefit of banner ads is that, by clicking on them, users are transferred to an advertiser's site, frequently directly to the shopping page of that site. Another advantage of using banners is the ability to customize them for individual surfers or a market segment of surfers. Also, viewing of banners is common, because in many cases customers are forced to see banner ads while waiting for a page to load or before they can get the free information or entertainment that they want to see (a strategy called forced advertising, and it is banner spam). Finally, banners may include attention-grabbing multimedia.

The major disadvantage of banners is their cost. If a company demands a successful marketing campaign, it will need to allocate a large percentage of its advertising budget to place banners on highly-visited websites. Another drawback is that a limited amount of information can be placed on the banner. Hence, advertisers need to think of a creative but short message to attract viewers.

However, it seems that viewers have become somewhat immune to banners and simply do not notice them as they once did. The click-through rate has been declining over time. Because of these drawbacks, it is important to decide where on the screen to place banners (e.g, right side is better than left side, top is better than bottom). Companies such as QQ.com and Taobao.com in China have built behavior labs to track eye movements of consumers to understand how screen location and Web page design may affect viewer attention. For more on the efficient use of banner ads, see Online File W9.8.

<H3>Banner Swapping and Banner Exchanges

<KT>Banner swapping</KT> means that company A agrees to display a banner of company B in exchange for company B's displaying company A's banner. This is probably the least expensive form of banner advertising, but it is difficult to arrange. A company must locate a site that will generate a sufficient amount of relevant traffic. Then, the company must contact the owner/Webmaster of the site and inquire if the company would be interested in a reciprocal banner swap. Because individual swaps are difficult to arrange, many companies use banner exchanges.

<KT>Banner exchanges</KT> are markets where companies can trade or exchange placement of banner ads on each other's websites. A multi-company banner match may provide a better match, and it will be easier to arrange than a two-company swap. For example, company A can display B's banner effectively, but B cannot display A's banner optimally. However, B can display C's banner, and C can display A's banner. Such bartering may involve many companies.

<H2>Pop-Up and Similar Ads

One of the most annoying phenomena in Web surfing is the increased use of pop-up, pop-under, and similar ads. A <KT>pop-up ad</KT>, also known as ad spawning, appears due to the automatic launching of a new browser window when a visitor enters or exits a website, when a delay occurs, or when other triggers cause the display. A pop-up ad appears in front of the active window. A <KT>pop-under ad</KT> is an ad that appears underneath (in back of) the current browser window. When users close the active window, they see the ad. Pop-ups cover the user's current screen and may be difficult to close. Pop-up and pop-under ads are controversial: Many users strongly object to this advertising method, which they consider to be intrusive. Most browsers provide an option that allows the viewer to block pop-up windows. Legal attempts have also been made to control pop-ups because they are basically a form of spam.

Several other tactics, some of them very aggressive, are being used by advertisers, and their use is increasing. These tactics may be accompanied by music, voice, and other rich multimedia. For details information see Wikipedia.

<H3>Pop-up Videos

Along with the increased popularity of videos comes the pop-up commercial in front of them. Some can be skipped, others are difficult to delete. The commercials usually last 20-30 seconds, similar to TV commercials. These pop-ups may or may not be related to the content of the video you want to view.

<H2>E-Mail Advertising

<KT>E-mail marketing</KT> refers to the use of e-mail as a means of communicating commercial messages to an audience. E-mail marketing may occur in different formats and for different purposes. Pixel Vector consulting (2012) list four e-mail marketing formats.

Sending company or product information to people or companies that appear on mailing lists has become a popular way to advertise on the Internet. E-mail messages may be combined with brief audio or video clips to promote a product; some messages provide links that users can click on to make a purchase. Sending coupons and special offers is done by all major retailers, including department stores and supermarkets. Airlines, banks, educational institutions, and anyone else who can get your e-mail will send you e-mail ads.

<H3>The Major Advantages and Limitations of E-Mail Advertisement

The major advantages of e-mail advertising are:

<BL>

• It is a low-cost and effective method.

• Advertisers can reach huge number of consenting subscribers.

• Most Internet users check or send e-mail on a typical day. So ads reach customers quickly.

• E-mail is an interactive medium that can combine advertising and customer service.

• E-mail ads can include a direct link to any URL, so they act like banners. A consumer may be more likely to respond to relevant e-mail messages especially when discounts or special sales are provided.</BL>

[Comp: please shade the bullet list]

For further details see Strauss and Frost (2012).

<H4>Limitations.</H4> Using e-mail to send ads (sometimes floods of ads) without the receivers' permission is considered spamming.

The quantity of e-mail that consumers receive is exploding. In light of this, marketers employing e-mail must take a long-term view and work toward motivating consumers to continue to read the messages they receive. As the volume of e-mail increases, consumers' tendency to screen and block messages will rise as well. Today most e-mail services permit users to block messages from specific sources or automatically filter certain ads to junk mail.

<H3>Implementing E-Mail Advertising

A list of e-mail addresses can be a very powerful tool for a company, helping it to target a group of people that it knows something about. In many cases the mailing list is based on membership and loyalty programs, such as the airlines' frequent flyer program. For information on how to create a mailing list, consult <URL>groups.yahoo.com</URL> (the service is free) or <URL>topica.com</URL>.

E-mail can also be sent to mobile devices. Mobile phones, in particular, offer advertisers a real chance to advertise interactively and on a one-to-one basis with consumers-anytime, anyplace. In the future, e-mail ads will be targeted to individuals based not only on their user profiles but also on their physical location at any point in time. See Chapter 6 for a description of this concept, known as l-commerce.

<H4>E-Mail Hoaxes. E-mail hoaxes are very popular; some of them have been going on for years (e.g., Neiman Marcus's cookie recipe, the Nigerian treasure, the Koran and the Iraq invasion). Some of these are scams. For details, see <URL>ftc.gov</URL> and Chapter 9.

<H4>Fraud. Fraud is also a consideration. For example, a person may receive an e-mail stating that his or her credit card number is invalid or that his or her MSN service will be terminated unless another credit card number is sent in reply to the e-mail. For protection against such fraudulent practices, see <URL>scambusters.org</URL> and Chapters 9 and 14.

<H4>E-Mail Advertising Methods. E-mail advertising can be done in many different ways, as shown in Online File W9.9.

<H2>Search Engine Advertisement

<KT>Search advertising</KT> is a method of placing online advertisements on the Web pages that show results from search engine queries. Search engines are a good mechanism for most people to find information and, therefore, a good platform for online advertising. Note that search advertising includes mobile search and social network search (see Adhikari 2010). The two major forms of search engine advertising are keyword advertising and listing URLs.

<H3>Keyword Advertising

Google has created a new advertising technology by linking an advertisement with the user's keywords. Advertisers choose the keywords to which their advertisements will link. Advertisements appear on the screen along with the search results when the chosen keywords are searched. This can substantially increase the likelihood that the advertisement will be viewed because of its high relevance to user interests. This innovation has resulted in the great success of Google. In a single year, more than 1.5 million U.S. marketers used Google as their advertising channel. In fact, more than 90 percent of Google's revenue is generated from this creative technology. Furthermore, Google allows the advertisers to bid for the order of appearance.

<H3>URL Listing

Most search engines allow companies to submit their Internet addresses, called URLs (Universal Resource Locators) for free, so that these URLs can be searched electronically. Search engine spiders crawl through each site, indexing its content and links. The site is then included as a candidate for future searches. Because there are quite a few search engines, advertisers who use this method should register URLs with as many proper search engines as possible. In some cases, URLs may be searched even if they are not submitted.

However, the URL method has several drawbacks. The major one is location on the list provided by the search engine. Search engines maintain a huge amount of Web pages and get even larger because it is the collection size that attracts users to create value. Hence, the chance that a specific site will be found and placed at the top of a search engine's display list (say, in the first 10 items) is very slim. (See the discussion of search engine optimization that follows.)

<H3>Search Engine Optimization (SEO)

It is very difficult for a company to be placed at the top of search results. Therefore, many marketers are trying to outsmart the ranking algorithm and find shortcuts that can lead to a better position in the search results. This is the basic idea behind search engine optimization. Search engines use algorithms to determine the position of a Web page in a search result based on certain criteria, such as popularity (e.g., the click-through rate). Ads with low click-through rates can be pushed down to subsequent pages. Therefore, it pays to find methods for optimizing keyword selection. For methods and details, check the information at Wikipedia.

<KT>Search engine optimization (SEO)</KT> is a process of improving the visibility of a location of your company (or a brand) on the results displayed by a search engine. Other forms of search engine marketing (SEM) target paid listings. In general, the earlier (or higher on the page) and more frequently a site appears in the search result list, the more visitors it will receive from the search engine's users. SEO may target different kinds of search, including image search, local search, video search, and industry-specific vertical search engines. Companies can try to optimize by themselves. For how to do this, see Clay and Espara (2012). However, sometimes it may be wise to use a professional optimizer.

The optimizer (self or hired) needs to consider how search engines work, what people search for, the actual search terms typed into search engines, and which search engines are preferred by their targeted audience. The optimizer then can tailor the ads and the keywords accordingly. The optimizer, which can be a company, person, or a consultant, can use algorithms (such as Google analytics) to do the tailoring. For further details, see McDivitt (2012) and also check the information at Wikipedia.

[Insert Exhibit 9.9 here]

<H4>Paid Inclusion (Sponsored Ad).</H4> Another solution is to buy keyword ads on the page that contain the search engine's results of a search. This is referred to as paid inclusion or sponsored search.

<H4>Example. Enquiro.com (a meditative company; <URL>enquiro.com</URL>) specializes in search engine advertising and optimization. The company offers news, white papers, case studies, and more on its website (<URL>ask.enquiro.com</URL>). It specializes in both B2C and B2B applications. For details see <URL>enquiro.com</URL>. The company connects site optimization with Web analytics, site analysis and auditing, keyword search, and clients' objectives and needs. For the relationship diagram see at <URL>enquiro.com/</URL>.

Finally, ads that appear on the side and top of the search results are attention-grabbers, but they are expensive (see AdWords, later in this section). Several companies provide services that optimize Web content so that a site has a better chance of being discovered by a search engine-for example, Web Position from WebTrends (<URL>webtrends.com</URL>). More tips for improving a site's listing in various search engines can be found at <URL>searchenginewatch.com<URL>.

This way, your banner ad will be placed on the first page of the search result as a "sponsored ad." These appear on the side and top of the search results as attention-grabbers, but they are expensive.

<H2>Google: The Online Advertising King

No other EC company can match the success of Google and its meteoric rise. Google is considered by many to be not only changing the Internet but also the world. Google uses several varieties of search engine advertising methods that are generating billions of dollars in revenue and profits. For a comprehensive discussion of Google, check the information at Wikipedia.

Google derives almost all of its revenue from its advertising programs. Google has implemented various innovations in the online advertising market that helped make them one of the biggest players in the market. Using a behavioral marketing method of its subsidiary DoubleClick, Google can determine user interests and then target advertisements that are relevant to the search topic context and the user who is viewing them. Google Analytics allows website owners to track where and how people use their website, for example, by examining click rates for all the links on a page. Google advertising is done in a two-part program: Google's AdWords and AdSense.

<H3>Google's Major Advertisement Methods: AdWords and AdSense

The details of AdWords and AdSense are:

<H4>AdWords.</H4> AdWords is an advertising program adjacent to Google search. Whenever you use Google to search something you will notice URLs with colored backgrounds, titled "sponsored links" on the right hand side or on the top. These include Google AdWords participants. According to Google.com these URL's are created by advertisers who select a few key terms related to their brands. They also choose how much they want to spend to "buy" these key terms (up to a daily dollar limit). Google uses ranking algorithms to match the advertisers' selected key terms with the searchers' search activities. Typically, if a searcher types in a selected keyword, a banner ad will appear in the sponsored links column. Then, if the searcher clicks on the ad (to go to the advertiser's page) the sponsor vendor is billed according to the agreed upon rate (payments are made from the prepaid budget). For details see information at <URL>adwords.google.com<URL> and <URL>google.com<URL>.

Since all advertisers like their ads to appear on the first page of the search results, Google device an auction system that determine which ads are shown where and how fees are determined. For an illustrative infographics see Gabbert, 2011.

Despite its success, AdWords by itself does not provide the best one-to-one targeting. This may be achieved in many cases through a complementary program-AdSense. (both are also offered on mobile devices)

<H4>AdSense.</H4> Google's AdSense is an affiliate program. Website owners can, in collaboration with Google, add search engines to their own sites. Then, the search results by surfers done on the content of the affiliated websites will inclue sponsored ads (like inAdWords) which are relevant to the content of the Website owners.

AdSense automatically delivers an advertiser's text, image, and video ads that are precisely matched to the content of each participant's affiliate site. The matching of ads to user content is based on Google's proprietary algorithm. The key is the quality and appearance of both the pages and the ads, as well as the popularity of the site. Hundreds of thousands of companies and individuals participate in the affiliate program. Google provides the affiliates with analytics tools and procedures that help convert visitors to customers see the information at <URL>google.com</URL>.

Revenue generated from advertisers that use the websites are shared by Google with the website owners (affiliates).

AdSense has become a popular method of placing advertising on websites because the advertisements are less intrusive than most other banners, and the content of the advertisements is often more relevant to the website. For an example of a site using AdSense, see RTC Magazine at <URL>rtcmagazine.com</URL>. Google's success is attributed to the quality of the matches, the large number of advertisers in its network, the ability to use ads in many languages, and the clearity of the ads.. Competing programs are offered by eBay and Yahoo! (see eBay AdContex and Yahoo!'s Content Match).

[Comp: Please shade above H4s]

For additional information at Wikipedia.

<H2>Viral Marketing (Advertising)

<KT>Viral marketing (viral advertising)</KT> refers to electronic word-of-mouth marketing (WOM) in which customers promote a product or service by telling others about it. This can be done by e-mails, by text messaging, in conversations facilitated in chat rooms, via instant messaging, by posting messages on social network walls, and in discussion groups. It is especially popular in social networks. Having people forward messages to friends, telling them about a good product product, is an example of viral marketing. Viral marketing has been used for generations, but now its speed and reach are multiplied by the Internet and is done at minimal cost to vendors, because the people who transmit the messages are usually paid nothing. The process is analogous to the spread of computer (or regular) viruses using a self-replication process. Viral messages may take the form of text messages, video clips, of interactive games.

For example, advertisers might distribute a small game program or a video embedded within a sponsor's e-mail that is easy to forward. By releasing a few thousand copies of the game to some consumers, vendors hope to reach hundreds of thousands of others. Viral marketing also was used by the founder of Hotmail, a free e-mail service that grew from zero to 12 million subscribers in its 18 initial months and to more than 50 million subscribers in about 4 years. Each e-mail sent via Hotmail carried an invitation for free Hotmail service. Facebook's reputation was achieved in a similar way, but much faster. Also known as advocacy marketing, viral marketing, if properly used, can be effective, efficient, and relatively inexpensive. eWOM can also influence consumer product judgment (see Sernovitz 2012). For further details, see the information at Wikipedia, McColl (2010), and <URL>learnmarketing.net</URL>.

According to a 2010 survey done in Chinese markets, word of mouth has become an important factor in consumers' purchasing decisions. In 2010, 64 percent of respondents said that word of mouth influenced their purchasing decisions, while in 2008 only 56 percent of consumers cared about word of mouth. Incidentally, online search was also found to be an important factor for people before they make the final purchase decision, other than traditional TV advertisement (see Atsmon and Magni 2010 and Magni and Atsmon 2010).

One of the downsides of a viral strategy is that several e-mail hoaxes have been spread this way. Viral marketing has also been criticized by consumers because of a concern over unsolicited e-mails, which many see as an invasion of privacy.

A major development is viral videos, which is discussed under video ads next, as well as in <OLINK>Chapter 7</OLINK> (for social networks).

<H2>Video Ads

Video ads are growing rapidly, mainly due to the popularity of YouTube and similar sites. Online video is growing at nearly 40 percent annually while TV viewing continues to fall. For monthly statistics, see 'monthly statistics' at <URL>comscore.com</URL> and <URL>marketingcharts.com</URL>. Video ads appear all over the Web, both as unsolicited pop-ups, or when you give permission to see a demo or information about a product. Video ads became very popular in the Web 2.0 environment and social networking (see <OLINK>Chapter 7</OLINK>).

The major reason for the popularity of video is that almost everyone who uses the Internet now watches online videos. According to Horton (2012), online video use in the U.S. exceeded 84 percent in May 2012. Two "other factors that have spurred the rapid growth of online video include the increasing availability of broadband Internet access and Web 2.0 technology that allows user interaction with and control of content" (Glenn 2008).

Many retailers are adding product-specific videos to their e-commerce sites. For a complete overview of video marketing and advertising, see 'video marketing and advertising ' at <URL>webvideomarketing.org</URL> and Daum, et al. (2012). According to a Cisco survey, most large online retailers are using videos to help sell products. Forrester Research found that most major retailers are making product videos central to their marketing strategies. According to <URL>clickz.com</URL>, U.S. users spent 45 percent more time viewing online videos in January 2011 than in January 2010. According to a comScore study (per McGee (2012), Americans watched more than10 billion video ads in May 2012 (out of 37 billion online videos).For a detailed overview of video advertising, see IAB (2008a). This report also includes a classification of all types of video ads ; see 'types of video' at<URL>iab.net</URL>.

Some of the leading companies in this area are YouTube, Metacafé, VEVO, Hulu, Tremor Media Video Network, Adap.tv, and SPOTXchange.

[Insert Exhibit 9.10 here]

Podcasting has begun to capture the public imagination. Content creators are now providing a growing stream of intriguing and diverse content for downloading on PCs, MP3 players or on mobile devices, allowing consumers to control the time and place of their viewing or listening. And even advertising is growing in podcasts. Almost any video that are clicking on is preceded by 10-30 second commercial that you can skip only some of the time. With the growth of online participation, consumers exert greater influence over the products and brands considered for purchase.

Two-minute YouTube clips were just the beginning as television comes to the Internet to become the network of tomorrow. For example, Diggnation (see <URL>digg.com</URL>) is a weekly tech/Web culture show based on the top social bookmarking news stories site. Diggnation drew about 250,000 viewers a week in 2008 and was among the most popular free video podcasts on Apple's iTunes service-alongside offerings from ABC, the BBC, and CNN. Revision 3 (<URL>revision3.com</URL>) appeals to niche audiences interested in the geek culture; its advertisers can target their messages to smaller, more relevant groups of buyers.

<H3>Consumer-Generated Videos

Many companies are trying to use user-generated videos for their online and even for TV commercials.

YouTube has emerged as the largest advertising platform for video ads. It has many millions of videos and is growing at the rate of about 1 million videos a year. YouTube is already allowing marketers from leading brands to upload videos to YouTube, just like anybody else. YouTube also began adding conventional ads to some of its videos and sharing the revenue with users who provide the content. Google's AdSense ad distribution network also offers ad-supported video clips. For more on similar contests, see 'online video contests' at <URL>onlinevideocontests.com</URL> and <URL>zoopa.com</URL>.

<H4>Example: Crash the Super Bowl.</H4> Doritos and Pepsi joined forces in 2010 to offer a grand prize of up to $2 million to solicit user-generated video ads , see 'video ads' at<URL>crashthesuperbowl.com</URL>). Wining videos were broadcasted at the Super Bowl. It attracted more than 2,000 submissions, and 3 million online viewers evaluated the submissions. This resulted in a huge advertising effect. For more on similar contests, see 'contest information' at<URL>onlinevideocontests.com</URL> and <URL>zoopa.com</URL>.

[End of example]

<H3>Interactive Videos

The term <KT>interactive video</KT> refers to a technique used to mix user interaction with videos. The interaction is controlled by a computer for an entertainment, advertisement, or educational activities. Interactive video are popular because:

<BL>

• Increased bandwidth has as increased downloading speed of videos

• Good search engines to find videos have been developed

• Both the media and advertisers have increased the use of videos

• Incentives such as contents and gifts are offered for the use interactive videos</BL>

The following are representative types of interactive videos.<H4>Video Click-Throughs. VideoClix.com and Clickthrough.com developed tools that allow users of video to click on any person, place, banner ad and so forth.

<H4>Live Interactive Video.</H4> In live interactive videos, you can see certain events in real time, and sometimes interact with those in the video. For example, GE delivered a live Webcast, presenting the company's annual report to investors in a banner ad, in real time. Viewers could interact with the presenters, asking questions or making comments.

<H4>Customizable online interactive videos. Customizable videos allow the users to adjust some variables and then play a video customized to the user's particular preferences. However, the user does not actually interact with the video while it is playing. For examples of this form of video see 'interactive video' at Wikipedia

<H4>Live interactive video. In live interactive videos you can see certain events in real time, and sometimes interact with those in the video.

For example, GE delivered a live Webcast, presenting the company's annual report to investors in a banner ad, in real time. Viewers could interact with the presenters, asking questions or making comments. GE is also inviting their business partners for the viewing.

<H4>Example: Interactive Dressing Room.</H4> Knickerpicker.com created the first of its kind (in the United Kingdom), an interactive online video dressing room (for lingerie). It is loaded with all the leading designers' brands. The animated models appear with your selected brands, and you can control their movement (e.g., turn them around). For details, see 'Interacitve Dressing Room' at <URL>knickerpicker.com</URL>.

[End of types of interactive videos]

<H3>Viral Videos

As discussed earlier, viral marketing involves WOM on the Internet, thus sharing information. One type of media that is being shared is video clips in what is called <KT>viral video</KT>. Video clips are circulated via e-mail, SMSs, blogs, discussion forums, etc. This way people share videos that receive more attention, sometimes drawing millions of viewers in a short time. Popular sites that are used for viral videos include YouTube at<URL>youtube.com</URL> and VEOH at <URL>veoh.com</URL>.

Viral videos are those that their viewers like (or dislike) so much that they spread the word about them quickly across the Internet. Marketers are using viral videos at an increasing rate inserting brands in the videos of pop-ups prior to the start of the presentation, see a periodic list of videos at <URL>adage.com</URL>. Note that if the reactions are positive, the buzz can be useful, but negative reactions can hurt the brand (see the discussion on reputation systems in <OLINK>Chapter 7</OLINK>). Baseline magazine periodically provides a list of the 10 best viral marketing videos. For additional discussion, see '10 best viral marketing video' at Wikipedia.

<H2>Advergaming

According to PC Magazine, an <KT>advergame (advertising in a game)</KT>>, "is a free electronic game to promote a product or brand." Such games are popular in social networks and give advertisers a chance to reach millions of game players. Advergaming normally falls into one of three categories (per Obringer 2012):

<NL>

1. A company places brand-related games in order to attract players and expose them to the brand. An example is shown at Intel's website , see Intel's website at<URL>itmanager3.intel.com</URL>.

2. Games that require players to engage in some activities are useful. The subjects may be commercial, political, or educational. Examples include Pepsi and America's Army , see America Army at<URL>americasarmy.com</URL>, intended to boost recruitment for the U.S. Army. The ads are contained in the game.

3. With some games, advertising appears within the actual game (like banner ads). An example

is Monopoly, see 'Monopoly' at <URL>pogp.com</URL (sponsored by Toyota), in which watching ads is how the free game is paid for. Prizes are won through daily drawings and jackpots. For details see Obringer (2012).</NL>

Gamers may invite their friends to participate, which could assist promotion by word-of-mouth. For further discussion and benefits, see Obringer (2012) at Wikipedia, and <URL>adverblog.com<URL>.

<H2>AUGMENTED REALITY ADVERTISEMENT

<KT>Augmented reality (AR)</KT>is a term for a live direct or indirect view of a physical, real-world environment whose elements are augmented by computer-generated sensory input, such as sound or graphics. The technology functions by enhancing one's current perception of reality. Thus, it is utilized by advertisers and marketers, especially in the fashion industry.

<H4>Examples of Applications in advertisement. Marketers started to use AR to promote products via interactive AR applications. At the 2008 LA Auto Show, Nissan unveiled the concept vehicle Cube and presented visitors with a brochure which, when held against a Webcam, showed alternate versions of the vehicle. In August 2009, BestBuy ran a circular with an augmented reality code that allowed users with a Webcam to interact with the product in 3D. The 2009 December issue of Esquire Magazine is dedicated to AR and its applications. In 2010, Walt Disney used mobile AR to connect a movie experience to outdoor advertising. Burger King used it in a promotion for their $1 burgers. You have had to hold a piece of paper with a Burger King logo on it, the program would recognize the logo through the Webcam and the piece of paper would turn into a burger. You could move it around and even it let you open the bun up to reveal the contents of the burger. Watch-maker, Tissot, did something similar where you print out a piece of paper and wear it like a watch, the program then would recognize it and would place a virtual copy of the watch onto your wrist. You could choose whatever model or color watch and it would change instantly on your wrist as you turned and rotated your wrist.

One area that is using this technology is retailers in clothing, fashion, and jewelry where visualization is crtical. For example, Fashionista Corp. combines AR and motion capture with real-time merchandize recommendations. It allows shoppers to "try on" clothing and share their favorite looks with family and friends in real time.

<H5>Virtual dressing rooms. These are getting popular (e.g., see Amato-McCoy 2010) you can dress an avatar, or you can dress yourself when Webcam is used to enter your photo. Fashionista provides technology for the latter applications.

<H2>Advertising in Chat Rooms and Forums

Vendors frequently sponsor chat rooms. The sponsoring vendor places a chat link on its site, and the chat vendor does the rest , see information of Chat rooms and Forums at <URL>talkcity.com</URL>, including placing the advertising that pays for the session. The advertising in a chat room merges with the activity in the room, and the user is conscious of what is being presented.

Advertisers sometimes use online fantasy sports (e.g., available at Yahoo!) to send ads to specific sports fans (e.g., fans of the National Football League or Major League Baseball). Online fantasy sports attract millions of visitors every month.

As illustrated in <OLINK>Chapter 7</OLINK>, vendors also advertise to members of social networks. Sites such as Facebook offer targeted advertising opportunities, and vendors usually offer discounts to members on advertised products. Ads also link users to other sites that might be of interest to community members.

The main difference between an advertisement that appears on a static Web page and one that comes through a chat room is that the latter allows advertisers to filter and analyze messages and target the chatters repeatedly An advertiser can start with one message and build upon it to a climax, just as an author does with a good story.

Chat rooms also are used as one-to-one connections between a company and its customers. For example, Mattel Corp. sells about one-third of its Barbie dolls to collectors. These collectors use a chat room to make comments or ask questions that are then answered by Mattel's staff.

<H6>Section 9.8 Ÿ Review Questions

<GENQ> 1. Define banner ads and describe their benefits and limitations.

2. Describe banner swapping and banner exchanges.

3. Describe the issues surrounding pop-ups and similar ads.

4. Explain how e-mail is used for advertising.

5. Describe advertising via classified ads.

6. Describe the search engine optimization technique.

7. Describe Google's AdWords and AdSense.

8. Describe video ads and their growing popularity.

9. Define advergaming and describe how it works.

10. Describe augmented reality advertisement.</GENQ>

<H1>9.9 Mobile Marketing and Advertising

There is ample evidence that the global mobile market is growing rapidly. (For comprehensive statistics, including mobile marketing, see 'mobile marketing 'at <URL>mobithinking.com/</URL>. For example, the ratio of mobile handsets, including smartphones, to desktop and laptop computers is approximately 2 to 1 and growing. This represents a huge opportunity for online mobile marketing and advertising. In general, there are higher response rates to mobile marketing campaigns when compared to nonmobile online campaigns. For an overview of the field, see Dushinski (2012) and Hansen (2012).

<H2>Major Concepts

Mobile marketing and advertising is a subset of m-commerce (<OLINK>Chapter 8</OLINK>). Its major elements are described next.

<H3>Defining Mobile Marketing

There are several definitions of mobile marketing. However, none is universally accepted. <KT>Mobile marketing</KT> is frequently defined as the use of the mobile devices and wireless infrastructure as a means of marketing and advertising. The Mobile Marketing Association at<URL>mmaglobal.com</URL> offers the following definition: "A set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network." For a detailed description, see Krum (2010).

Mobile marketing includes sales, market research, customer service, and advertising, all supported by mobile computing. Companies can devise contests where customers describing the quality of a new product, and the sellers can send coupons and promotions. You can make ads interactive since mobile computing provides a direct link between vendors and consumers (e.g., see more information at<URL>where2getit.com</URL>. Companies have reported that they see a better response from mobile marketing campaigns than from traditional marketing campaigns.

<H3>The Process of Mobile Advertisement

Mobile advertising takes many formats that according to <URL>emarketingdictionary.com</URL> include "the advertisers, a mobile ad network, mobile operators, and mobile devices." These parts are used in the advertising process.

<LINK>Exhibit 9.5</LINK> shows how the system worksThe process is described by <URL>emarketingdictionary.com</URL> as: "a company creates and submits a small banner ad to a mobile advertising network and selects the location, time, and category as the ad promotion criteria. The mobile advertising (process) submits these ads to multiple mobile networks and keeps track of the transmission, selection, and response to these ads. The mobile system (administrators) review the capabilities of the customers' mobile devices in their network to determine which devices can receive and respond to the mobile ads."

[Insert Exhibit 9.11 here]

<H4>Mobile Sales.</H4> Many merchants accept orders sent via mobile devices. For details, see 'mobile sales' at<URL>mobilestarterstore.com</URL>.

According to Siwicki (2011), 78 percent of the larger retailers are investing in mobile commerce in 2011 while 59 percent have an m-commerce site (or will have by 2012). For statistics, see 'statistics' at<URL>internetretailer.com</URL>.

<H2>Implementing Mobile Advertising and Marketing

<KT>Mobile advertising (m-advertising)</KT> is advertising done via mobile devices. For other definitions, see information at <URL>emarketingdictionary.com/</URL>. At the time of this writing, most mobile advertising is targeted at smartphones, and according to <URLmobithinking.com/</URL>, there are about 7 billion mobile phones in the world as of 2012 of which about 33 percent are smartphones. For an overview and a video clip, see 'video clip' at <URL>advertising.microsoft.com/</URL>.

The major activities in m-commerce center around the advertisement of brands and specific products, which can be done by several methods, including campaigns. For a comprehensive description, see IAB (2008b). For the use of mobile devices in supermarkets, see the Food Lion closing case in <OLINK>Chapter 8</OLINK>.

Advertisers and media industry increasingly take account of the fast growing mobile market, though it remains at around only 1 percent of global advertising spent in the U.S. Furthermore, as mobile phones outnumber TV sets by over 3 to 1, and PC-based Internet users by over 4 to 1, and the total laptop and desktop PC population by nearly 5 to 1, advertisers in many markets have recently rushed to this media. For example, in Spain 75 percent of mobile phone owners receive ads, in France 62 percent and in Japan 54 percent. More remarkably, as mobile advertising matures, like in the most advanced markets, the user involvement also matures. In Japan today, already 44 percent of mobile phone owners click on ads they receive on their phones. According to the research firm Berg Insight the global mobile advertising market that was estimated to be over $1.3 billion. Furthermore, the global advertising market grows at a compound annual growth rate of 43 percent and will reach over $11 billion in 2014. The major boosters to mobile advertisements are the success of iPhone and iPad (see Clifford 2010). <H3>Mobile Interactive Advertising

Mobile interactive advertising refers to the delivery of interactive marketing via mobile devices, mostly mobile and smartphones. For an overview of interactive marketing, see the information at Wikipedia. The inclusion of "interactive" points to the fact that this is not one-way communication, but that the advertisement may include customer response (e.g., placing an order or asking a question). For a comprehensive review, see IAB (2008b). For practical implementation see 'practical implementation' at<URL>migcan.com</URL>.

An extension of interactive services is the use of Apple's iAds. The iAd platform is built directly into the iPhone's OS interface. Apple is looking to change the nature of advertising by conducting the ad experience within apps rather than within searches. This may improve the quality and success of advertising as well.

<H3>Types of Mobile Ads

Mobile ads may appear in different forms. The most popular one is short messages. Other forms include rich media advertising, advergaiming, and even ads during mobile TV receipts. The methods are similar to the generic Internet ads methods.

<H4>Short Message Ads.</H4> SMS ads are commercial messages sent in the form of short text messages. They are quite popular and currently dominating the market but mobile banner ads are