In-Class #7Internet AdvertisingMulitichannel AdvantageE-tailer’s Mktg. BudgetOnline Retailer Mkt. SpendWhy Increased Online?Budget AllocationStrategyEffective for AcquisitionAd RevenuesTypes of MediaBannersSlide 13Affiliates/AssociatesSlide 15Slide 16Slide 17HED 460In-Class #7Discuss 2 things you read about privacy that were surprising to youWhy do you think Internet retailers are spending less $$ on traditional advertising media than they did 2 years ago?HED 460Internet Advertising1999/2000 saw huge amounts of e-tail advertisements22% consumers were unable to recall any specific Internet advertisements (post-holiday)Pure-play e-tailers budget nearly 2x as much for advertising as multichannelHED 460Mulitichannel AdvantageName recognitionLow cost mechanismsweb address in advertising for stores, catalogs, store receipts, bags, other advertising mediaHED 460E-tailer’s Mktg. Budget40.521.45.5051015202530354045BudgetPure-PlayMultichannelStoreHED 460Online Retailer Mkt. Spend38626434010203040506070Q4 1999 Q3 2000OnlineOfflineHED 460Why Increased Online?Traditional mediums did not workBroad focus vs narrow focus neededDifficult to target specific markets with TV, radio, newspaperOnline is easier to target small discrete groupsHED 460Budget Allocation491833AcquisitionAwarenessRetentionHED 460StrategyRapid growth modeawareness and acquisitionGrowth rates slowcustomer loyalty and repeat businesscurrently less than 1/5 budget on customer retentionHED 460Effective for AcquisitionPersonalized/targeted email45% effectiveness for pure-play13% for multichannelCross-promos in catalog and “deals” with portals, ISP’s, community sites17.9% effectiveness with multichannelOther web site links and direct mail10.3% effectiveness with multichannelHED 460Ad Revenues46%28%9%6%4%0%5%10%15%20%25%30%35%40%45%50%BannersSponsorsClassif.ReferralI nterstitialMediaHED 460Types of MediaBanner adsHED 460BannersAd with clickable link to web siteBrand AwarenessTargets customersInexpensiveAnnoyingLow click through ratesUndifferentiatedHED 460Types of MediaAffiliates/Associates (usually outsourced)Content sites receive financial incentive to sell other companies’ products or display their ads (CPA vs. CPM)Affiliate gets a % of the sale (5-15%)Affiliate receives no payment to display adVolume yields greater revenues/profitsLow risk to advertiserHED 460Affiliates/AssociatesHED 460Affiliates/AssociatesHED 460Affiliates/AssociatesHED 460Types of MediaInterstitials (5-10 seconds)Messages delivered to browser as viewer awaits for page to downloadGrabs attentionTies offers to specific online behaviorDelays access to new pagePage loading delaysIntrusion