CS155b E Commerce Lecture 18 April 17 2001 B2C E Commerce Continued Acknowledgement Helen Chiang Revenue Models for B2C Sell goods and services and take a cut just like B M retailers e g Amazon E Trade Dell Advertising Ads only original Yahoo Ads in combination with other sources Transaction fees Sell digital content through subscription e g WSJ online Economist Intelligence Wire Revenue Models for Online Ads Number of Impressions How many times does the user cause the advertiser s content to be displayed Click Through How many times does the user click on the ad to go to the advertiser s site Pay per sale How many times does the user click through and then buy something Status as of 4th Quarter 2000 3 of all ads radio twice as big 55 of online ads are by dot coms 79 companies place 1 2 of all online ads Most ads run on 1 site for 3 weeks Portals and Search Engines host more ad impressions than any other type of site 44 63 of ad impressions have a branding focus Top Online Advertisers Top 15 Advertisers by Impressions Jan 2001 316 336 344 348 377 386 387 410 488 543 622 646 847 1761 3534 0 500 1000 1500 2000 2500 Impressions in millions 3000 3500 4000 WWW Growing Faster Than Ad Supply Immediate problem Too many pages too few advertisers Current Price 1 per thousands of impressions Price 3 Years Ago 10 to 50 per thousands of impressions Inherent Difficulty with Online Ads Downward Spiral Banner ads easy to ignore Average click through has fallen to less than 1 in 200 Leads to creation of more obnoxious ads e g pop ups Entertaining Getting the right ads requires time effort and money Internet market not large enough to justify it 5 of the world s top 10 advertisers each spent less than 1 million on online ads last year Top 25 National Advertisers Total U S ad spending in 1999 Netw ork TV Netw ork radio National spot radio Inte rne t of Total 5 963 20 28 189 50 25 074 10 0 62 8 039 30 0 31 Rank 1999 Advertiser 1 Genera l Motors Corp 2 Procter Gamble Co 2 611 766 60 621 527 30 113 294 70 10 265 90 10 838 70 3 Philip Morris Cos 2 201 600 90 383 215 50 200 873 10 4 5 6 Pfizer AT T Corp DaimlerChrysler Spot TV 4 040 374 00 887 893 20 503 807 40 873 0 04 2 142 433 70 364 704 20 59 059 30 11 805 10 1 425 90 1 950 871 20 258 716 10 100 987 90 8 249 80 32 705 00 1 804 055 50 286 520 60 664 880 60 2 068 30 23 610 50 2 995 30 1 254 20 13 644 80 9 958 30 0 06 0 70 0 55 1 639 761 50 364 989 10 229 678 40 7 Ford Motor Co 8 Sea rs Roebuck Co 1 505 205 50 186 855 70 9 PepsiCo 1 315 712 50 189 049 90 10 Verizon Communications 11 W alt Disne y Co 12 Time Warner 13 Diage o 14 15 McDonald s Corp IBM Corp 16 Intel Corp 1 119 330 40 17 WorldCom 1 108 381 50 274 400 00 18 Viacom 19 Toyota Motor Corp 20 Johnson Johnson 21 U S Government 998 050 90 239 004 60 37 917 30 22 J C Penney Co 995 868 40 114 657 30 15 517 90 5 526 30 23 SBC Communications 926 103 60 7 472 60 127 474 60 24 Sony Corp 922 678 80 149 800 30 25 L Orea l 899 815 10 209 916 90 10 613 00 4 959 40 16 981 00 13 638 50 0 83 48 573 40 12 343 00 7 859 90 1 444 40 0 10 62 371 00 0 5 454 30 581 3 0 04 135 634 90 0 74 497 40 1 876 20 0 14 1 304 002 20 242 015 30 128 353 70 1 578 80 23 867 90 16 360 50 1 25 1 202 905 90 189 959 60 97 659 40 1 999 20 35 172 00 7 487 40 0 62 1 198 445 20 269 970 40 78 186 80 1 312 749 00 1 690 50 0 34 430 10 80 7 0 01 36 9 0 3 238 90 11 748 40 599 6 32 158 80 0 05 2 85 2 573 00 0 7 391 20 13 464 10 1 20 21 760 20 0 5 030 10 5 581 50 0 50 1 134 802 30 296 766 10 179 444 60 1 128 462 30 105 545 30 10 526 60 77 448 20 1 064 529 80 115 080 10 192 982 50 10 332 20 32 321 90 1 025 231 70 227 478 10 201 210 70 1 004 497 00 466 870 70 0 00 0 4 009 20 9 769 90 0 95 32 1 3 036 90 3 484 80 0 35 4 533 10 0 45 10 489 80 1 652 00 0 17 0 43 552 30 2 851 20 0 31 65 719 20 292 7 12 763 80 9 719 90 1 05 19 719 80 0 3 126 00 402 7 0 04 33 974 10 12 703 90 21 972 30 Inherent Difficulty continued Accountability Advertisers can tell immediately whether their ads work High Expectations Well targeted ads cost up to 100 times as much as generic ads But how precisely can one target Discussion Point Will online advertising survive the dot com crash and the unrealistic expectations Will it stabilize as just one more branding medium Amazon com Full Name Amazon com Inc Employees 9 000 Stock Price 14 67 at close April 12 2001 52 Wk Range 8 10 to 68 44 2000 Sales 2 762 M Year Sales Growth 68 4 Internet s largest retailer Best known for books CDs DVDs and Videos 1 Brand Strength Source U S Bancorp Piper Jaffray July 24 2000 Mind Share Company 1 1 Amazon com 24 1 2 eBay com 16 1 3 Yahoo com 4 9 4 priceline com 2 7 5 buy com 1 9 6 BarnesandNoble com 1 8 7 CDNow com 1 3 8 AOL com 1 1 9 Egghead com 1 0 10 Iwon com 0 9 JCPenney com 0 9 Company Amazon com eBay com BarnesandNoble com BMG com CDNow com ColumbiaHouse com JCPenney com priceline com buy com Yahoo com 1800flowers com Company Online Purchaser Share 2 18 7 15 8 6 0 3 9 3 3 3 1 3 0 2 7 2 6 2 3 2 3 1 Mind Share the percent of Internet users for whom the site first came to mind when asked to think of Web sites that sell products or services over the Internet 2 Purchaser Share the percent of online buyers that bought from the site Main Lines …
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