S9.P1 - TOPIC 8 DIRECT MARKETING
LEARNING OUTCOMES y the end of this topic, you should be able to:
1. Define direct marketing and how it can move forward through advertising;
2. Discuss the features of direct marketing, its advantages and disadvantages;
3. Analyse the format of direct marketing; and
4. Identify the methods in evaluating the effectiveness of direct marketing.
INTRODUCTION Peter Drucker said, "The first task of any business is to decide what business it is in". The question for direct marketers is, „what business are you in, direct mail, direct response, direct advertising? No! As direct marketers you are in the business of developing customers for clients the acquisition, development, and retention of profitable and satisfied customers. Hemming (n.d.) Direct marketing is a marketing system based on individual customer records held in database and this database records become the basis for marketing research and analysis, planning, implementation or programmes and control of all the activities. Today, direct marketing is an integral part of business and advertising agency. The most powerful tool in direct marketing today is the database. Great advances in technology have enable marketers to gather vital customer information electronically and to selectively target their customer communications. This makes it possible for businesses to keep track of customers, their purchases, preferences, what, when, why and how they buy. Armed with this vital information, marketers can operate more efficiently and do a more effective job of developing mutually beneficial customer relationships (Hemming, n.d.).
ACTIVITY 8.1 One of the best ways to predict how someone will behave in the future is to look at what they have done in the past. By tracking a consumerÊs past purchasing behaviour, marketers can design highly targeted advertisements based on the specific preferences and tastes of individual customers. Examine your own buying behaviour for the past one week by answering the following questions: (a) What did you buy? (b) What are their reasons for buying? (c) How often do you buy? (d) Are you buying for others? (e) Where do you like to buy? (f) Where do you get your information? Summarise your buying behaviour and explain what you can conclude from your profile as a customer.
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8.1 DIRECT MARKETING BACKGROUND
There are two main types of marketing that companies can take part in. These are referred to as direct and indirect marketing methods. Indirect marketing or general marketing is any form of marketing that does not promote and sell something directly to consumers, but rather allows companies to build relationships with them through the media or other forms of communication. Direct marketing, on the other hand, involves sending marketing messages to particular people or organisations.
8.1.1 Definition of Direct Marketing The Direct Marketing Association of USA formally defines direct marketing as follows: „... an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location". Similarly, the Australian Direct Marketing Association also defines direct marketing as: „/ an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on database". The Institute of Direct and Digital Marketing, UK defines the term as follows: "The planned recording, analysis and tracking of customer behaviour to develop a relational marketing strategies". Section 11(3) of the Data Protection Act of the UK defines „direct marketing" as: "the communication (by whatever means) of any advertising or marketing material which is directed to particular individuals".
Ogilvy (1989) defines direct marketing as „any advertising activity which creates and exploits a direct relationship between you and your prospect or customer as an individual‰. There is actually no general agreement on the definition, but by contrasting the different definitions, the general opinions point to four basic features of direct marketing: (a) A combination of advertising and selling into a single function: (b) A prominent service concept that will affect repetitive buying; (c) A strong trend toward specificity; and (d) An existence of built-in feedback mechanisms. Today, direct marketing is a marketing system based on individual customer records held in the database and this database records become the basis for marketing research and analysis, planning, implementation or programmes and control of all the activities (Pickton & Broderick, 2005).
8.1.2 Databases in Direct Marketing As direct marketing concerns the understanding of one's individual customer than to build up product brand, there is a natural alignment between direct marketing with relationship marketing. Direct marketing encourages us to think in terms of customer relationships with the company by building new prospects or loyal customers. Therefore, it is important that direct marketing captures individual customer details at the first sale so that a marketer can begin a relationship with the customer. The customer is then treated in a special way over time in order to generate repeat business. The recording of individual data in a database and direct contact to allow a communication are key elements in operationalising a relationship marketing strategy. A database is an essential component of direct marketing. It facilitates the development of a medium to long-term commitment or relationship with both existing and potential customers. A shift from the product or service-focused marketing to customer and market segment-focused marketing has meant that customer databases have started to replace the traditional product-based database.
A database is not only a list of names and addresses but should also be distinguished by the quality and quantity of relevant marketing information on customers. There are primarily two types of information retained on a marketing database: (a) Historical data This is transactional data that indicates a customer's past orders, that is the frequency of purchases, responses to offers and size of the orders. This data also contains personal data such as name, address and gender. Historical data and customer attributes are scored to predict their future buying behaviour. (b) Predictive data This data is processed data which is derived through statistical methodology. Predictive data usually identifies those who are more likely to respond to a certain offer. Based on what was mentioned, it is clear that database marketing relies heavily on computer technology. It involves the collection, selection and analysis of customer records. Direct marketing is a subset of marketing and is a marketing method which creates a direct contact, response and relationship between a supplier and its potential customers or encourages business activities between them through targeting and certain media. There are two important elements in this definition; one is targeting which is facilitated by a customer database, the other is the use of media in communication.
8.1.3 Direct Marketing Issues Direct marketing is a customer-oriented method of marketing which uses customers details commonly held in databases to perform three main activities, namely, to analyse customers data, to formulate a marketing strategy and to implement it to obtain direct responses from customers. The use of databases to analyse customers purchasing behaviour is a fundamental building block of direct marketing. What information does a database currently hold? Many databases have a list of customer contacts but more specific information about their needs and interests are increasing recorded to make marketing more effective. This data might include:
(a) Personal profile of individual consumers age, gender and details of their lifestyle or socioeconomic status.
(b) Ordering behaviour dates, frequency and timing of orders.
(c) Types of order type and quantity of goods or services ordered and their value. (d) Total annual sales the margin on these sales and their payment history. (e) Details of distribution details postcode, type of area. One of the most important aspects of the legal environment pertaining to database marketing is customer privacy. The use of personal information by businesses is an issue of local and national concern. It is generally indicated that most consumers are concerned about, and opposed to, the unexpected or unintended use of personal information. Consumers and businesses sometimes have conflicting agendas. On the one hand, businesses want to maximise opportunities to utilise personal information for commercial reasons, including offering goods and services to consumers. On the other hand, consumers generally want to limit the ways their personal information is utilised and want control over that information. In Malaysia, and many other countries, there is no comprehensive privacy law that addresses the collection or use of personal information. For the most part, businesses have employed self-regulatory mechanisms to deal with privacy and data protection concerns through the use of disclosures or privacy policies by businesses. By disclosing data collection practices to consumers, companies are providing valuable information. However, disclosures can only be effective if useful information is provided and consumers are educated and informed about it. Another issue in direct marketing is the conflict on channel of distribution. The rapid development of commerce on the Internet has made it easier for many manufacturers who traditionally distribute their products through retailers to engage in direct sales. Top suppliers in a variety of industries have begun to sell directly to consumers over the Internet. These suppliers include global companies such as IBM, Nike, Pioneer Electronics, Cisco System and Estee Lauder. While more and more manufacturers are engaging in direct sales, their retailer partners voice the concern that orders should have been placed through them, and not through a manufacturerÊs direct channel. To avoid this conflict, some manufacturers have halted direct sales, while others have tried to convince retailers that their direct channel taps customer segments.
8.2 FEATURES OF DIRECT MARKETING
Several features distinguish direct marketing from general advertising and other types of marketing, as shown in Figure 8.1: Figure 8.1: Some features of direct marketing that are different than general advertising Let us now discuss the features one by one.
(a) Interactivity This is an interpersonal communication between the marketer and the prospect or customer. Marketing messages are addressed directly to the customer and/or customers. Direct marketing relies on being able to address the members of a target market. The two-way communication between the message sender and the receiver includes complaints, guarantees, terms of refund and returned goods, etc. Interactivity is identified as an important element of direct marketing now because of the rise of consumerism and the increasing number of self-approaching consumers who initiate contact with the direct marketing organisation.
(b) Measurability Direct marketers can measure the response to any offer. Measurability allows direct marketers to test a variety of lists, offers, media or any aspect of a campaign in order to allocate marketing resources to the most effective combination of elements. Direct marketing emphasises tractable, measurable responses from customers regardless of medium.
(c) Transaction at Any Location In direct marketing, the transaction may take place at any location and is not limited to retail stores or fixed places of business. The transaction may take place in the consumer's home or office via mail, over the phone, or through interactive television.
(d) Addressability This comes in a variety of forms including e-mail addresses, mobile phone numbers, web browser cookies, fax numbers and postal addresses. (e) Call for Action Direct marketing seeks to drive a specific "call to action". For example, an advertisement may ask the prospect to respond to a mail order or to call a free phone number or to click on a link to a website. (f) Selectivity of Target Audience Direct marketing allows a marketer to screen and target consumers who are most likely to be the potential customers. The advantage will result in improved cost effectiveness. (g) Concentration on Focused Group Direct marketing focuses on certain groups of consumers according to their preferences. This way, the marketer can formulate highly concentrated marketing strategies to achieve objectives and get a higher response rate than other marketing methods. (h) Comprehension of Communication Material As direct marketing deals with targeted and focused groups, comprehensive information and knowledge can be conveyed to the identifiable customers. Direct marketing can also overcome some cultural and linguistic barriers in marketing.
(i) Sales Promotion Effective and measurable sales promotion can be facilitated in direct marketing activities. (j) Continuity of Customer Contact A customer database is an important part of direct marketing which enables the direct marketing firm to have a long-term relationship and contact with its customers and enables the cultivation of brand loyalty. (k) Public Relations Based Upon the Relationship with the Individual Public opinion on a direct marketing company primarily depends on whether the firm can secure a favourable image with the customer. This is to say that customers will judge the company based on their experiences with the firm. This, along with continuity of customer contact, generates a sense of brand importance and accountability as well as consumer's trust in the brand.
8.3 ADVANTAGE AND DISADVANTAGE OF DIRECT MARKETING
The advantages and disadvantages of direct marketing should be noted before the marketing campaign begins, especially since those potential disadvantages may be eliminated if they are identified in advance. Listed next are some of the main advantages of direct marketing.
8.3.1 Advantages of Direct Marketing Direct marketing is facilitated by technology. It also broadens the marketing function with distribution channels offering delivery from the supplier to the customer directly. This sometimes results in a high efficiency, focused management effort, and higher margins which previously were given to distributors or retailers. Considering the role of direct marketing in marketing strategy, the following advantages may be identified: (a) Concentrated group: Consumers are targeted in concentrated groups that are effective for niche marketing; (b) Direct marketing is particularly cost effective when customers repeat their purchase; (c) As the direct marketing response is measurable, it is easier to control and evaluate the impact and effectiveness of marketing activity in the market;
(d) Direct marketing always offers a way for consumers to respond to their message and encourages them to respond immediately. Direct marketing also treats each consumer as an individual; therefore, it usually allows a higher flexibility in comparison with other marketing techniques. Tele-marketing, in particular, is very flexible for constructing message content and can receive immediate responses; (e) It is possible to simulate „test marketing‰ among a pre-defined consumer group. Before the marketing campaign actually starts, its effect on the market can be estimated based on the results of the test run. Marketers start to see direct marketing as an alternative route for a company to go international at an early stage. In this way, the company does not need overseas salespersons or other overseas market entry arrangements like contracting; (f) Companies will have the opportunity to build up a database and retain customers and establish long-term customer relationships; (g) Messages can be tailored to specific target groups; and (h) Direct marketing can carry out multi-functional marketing purposes, such as promotional messages, customer care and information.
8.3.2 Disadvantages of Direct Marketing
The disadvantages of direct marketing are described as follows: The biggest disadvantage of direct marketing is the „image problem‰. This problem results from those direct marketers who lack the discipline of targeting appropriate market segments that generates negative feedback from consumers. For example, direct mail is associated with „junk mail‰ although fewer complaints about direct mail have been received. In particular, people resent being telephoned too often or late or if a pushy door-to-door salesperson knocks on their door after they have had a long day at the office. Direct marketers ought to be very conscious about the customerÊs privacy especially at the initial contact (for example during the first mailing or first telephone call). Most consumers want to know from where their name and address have been obtained. Although research has asserted that some people prefer to receive direct mail, there are number of people who consider it to be intrusion or invasion of their privacy.
The initial customer acquisition costs are high while subsequent transactions are much lower. Direct marketing has a high cost per thousand people contacted compared with other advertising. Moreover, sometimes the response rate can be as low as two per cent when the direct marketer fails to target effectively, resulting in a financial loss. In addition, to develop a comprehensive database may require a large investment cost. That is to say, if direct marketing is used in short-term promotions it will cost a substantial amount to the organisation. In contrast, if it is run in long-term promotions, it will be a more cost effective option for management. When direct marketing involves product distribution from the supplier to the customer, the channel usually is not under the direct influence of the supplier. Products are either sent by general post service or a contracted carrier. Therefore, in some cases, unpredictable problems might occur.
ACTIVITY 8.2
Direct marketing suffers from poor image factors. Direct mail is often treated as junk mail while direct response advertisements on television are often low-budget ads for low-priced products. This contributes to the image that something less than the best products are marketed although home shopping channels do promote some expensive products. Telemarketing and spam are irritating to many consumers thus lowering the image of the direct marketing industry. Discuss.
8.4 FORMS OF DIRECT MARKETING Direct marketing is a collective term involving all kinds of direct marketing activities, techniques and media. It is essential for marketers to choose the most suitable form of medium or media in order to reach their customers and market their products effectively. There are many terms used to refer to direct marketing. Some of the most widely used ones are as follows; one-to-one marketing, targeting marketing, profiling, loyalty marketing, interactive marketing, personalisation, customisation, database marketing and segmentation. Direct marketers have a range of media choice to communicate their marketing messages. Television shopping channels, for example, broadcast and demonstrate various merchandises for those who wish to shop in their own home. Also, in many countries, teletext performs a satisfactory function in delivering messages and marketing activities. With improved technology and the increasing role of social change, the opportunities for media development are greater. Listed as follows are the various forms of direct marketing:
(a) Direct Selling Direct selling is one of several available channels of distribution where the manufacturer or supplier deals directly with the consumer. The World Federation of Direct Selling Associations (WFDSA) defines direct selling as: "On non-fixed retailing places and through the use of face-to-face way, the product and service are sold directly to the consumers". Other definition states that direct selling is a distribution method for consumptive product or service through personal contact and at different commercial locations, mainly at home. Some of the common direct selling methods include the following (refer to Table 8.1):
Table 8.1: Some of the Direct Selling Methods
Direct Selling
Method
Description
Person-to-person
Sales person makes individual appointments with customers sales to do presentations or to demonstrate new products.
Door-to-door sales
Sales person approaches homes and businesses by appointment or unannounced to leave catalogues and offer products or to do product demonstrations.
In-home
Sales person arranges parties and at-home gatherings to presentations present or to demonstrate products.
Online shopping
The use of websites and e-mail lists to build customer networks and to offer online ordering facilities.
Venue sales
The setting up of booths or kiosks at events to generate new leads and to promote and sell products. Network
The recruiting of other sellers into a network to "duplicate" marketing the product sales role, earning a percentage of their sales revenue and expanding the product reach.
(b) Direct Mail
Direct mail is considered the most common form of direct marketing communication. By using personally addressed mail, direct mail is the process of sending out sales letters or other materials that advertises a business and its products and services to potential customers or clients. There are several different types of direct mail such as catalogues, postcards, envelope mailers, fliers and leaflets.
(c) Direct Response Advertising
There are three criteria in defining a direct response advertisement: (i) It should make a definite offer; (ii) It has to provide enough information necessary to make a decision; and (iii) It has to provide specific directions for response, such as a toll-free number or a response coupon. These direct response advertisements can be delivered through any kind of media, such as newspapers, television, radio, inserts, fax, magazine, fliers and catalogues. (d) Mail-Order Catalogue A mail-order catalogue retailer is a retailer offering merchandise and/or services through catalogues posted directly to customers. Currently, there are two types of catalogues. (i) Channel of Distribution Involves selling where the consumer can purchase merchandises through mail-order. By producing catalogues or lists of goods and services, products are marketed directly to named consumers or are provided for customers. This form of direct marketing is used as the „channel of distribution‰. (ii) Promotional Catalogue This catalogue is distributed to consumers but do not necessarily involve purchase. If consumers are interested in buying the products, they will have to go back to a retail outlet. A wide range of products are sold through newspapers, magazines, inserts, and most significantly, catalogues. It focuses on selling a product through offers or sales promotions instead of sending messages or information. It urges consumers to purchase products or services. The influence of modern technology means that mail is no longer the only medium involved in mail-order catalogue sales. Very often, customers place their orders by telephone or even fax.
(e) Door-to-Door
Door-to-door direct marketing is primarily conducted through a salesperson recruited by a particular organisation which either sells some technical merchandise requiring detailed explanation or some fast moving consumer good requiring „word-of-mouth‰ to promote the merchandise. The former usually is a more knowledgeable salesperson on a certain technology, on machine operation, or insurance; the latter usually is only used with people who are loyal to or confident with the product and are commissioned to recommend the products to friends, relatives or neighbours. Companies selling products through house parties are also part of the door-to-door selling business.
(f) Telemarketing
Telemarketing involves contacting potential customers over the phone to sell products or services. It can generate new customer prospects in large volumes and is also a useful tool for following up on direct marketing campaigns. Telemarketing is gradually becoming one of the common forms of direct marketing. With technological developments and improvements in living standards, most households own a telephone which provides an immediate response towards a message delivery or sales promotion or even immediate purchase of the product. It has also become a medium for the consumer to place an order instead of responding by mail. The definition of telemarketing has been broadened to include Internet communication, due to the growing penetration of all kinds of telecommunication methods. It also includes automated calls and business-to business calls. There are four factors which influence effective telephone marketing: (i) Desirable product or service; (ii) Persuasive script; (iii) Skills to manage interaction, customer, and objectives; and (iv) Positively perceived telemarketer voice.
(g) Text Messaging and E-mails Text messaging allows businesses to reach individual customers and send messages to large groups of people at a low cost. Marketers may use the short message service (SMS) to send customers messages as follows: (i) Sales alerts on specials and product offers. (ii) Links to website updates. (iii) Appointment reminders or delivery or pick-up arrangement reminders. (iv) Personalised messaging such as birthday greetings, holiday greetings or remembrances.
(h) Vendor Machine
Vendor machine selling points are widely available. They provide convenience for both companies (which do not have to hire staff) and consumers (who can purchase the product without going to a shop). Usually, the products sold in a vendor machine are basic consumer goods for which the consumer has an immediate need, such as, drinks, chocolate bars, sanitary towels, tissues, etc.
(i) Social Media Marketing
Social media can be used effectively as a marketing tool for business. It gives the opportunity to interact directly with customers and regularly share relevant product or service information. Social media platforms also make it very easy for customers to share content with their entire network, increasing reach exponentially. Social media is able to develop a profile for a business that allows marketers to promote products and services while also encouraging customers to provide feedback by leaving comments.
Mobile Advertising Using SMS Mobile advertising is one of the newest trends, with which advertisers reach potential customers. Mobile advertising refers to the use of SMS or short message service as an advertising media. In Malaysia, SMS is a rapidly growing advertising media, providing brands, agencies and marketers the opportunity to connect with consumers beyond traditional and digital media directly on their mobile phones. Mobile advertising through the use of SMS can be a stand-alone medium for advertising, but mostly it is used together with other media, traditional media such as television, radio, newspapers or direct mail. SMS is usually sent by mobile phones, but can also be computer-generated. Recipients can generally store a limited number of messages; unlike e-mail, messages usually do not have a subject line that can be read without opening the message. SMS allows users of mobile phones to send and receive a text message of up to 160 characters and across virtually any operator network, which is a disadvantage of SMS for advertisers. According to MMA there are two primary types of advertising inventory: (a) Application-to-Person, A2P: This type of inventory includes SMS and MMS messages sent by a business or other organisation or entity via an automatic application to a consumerÊs mobile phone. In many cases, the consumer may interact with the application through messaging and this kind of advertising is the focus of this research. (b) Person-to-Person, P2P: The original purpose of messaging was to enable users to communicate amongst themselves. Almost 90 per cent of current SMS volume is still person-to-person message, but advertisers see big potential in SMS advertising. SMS advertising is strictly a form of telemarketing, but it shares features with e-mail marketing and mcommerce. Mcommerce (mobile electronic commerce) is defined as „the use of mobile, wireless (handheld) Internet-enabled devices to communicate and conduct transactions through public and private networks. One of biggest problems of mobile marketing is privacy, which Chaffey (2003) defines as „the right of an individual to control the information held about them by third parties‰. Target customers need to permit receiving SMS ads. It is believed that three variables could influence consumersÊ acceptance of mobile advertising and they are: user permission, wireless service provider (WSP) control and brand trust. User permission was believed to be the most important variable, as consumers were seen to be fearful of SMS mobile advertising and high levels of spam, as with e-mail marketing. WSP control is found to increase the probability of user acceptance to mobile advertising. Brand trust means that consumers may be more likely to permit advertising from „known names‰ that they trust and align their values and beliefs with. According to research from the Nielsen Company, usage of mobile Internet climbs every year and becomes a very important part of companyÊs advertising tools. Also, according to them, the biggest responses come from young people, which is the target group of mobile advertising.
Source: Adapted from Gregurec and Brodar (n.d.)
Direct Mail and Telemarketing
Types of Direct Mail
The most common types of direct mail include:
(a) Catalogues: bound, multi-page promotions of products.
(b) Self-mailers: created from a single-printed sheet that has been folded.
(c) Envelope mailers: with inserts inside the envelope. (d) Postcards: with your promotional message on one side and the customer's address on the other.
(e) Fliers: small handbill or handout.
(f) Leaflets: printed sheet of paper.
(g) Snap mailers: folds and seals with pressure. (h) Dimensional mailers: for example, a small box. (i) Intelligent documents: printed with personalised information from a database.
Types of Telemarketing
Types of telemarketing include: (a) Cold-calling: calling someone for the first time and without their permission to generate a new lead. (b) Warm-calling: a cold call that uses „warm‰ communication techniques designed to create a rapport, or a call made to follow-up on an initially positive response. (c) Follow-ups: calls designed to turn a lead into a prospect, renew contact with a lapsed customer, thank a customer for their support or check customer satisfaction. (d) Fundraising calls: contact made for the sole purpose of seeking charitable donations. (e) Market research: calls to individuals made according to customer or demographic segments to gather information for research surveys. (f) Database clean up: calls made to update customer records or establish a customerÊs level of ongoing interest in your products or services. Source: Adapted from Business and Industry Portal (n.d.)
ACTIVITY 8.3 Explain the following forms of direct mail and identify their strengths and weaknesses.
Direct mail letters
Postcards
Self mailers
Catalogues
Brochures
Direct mail coupon mailers
Personalised direct mail
8.5 CREATIVE APPROACH TO DIRECT MARKETING
Marketing strategies are very important to any marketing campaign because companies want to market effectively and efficiently. Marketers must think about the target demographic for the products they are advertising, and develop marketing techniques which will reach this demographic. Imagine every day we get hit with hundreds of marketing messages and for the most part we discard or ignore these messages. So how can your messages stand out from the rest? Direct marketing creativity has traditionally been dominated by an approach called USP or Unique Selling Proposition which focuses on selling by leading the prospect through a series of logical arguments (Pickton & Broderick, 2005). This contrasts with advertisersÊ need to create atmosphere and produce entertainment as part of their mission to create emotional liking for the product.
Standing Out From the Crowd
When it comes to looking for the best direct marketing techniques, there are a few key components that will improve your chances for success. Personalised Messages If the information is not relevant to the recipient, your message is sure to be overlooked. This is why the first component is to make sure the message is tailored to the individual. Using customer insights and variable data, you can create personalised marketing messages to fit your prospectÊs interests and needs. Timing Is Everything A large component of successful direct marketing is the timing. You want to reach out to your buyers when they are ready and in need of what you offer, not when it is convenient for you. How do you know when they are ready? Unfortunately this is not something that can be universal, but instead depends on your product, your clients and the data available. However, as you plan your direct marketing efforts these are the questions you should be asking and finding answers to.
Once Is Not Enough, Use Multi Touch Points Sending out one communication to your audience is not enough. People are getting hit with hundreds of messages per day and may ignore your offer the first time. Others may receive your message and have the intent to act, but then life happens and they never get around to it. Because of this, it is important that you have multiple touch points to improve your odds of getting through and having your prospects act. Utilise Multiple Communication Channels As you create your direct marketing campaign with multiple touch points, one thing to keep in mind is that people have different preferences on how they want to be reached. Some prospects may check their e-mail regularly, however you may have a „junk e-mail‰ address or the prospect may receive hundreds of e-mails per day and would prefer a printed piece. Other prospects may still prefer a phone call. The point is that you have better odds reaching the prospects when you utilise different types of communication channels. Technology Bringing It All Together While you create your timely integrated multichannel direct marketing campaign, technology can help you implement this strategy and manage the process. You are able to send out personalised direct marketing pieces and track the results. From here you can then send out additional direct marketing pieces and change the messaging based on their activity or non-activity. Source: Adapted from Best Direct Marketing Techniques, Winbrook (n.d.)
SELF-CHECK
8.1 Explain how each the following elements relate to effective direct marketing: (a) Identify your target audience. (b) Implement a compelling message. (c) Get your audienceÊs attention. (d) State or clarify your market position. (e) Educate and inform your audience. (f) Prove your claims with testimonials. (g) Provide your sales force with knowledge and with effective selling tools. (h) Gain the confidence of your prospects. (i) Convert prospects to clients.
8.6 DIRECT MARKETING MEASUREMENT
It is essential to measure the results of direct marketing activities. This is to make sure advertisers are getting the most out of their budget. Generally speaking, direct marketing measurement is about two things: finding out how well the current campaign is performing and gaining insights to apply to future campaigns. Next are some of the methods in the measurement („What is Effective Direct Marketing‰, n.d.): (a) Direct Order A direct order campaign is designed with the sole intent of generating a purchase. Its success is measured through the number of purchases it generates. (b) Lead or Traffic Generation A lead or traffic generation campaign is designed to generate product interest. Its success is measured by the number of qualified leads captured.
(c) Lead Follow-Up A lead follow-up campaign pursues qualified leads in an effort to nurture them toward a sale. Its success is measured by the number of leads who become customers. (d) Loyalty A loyalty campaign is designed to strengthen client bonds. Its success is measured by the number of clients retained, and through referrals from existing clients.
ACTIVITY 8.4
Consider the extended use of e-mail nowadays, for all sorts of communications. Do you think it is easy to measure direct mail responses when the ads are sent online? There are three possible ways listed next. Explain to what extent they are useful in gauging the success of your direct mail campaign. (a) The bounce rate of an e-mail which measures the percentage of the e-mail that is undeliverable. (b) The open rate, the percentage of e-mail that arrives at the
destination e-mail and is opened. (c) Along with HTML e-mails, a click-thru option within the e-mail to be used to allow direct mail recipients direct access to your website. Direct Marketing Analytics Now, with the introduction of digital tools and channels, direct marketing analytics has become easier, more accurate and more affordable than ever to measure the effectiveness of direct marketing campaigns. E-mail Marketing Analytics The best way to track the results of an e-mail marketing campaign is to use an e-mail marketing software solution like pbSmart™Connections, which comes with built-in analytic tools. Every time you send an e-mail marketing message to your contacts you can log in and see the campaign results in real time, and find out exactly who has opened your message and who has clicked on the various links. This helps you spot which messages and content are generating interest and driving results.
Direct Mail Marketing Analytics In the past, direct mail measurement was limited to a few options such as dedicated phone numbers or special discount codes. Many businesses are now using QR codes and dedicated URLs to make it easier to track campaign responses. With a QR code generator like pbSmart™Codes, you can add a QR code to any direct mail piece and track how many customers scanned your code in real time. Direct mail solutions like pbSmartMarketer™ will add a dedicated website URL to your direct mail pieces, so you can see exactly how many customers visited the website in your direct mail call to action. Bill Advertising Analytics With bill advertising, there are a few additional options for direct marketing measurement. For example, mail solutions like pbSmartPostage™ and pbWebConnect™ allow you to print QR codes and marketing messages directly onto your envelopes. This allows you to instantly track responses as your campaign goes live. Source: Adapted from Pitneybowers (n.d.) Direct marketing is a marketing system based on individual customer records held in a database. These database records become the basis for marketing research and analysis, planning, implementation or programming and control of all the activities. Direct marketing encourages us to think in terms of customer relationships with the company by building new prospects or loyal customers. Direct marketing is a collective term involving all kinds of direct marketing activities, techniques and media. It is essential for marketers to choose the most suitable form of medium or media in order to reach their customers and market their products effectively. Several features distinguish direct marketing from general advertising and other types of marketing such as interactivity, measurability and addressability. It broadens the marketing function with distribution channels offering delivery from the supplier to the customer directly. This sometimes results in a high efficiency, focused management effort and higher margins which previously were given to distributors or retailers.
One of the biggest disadvantages of direct marketing is the "image problem" which results from those direct marketers who lack the discipline of targeting appropriate market segments that generates negative feedback from consumers. Direct marketing creativity has traditionally been dominated by an approach called USP which focuses on selling by leading the prospect through a series of logical arguments. This contrasts with advertisers' need to create atmosphere and produce entertainment as part of their mission to create emotional liking for the product. As with all forms of marketing, it is essential to measure the results of direct marketing activities to make sure advertisers are getting the most out of their budget. Generally speaking, direct marketing measurement is about finding out how well the current campaign is performing and gaining insights to apply to future campaigns.
Database
Direct response advertising
Direct mail
Direct selling
Direct marketing
Mail-order catalogue
Direct order
Telemarketing
Best Direct Marketing Techniques,
Winbrook. (n.d.).
Retrieved from http://www.winbrook.com/ Business and Industry Portal, Queensland Government. (n.d.). Retrieved from www.business.qld.gov.au Chaffey, D. (2003). E-business and e-commerce management. London: Prentice Hall. Fresh Color Press. (n.d). What is effective direct marketing . Retrieved from www.freshcolorpress.com
REF:
Gregurec, I., & Brodar. K., (n.d). Effectiveness of the direct marketing as the promotional element of an enterprise. Retrieved from www.http://oliver.efri.hr Hemming, B. (n.d). Direct marketing in the 21st century. Marketing Edge. Retrieved from http://www.marketingedge.org/ Ogilvy, D. (1989). Confessions of an advertising man . Charlotte Hall, MD: Recorded Books. Pickton, D., & Brodericks, A. (2005). Integrated marketing communication . Harlow, England: Prentice Hall. Pitneybowers. (n.d). Small business marketing and customer communications tools. Retrieved from http://www.pitneybowes.com/us/small-business.html
Sekitar Institusi Pendidikan semasa.
Thursday, 23 June 2016
S8.P1 TOPIC 7 INTERNET ADVERTISING
TOPIC 7 INTERNET ADVERTISING
LEARNING OUTCOMES...
By the end of this topic, you should be able to:
1. Explain the factors behind the popularity of Internet advertising;
2. Trace the development of online advertising;
3. Analyse the advantages and disadvantages of online advertising;
4. Identify the forms of Internet advertising; and
5. Discuss the effectiveness of online advertising.?
INTRODUCTION Nine out of ten businesses fail; so I came up with a foolproof plan create ten businesses". Robert Kiyosaki Internet advertising, also known as online advertising, is the delivery of advertising messages and marketing communications through the Web. It is a marketing strategy that involves the use of the Internet as a medium to deliver marketing messages to the right customers in order to obtain website traffic. Internet advertising is becoming more popular and has presented sustainable revenue growth since its inception in the mid-1990s. This is due to the growing number of online users, easier Internet connectivity, accurate statistics and the fast and easy management of advertising campaigns in real time. Due to its wide success, Internet advertising currently constitutes a significant marketing channel for a large number of firms, and it is thus gradually gaining attention in the context of marketing communications strategy planning and implementation. Research shows that advertising online works well with other forms of advertising to help give a brand name or product a significant uplift in exposure.
ACTIVITY 7.1 Find out the definition of the following concepts and compare the term with each other: (a) Online advertising; (b) Online marketing; (c) Internet advertising; (d) Digital advertising; (e) Mobile advertising; and (f) Interactive advertising.
7.1 DEVELOPMENT OF ONLINE ADVERTISING The rapid growth of the Internet, and the incredible flow of information that the Internet has made possible, have transformed the business of advertising. It is rare today to surf the Web without seeing online advertisements, often in the form of visual display advertisements on web sites and textual advertisements on search sites. Online advertising has certainly taken business away from traditional modes of advertising. There appears to be no consensus on precisely when advertising on the Internet began. Tim O'Reilly, founder of the web portal Global Network Navigator (GNN), claims that the first advertising appeared in 1993 on GNN. Others cite a banner advertisement sold to AT&T displayed on the HotWired site in 1994.
Many early attempts at online advertising met with limited success. This was due to the general problem that many advertisers still looked at advertising from the perspective of the traditional media such as newspaper and television. During this time, online ads were sold exclusively on a cost-per-impression ("CPM") pricing model used by offline media. The advertiser was charged proportionally to the number of times the ad was displayed on a web page. But reporting was very basic. According to Adjuggler (n.d.), advertisers generally had to depend on the website's visitor statistics shown on the Web to get an idea of how many people actually visit the advertisement. This way, advertising was sold almost in the way that the print advertisement was, meaning that it was based solely on the size of the advertisement. Pricing was based on the expected number of individual visitors of website who would view the advertisements. Then came the tracking technology. At first, most online advertising was very simple both in terms of the advertising and how it was sold. It was common for advertisers to pay to have a small banner advertisement placed on a website for a given period of time. Some of the earliest advertisement serving software appeared in the mid-90s. This paved the way for the more advanced serving and tracking technologies such as follows: (a) Multiple banner advertisements to be rotated in the same space on a web page to keep track of how many impressions or views a particular advertisement has obtained. (b) The start and end dates of the campaign to be specified and the limits on the number of impressions to be shown. (c) Track clickthroughs, so advertisers could find out how many people saw their advertisements and how many had clicked on it to get to their site. These innovations made it possible for advertisers to sell online advertising in new ways. For example, an advertiser could specify that they only wanted to buy 500,000 impressions over the course of three months. These innovations made it possible for advertisers to sell online advertising in new ways. With this new development, publishers are now able to sell advertising space to multiple advertisers and not giving up all of their space to just one advertiser at a time. The latest development in the Internet technology involves the social web and mobile technology. These two innovations have changed the way people use the Internet. In the social web, people have found a new way to communicate (Adjuggler, n.d.).
Since its creation in 2004, Facebook has grown into a worldwide network of over one billion subscribers with around 665 million active users each day on average. Mobile technology, on the other hand, has made possible a much greater reach of the Internet, increasing the number of Internet users everywhere.
ACTIVITY 7.2 ReportLinker (at www.reportlinker.com) reported that the annual revenue in the global online advertising industry is forecasted to reach an estimated USD$139.8 billion in 2018 with a compound annual growth rate (CAGR) of 7.3 per cent during 20132018. The global online advertising industry witnessed a CAGR of 12.4 per cent during 2007 2012 as revenue reached USD$91.6 billion in 2012. The top three and top five players of the industry accounted for 64 per cent and 69 per cent of global revenue, respectively, in 2012. There is a medium degree of competition in the industry due to its moderate to high threat of substitutes and moderate buyers power. Based on the earlier statement, find out from the Internet authoritative sources about the following: (a) Profile of top players in the online advertising industry. (b) The general trends in online advertising in Asia, Europe and the US. (c) How is the trend in online advertising compared to conventional media advertising?
7.2 INTERNET AS ADVERTISING MEDIUM The Internet and its most broadly known application, the World Wide Web is gaining tremendous importance in our society. The Web represents a new medium for doing business that transcends national borders and attracts a significant share of social and economic transactions. A large part of these transactions involves advertising.
7.2.1 Popularity of Internet Advertising Internet advertising is becoming more popular and has presented sustainable revenue growth since its inception in the mid-1990s. The obvious advantages of online advertising media low costs, multiple tracking options, better segmentation as well as the growing number of online users, easier Internet connectivity, accurate statistics and the fast and easy management of advertising campaigns in real time ? are forcing marketing managers to re-allocate big portions of their advertisement budgets from traditional offline marketing media to online ad campaigns. (a) Easier Connectivity The current Internet technology no longer relies solely on cables to receive and send data. It has become easier to install any software with generally affordable cost, and better range of coverage. (b) Growing Number of Users The Internet is now serving millions of users and a multitude of purposes in all parts of the world. It has now consolidated itself as a very powerful platform that has changed the way we do business, and the way we communicate. It has given a globalised dimension to the world and has become the universal source of information for millions of people, at home, at school and at work. (c) Accurate Statistics This new technology is capable of giving accurate statistical reports and the possibility to measure the precise return on investment. Reports like this include number of visits, number of impressions and the most effective keywords. (d) Real Time Advertising This technology allows advertisers to change an advertising campaign in real time. In this way, advertisers can change the daily budget at any time, limit the advertisement in specific days, choose specific sites to show the advertisement or just add new keywords. All these changes take effect in real time where the time gaps between the events occurring, our ability to see that event and the feedback that comes from our reaction to that event has been eliminated.
7.3 The real-time marketing concept may refer to different notions in digital advertising environment. Explain the following statements and discuss the similarities and differences of each: (a) Real-time marketing can be tied to automation marketing concept by which micro or individual campaigns are automatically triggered by events and customersÊ actions. In this case, we speak of real-time marketing because the marketing message is sometimes created and sent in real time. In this situation, a message can be sent in real time but the campaign and templates have been implemented beforehand. (b) The real-time marketing term is used for describing marketing actions and executions that are realised in real time. Thus, ads are often targeted, custom taylored and bought in milliseconds in digital advertising ecosystem. Reporting is also done and accessible in real time for most digital campaigns. (c) The real-time marketing concept has been used for a different meaning. It refers to marketing actions that are thought of and deployed almost in real time by brands to react to different events and to capitalise on social media buzzing. In this case, real-time marketing campaigns are often thought of and implemented within a brand newsroom. 7.2.2 Internet Advertising versus Traditional Media Advertising Some of the most notable benefits of online advertising over traditional advertising are: (a) Cost Implications The use of Internet advertising is suitable for those who cannot bear the high cost of conventional outlets such as outdoor banner advertising, trade shows or magazine advertisements. This medium is much better in terms of cost. Online media covers a huge audience resulting in a much better return on investment.
(b) Easier Targeting Means It is possible for the Internet to taper down the target audience so that only the segment that views the advertisements consists of potentially strong buyers. The web browsing history of users can be made a reference to focus on the preferences and to avoid useless repetitions. Also, there is a lot of geographical targeting through the Internet to make the advertisements relevant to users. (c) Measurablility Measurability is one of the most important factors in deciding the impact of online advertising. The Internet is capable of collecting accurate data on hits, pages visited, number of times the advertisement was viewed by the same user, how the user reached the advertisement or the website and whether the activity resulted in a sale. (d) Versatility Online advertising can be highly interactive. This is unlike offline media which is less versatile. Online advertising may be able to incorporate videos and games to audio messages. (e) Speed Once an advertising copy is ready, the messages can be published and distributed rapidly from the advertiser and publisher to the consumers. Deployment is immediate as modifications and replacements in the advertisements are faster on the Internet. 7.2.3 Social Media Advertising Social media such as Facebook news feeds and Twitter timelines is now being used as a form of online advertising. Most people are simply using these social networks to be engaged in personal conversation or to share their personal materials such as pictures of babies and pets, family holidays and vacation as well as occasional work-related gripe or political posts. However, social media advertising has now become a staple of the media mix as marketers look to leverage their campaigns to drive valuable word of mouth and influence. Facebook does have its benefits and advantages because it uses an advertising system that is very simple to implement. It also offers a wide range of coverage in the Facebook website. However, only Facebook users that are within the specific demographic will be able to see the advertising. This helps to narrow down who sees advertising so advertisers are not wasting their money on people who are not going to be interested in what their website has to offer.
Apart from Facebook and Twitter, new social media networks keeps emerging. Many died out before they secured mass-appeal and adoption. A few maintain relevance and start to grow. Examples of those that have found staying power are Pinterest, SnapChat, Instagram, Reddit, Foursquare and Tumblr which already contained advertising campaigns. On the other hand, major companies are already expressing doubts about the efficacy of social media marketing campaigns. Experts are also questioning the issues on return on investment. Agencies and media planners, therefore, need to be careful when using social media networks by evaluating the results.
ACTIVITY 7.4 Discuss the points given next on the differences and similarities of the Internet and certain traditional media in relation to advertising.
(a) Nielsen summarises the differences by introducing the lean- forward and lean-back mode. On the Web, the consumers use their lean forward mode, since they are active, engaged and goal- directed. When watching television on the other hand, they are in the lean back mode since they are more passive, relaxed and want to be served with information or entertainment.
(b) When using television, the advertisers get the possibility to interrupt the
consumer in his or her activity. Online advertising has to compete with other elements on the website for the user'sumers are task-oriented and where the ads usually are irrelevant for the consumersÊ information search or processing goal.
(c) Television consumers can, and will probably, avoid looking directly at the advertising, but peripheral attention might still be captured. Online ads are typically located in the periphery in relation to the editorial content. Since online ads seldom are targets of information search on the Internet, consumers may use active navigation behaviour to try to avoid them.
(d) Unlike television ads that are only broadcast for a limited amount of time, online advertising can exist within the consumersÊ visual field for an unlimited amount of time.
(e) Online ads can be targeted in a completely new way. Television ads are shown in connection to programmes that target the same audience as the product or brand in the ad. When advertising online, the ads can be closely connected to every individual consumer based on their- and/or other consumers previous surfing behaviour. This gives online advertising large possibilities to target the very specific audience that is most likely to be influenced by it.
ACTIVITY 7.5 Explain the following social media networks and discuss how online
advertising may be relevant on these platforms:
Facebook News Feed
Twitter Timeline
Pinterest
SnapChat
Instagram
Reddit
Foursquare
Tumblr
7.3 ADVANTAGES AND DISADVANTAGES OF INTERNET ADVERTISING
There are a variety of ways to advertise on the Internet, each with advantages and disadvantages. Media planners and advertising agencies have to consider several factors when deciding whether advertising on Internet is right for the advertisers. A good online advertising agency and a good media planner understand both the advantages and disadvantages of the medium in order to create campaigns that set new heights in performance.
7.3.1 Advantages These are some of the many advantages that online marketing offers over traditional media outlets: (a) Cost-efficiency Advertising on the Internet is much more cost-efficient than using traditional mass market and niche media. Internet advertisements can be viewed by millions of people while being displayed all day and night. It has a worldwide audience. An online advertisement posted anywhere in the world can be viewed from anywhere in the world. Cooperative advertising arrangements can be completely free, allowing advertisers to reach large audiences with no expense. (b) Affordability A main advantage of online advertising is that it has a much affordable price when compared with the traditional advertising costs. On the Internet, companies can advertise at a much more inexpensive cost for a much wider audience compared to newspapers, radio, television or other mass media. (c) Effective Target Market Market segmentation and target marketing are more effective on the Internet than any other advertising medium. Strategically placed web advertisements can achieve 100 per cent relevant views. Consider, for example, an advertisement for a new video game placed on a video game- oriented website. Virtually every visitor to the website will be a video game enthusiast, maximising the impact of the advertising exposure. (d) Interactivity The Internet facilitates true two-way communication in advertising messages. By placing interactive ads on the Internet, marketers can use surveys, comments and usage statistics to fine-tune their campaigns midstream and maximise their effectiveness. Linking online advertisements to social networking, outlets can enhance the communication between your company and your customers even further, allowing you to receive genuine feedback on a consistent basis. (e) Captive Audience In many traditional media advertising, it is easy for viewers to skip advertisements. This common practice reduces the impact of this media. Internet advertisements, on the other hand, cannot be ignored as easily as television or radio advertisements. A banner advertisement on the side of an informative website, for example, remains in the visitor's peripheral vision as long as he is reading the website's information. Advertisements placed before streaming web videos cannot be skipped, allowing marketers to take advantage of a captive audience. (f) No Rigorous Payment In traditional advertising, advertisers have to pay the full amount of money to the advertising agency, no matter the results. In online advertising, advertisers pay only for the qualified clicks, leads or impressions. (g) Easy Result Measurement It is easy to measure the Internet advertising results and this makes online advertising more appealing than the traditional advertising methods. There are many effective analytics tools to measure online advertising results and these help companies and agencies to make effective planning for the subsequent campaigns. The effectiveness of Internet advertising has been traditionally measured by means of the number of clicks and commonly operationalised by means of the well-known Click-Through Rate (CTR), which is defined as the ratio of the number of clicks over the number of impressions.
(h) Build Brand Awareness
Many advertising experts argue that the mere exposure of online users to the advertising message can be beneficial in terms of building brand awareness. A regularly updated website with well-written content that maintains people's interest is essential to showing people exactly how a business is distinctive and how a company offers the best value to its clients.
7.3.2 Disadvantages
Having an online presence is a necessity for many companies and organisations. However, marketing and advertising online has certain disadvantages and downfalls that may persuade the business to use its advertising budget on other marketing methods. (a) Advertisements Seen as Spam Many online advertising vehicles, especially pop-up and pop-under ads, are seen as spam. This causes several problems for the products and business. With the advertisements being considered as spam, many users refuse to connect with them and, instead, just think of them as irritating. To protect against advertisements and spams, there are blockers programmes, often built into the Internet browser, that block these ads, so the business may be paying for advertisements that customers never even see. These disadvantages of online advertising may spill over into the business's physical presence because, if the ads are irritating enough, customers may associate that irritation with the business. (b) Advertising Fatigue Many websites have advertisements, so customers experience advertising fatigue or blindness and may not see the advertisements. Web users are so inundated with banner ads and spam e-mail that they have begun to ignore Internet advertising just as much as advertisements on traditional media. It has been used so much that users have developed a blind eye to most online advertisements. (c) Intrusion The nature of a lot of display advertising is intrusive such as pop-up advertisements. Therefore, pop-up blockers are often installed to prevent advertisements from being served as they were intended by the advertisers. Most browsers now block pop-ups. There are also extensions available for the Firefox browser, such as Adblock Plus, that will block advertising on web pages. Technologically savvy consumers are increasingly using these methods to limit the advertising that they see. (d) Technical Issues In many places, there is still less connectivity and accessibility. There is also a problem in website downtime, lags in website or video loading and browser complications which may reduce the number of times consumers see online advertisements and how well they see them. Viewing problems can occur because of problems with a website or if a consumer is using a smart phone or other mobile device to view a website, has a slow connection speed or does not have the correct applications and programmes installed on his or her computers for proper viewing. When technical issues occur, companies lose the opportunity to broadcast advertisements for their products and services and may lose potential sales.
7.4 FORMS OF INTERNET ADVERTISING Internet advertising takes a multitude of forms. More and more innovative types of advertising are coming into existence as the Web matures. The list given is not meant to be an exhaustive list. However, it covers all the main types of advertising in use today. Some of the main ones are as shown in Figure 7.1:
Figure 7.1: Some forms of internet advertising
Now, let us discuss the forms one by one. (a) Textual Advertisement According to Ratliff and Rubenfeld (2011), the simplest online advertisements are textual in nature. It is fully described by a string of words, the colour, size of the characters and the dimensions of the advertisement's bounding text box. These ads allow only the most basic interactivity; the viewer can click on the advertisement and be transported to the advertiserÊs web site or, more specifically, the ad's "landing page". (b) Banner Advertisement This is the most basic, traditional and prominent method of web advertising. Banners are placed at the top or bottom of a web page providing a link to a company's site providing product, sales and other marketing activities. Banner advertisements can be used on general sites. With this method, the advertiser essentially buys a run of advertising, usually for a specific period of time. A banner advertisement is a graphic image used on websites which comes into view on all sorts of web pages. When clicked, it takes the user to the main website of the product advertised by the banner. Banner advertisements are common, and placement matters to advertisers and potential customers. Plain banner advertisements are one of the less obtrusive online advertising formats. Users who choose to click the banners will end up on a website and hopefully will make a purchase. (c) Display Advertisement A standard display advertisement has more graphical elements. A display advertisement is typically one of a standard set of dimensions, with a photograph or other graphics, for example, a logo and a text message. Like textual advertisements, such display ads also typically allow interactivity through clicking. The graphical element of a display advertisement is often animated, typically using Adobe's Flash technology (Ratliff & Rubinfeld, 2011). (d) Website as Advertiser The most basic form of advertising on the Web is when a website sells an advertising link. This advertisement looks like content itself. They are designed to match the layout of the website so viewers will interact with the advertisement. The advertisement is displayed on one or more of its pages for which advertisers pay a fee based on the page impressions or the clicks on the advertisement.
A website can be an advertiser and a publisher of advertising at the same time. In this way, websites buy and sell the traffic of potential consumers who visit them. These advertisements are popular because their tactics can lead to a larger mailing list or purchase for the advertiser. (e) Pop-ups This form usually appears in a separate small window that "pops up" over the main browser window when a visitor enters a site. The pop-up windows can contain anything such as text, graphics, a form, e-mail addresses or a little game. A website might have one or more pop-ups, each advertising a different product or service. This kind of online advertising can be minimised with a pop-up blocker, but not all pop-ups are blockable. Some studies show that website viewers consider pop-up advertisements as one of the most annoying type of online advertising formats. (f) Opt-in Mailing This form of online advertisement consists of sending an e-mail message to an audience that has expressed an interest in receiving information on a given topic. Some sites sell their lists of recipients to advertisers, but most prefer to keep the e-mail addresses secret and distribute the advertisement on the advertiser's behalf. Opt-in mailing is not the same as spam which is another word for bulk mailing which involves sending a message to people who have never shown any interest in receiving it. Spam will destroy your business. Some companies claim to be opt-in whereas they are actually selling spam services. (g) HTML Advertisement HTML ads combine graphics and text with other HTML elements such as pull-down list, check boxes or forms. These can be very effective in getting traffic, but are much harder to serve and track, and generally require sophisticated software to run properly.
h) Video Advertisement
His advertisement has taken the place of some banner advertisements. Instead of still graphics, it takes the form of a video. These advertisements are difficult to ignore because the movement is quick to catch the eye and the video usually has audio. Some advertisers make the video hard to pause or exit, making website visitors view or hear the advertisement until it ends.
(i) Interstitials
Interstitials are advertisements that are shown in the transition between two pages of a site. So you click on a link on Page X, but instead of going to Page Y you arrive at an intermediate page containing the sales pitch. Interstitials are gaining popularity with advertisers since they offer an almost unlimited amount of space to pitch a product. These advertisements take over the entire page, and the viewer is usually asked to click "next" to continue doing what he or she wanted to do. Sometimes this kind of advertisement includes videos and does not give the viewer an option to skip it. Like most advertisements, intersitital advertisements can be an unwelcome sight if not cleverly integrated. Besides, many visitors may find interstitials irritating and intrusive.
(j) Hybrid Advertisement
Hybrid advertisement combines aspects of other advertising types, such as text and banners, to make a more effective pitch to visitors.
(k) Sponsorship
Sponsorship involves integrating the advertising more fully into the body of a site. Many sponsorships take the form: "Site brought to you by Sponsor" or "Sponsor 's guide by Site".
(l) Rich Media Advertisements
Rich media advertisements incorporate the use of multimedia elements such as sound, animation and interactive elements. This is certainly very beneficial for advertisers. However, for web masters it is quite problematic because of the extra load time although the premium for rich-media advertisements is low. In rich media advertisements, users can interact in a web page that is not solely animated or by a click-through function. These can be used either on their own or in a combination of technologies such as Flash, sound, video, DHTML, Java and JavaScript.
Online Ads: A Guide to Online Ad Types and Formats Online ads have become a daily part of Internet life. For new marketers, it can be confusing getting a grasp on the scope and variety of online ads available. Next are some of the types of online advertising based on the Internet platform, as shown in Figure 7.2 ("wordStream: Online advertising made easy", n.d.).
Figure 7.2: Some types of online advertising on the Internet platform
Let us now discuss the types of online advertising based on the Internet.
(a) Google Search Ad
Google search ads are online ads that appear alongside the search engine result page when users search a keyword query on Google. These ads are PPC, or pay-per-click ads, in which advertisers pay for each ad click. Google's PPC search ads are managed by Google's AdWords advertising platform, which allows advertisers to bid on keywords, craft ad text, set budgets and more.
(b) Facebook Ad
Facebook ads exist in many different forms, each offering unique pros and cons for advertisers looking to market on Facebook. Marketplace ads appear in the side columns of the Facebook website with a headline, copy and an image.
(c) Banner Ad
Banner ads are image-based advertisements that often appear on the side, top, and bottom sections of websites. They can range widely in terms of size, design and function. You will typically find them in all sorts of news- based websites, blogs and specialised web communities. Many websites brokerage their ad space with ad exchanges such as Google's Display Network, or you can buy the ad space in the same manner you would buy an ad in a newspaper.
(d) Google Display Ad
Google display ads are a form of contextual banner ads used in the Google Display Network, Google's collection of network sites that agree to host display ads. The Google Display Network also includes Google properties such as YouTube, Gmail, Blogger, etc. Google Display ads can be text, images and even video-based. To serve online ads on the Google Display Network, you need to start by using Google AdWords.
(e) Flash Ad
Flash ads are banner ads that use flash design, often featuring interactive elements to entice users. While flash is still used subtly in certain display ads, the playful, interactive and somewhat hokey flash ads that were common in the millennial years are no longer considered a popular form of banner ads.
(f) Reddit Ad
Reddit ads are advertisements featuring a headline title, destination URL, and an optional photo. Reddit ads work on a bid-based system, in which advertisers can set campaign budgets and choose how long they want their campaign to run for. Reddit ads allow for some unique targeting options and are often fairly cheap, with low cost-per-impressions.
(g) Mobile Ad
Mobile ads are ads that appear on smartphones, tablets and any other mobile device. Many social media platforms, websites and apps offer their own unique mobile ad options. If you advertise on Google AdWords, you can advertise to mobile devices by taking advantage of Enhanced Campaigns.
(h) In-game Ad
In-game ads are advertisements that exist within computer or video games.
One of the most common examples of in-game advertising is billboards appearing in sport games. In-game ads also might appear as brand name products like guns, cars, or clothing that exist as gaming status symbols.
(i) AdMob Ad
AdMob ads are advertisements that appear within mobile apps. AdMob itself is Google's mobile advertising platform, enabling app creators to make revenue off of free games by offering ad space, and allowing advertisers to get ad spots in the most popular mobile games and apps. AdMob ads can appear as mobile-optimised text ads, image-based banner ads or even interstitials ads, which use rich HTML5.
(j) E-mail Ad
E-mail ads are advertisements sent to users via web mail. E-mail ads can be used to notify subscribers of certain promotions, discounts, or new features, among other uses. Most e-mail advertisements feature a large image with minimal text; users will not waste large amounts of time reading e-mail ads, so it is important to make your message as clear and concise as possible. E- mail ads also rely on a compelling subject line to ensure that a user will open the e-mail.
(k) Gmail Ad
Gmail ads in Google's online e-mail service are contextual ads that are generated by an automated process that scans a userÊs e-mails to discover interests and topics that are relevant to the user. If a user is writing and receiving many e-mails about air conditioners, that user may see ads about air conditions appear within the Gmail client. While privacy advocates are wary of such practices, Gmail advertising is fully automated and Google asserts that no humans read user e-mails, only robots.
(l) Youtube Ad
YouTube ads are ads that appear on Google's video-sharing site. Since Google obtained ownership of YouTube, advertising on YouTube has become nearly as easy and customisable as advertising on AdWords. YouTube ads provide a number of targeting options and several different ad formats. YouTube advertisements can appear as banner ads, in-video overlay ads, in-stream video ads (which are video ads that appear before or during another YouTube video), as well as several other setups.
(m) Pinterest Ad
Pinterest ads are simply pieces of content pinned by brands and advertisers. When marketing a specific product, marketers create Pinterest advertisements by adding a dollar sign before the price amount to the description. This tells Pinterest that this item is for sale at that specific price. Pinterest marketers can then link the pinned item to the official product page to drive retail traffic. (n) Instagram Ad There are at the moment no „official‰ Instagram ads just brands being creative and producing Instagram pics that can be shared right alongside user-crafted content. '
ACTIVITY 7.6
'Identify the following online advertisements in terms of their form and discuss their content and design: "The Mummy" (1959) DVD MoviesUnlimited.com Starring Christopher Lee. Discover 1000s of titles not found elsewhere Agoda.com: Smarter Hotel Booking www.agoda.com/ iscount Hotel deals on 539137 hotels worldwide. BOOK NOW, PAY LATER available on thousands of hotels. Fast and secure with lowest rates Guaranteed!
7.5 MEASURING EFFECTIVENESS OF ONLINE
ADVERTISING
There is no precise way to measure the success of an advertising campaign. It is difficult, for example, trying to determine how many sales dollars are generated by each advertising dollar spent. But there are methods that will give advertisers a rough idea of whether advertisements are effective. Since the inception of online advertising, a series of operational measures were employed to quantify the effectiveness of advertising campaigns. To assess the effectiveness of an advertising campaign, advertisers or agencies will normally monitor the following: (a) Sales;
b) New customers;
(c) Requests for information;
(d) Phone inquiries;
(e) Retail store traffic; and
(f) Website traffic or click-through rates.
The following are some of the main measures for online advertising:
(a) Number of Impression Number of impressions or exposures is the number of times an advertisement is displayed to users. "Impressions" refers to the number of times the advertisement is viewed. Some campaigns are purchased by number of impressions. Every time an advertisement is displayed on a user's screen, or every time a page loads with an advertisement on it, an impression is counted, regardless of clicks. Depending on the network or technology used, these advertisements will either be accompanied by an invisible pixel or Javascript code that alerts the hosting server whenever it is loaded. (b) Click-Through Rate Click-through rate (CTR), considered a significant way to measure the performance of online advertisements, is a metric that measures the number of clicks advertisers receive on their advertisements per their number of impressions. It is the ratio of the number of click-throughs to the number of impressions or the percentage of visitors who arrive at a web page and who click on a call-to-action that advertisers want them to click. The call-to-action can be a banner advertisement, a link at the end of a post or any other element on the web page. Most online advertisement networks use some form of URL redirect to measure clicks. Before the user reaches the advertisement's intended landing page, he or she briefly visits the advertisement network's own URL for measurement. This usually happens so quickly that the user does not even notice. Each advertisement has its own redirect URL, so each time that URL is loaded on the server, one click is counted. However, there has been a steady decline in the reported CTR levels through the past years. This declined CTR figures have been mainly attributed to the fact that online users avoid looking at the advertisement items during browsing.
(c) Post-Impression
The number of post-impressions is the number of visits to a website, after exposure to an Internet advertisement, without clicking through the advertisement. This measurement captures both the direct performance of the advertising message and the subliminal effects that this message may have on the online user. However, post-impressions are hard to track and miss some aspects of advertising effectiveness, for example the attitudes of users towards the advertised brand.
(d) Memory-based Measure
This is a traditional measure of advertising effectiveness but it has been revived in the context of Internet advertising. Such measures reflect the attitudinal response of online users to the advertisements displayed to them. Among the methods to quantify the effect of online advertisements are unaided and aided recall, brand recognition, purchase intention and purchase consideration. Recall and recognition tests measure the extent to which web advertising affects the explicit memory of consumers. (e) Priming Priming refers to the exposure of a person to some prior event or stimulus, that is, the prime that results in increased accessibility of information related to this stimulus. Priming studies quantify the implicit memory effects of advertising. Three types of priming are:
(i) Feature priming, which tests the accessibility and readiness of the priming information, for example, by means of word completion tests.
(ii) Semantic priming, which investigates the possibility of semantic changes in implicit memory through the measurement of reaction times to stimuli following semantically-related primes.
(iii) Categorical priming, which looks into implicit associations between categories, for instance, implicit attitudes towards brands.
(f) Bounce Rate
When a page is well-designed, it will be able to keep visitors at your site and it will also encourage them to navigate to other sections or pages of the website including doing a certain action such as to fill out a form, or to show continued interest in what a web page has to offer. On the other hand, a poorly designed page will make visitors leave the site. A bounce rate is calculated when a visitor leave a website. This measurement is useful to improve websites and generate the most leads possible (Podsada, 2013). The bounce rate shows the percentage of visitors that come to a website and leave after seeing the first page. This metric tells advertisers whether the page is effective at making them take action and whether they are attracting the right visitor to the page.
ACTIVITY 7.7
Advertisements on mobile devices are measured in various ways depending on the marketing channel used and its associated measurement capabilities. The Mobile Web Advertising Measurement Guidelines have been developed by the membership of the Mobile Marketing Association (MMA) and other contributors who are representative of the key parties in the mobile marketing ecosystem and include handset manufacturers, wireless operators, ad servers, content providers, agencies, brands and technology enablers. Explain the main measures in mobile web advertising by referring to the guidelines which can be found in this website: http://www.iab.net/media/file/MobileWebMeasurementGuidelines2 FINAL.pdf
SELF-CHECK
7.1 Identify if the following statement is true (T) or false (F) CTR is a key measurement showing advertisers the following:
How well your online advertising, such as Google AdWords or banner ads, are enticing your customers to keep going. How well your website, social media, or mobile advertising is converting visitors into leads and customers. The percentage of advertisers who have a web page that promote click on a call-to-action.
Number of visits to a website, after exposure to an Internet advertisement, without clicking through the advertisement. How effectively your sales team is converting leads into customers. The percentage of visitors that come to your website and leave after seeing the first page. ?
Internet advertising, also known as online advertising is the delivery of advertising messages and marketing communications through the Web. It is a marketing strategy that involves the use of the Internet as a medium to deliver marketing messages to the right customers in order to obtain website traffic. Media planners and advertising agencies have to consider several factors when deciding whether advertising on Internet is right for the advertisers. A good online advertising agency and a good media planner understand both the advantages and disadvantages of the medium in order to create campaigns that set new heights in performance. Having an online presence is a necessity for many companies and organisations. Although beneficial to advertisers, marketing and advertising online have certain disadvantages and downfalls that may persuade the business to use its advertising budget on other marketing methods.
? Internet advertising takes a multitude of forms. More and more innovative types of advertising are coming into existence as the Web matures. Some of the main ones include textual advertisements, banner advertisements, display advertisements, website as advertiser, pop-ups, opt-in mailing, HTML advertisements, video advertisements, interstitials, hybrids advertisements, sponsorship and rich media advertisements.
? There is no precise way to measure the success of an online advertising campaign. It is difficult to determine its effectiveness but there are methods and operational measures which can be employed to quantify the effectiveness of online advertising campaigns.
Advertising fatigue
Pop-ups
Banner advertisement
Real-time advertising
Click-Through Rate (CTR)
Rich media advertisements
Display advertisement
Spam
HTML advertisement
Sponsorship
Hybrid advertisement
Textual advertisement
Interstitials
Video advertisement
Measurability
Website as advertiser
Opt-in mailing
LEARNING OUTCOMES...
By the end of this topic, you should be able to:
1. Explain the factors behind the popularity of Internet advertising;
2. Trace the development of online advertising;
3. Analyse the advantages and disadvantages of online advertising;
4. Identify the forms of Internet advertising; and
5. Discuss the effectiveness of online advertising.?
INTRODUCTION Nine out of ten businesses fail; so I came up with a foolproof plan create ten businesses". Robert Kiyosaki Internet advertising, also known as online advertising, is the delivery of advertising messages and marketing communications through the Web. It is a marketing strategy that involves the use of the Internet as a medium to deliver marketing messages to the right customers in order to obtain website traffic. Internet advertising is becoming more popular and has presented sustainable revenue growth since its inception in the mid-1990s. This is due to the growing number of online users, easier Internet connectivity, accurate statistics and the fast and easy management of advertising campaigns in real time. Due to its wide success, Internet advertising currently constitutes a significant marketing channel for a large number of firms, and it is thus gradually gaining attention in the context of marketing communications strategy planning and implementation. Research shows that advertising online works well with other forms of advertising to help give a brand name or product a significant uplift in exposure.
ACTIVITY 7.1 Find out the definition of the following concepts and compare the term with each other: (a) Online advertising; (b) Online marketing; (c) Internet advertising; (d) Digital advertising; (e) Mobile advertising; and (f) Interactive advertising.
7.1 DEVELOPMENT OF ONLINE ADVERTISING The rapid growth of the Internet, and the incredible flow of information that the Internet has made possible, have transformed the business of advertising. It is rare today to surf the Web without seeing online advertisements, often in the form of visual display advertisements on web sites and textual advertisements on search sites. Online advertising has certainly taken business away from traditional modes of advertising. There appears to be no consensus on precisely when advertising on the Internet began. Tim O'Reilly, founder of the web portal Global Network Navigator (GNN), claims that the first advertising appeared in 1993 on GNN. Others cite a banner advertisement sold to AT&T displayed on the HotWired site in 1994.
Many early attempts at online advertising met with limited success. This was due to the general problem that many advertisers still looked at advertising from the perspective of the traditional media such as newspaper and television. During this time, online ads were sold exclusively on a cost-per-impression ("CPM") pricing model used by offline media. The advertiser was charged proportionally to the number of times the ad was displayed on a web page. But reporting was very basic. According to Adjuggler (n.d.), advertisers generally had to depend on the website's visitor statistics shown on the Web to get an idea of how many people actually visit the advertisement. This way, advertising was sold almost in the way that the print advertisement was, meaning that it was based solely on the size of the advertisement. Pricing was based on the expected number of individual visitors of website who would view the advertisements. Then came the tracking technology. At first, most online advertising was very simple both in terms of the advertising and how it was sold. It was common for advertisers to pay to have a small banner advertisement placed on a website for a given period of time. Some of the earliest advertisement serving software appeared in the mid-90s. This paved the way for the more advanced serving and tracking technologies such as follows: (a) Multiple banner advertisements to be rotated in the same space on a web page to keep track of how many impressions or views a particular advertisement has obtained. (b) The start and end dates of the campaign to be specified and the limits on the number of impressions to be shown. (c) Track clickthroughs, so advertisers could find out how many people saw their advertisements and how many had clicked on it to get to their site. These innovations made it possible for advertisers to sell online advertising in new ways. For example, an advertiser could specify that they only wanted to buy 500,000 impressions over the course of three months. These innovations made it possible for advertisers to sell online advertising in new ways. With this new development, publishers are now able to sell advertising space to multiple advertisers and not giving up all of their space to just one advertiser at a time. The latest development in the Internet technology involves the social web and mobile technology. These two innovations have changed the way people use the Internet. In the social web, people have found a new way to communicate (Adjuggler, n.d.).
Since its creation in 2004, Facebook has grown into a worldwide network of over one billion subscribers with around 665 million active users each day on average. Mobile technology, on the other hand, has made possible a much greater reach of the Internet, increasing the number of Internet users everywhere.
ACTIVITY 7.2 ReportLinker (at www.reportlinker.com) reported that the annual revenue in the global online advertising industry is forecasted to reach an estimated USD$139.8 billion in 2018 with a compound annual growth rate (CAGR) of 7.3 per cent during 20132018. The global online advertising industry witnessed a CAGR of 12.4 per cent during 2007 2012 as revenue reached USD$91.6 billion in 2012. The top three and top five players of the industry accounted for 64 per cent and 69 per cent of global revenue, respectively, in 2012. There is a medium degree of competition in the industry due to its moderate to high threat of substitutes and moderate buyers power. Based on the earlier statement, find out from the Internet authoritative sources about the following: (a) Profile of top players in the online advertising industry. (b) The general trends in online advertising in Asia, Europe and the US. (c) How is the trend in online advertising compared to conventional media advertising?
7.2 INTERNET AS ADVERTISING MEDIUM The Internet and its most broadly known application, the World Wide Web is gaining tremendous importance in our society. The Web represents a new medium for doing business that transcends national borders and attracts a significant share of social and economic transactions. A large part of these transactions involves advertising.
7.2.1 Popularity of Internet Advertising Internet advertising is becoming more popular and has presented sustainable revenue growth since its inception in the mid-1990s. The obvious advantages of online advertising media low costs, multiple tracking options, better segmentation as well as the growing number of online users, easier Internet connectivity, accurate statistics and the fast and easy management of advertising campaigns in real time ? are forcing marketing managers to re-allocate big portions of their advertisement budgets from traditional offline marketing media to online ad campaigns. (a) Easier Connectivity The current Internet technology no longer relies solely on cables to receive and send data. It has become easier to install any software with generally affordable cost, and better range of coverage. (b) Growing Number of Users The Internet is now serving millions of users and a multitude of purposes in all parts of the world. It has now consolidated itself as a very powerful platform that has changed the way we do business, and the way we communicate. It has given a globalised dimension to the world and has become the universal source of information for millions of people, at home, at school and at work. (c) Accurate Statistics This new technology is capable of giving accurate statistical reports and the possibility to measure the precise return on investment. Reports like this include number of visits, number of impressions and the most effective keywords. (d) Real Time Advertising This technology allows advertisers to change an advertising campaign in real time. In this way, advertisers can change the daily budget at any time, limit the advertisement in specific days, choose specific sites to show the advertisement or just add new keywords. All these changes take effect in real time where the time gaps between the events occurring, our ability to see that event and the feedback that comes from our reaction to that event has been eliminated.
7.3 The real-time marketing concept may refer to different notions in digital advertising environment. Explain the following statements and discuss the similarities and differences of each: (a) Real-time marketing can be tied to automation marketing concept by which micro or individual campaigns are automatically triggered by events and customersÊ actions. In this case, we speak of real-time marketing because the marketing message is sometimes created and sent in real time. In this situation, a message can be sent in real time but the campaign and templates have been implemented beforehand. (b) The real-time marketing term is used for describing marketing actions and executions that are realised in real time. Thus, ads are often targeted, custom taylored and bought in milliseconds in digital advertising ecosystem. Reporting is also done and accessible in real time for most digital campaigns. (c) The real-time marketing concept has been used for a different meaning. It refers to marketing actions that are thought of and deployed almost in real time by brands to react to different events and to capitalise on social media buzzing. In this case, real-time marketing campaigns are often thought of and implemented within a brand newsroom. 7.2.2 Internet Advertising versus Traditional Media Advertising Some of the most notable benefits of online advertising over traditional advertising are: (a) Cost Implications The use of Internet advertising is suitable for those who cannot bear the high cost of conventional outlets such as outdoor banner advertising, trade shows or magazine advertisements. This medium is much better in terms of cost. Online media covers a huge audience resulting in a much better return on investment.
(b) Easier Targeting Means It is possible for the Internet to taper down the target audience so that only the segment that views the advertisements consists of potentially strong buyers. The web browsing history of users can be made a reference to focus on the preferences and to avoid useless repetitions. Also, there is a lot of geographical targeting through the Internet to make the advertisements relevant to users. (c) Measurablility Measurability is one of the most important factors in deciding the impact of online advertising. The Internet is capable of collecting accurate data on hits, pages visited, number of times the advertisement was viewed by the same user, how the user reached the advertisement or the website and whether the activity resulted in a sale. (d) Versatility Online advertising can be highly interactive. This is unlike offline media which is less versatile. Online advertising may be able to incorporate videos and games to audio messages. (e) Speed Once an advertising copy is ready, the messages can be published and distributed rapidly from the advertiser and publisher to the consumers. Deployment is immediate as modifications and replacements in the advertisements are faster on the Internet. 7.2.3 Social Media Advertising Social media such as Facebook news feeds and Twitter timelines is now being used as a form of online advertising. Most people are simply using these social networks to be engaged in personal conversation or to share their personal materials such as pictures of babies and pets, family holidays and vacation as well as occasional work-related gripe or political posts. However, social media advertising has now become a staple of the media mix as marketers look to leverage their campaigns to drive valuable word of mouth and influence. Facebook does have its benefits and advantages because it uses an advertising system that is very simple to implement. It also offers a wide range of coverage in the Facebook website. However, only Facebook users that are within the specific demographic will be able to see the advertising. This helps to narrow down who sees advertising so advertisers are not wasting their money on people who are not going to be interested in what their website has to offer.
Apart from Facebook and Twitter, new social media networks keeps emerging. Many died out before they secured mass-appeal and adoption. A few maintain relevance and start to grow. Examples of those that have found staying power are Pinterest, SnapChat, Instagram, Reddit, Foursquare and Tumblr which already contained advertising campaigns. On the other hand, major companies are already expressing doubts about the efficacy of social media marketing campaigns. Experts are also questioning the issues on return on investment. Agencies and media planners, therefore, need to be careful when using social media networks by evaluating the results.
ACTIVITY 7.4 Discuss the points given next on the differences and similarities of the Internet and certain traditional media in relation to advertising.
(a) Nielsen summarises the differences by introducing the lean- forward and lean-back mode. On the Web, the consumers use their lean forward mode, since they are active, engaged and goal- directed. When watching television on the other hand, they are in the lean back mode since they are more passive, relaxed and want to be served with information or entertainment.
(b) When using television, the advertisers get the possibility to interrupt the
consumer in his or her activity. Online advertising has to compete with other elements on the website for the user'sumers are task-oriented and where the ads usually are irrelevant for the consumersÊ information search or processing goal.
(c) Television consumers can, and will probably, avoid looking directly at the advertising, but peripheral attention might still be captured. Online ads are typically located in the periphery in relation to the editorial content. Since online ads seldom are targets of information search on the Internet, consumers may use active navigation behaviour to try to avoid them.
(d) Unlike television ads that are only broadcast for a limited amount of time, online advertising can exist within the consumersÊ visual field for an unlimited amount of time.
(e) Online ads can be targeted in a completely new way. Television ads are shown in connection to programmes that target the same audience as the product or brand in the ad. When advertising online, the ads can be closely connected to every individual consumer based on their- and/or other consumers previous surfing behaviour. This gives online advertising large possibilities to target the very specific audience that is most likely to be influenced by it.
ACTIVITY 7.5 Explain the following social media networks and discuss how online
advertising may be relevant on these platforms:
Facebook News Feed
Twitter Timeline
SnapChat
Foursquare
Tumblr
7.3 ADVANTAGES AND DISADVANTAGES OF INTERNET ADVERTISING
There are a variety of ways to advertise on the Internet, each with advantages and disadvantages. Media planners and advertising agencies have to consider several factors when deciding whether advertising on Internet is right for the advertisers. A good online advertising agency and a good media planner understand both the advantages and disadvantages of the medium in order to create campaigns that set new heights in performance.
7.3.1 Advantages These are some of the many advantages that online marketing offers over traditional media outlets: (a) Cost-efficiency Advertising on the Internet is much more cost-efficient than using traditional mass market and niche media. Internet advertisements can be viewed by millions of people while being displayed all day and night. It has a worldwide audience. An online advertisement posted anywhere in the world can be viewed from anywhere in the world. Cooperative advertising arrangements can be completely free, allowing advertisers to reach large audiences with no expense. (b) Affordability A main advantage of online advertising is that it has a much affordable price when compared with the traditional advertising costs. On the Internet, companies can advertise at a much more inexpensive cost for a much wider audience compared to newspapers, radio, television or other mass media. (c) Effective Target Market Market segmentation and target marketing are more effective on the Internet than any other advertising medium. Strategically placed web advertisements can achieve 100 per cent relevant views. Consider, for example, an advertisement for a new video game placed on a video game- oriented website. Virtually every visitor to the website will be a video game enthusiast, maximising the impact of the advertising exposure. (d) Interactivity The Internet facilitates true two-way communication in advertising messages. By placing interactive ads on the Internet, marketers can use surveys, comments and usage statistics to fine-tune their campaigns midstream and maximise their effectiveness. Linking online advertisements to social networking, outlets can enhance the communication between your company and your customers even further, allowing you to receive genuine feedback on a consistent basis. (e) Captive Audience In many traditional media advertising, it is easy for viewers to skip advertisements. This common practice reduces the impact of this media. Internet advertisements, on the other hand, cannot be ignored as easily as television or radio advertisements. A banner advertisement on the side of an informative website, for example, remains in the visitor's peripheral vision as long as he is reading the website's information. Advertisements placed before streaming web videos cannot be skipped, allowing marketers to take advantage of a captive audience. (f) No Rigorous Payment In traditional advertising, advertisers have to pay the full amount of money to the advertising agency, no matter the results. In online advertising, advertisers pay only for the qualified clicks, leads or impressions. (g) Easy Result Measurement It is easy to measure the Internet advertising results and this makes online advertising more appealing than the traditional advertising methods. There are many effective analytics tools to measure online advertising results and these help companies and agencies to make effective planning for the subsequent campaigns. The effectiveness of Internet advertising has been traditionally measured by means of the number of clicks and commonly operationalised by means of the well-known Click-Through Rate (CTR), which is defined as the ratio of the number of clicks over the number of impressions.
(h) Build Brand Awareness
Many advertising experts argue that the mere exposure of online users to the advertising message can be beneficial in terms of building brand awareness. A regularly updated website with well-written content that maintains people's interest is essential to showing people exactly how a business is distinctive and how a company offers the best value to its clients.
7.3.2 Disadvantages
Having an online presence is a necessity for many companies and organisations. However, marketing and advertising online has certain disadvantages and downfalls that may persuade the business to use its advertising budget on other marketing methods. (a) Advertisements Seen as Spam Many online advertising vehicles, especially pop-up and pop-under ads, are seen as spam. This causes several problems for the products and business. With the advertisements being considered as spam, many users refuse to connect with them and, instead, just think of them as irritating. To protect against advertisements and spams, there are blockers programmes, often built into the Internet browser, that block these ads, so the business may be paying for advertisements that customers never even see. These disadvantages of online advertising may spill over into the business's physical presence because, if the ads are irritating enough, customers may associate that irritation with the business. (b) Advertising Fatigue Many websites have advertisements, so customers experience advertising fatigue or blindness and may not see the advertisements. Web users are so inundated with banner ads and spam e-mail that they have begun to ignore Internet advertising just as much as advertisements on traditional media. It has been used so much that users have developed a blind eye to most online advertisements. (c) Intrusion The nature of a lot of display advertising is intrusive such as pop-up advertisements. Therefore, pop-up blockers are often installed to prevent advertisements from being served as they were intended by the advertisers. Most browsers now block pop-ups. There are also extensions available for the Firefox browser, such as Adblock Plus, that will block advertising on web pages. Technologically savvy consumers are increasingly using these methods to limit the advertising that they see. (d) Technical Issues In many places, there is still less connectivity and accessibility. There is also a problem in website downtime, lags in website or video loading and browser complications which may reduce the number of times consumers see online advertisements and how well they see them. Viewing problems can occur because of problems with a website or if a consumer is using a smart phone or other mobile device to view a website, has a slow connection speed or does not have the correct applications and programmes installed on his or her computers for proper viewing. When technical issues occur, companies lose the opportunity to broadcast advertisements for their products and services and may lose potential sales.
7.4 FORMS OF INTERNET ADVERTISING Internet advertising takes a multitude of forms. More and more innovative types of advertising are coming into existence as the Web matures. The list given is not meant to be an exhaustive list. However, it covers all the main types of advertising in use today. Some of the main ones are as shown in Figure 7.1:
Figure 7.1: Some forms of internet advertising
Now, let us discuss the forms one by one. (a) Textual Advertisement According to Ratliff and Rubenfeld (2011), the simplest online advertisements are textual in nature. It is fully described by a string of words, the colour, size of the characters and the dimensions of the advertisement's bounding text box. These ads allow only the most basic interactivity; the viewer can click on the advertisement and be transported to the advertiserÊs web site or, more specifically, the ad's "landing page". (b) Banner Advertisement This is the most basic, traditional and prominent method of web advertising. Banners are placed at the top or bottom of a web page providing a link to a company's site providing product, sales and other marketing activities. Banner advertisements can be used on general sites. With this method, the advertiser essentially buys a run of advertising, usually for a specific period of time. A banner advertisement is a graphic image used on websites which comes into view on all sorts of web pages. When clicked, it takes the user to the main website of the product advertised by the banner. Banner advertisements are common, and placement matters to advertisers and potential customers. Plain banner advertisements are one of the less obtrusive online advertising formats. Users who choose to click the banners will end up on a website and hopefully will make a purchase. (c) Display Advertisement A standard display advertisement has more graphical elements. A display advertisement is typically one of a standard set of dimensions, with a photograph or other graphics, for example, a logo and a text message. Like textual advertisements, such display ads also typically allow interactivity through clicking. The graphical element of a display advertisement is often animated, typically using Adobe's Flash technology (Ratliff & Rubinfeld, 2011). (d) Website as Advertiser The most basic form of advertising on the Web is when a website sells an advertising link. This advertisement looks like content itself. They are designed to match the layout of the website so viewers will interact with the advertisement. The advertisement is displayed on one or more of its pages for which advertisers pay a fee based on the page impressions or the clicks on the advertisement.
A website can be an advertiser and a publisher of advertising at the same time. In this way, websites buy and sell the traffic of potential consumers who visit them. These advertisements are popular because their tactics can lead to a larger mailing list or purchase for the advertiser. (e) Pop-ups This form usually appears in a separate small window that "pops up" over the main browser window when a visitor enters a site. The pop-up windows can contain anything such as text, graphics, a form, e-mail addresses or a little game. A website might have one or more pop-ups, each advertising a different product or service. This kind of online advertising can be minimised with a pop-up blocker, but not all pop-ups are blockable. Some studies show that website viewers consider pop-up advertisements as one of the most annoying type of online advertising formats. (f) Opt-in Mailing This form of online advertisement consists of sending an e-mail message to an audience that has expressed an interest in receiving information on a given topic. Some sites sell their lists of recipients to advertisers, but most prefer to keep the e-mail addresses secret and distribute the advertisement on the advertiser's behalf. Opt-in mailing is not the same as spam which is another word for bulk mailing which involves sending a message to people who have never shown any interest in receiving it. Spam will destroy your business. Some companies claim to be opt-in whereas they are actually selling spam services. (g) HTML Advertisement HTML ads combine graphics and text with other HTML elements such as pull-down list, check boxes or forms. These can be very effective in getting traffic, but are much harder to serve and track, and generally require sophisticated software to run properly.
h) Video Advertisement
His advertisement has taken the place of some banner advertisements. Instead of still graphics, it takes the form of a video. These advertisements are difficult to ignore because the movement is quick to catch the eye and the video usually has audio. Some advertisers make the video hard to pause or exit, making website visitors view or hear the advertisement until it ends.
(i) Interstitials
Interstitials are advertisements that are shown in the transition between two pages of a site. So you click on a link on Page X, but instead of going to Page Y you arrive at an intermediate page containing the sales pitch. Interstitials are gaining popularity with advertisers since they offer an almost unlimited amount of space to pitch a product. These advertisements take over the entire page, and the viewer is usually asked to click "next" to continue doing what he or she wanted to do. Sometimes this kind of advertisement includes videos and does not give the viewer an option to skip it. Like most advertisements, intersitital advertisements can be an unwelcome sight if not cleverly integrated. Besides, many visitors may find interstitials irritating and intrusive.
(j) Hybrid Advertisement
Hybrid advertisement combines aspects of other advertising types, such as text and banners, to make a more effective pitch to visitors.
(k) Sponsorship
Sponsorship involves integrating the advertising more fully into the body of a site. Many sponsorships take the form: "Site brought to you by Sponsor" or "Sponsor 's guide by Site".
(l) Rich Media Advertisements
Rich media advertisements incorporate the use of multimedia elements such as sound, animation and interactive elements. This is certainly very beneficial for advertisers. However, for web masters it is quite problematic because of the extra load time although the premium for rich-media advertisements is low. In rich media advertisements, users can interact in a web page that is not solely animated or by a click-through function. These can be used either on their own or in a combination of technologies such as Flash, sound, video, DHTML, Java and JavaScript.
Online Ads: A Guide to Online Ad Types and Formats Online ads have become a daily part of Internet life. For new marketers, it can be confusing getting a grasp on the scope and variety of online ads available. Next are some of the types of online advertising based on the Internet platform, as shown in Figure 7.2 ("wordStream: Online advertising made easy", n.d.).
Figure 7.2: Some types of online advertising on the Internet platform
Let us now discuss the types of online advertising based on the Internet.
(a) Google Search Ad
Google search ads are online ads that appear alongside the search engine result page when users search a keyword query on Google. These ads are PPC, or pay-per-click ads, in which advertisers pay for each ad click. Google's PPC search ads are managed by Google's AdWords advertising platform, which allows advertisers to bid on keywords, craft ad text, set budgets and more.
(b) Facebook Ad
Facebook ads exist in many different forms, each offering unique pros and cons for advertisers looking to market on Facebook. Marketplace ads appear in the side columns of the Facebook website with a headline, copy and an image.
(c) Banner Ad
Banner ads are image-based advertisements that often appear on the side, top, and bottom sections of websites. They can range widely in terms of size, design and function. You will typically find them in all sorts of news- based websites, blogs and specialised web communities. Many websites brokerage their ad space with ad exchanges such as Google's Display Network, or you can buy the ad space in the same manner you would buy an ad in a newspaper.
(d) Google Display Ad
Google display ads are a form of contextual banner ads used in the Google Display Network, Google's collection of network sites that agree to host display ads. The Google Display Network also includes Google properties such as YouTube, Gmail, Blogger, etc. Google Display ads can be text, images and even video-based. To serve online ads on the Google Display Network, you need to start by using Google AdWords.
(e) Flash Ad
Flash ads are banner ads that use flash design, often featuring interactive elements to entice users. While flash is still used subtly in certain display ads, the playful, interactive and somewhat hokey flash ads that were common in the millennial years are no longer considered a popular form of banner ads.
(f) Reddit Ad
Reddit ads are advertisements featuring a headline title, destination URL, and an optional photo. Reddit ads work on a bid-based system, in which advertisers can set campaign budgets and choose how long they want their campaign to run for. Reddit ads allow for some unique targeting options and are often fairly cheap, with low cost-per-impressions.
(g) Mobile Ad
Mobile ads are ads that appear on smartphones, tablets and any other mobile device. Many social media platforms, websites and apps offer their own unique mobile ad options. If you advertise on Google AdWords, you can advertise to mobile devices by taking advantage of Enhanced Campaigns.
(h) In-game Ad
In-game ads are advertisements that exist within computer or video games.
One of the most common examples of in-game advertising is billboards appearing in sport games. In-game ads also might appear as brand name products like guns, cars, or clothing that exist as gaming status symbols.
(i) AdMob Ad
AdMob ads are advertisements that appear within mobile apps. AdMob itself is Google's mobile advertising platform, enabling app creators to make revenue off of free games by offering ad space, and allowing advertisers to get ad spots in the most popular mobile games and apps. AdMob ads can appear as mobile-optimised text ads, image-based banner ads or even interstitials ads, which use rich HTML5.
(j) E-mail Ad
E-mail ads are advertisements sent to users via web mail. E-mail ads can be used to notify subscribers of certain promotions, discounts, or new features, among other uses. Most e-mail advertisements feature a large image with minimal text; users will not waste large amounts of time reading e-mail ads, so it is important to make your message as clear and concise as possible. E- mail ads also rely on a compelling subject line to ensure that a user will open the e-mail.
(k) Gmail Ad
Gmail ads in Google's online e-mail service are contextual ads that are generated by an automated process that scans a userÊs e-mails to discover interests and topics that are relevant to the user. If a user is writing and receiving many e-mails about air conditioners, that user may see ads about air conditions appear within the Gmail client. While privacy advocates are wary of such practices, Gmail advertising is fully automated and Google asserts that no humans read user e-mails, only robots.
(l) Youtube Ad
YouTube ads are ads that appear on Google's video-sharing site. Since Google obtained ownership of YouTube, advertising on YouTube has become nearly as easy and customisable as advertising on AdWords. YouTube ads provide a number of targeting options and several different ad formats. YouTube advertisements can appear as banner ads, in-video overlay ads, in-stream video ads (which are video ads that appear before or during another YouTube video), as well as several other setups.
(m) Pinterest Ad
Pinterest ads are simply pieces of content pinned by brands and advertisers. When marketing a specific product, marketers create Pinterest advertisements by adding a dollar sign before the price amount to the description. This tells Pinterest that this item is for sale at that specific price. Pinterest marketers can then link the pinned item to the official product page to drive retail traffic. (n) Instagram Ad There are at the moment no „official‰ Instagram ads just brands being creative and producing Instagram pics that can be shared right alongside user-crafted content. '
ACTIVITY 7.6
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7.5 MEASURING EFFECTIVENESS OF ONLINE
ADVERTISING
There is no precise way to measure the success of an advertising campaign. It is difficult, for example, trying to determine how many sales dollars are generated by each advertising dollar spent. But there are methods that will give advertisers a rough idea of whether advertisements are effective. Since the inception of online advertising, a series of operational measures were employed to quantify the effectiveness of advertising campaigns. To assess the effectiveness of an advertising campaign, advertisers or agencies will normally monitor the following: (a) Sales;
b) New customers;
(c) Requests for information;
(d) Phone inquiries;
(e) Retail store traffic; and
(f) Website traffic or click-through rates.
The following are some of the main measures for online advertising:
(a) Number of Impression Number of impressions or exposures is the number of times an advertisement is displayed to users. "Impressions" refers to the number of times the advertisement is viewed. Some campaigns are purchased by number of impressions. Every time an advertisement is displayed on a user's screen, or every time a page loads with an advertisement on it, an impression is counted, regardless of clicks. Depending on the network or technology used, these advertisements will either be accompanied by an invisible pixel or Javascript code that alerts the hosting server whenever it is loaded. (b) Click-Through Rate Click-through rate (CTR), considered a significant way to measure the performance of online advertisements, is a metric that measures the number of clicks advertisers receive on their advertisements per their number of impressions. It is the ratio of the number of click-throughs to the number of impressions or the percentage of visitors who arrive at a web page and who click on a call-to-action that advertisers want them to click. The call-to-action can be a banner advertisement, a link at the end of a post or any other element on the web page. Most online advertisement networks use some form of URL redirect to measure clicks. Before the user reaches the advertisement's intended landing page, he or she briefly visits the advertisement network's own URL for measurement. This usually happens so quickly that the user does not even notice. Each advertisement has its own redirect URL, so each time that URL is loaded on the server, one click is counted. However, there has been a steady decline in the reported CTR levels through the past years. This declined CTR figures have been mainly attributed to the fact that online users avoid looking at the advertisement items during browsing.
(c) Post-Impression
The number of post-impressions is the number of visits to a website, after exposure to an Internet advertisement, without clicking through the advertisement. This measurement captures both the direct performance of the advertising message and the subliminal effects that this message may have on the online user. However, post-impressions are hard to track and miss some aspects of advertising effectiveness, for example the attitudes of users towards the advertised brand.
(d) Memory-based Measure
This is a traditional measure of advertising effectiveness but it has been revived in the context of Internet advertising. Such measures reflect the attitudinal response of online users to the advertisements displayed to them. Among the methods to quantify the effect of online advertisements are unaided and aided recall, brand recognition, purchase intention and purchase consideration. Recall and recognition tests measure the extent to which web advertising affects the explicit memory of consumers. (e) Priming Priming refers to the exposure of a person to some prior event or stimulus, that is, the prime that results in increased accessibility of information related to this stimulus. Priming studies quantify the implicit memory effects of advertising. Three types of priming are:
(i) Feature priming, which tests the accessibility and readiness of the priming information, for example, by means of word completion tests.
(ii) Semantic priming, which investigates the possibility of semantic changes in implicit memory through the measurement of reaction times to stimuli following semantically-related primes.
(iii) Categorical priming, which looks into implicit associations between categories, for instance, implicit attitudes towards brands.
(f) Bounce Rate
When a page is well-designed, it will be able to keep visitors at your site and it will also encourage them to navigate to other sections or pages of the website including doing a certain action such as to fill out a form, or to show continued interest in what a web page has to offer. On the other hand, a poorly designed page will make visitors leave the site. A bounce rate is calculated when a visitor leave a website. This measurement is useful to improve websites and generate the most leads possible (Podsada, 2013). The bounce rate shows the percentage of visitors that come to a website and leave after seeing the first page. This metric tells advertisers whether the page is effective at making them take action and whether they are attracting the right visitor to the page.
ACTIVITY 7.7
Advertisements on mobile devices are measured in various ways depending on the marketing channel used and its associated measurement capabilities. The Mobile Web Advertising Measurement Guidelines have been developed by the membership of the Mobile Marketing Association (MMA) and other contributors who are representative of the key parties in the mobile marketing ecosystem and include handset manufacturers, wireless operators, ad servers, content providers, agencies, brands and technology enablers. Explain the main measures in mobile web advertising by referring to the guidelines which can be found in this website: http://www.iab.net/media/file/MobileWebMeasurementGuidelines2 FINAL.pdf
SELF-CHECK
7.1 Identify if the following statement is true (T) or false (F) CTR is a key measurement showing advertisers the following:
How well your online advertising, such as Google AdWords or banner ads, are enticing your customers to keep going. How well your website, social media, or mobile advertising is converting visitors into leads and customers. The percentage of advertisers who have a web page that promote click on a call-to-action.
Number of visits to a website, after exposure to an Internet advertisement, without clicking through the advertisement. How effectively your sales team is converting leads into customers. The percentage of visitors that come to your website and leave after seeing the first page. ?
Internet advertising, also known as online advertising is the delivery of advertising messages and marketing communications through the Web. It is a marketing strategy that involves the use of the Internet as a medium to deliver marketing messages to the right customers in order to obtain website traffic. Media planners and advertising agencies have to consider several factors when deciding whether advertising on Internet is right for the advertisers. A good online advertising agency and a good media planner understand both the advantages and disadvantages of the medium in order to create campaigns that set new heights in performance. Having an online presence is a necessity for many companies and organisations. Although beneficial to advertisers, marketing and advertising online have certain disadvantages and downfalls that may persuade the business to use its advertising budget on other marketing methods.
? Internet advertising takes a multitude of forms. More and more innovative types of advertising are coming into existence as the Web matures. Some of the main ones include textual advertisements, banner advertisements, display advertisements, website as advertiser, pop-ups, opt-in mailing, HTML advertisements, video advertisements, interstitials, hybrids advertisements, sponsorship and rich media advertisements.
? There is no precise way to measure the success of an online advertising campaign. It is difficult to determine its effectiveness but there are methods and operational measures which can be employed to quantify the effectiveness of online advertising campaigns.
Advertising fatigue
Pop-ups
Banner advertisement
Real-time advertising
Click-Through Rate (CTR)
Rich media advertisements
Display advertisement
Spam
HTML advertisement
Sponsorship
Hybrid advertisement
Textual advertisement
Interstitials
Video advertisement
Measurability
Website as advertiser
Opt-in mailing
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