Internet Advertising A PROJECT REPORT

Under the Professorship of Prof. Debasis Pradhan

By: Siddhant Bhatia

i

Table of Contents

Introduction __________________________________________________________________________ 1

Evolution of Internet Advertising _________________________________________________________ 2

Profile of Marketers ____________________________________________________________________ 5

Customer Segmentation ________________________________________________________________ 8

Rationale for using Internet Advertising ___________________________________________________ 10

Why Internet Advertising? _____________________________________________________________ 11

Role of Technology____________________________________________________________________ 13

Synergy with Other forms of Communication ______________________________________________ 15

Marketing & Communication Objectives __________________________________________________ 16

Measuring Effectivenenss ______________________________________________________________ 17

Referrences _________________________________________________________________________ 18

1

Introduction dvertising has become a necessity in today’s markets where competition is always on a rise and

market shares of firms are getting thinner. A higher market share can only be possible by

having a strong customer base who are loyal towards a particular product or service. This is where

advertising comes in play. It includes all the actions taken up by either the firm or a marketer to

communicate with the target customers.

With progressing times, Internet has become a necessity in billions of lives. It has been penetrated in

various societies and communities and has been constantly allowing people to carry out various

tasks. With such a high reach, internet has been recognized as an important source of

communicating and promoting with customers. In clear terms, Internet Advertising is the usage of

the Internet as the medium to advertise a company’s product or service to its targeted audience.

This form of advertising has proven to be the most cost effective, and is precisely measurable to

understand the ratio between costs spent to revenue earned. It is also an effective medium of

obtaining new customers.

The primary advantage of using this medium is the greater reach of promotions with minimum

advertising cost. The Internet has quickly become the fastest growing medium for advertising,

outrunning even media monsters such as television and Magazines. We will be discussing further as

to how be internet effective for promotions along with the type of marketers who use them. We will

also be discussing about various ways of segmenting customers and targeting them through various

channels applicable online only. This, off course, would be also discussed in a synergistic

environment where other forms of mediums are also used.

A

2

Evolution Internet Advertising has evolved a long way from:-

Email advertising (which led to large scale commercial spam mails) - Not to be overlooked, more

people use email on a regular basis than use any other online tools. Having a regular opt-in

marketing newsletter should be part of every company’s online advertising strategy to promote

its products or services. Email advertising can also include buying placements in the newsletters

of related companies.

Online classified ads (which displayed clickable commercial banner advertisements, usually at

the bottom of webpages, promoting commercial products) - Banner ads (or web banners), are

for the most part, rectangular image ads that appear on another organization’s website.

One important consideration with banner advertising is that you should only post your ads on

sites that are related to your product or service or that attract your target audience. Banner ad

costs can vary according to the traffic the site gets and can be on a pay per click basis or on a

time based (i.e. monthly) fee basis.

Search engine ads (the inception of keyword auction concept, wherein Google invented

‘AdWords’ and sold the most searched keyword to the highest bidder) - Usually associated with

search engine results ads like Google Adwords and one of the most commonly used forms on

3

online advertising, search based ads are predominantly text based and appear as sponsored or

paid ads when people search for a particular phrase or keyword online.

With search ads you pay or bid on an ad appearing to a searcher (impressions) or when

someone clicks on the ad (pay per click). These ads are highly targeted because they appear only

to the people who enter pertinent related keywords. If you have a new website this is a great

way to get noticed by the major search engines, and really useful if you are going after new

audiences.

The key to being successful using these ads is to use very specific key terms that you know

potential clients will use and to make the most of them in the ad text.

Social networking ads (Facebook, Pinterest, Twitter)- Many of the major social networks

like LinkedIn, Facebook and Twitter allow you to advertise and these social ads are the

fastest growing form of online advertising. The biggest benefit of advertising using social

networks is that your ads can be aimed at a very highly targeted audience and you can get

started with just a few dollars per day to test the waters. Online advertising tools make it easy

for companies to use adverts to reach their audience online and can be a huge driver of targeted

traffic to your website.

4

Recent trends (a combination of advertising on vlogs – Youtube is one such example where

online ads are getting placed. Below is an example which depicts how, on the right, the ads are

displaced which are based on the recent browsing patterns of the customers.

Online magazines (Inc.com, or Entrepreneur.com etc) - Such websites have forums and articles

which are linked with online promoted products or other websites to form a relation. This allows

more hits from customers to those links.

5

Profile of Marketers Any commercial institutions that wish to promote its products or services to customers online and

the advertising agencies who wish to help these commercial institutions sell their services are the

primary users of this form of communication. Marketers using this form of communication usually

try to build a huge database of customer purchase & preferences database, the size of this database

measures the marketers’ effectiveness, they build these databases through behavioral targeting.

Due to the high penetration of Internet in today’s times, any firm can take its leverage and market

its brand and products online. Infact, in contrast to the amount of money the MNCs spend on TV

ads, internet costs one sixth of it. In India, major part of the economy is driven by Small Medium

Enterprises (SMEs). These companies have strong and limited products and services with,

sometimes, limited marketing budgets. In such cases, internet can truly be realized to its full

potential for reaching out to the customers. One example of internet being effectively used is

through Social Media platforms like Facebook and Twitter.

The above graph depicts how Telecom (Airtel, Vodafone, Idea, Reliance and Auto industries (Tata

Motors, Maruti Suzuki, Toyota, Honda) constitute the biggest chunk of marketers as an industry.

0 2 4 6 8 10 12 14 16

Auto

BFSI

Consumer Durables

E-commerce

Education

Electronic Media

FMCG

IT

Online Publishers

Others

Print Media

Telecom

Travel

Industry wise Spends 2012-13

6

Some further examples of how different marketers promote through internet have been illustrated

below.

DFM Foods (creators of Crax snacks) effectively use Youtube and Facebook

to promote their most renowned product Crax to the masses. This includes

using videos and promoting it on YouTube and engaging with customers on

their social media page. Overall, SMEs have been active in promoting their social pages and profiles

in order to communicate and reach out to potential buyers.

Other major players in promoting themselves online are the –

ecommerce websites like Flipkart, Jabong and Myntra. Since their

products are sold using the internet, they have created a fluid eco-

system which takes the consumers to their website from various

online portals. For instance, Flipkart has invested extensively in

Google Ad Words and other forms of Search Engine Optimization (SEO) as in when a person types in

‘buy’ ‘buy online’ ‘buy in India’, Flipkart’s URL comes on the top. This is done through extensive

organic SEO as well as using Pay Per Click (PPC). These web sites also use Referral Marketing to make

consumers reach out to other consumers and, in return, getting discounts and other forms of

incentives. This could only be possible where people are connected to each other and

communication doesn’t take much time.

MNCs like HUL, Nestle and P&G have been dominating the online

advertising space with high marketing budgets aiming a complete

integration between various forms of online marketing along with

other advertising mediums like TV and print media. They aim at

targeting large no. of consumers and creating a deep impact in their

minds. Maggie, a product of Nestle has using online promotion channels like Facebook pages and

Twitter to engage customers by allowing them to submit their personal Maggie stories where they

7

describe how the effective Maggie was in certain situations of their lives to relieve them of their

hunger pangs.

Professionals are also using online advertising medium to showcase their

talents and attract customers who would pay for their services.

Dedicated social sites like Behance and Soundcloud are quite popular

amongst artists and musicians alike. These platforms provide a

systematic and elegant way of creating digital portfolios which could be

conveniently viewed by any customer. YouTube has already

revolutionized video browsing and has effectively given a platforms for

any person to use video to showcase his abilities. These are solid

examples how internet is changing the way professionals do their business and engage with their

respective clients. Another creative example is fiverr.com which allows users to sell their services,

ranging from paid reviewing to creating caricatures, for just 5$.

8

Customer Segmentation Before devising an online promotional strategy it is important to understand which customers to

target. Should they be differentiated based on geography in case of an international brand or

should they be based on certain age and demographic patterns for a national product or a brand?

Should customer loyalty and trust be the prime agenda or sustaining revenue growth?

THoM Yearly Marketing Survey (2010) indicates that Building customer loyalty is the most important

agenda which a marketer looks forward to at 36% with Differentiation from competition the second

highest at 32%. Internet advertising has given us the ability to tweak our preferences and target

specifically customers who’ll favor us. This wasn’t achievable when 10 years back when Google

search engine was still breaking through the masses. However, most companies still use the most

basic segmentation method, being demographics in B2C and firmographics in B2B. Firmographics

are the characteristics of an organization especially when used to segment markets in market

research. On a larger scale, following are the general categories used to define customer

segmentation:-

1. Demographic Segmentation – The question to be addressed here is how we can describe our

customers. This includes customer profiling on the basis of age, sex, nationality, likes, dislikes, and

hobbies and other and then using these to pinpoint customers on the global map.

2. Need based Segmentation – This addresses what the customer actually wants and includes

needs, drivers and other barriers indicating what he/she feels about a product/service, what is

the preference and for which reasons.

3. Usage based Segmentation – This answers as to what, where and how the customer makes the

purchase. This is driven by understanding the past purchases made by customers using which all

channels and for which products/services.

4. Value based segmentation – This looks after the total value which the customer delivers. The

total current/potential value generated by customer and by products and services in terms of the

customer spent – cost to serve.

9

Other forms of segmentation are:-

1. Location OR Geography – This covers the typical location of the customer base which the

marketer will be appealing to and can be further broken down into:-

a. Local – for companies having a single physical location with a limited area coverage.

b. Regional – when physical presence is in multiple locations or the customer base is

scattered in different areas.

c. National – when the operations are based in a particular country or when the

customers are targeted on the basis of the country. This could also include online

trading and e-commerce companies with no physical boundaries.

d. International - for online companies, particularly when you have a select set of

countries that comprise your target market, or for international companies that have

a worldwide presence.

2. Personal Characteristics – These cover the widest range of parameters which could be

tweaked to get the maximum exposure. These cover things like Demographics,

Psychographics and, at times, fully developed Personas. Personas are using precise

characteristics like age, sex, nationality, likes, dislikes, hobbies and other factors to develop

profiles and then using these to pinpoint customers on the global map.

3. Industry OR Business Segment – At times, firms use internet to communicate with their

customers from different industries such as automobiles or IT. The major reason over here is

to promote a particular brand or the company as a whole to other buyers by showcasing the

products and services offered. This generally takes place through individual websites or

through other dedicated portals like Indiamart.com or Alibaba.com. These portals provide a

platform for various industry suppliers to target potential buyers. Also earlier, companies

didn’t resort to using social networking sites due to their casual approach. With time, these

10

companies have realized the potential of targeting a larger base and also utilizing a quick and

effective of communicating with the value chain partners.

11

Rationale for using Internet The marketers promote their products on forums where there is a large footfall potential

customers, the Internet is no different. The Web is now a common tool & an integral part of any

person’s life, thus online advertising can often be delivered in a much more targeted way toward

specific market segments, as compared to traditional advertising, hence advertisers target forums

with maximum web traffic.

Online advertising is a rapidly growing, multi-billion dollar industry. In the past two decades it has

grown at least an order of magnitude faster than advertising in other media. According to the Global

Online Advertising Spending Statistics the total internet advertisers spend in 2012 is estimated at

over 94.2 billion dollars and the prediction is it will reach to 132 billion dollar by the end of 2014.

It has different formats, including search advertising, display advertising, social network advertising,

in app/game advertising. It contains multiple parties (i.e., advertisers, users, publishers, and ad

platforms such as ad exchanges), which interact with each other harmoniously but exhibit a conflict

of interest when it comes to risk and revenue objectives.

The Internet has no “business” hours. It’s open 24/7/365. That gives you the ability to promote, to

engage and, most importantly, to sell around the clock. As mentioned above, traditional media

advertising (like newspaper and television) may cast a wide net but is limited in scope. Online

marketing is also a time and money saver in other ways.

12

Why Internet Advertising? With a massive audience already using internet in their daily lives and the increasing penetration

of internet facilities, online advertising is becoming more conducive as a cheap and effective way

of promotion. From official work by professionals to connecting with friends on social networking

websites, Internet is a prime medium.

With more people relying on Internet based utilities, Internet advertising is becoming the main

source of reaching out to people. The advantages it provides over other mediums is, most

importantly, immediate publishing of information and content i.e. information can be immediately

relayed to a targeted audience that does not suffer geographical or time restrictions.

Advertisements can be customized in terms of content and keywords, enabling the display of an

advertisement to appear on relevant web pages. Online marketers are able to create, deliver and

execute an online marketing campaign to a full spectrum of viewers, spending only what’s necessary

in order to reap maximum rewards later on. This ensures the advertiser a cost effective way of

advertising.

Main features of Internet Advertising are broadly listed below:-

1. Cost effective – Comparatively, the overall cost spent on advertising through online media is

much less in contrast to the cost required to advertise through television.

2. Massive reach – Due to high penetration of internet in the modern society, a mass market

can be targeted through this medium. Internet is also found in rural and semi-rural areas

where some people have started using e-commerce sites to order products.

3. Visual Appeal – Internet advertising is a creative field where attractive looking ads are

designed with the use of images, texts and videos. These can also be interactive where

customer is required to give his/her input to make the ad respond accordingly, a feature not

found on TV.

13

4. Measurable – With stand along tools like Google Analytics and other statistical tools built in

platforms like Mail Chimp and Slideshare, progress and performance of ads are calculable

5. Targeted approach – Internet tools allow easy customisation based on the agendas to create

customer segmentations. This can be done in a precise and clear manner, thanks to highly

modernised protocols and built in extensive search tools.

6. Quick reach – It also provides instant connectivity so much so that, with a click of a mouse, a

marketer can launch the ad campaign viewable to billions of customers on the web.

14

Role of Technology Internet is a crucial part of the technology domain where other forms of technology plays an

important role in carrying out effective online advertising. With devices like mobile phones and

tablets, laptops and desktops being used worldwide and in masses, reaching out through internet is

indeed highly preferred. When mobile phones were scarce, ads were only limited to TV, radio and

print. With a mass penetration of phones along with high speed connectivity like 3G and 4G,

browsing the web and checking mails have been preferred on the go. Also, people can now

conveniently watch videos and view other multimedia mediums like pdf, audio files, flash based

content and other forms.

In terms of a customer making a purchase, it has been a common trend that he first researches

online about the various products which could satisfy his needs. He then, shortlists certain products

which could effectively provide utility and satisfy the requirements. Now, he can either make a

purchase online or go to a store for a demo. At times, a visit to store is also not made as the

customer gets convinced by the reviews of other customers who bought the same product. This can

be demonstrated with the image below:-

15

This beautifully illustrates how customers are researching about the products online and then

making a purchase through the store or through an online e-commerce site. With high priced

electronic items, a customer visits a physical store whereas for non-luxury items or necessity items,

he prefers to purchase online due to the assurance about the quality and the convenience of getting

it delivered at the doorstep. This demonstrates how the lines between online and offline shopping

experiences are blurring.

With new technology areas like TVs (Apple TV and Google YouTube) and Home Appliances getting

internet rich features, internet ads will have a major role in reaching out to customers.

16

Understanding Synergy with other Mediums With the capable technology developing in and around the business community and the society, a

synergistic effect can be achieved and is, mostly, desirable. MNCs before launching a product

ensure that they cover other popular media formats like broadcasting and print along with right

internet tools to create a much deeper and larger customer impact. This is also to ensure that the

brand or a product/service is viewed by a particular audience for a longer time. Also at times,

marketers are looking forward to targeting customers who are linked to other media formats. In

such a case, a common unified theme is defined and advertised using various mediums. For

Example: Amir Khan endorses the Godrej products, this ad was originally initiated as an online

advertisement & this has been carried forward in Television ads as well. Nowadays various ad

campaigns are launched simultaneously on different ad mediums. This could also include good

Public Relations having a personal and more dedicated approach to customers. This is most

commonly found in new movies and TV series which are advertised one to two months before them

being broadcasted.

Above is an example where on the left is a print ad of the movie ‘My Name is Khan’, in the center is

a poster of the same movie on the billboard and on the right is a snapshot from a YouTube trailer.

17

Marketing and Communication Objectives Most advertisers need to understand as to who to target and what type of information needs to

be communicated. A well-defined advertising plan will include what cost is the advertiser ready to

pay along with quantitative targets set for the desired results in order to quantify the

implementation. Also having a direct and clear approach, keeping in mind the psychological profiles

of the people targeted is important. Factors like demography, internet usage time, and personal

preferences also play an important role in chalking out the marketing and advertising objectives.

Since internet promotion is a cost effective medium in comparison to TV or print ads and can target

a large audience with customizable options based on consumer profiles, it does fulfil most of the

objectives.

Marketing Objectives should identify various customer segments which are to be served and how to

serve each one of them. The prime agenda over here is to that needs and wants of the consumer are

to be identified and then the communication objectives are chalked out.

Communication Objectives will detail the activities taken up to create awareness, generate interest,

disseminate information, create an image, and create a strong brand

18

Measuring Effectiveness Understanding how online marketing works, develops from the beginning and grows is of vital

importance. Defining the objectives of online communications strategies is the initial step in

measuring the effectiveness. Aspects like age and gender, demographic patterns, actual internet

usage, favorite websites and search engine, and personal preferences. All of these are comprised

under consumer browsing behavior, measuring which will help an advertiser develop an effective

online promotion plan. Some the ways of measuring the performance of online promotion is by:-

• Effectiveness of SEO is measured with the position of the website in the search engines on

prominent key words. Tools like Google key words, SEO profiler is used - Effectiveness of

SEM (search engine management) is measured on the basis of improvement in quality score.

Tools like SEM Rush, Comscore are used.

• Real Time Web Analytics like Google Analytics to measure the effectiveness of SEM (both

search and display advertising). We can get the following data analysis : Page views, unique

visitors, time on site, time on the web page, new visitors, repeat/ return visitors, frequency,

pages per visit, bounce rate and exit rate.

• E-Mail Marketing – Using various tools like Open Rates, Click Rate, Bounces and Conversions,

one can measure the interaction of customers with the ad mails.

• Affiliate Marketing – This involves taking the help of professionals to target customers.

These professionals provide detailed analysis of the performance of promotional material in

the form of Click-through Rate (CTR), Conversion Rate, Average Order Value (AOV), Earnings

Per Click (EPC).

19

References The following websites have been referred in preparing this project report:-

1. http://en.wikipedia.org/wiki/Online_advertising

2. http://www.webopedia.com/TERM/I/internet_marketing.html

3. http://www.economist.com/node/7138905

4. http://techcrunch.com/2014/01/27/nielsen-internet-advertising-grew-32-in-2013-but-its-

still-only-4-5-of-spend-vs-tv-at-57-6/

5. http://www.cnbc.com/id/101365274