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Online Advertising. Speaker: Jerry Gao Ph.D. San Jose State University email: [email protected] URL: http://www.engr.sjsu.edu/gaojerry Dec., 2000. Introduction to Web Advertising. Introduction to Advertising Introduction to Web Advertising Web Advertising Methods - PowerPoint PPT Presentation
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Online Advertising
Speaker: Jerry Gao Ph.D.
San Jose State Universityemail: [email protected]
URL: http://www.engr.sjsu.edu/gaojerry
Dec., 2000
Introduction to Web Advertising
• Introduction to Advertising• Introduction to Web Advertising• Web Advertising Methods• Web Advertising Business Models• Web Advertising Technologies• Web Advertising Tools• Web Advertising Business Companies• Samples of Business Financial Information
Introduction to Advertising
Definition of advertising:
- Advertising is a form of mass communication, it is also nonpersonal.
- Advertising is paid nonpersonal communication from an identified sponsor using mass media to persuade or influence an audience.
- Advertising is one of the four marketing techniques (advertising, sales promotion, public relations, personal selling)
Types of Advertising:
Brand advertising Retail advertisingPolitical advertising Directory advertisingDirect-response advertisingBusiness-to-business advertisingInstitutional advertisingPublic service advertising
Introduction to Advertising
Types of advertising:
- Brand Advertising: (Irrand advertising)- The most visible type of advertising is national consumer advertising.- It focuses on the development of a long-term brand identity and image.
- Retail Advertising: - It is local and focuses on the store where a variety of products can be purchased or where a service is offered. Retail advertising emphasizes price, availability, location, and hours of operation.
- Political Advertising:- It is used by politicians to persuade people to vote for them and therefore is an important part of the political process in democratic countries.
- Directory advertising: (such as yellow pages)- It is used to help people to find out how (where) to buy a product or service.
Introduction to Advertising
Types of advertising:
- Direct-response advertising:- It can use any advertising medium, including direct mail, but the message is different from that of national and retail advertising in that it tries to simulate a sale directly.
- Business-to-business advertising:- It includes messages directed at retailers, wholesalers, and distributors, aswell as industrial purchasers and professionals such as lawyers and physicians.
- Institutional advertising: (corporate advertising)- It focuses on establishing a corporate identity or winning the public over to the organization’s point of view.
- Public service advertising (PSA):- PSA communicates a message on behalf of some good cause.- These advertisements are created for free by advertising professionals, and the space and time are donated by the media.
Four Major Roles of Advertising:
•Marketing Role- target market, marketing communication
•Communication Role- a form of mass communication. It transmits different types of market information to match buyers and sellers in the marketplace.
•Economic Role- two major schools of thought concerning the effects of advertising on the economy: a) market power, b) market competition.- market power school
“as a persuasive communication tool to distract consumers’ attention from the price of product.”- market competition school
“ as a source of information that increases consumers’ price sensitivity and stimulates competition.”
•Societal Role- inform us about new improved products- teach us how to use these innovations- help us compare products and features- make informed consumer decisions.
Introduction to Advertising
Functions of Advertising:
•Direct action versus indirect action- Direct-action advertising is intended to produce a quick response.Such as, coupon with an expiration date, or a sale with expiration date, 800 number, a mail-in-order. - Indirect-action advertising is designed to stimulate demand over a longer period of time.
•Primary versus selective- Primary advertising aims to promote demand for a generic product.- Selective advertising attempts to create demand for a particular brand.
•Commercial versus noncommercial- Commercial advertising promotes a product with the intent of making a profit.- Noncommercial advertising tends to be sponsored by organizations that are not in business to make money.
Introduction to Advertising
The Four Major Players on Advertising:•The advertiser - the individual or organization that usually initiates the advertising process. He/She makes the final decisions on:
- where, whom the Ad will be directed to- the used media- the budget, size and location- the Ad schedule and duration
•The advertising agency•The media•The vendor
Introduction to Advertising
The Types of Advertisers:
•Manufactures - product makers•Resellers - wholesalers or retailers•Individuals - individual advertisers •Institutions - institutions, government agencies, and social
groups.
Introduction to Advertising
The Four Major Players on Advertising:•The advertiser - the individual or organization that usually initiates the advertising process. He/She makes the final decisions on:
- where, whom the Ad will be directed to- the used media- the budget, size and location- the Ad schedule and duration
•The advertising agency•The media•The vendor
• Forester Research, Inc. estimates $1.5 billion was spent on Internet advertising worldwide in 1998. $5.5 billion will be spent in 2002, and that amount will increase to $22 billion in 2004.
0
5
10
15
20
25
1998 2002 2004
billion
The Web Advertising Industry
Introduction to Web Advertising
Size W(pixels)
H(pixels)
Name
468*60 468 60 Full Banner392*72 392 72 Full Banner/Vertical navigation Bar234*60 234 60 Half Banner125*125 125 125 Square Button120*240 120 240 Vertical Banner120*90 120 90 Button #1120*60 120 60 Button #288*31 88 31 Micro Button
Standard Banner Size for Web Advertising
468 * 60 pixelsFull Banner
397 * 72 pixelsFull Banner / Vertical Navigation Bar
234 * 60 pixelsHalf Banner
120 * 240 pixels
VerticalBanner
120 * 90 pixelsButton #1
125 * 125 pixelsSquare Button
120 * 60 pixelsButton #288 * 31
Standard Banner Size for Web Advertising
Web Advertising Methods
•AD Email•AD Banner•Directed AD•Dynamic AD•Promotional Programs•Push ADs
•Membership•Search Engine or Portal•Rich Media AD•Superstitial AD•Transitional•Multi-player Games
Web Advertising Business Models
Ad Serving:
- Providing a systematic process and services for businesses to publish advertisements on the web
Ad Networking:
-Ad Networks are third parties that take a portion of the advertising inventory and sell it monthly to appropriate sites.
Web Advertising Business Models
Classified AD:
- Providing a systematic process and services for businesses to publish their advertisements on the web in web sites.
Ad Exchange:
- An AD brokerage marketplace is set to support AD space exchanges and service over the Internet between different web sites.
Media Auction Sites:
- Providing online trading service for businesses to offer the remaining advertising inventory to the highest bidder over the Internet
Web Advertising Solutions
For Businesses:
•Advertising Process Management:•AD Inventory Management•AD Process Management•AD Planing & Scheduling•AD Tracking & Reporting•AD Performance Analysis
•Advertising Services:•AD generation service•AD campaign and placement service•AD delivery, monitor, and tracking
Web Advertising Solutions
For Publishers:
•AD Space Management:•AD Inventory Management•AD Space Process Management•AD Space Planing & Scheduling•AD Space Tracking & Reporting
•AD Space Trading:•AD Space for Sell and for Rental•AD Space Campaign•AD Space Auction &Negotiation
Web Advertising Solutions
For Advertising Agency:
•AD Marketing Process Management:•AD Marketing Plan•Advertising Process Management
•Advertising Community Support:•Search or AD Space Search •AD Service Business Search•Advertising Yellow Page•AD Business Association Support
•AD/AD Space Brokerage:•AD or AD Space Champing•AD or AD Space Auction
Web Advertising Technologies
•Internet-Based Technology:•HTML-Based Banners•JavaScript-Based Dynamic Graphics •Image-Based Static/Dynamic Banners•VML-Based Graphics•Email•SVG
•Rich Media:•Voice, Video, Text
Type of Ad Size Cost Effectiveness BandwidthBanners - Static Various
standardsizes
Inexpensive LessResponse. Low
Banners -Animated
Variousstandardsizes
Moreexpensivethan staticbanner
Betterresponse. Low
Banners – HTML Varied Inexpensive Higherresponse thananimated
Low
Banners – Richmedia
Varied MoreExpensive
Highresponse High
Button Small Inexpensive Effective infreedownloads
Low
E-mail N/A Inexpensive Reaches apreciselytargetedaudience
Low
Text Links N/A Inexpensive Moderatelyeffective Low
Interstitials(pop windows)
Varioussizes
Moderate Not veryeffective Medium
Interstitials –Rich media
Varied MostExpensive
VeryEffectiveHighresponse
High
Comparison of Web Advertising Methods
Type ofAdvertisement
WebAdvertisement
PrintAdvertisement
TV / Radio
Selectivity Very High High Low
Targetability High High Very High
Feedback High Low Very Low
Cost$1-$2 per click,
$4-$7 perimpression
Expensive More Expensive
Cost MethodCPMCPC
Depend on thepage size and
publisher
Depend onchannel and time
Trackability Easy tracking Difficult Difficult
MeasurementMethod
Impressions/ permonth
Volume of copiesper issue
Time (Sec)
Flexibility24 hours a day, 7days a week, 365days a year, canchange ad many
times
can’t change ad,Limited issues
can change adbut expensive
Comparison of Web and Traditional Media
Billing Methods
Models High LowCost-per-impression >$70 5Cost-per-click $1.00 $0.13Pay-per-sales 20% of sales 2% of salesPay-per period 20,000 5,000
A. Cost Per Impression (CPM) BannerB. Cost Per Click (CPC) BannerC. Pay Per Sales (Affiliate Web Sites)D. Pay Per Period (Online Sponsorship)
Sample Ad Rate Guide-Sample rates as of June, 2000
Impression Rate Impression 1 Month Run of Site 1 Month
500,000 $40/CPM 1,000,000+ 14/CPM 1-249,000 $29/CPM
860,000 $35/CPM 750k-999k $18/CPM 250-499k $28/CPM
2,000,000 $30/CPM 500k-749k $22/CPM 500-999k $27/CPM
4,000,000 $25/CPM 250k-499k $26/CPM 1.0-1.9 mil $24/CPM
8,500,000 $20/CPM 249k or less $30/CPM 2-2.9 mil $22/CPM
3-4.9 mil $20/CPM
5 mil+ $18/CPM
Nat’l Newspaper Site E-Mail Newsletters Search Engine/Portal
Major Players in Web Advertising
AD Networking Players:•24/7 Media•AdForce•AdKnowledge•DoubleClick•Flycast•MatchLogic
AD Serving Players:•Accipiter•AdForce•AdKnowledge•DoubleClick•Net Gravity•Real Media’s Open AdStream
Media Auction Site Players:•AdAuction•AdOutlet
Company 3 Month Period Ended in 4/00 V.S.DoubleClick 240% increaseEngage 1,188% increase24/7 Media 287% increaseVaueClick400% increase
Company 3 Month Period Ended in 4/00 V.S.DoubleClick 179% increaseEngage 1,033% increase24/7 Media 229% increaseVaueClick450% increase
Company 3 Month Period Ended in 4/00 V.S.DoubleClick 171% increaseEngage 1,330% increase24/7 Media 372% increaseVaueClick665% increase
Operating Expenses
Cost of Revenue
Revenue
Financial Status of Web AD Companies
Web Advertising - Problems and Issues
Problems:• How to measure of effectiveness of online advertising?
- Evaluation formula and metrics.
• How to track, measure, and analyze the AD viewers?- AD targeting- Measurement and analysis of AD viewers
• Standardization of web advertising:- Standardization of web advertising protocols- Standardization of web advertising management processes- Standardization of web AD in different technologies
• New technologies and methods to support web advertising in:- AD display and presentation- AD tracking and analysis- AD management and control