Internet

InternetAdvertising
Advertising and
and
Customer Acquisition
Techniques
Techniques

Chapter
Chapter 44
The Internet Audience
Before firms can sell their products online, they first must
understand what kinds of people they will find online and
how those people behave in the online marketplace
Questions:
Who is online?
•
How do people behave online?
The Internet Audience
In 2013 in the US, around 243 million people of all ages
had access to the Internet
Almost 85 million households in the US (over 70% of all
households) had broadband access to the Internet
By comparison, 98% of all US households currently have
televisions and 94% have telephones
Worldwide, around 2.56 billion people are online
Internet growth has slowed to about 2-3% a year in the
US and it is unlikely that Internet access will reach the
same levels as televisions or telephones in the near future
Here are the top 20 most-used social networking sites and apps in the world,
2019

Facebook: 2.27 billion.

YouTube: 1.9 billion.
WhatsApp: 1.5 billion.
Facebook Messenger: 1.3 billion.
WeChat: 1.08 billion.
Instagram: T billion.
Intensity and Scope of Usage
The slowing growth rate in the US Internet population is
compensated for in part by an increasing intensity and
scope of use
Overall, over 80% of adult Internet users in the US report
logging on in a typical day
They also spend more time online over 2 hours per day
In 2013, mobile smartphones and tablets are major
access points to the Internet and online commerce
About 143 million people, almost 60% of US Internet
users, access the Internet using a mobile device
Demographics and Access
The demographic profile of the Internet and e-
commerce has changed greatly since 1995
Up until 2000, single, white, young, college-educated
males with high incomes dominated the Internet
This inequality in access and usage led to concerns about
a possible "digital divide"
Demographic similarities and differences can be
assessed by looking at:
Gender, age, ethnicity, community type, income level, and
education
Demographics and Access (cont.)
Gender
Fairly equal percentage of men and women users (85%)
Age
Young adults (18-29) form the age group with the highest
percentage of Internet use (98%)
Teens (12-17) also have a very high percentage of their age group
online (97%)
Adults in the 30-49 group (92%) are also strongly represented
Another fast-growing group online is the 65 and over segment, 56%
of whom now use the Internet
Demographics and Access (cont.)
Ethnicity
Variation across ethnic groups is not as wide as across
age groups
In 2004, there were significant differences among ethnic groups,
but this has receded
Income level
About 96% of households with income levels above $75,000 have
Internet access, compared with only 76% of households earning
less than $30,000
Demographics and Access (cont.)
Education
Of those individuals with a high school education or
less, 59% were online in 2013, compared to 96% of
individuals with a college degree or more
In summary, the "digital divide" has indeed moderated, but
it still persists along the income, education, age, and
ethnic dimensions (Table 6.3 provides a summary)
Consumer Behavior
Once firms have an understanding of who is online, they
need to focus on how consumers behave online
The study of consumer behavior is a social science
discipline that attempts to model and understand the
behavior of humans in a marketplace
Models of consumer behavior attempt to predict or
"explain" what consumers purchase and where, when,
how much, and why they buy
The following slides describe a general model of
consumer behavior and a more detailed model of online
consumer behavior
FIGURE 6.1 A GENERAL MODEL OF CONSUMER BEHAVIOR

Cultural Brand

Marketing
In-store Buyer
Social Communications
Behavior Decisions
Stimuli

Firm
Psychological
Capabilities

Independent Intervening Dependent

Demographic Variables Variables
Variables Market Stimuli
Background Social Networks
Factors Communities

SOURCE: Adapted from Kotler and Armstrong, 2009.

FIGURE 6.3 MODEL OF ONLINE CONSUMER BEHAVIOR

Brand

Marketing
Culture Communications |
Stimuli
Purchasing
Attitudes
Firm
Social Norms
Capabilities
Perceived
Behavioral Purchase
Control
Psychological Web Site Jo!eueg
weansyous

Factors Features
Social
Networks
Background Consumer
Demographic |
Skills
Factors

Product
Characteristics
Clickstream Behavior
Clickstream behavior refers to the transaction log that
consumers establish as they move about the Web
They may move from search engine, to a variety of sites,
then to a single site, then to a single page, and then,
finally, a decision to purchase
Understanding individual user clickstream behavior may
enable websites to be designed to better support this
online purchase decision process
 TABLE 6.2 WHY CONSUMERS CHOOSE THE ONLINE CHANNEL

REASON PERCENTAGE OF RESPONDENTS

24-hour shopping convenience 35.1%

Easier to compare prices 33.1%

Free shipping offers 31.5%

No crowds like in mall/traditional stores 30.8%

More convenient to shop online 29.2%

Easier to find items online than in stores 17.5%

Better variety online 17.4%

No sales tax 14.9%

Direct shipping to gift recipients 13.8%

Easier to compare products 11.4%

SOURCE: Based on data from eMarketer, Inc., 2011a.

How Shoppers Find Vendors Online
Given the prevalence of "click here" banner ads, one
might think customers are driven to online vendors by
spur-of-the-moment decisions
In fact, only a tiny percentage of shoppers click on
banners to find vendors
The three most common methods that shoppers use to
find vendors online include:
Search engines
Online marketplaces (for example Amazon and eBay)
Go directly to a specific retail Web site
Online buyers are "goal-oriented" and intentional
shoppers
Why More People Don't Buy Online
Probably the largest factor preventing more people from
shopping online is the "trust factor"
• Distrust for online merchants
Credit card information loss
Use of personal information and invasion of privacy
Secondary factors can be summarized as "hassle factors"
Shipping costs
Returns
• Inability to touch and feel the product
FIGURE 6.5 ONLINE ADVERTISING FROM 2004-2017

$60 30.0%
29%
28%
$55 27.5.0%
5
billions)

27% Spending
$50 25.0% 9
$45 22.5%

22% 20.0%
¿ $40 20%

$35 17.5%
17%
$30 15.0%

$25
Total Online Ad Spending
12.5%
e!pow . 12101 jo oBequoaJod

$20 10.0%

$15 7.5%

$10 5.0%

.6%
$5 2.5%

$O 0.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

SOURCES: Based on data from eMarketer, Inc., 2013h.

Search Engine Marketing and Advertising
In 2013, companies will spend an estimated $19.6 billion
on search engine marketing and advertising
Search engine marketing (SEM) refers to the use of
search engines to build and sustain brands
Search engine advertising refers to the use of search
engines to support direct sales to online customers
There are at least three different types of search engine
advertising:
Keyword paid inclusion (sponsored links)
Advertising keywords (for example, Google's AdWords)
Search engine context ads (for example, Google's AdSense)
Originally, search engines performed unbiased searches
(organic search), but this has transformed to a pay model
Search Engine Issues
While search engines have provided significant benefits
for merchants and customers, they also present risks and
costs
Search engines have the power to crush small
businesses
Merchants may be at the mercy of search engines for
access to the online marketplace
Other practices that degrade the results and usefulness of
search engines include:
Link farms
Content farms
Click fraud
FIGURE 6.7 HOW AN ADVERTISING NETWORK SUCH AS DOUBLECLICK
WORKS

MERCHANT SITE ADVERTISING NETWORK

DoubleClick.Net User
Profile
Merchant server connects Ad server reads cookie; [ Database
to DoubleClick ad server checks database for profile

4 Ad server selects
and serves an
appropriate
Network
banner ad
Member
based on
Firms
profile

Consumer
requests Web
page from ad
network DoubleClick follows consumer from

member site site to site through use of tracking files

CONSUMER
Internet Marketing Technologies
Online data sources
Web transaction logs records user activity at a Web site
Registration forms
Shopping carts
Tracking files (cookies, etc.)
Databases, data warehouses, data mining, and big data
• Customer relationship management (CRM) systems
Database: Stores records and attributes
Database management system (DBMS):
Software used to create, maintain, and access databases

SQL (Structured Query Language):

Industry-standard database query and manipulation language used in a
relational database
Relational database:
Represents data as two-dimensional tables with records organized in
rows and attributes in columns; data within different tables can be
flexibly related as long as the tables share a common data element
Data warehouse:
Collects firm's transactional and customer data in single
location for offline analysis by marketers and site managers
Data mining:
Analytical techniques to find patterns in data, model
behavior of customers, develop customer profiles
• Query-driven data mining
Model-driven data mining
Rule-based data mining
'Big data"
Web traffic, e-mail, social media content
Traditional DBMS unable to process the volumes-
petabytes and exabytes
Hadoop
Open-source software solution
Processes any type of data, including unstructured and
semi-structured
Distributed processing
 Create customer profiles:
profiles:
Product and usage summary data
Demographic
Demographicand
andpsychographic
psychographicdata
data
Customer Relationship Profitability
Profitability measures
measures
Contact history
Management
Management(CRM)
(CRM) Marketing
Marketing and salesinformation
and sales information
Systems Customer
Customer data
data used
used to:
to:
Develop and sell additional
additionalproducts
products
Identify
Identify profitable
profitablecustomers
customers
Optimize
Optimize service
service delivery,
delivery,and
andso
soon
on

Copyright©©2014
Copyright 2014Pearson
PearsonEducation,
Education,Inc.
Inc.Publishing
PublishingasasPrentice
PrenticeHall
Hall Slide
Slide 6-25
6-25
 A CRM System
Figure 6.10,
6.10, Page
Page 387

Business intelligence
Data mining
IHM EE
Analysis and reporting
Modeling

Marketing campaign management

Data aggregation Advertising campaign management
Data cleaning Behavioral targeting
Customer database
Data warehouse

Transaction processing
Operational data collection

tb Site Transiation

htto:ww.
Aa
Telephone Sales force Web site In-store Social networks Mail

Customer Touch Points

Copyright ©
Copyright © 2014
2014Pearson
PearsonEducation,
Education,Inc.
Inc.Publishing
Publishingas
as Prentice
PrenticeHall
Hall Slide
Slide 6-26
6-26
 How CRM fits in with your Online Strategy

Leads Capture Website cwitker

Form
WORDPRESS.COM facebook.

Linked in

E-commerce Self Help

Online Customer
Shopping Portal

CRM SYSTEM

Reports and Analytics

Copyright Sankhya Consultants 2013
Group Activity
Watch and
and assess
assess the CRM Video and answer
answer the
thefollowing
followingquestions:
questions:
1.
1.How
How CRM
CRM works
works for
for business
business
2. What
What are
arethe
thefeatures
featuresofofthe
theCRMsystem
CRMsystem
3. What
What are
arethe
theadvantages
advantagesofofthe
theCRM
CRMapplication
applicationsystem
system
4. Discuss
Discuss your overall
overallconclusion
conclusionononthe
thesystem
system

Video clip:
https://www.youtube.com/watch?v=7me7mjvTiTI
https://www.youtube.com/watch?v=7me7mjvTiTI
 T
ThaukYou!