ECOMM QUIZ REVIEWER CONSUMER BEHAVIOR - a social science

discipline that attempts to model and understand the

CHAPTER 6
behavior of humans in a marketplace
E-COMMERCE MARKETING AND
ADVERTISING CONSUMER BEHAVIOR MODELS try to
predict the decisions that consumers make in the
WHAT’S NEW IN ONLINE MARKETING marketplace
AND ADVERTISING 2020–2021
BUSINESS A GENERAL MODEL OF CONSUMER
BEHAVIOR
• Although online marketing and advertising
spending had been increasing by over 20% a year
over the last five years (while most forms of
traditional media marketing and advertising were
either flat or declining), the Covid-19 pandemic
impacted all types of ad spending, including digital,
in 2020. Digital ad spending worldwide increased
by less than 5% in 2020 but is expected to resume
growing at double-digit rates in
2021 and continue to comprise an ever-increasing
share of all ad spending, reaching almost 65% by
2024.
• Mobile advertising is the platform for over 70% of THERE ARE FIVE
all digital advertising spending. STAGES IN THE CONSUMER DECISION
• Search engine marketing and advertising remain PROCESS:
important, but its rate of growth is slowing 1. awareness of need
somewhat compared to other formats. Search ad 2. search for more information
spending remained relatively flat in 2020 due to the 3. evaluation of alternatives
Covid-19 pandemic, but is expected to resume 4. the actual purchase decision
growing at a faster pace in 2021. 5. Post-purchase contact with the firm.
• Digital video ads remain the fastest-growing ad
format.
• Social network advertising and marketing
spending continues to expand.
• Viewability issues and ad fraud continue to cause
concerns for marketers.
• Native advertising and other forms of content
marketing rise.

TECHNOLOGY
• Ad-blocking software creates concern for both
online publishers and advertisers.
• Big data: online tracking produces oceans of data,
challenging business analytics programs.
• Cloud computing makes rich marketing content
and multi-channel, cross-platform marketing a
reality.
• Programmatic advertising (an automated,
technology-driven method of buying and selling
display and video ads) takes off.

SOCIETY
• Targeted advertising based on behavioral tracking
leads to growing privacy awareness and fears.
• Marketers become increasingly concerned about
the placement of their ads next to controversial
online content, giving rise to advertising boycotts
and companies focusing on brand safety.
In this general model of online consumer behavior,
the decision to purchase is shaped by background
demographic factors, several intervening factors,
and, finally, influenced greatly by clickstream
behavior very near to the precise moment of
purchase.
CLICKSTREAM BEHAVIOR refers to the
transaction log that consumers establish as they
move about the Web, from search engines to a
variety of sites, then to a single site, then to a single
page, and then, finally, to a decision to purchase.
These precious moments are similar to “point-of-
purchase” moments in traditional retail.
CLICKSTREAM BEHAVIOR the transaction log
that consumers establish as they move about the
Web
ONLINE MARKETING AND ADVERTISING
STRATEGIES AND TOOLS
CUSTOMER EXPERIENCE the totality of
experiences that a customer has with a firm,
including the search, informing, purchase,
consumption, and aftersales support for its products,
services, and various retail channels
ONLINE ADVERTISING is a paid message on a
website, app, or other digital medium
AD TARGETING the sending of marketing
messages to specific subgroups in the population
SEARCH ENGINE MARKETING (SEM) refers
to the use of search engines to build and sustain
brands
SEARCH ENGINE ADVERTISING involves the
use of search engines to support direct sales to
online
ORGANIC SEARCH inclusion and ranking of
sites depend on a more or less unbiased application
of a set of rules imposed by the search engine
PAID INCLUSION for a fee, guarantees a
website’s inclusion in its list of sites, more frequent
visits by its web crawler, and suggestions for
improving the results of organic searching
PAY-PER-CLICK (PPC) SEARCH AD primary
type of search engine advertising
KEYWORD ADVERTISING merchants purchase
keywords through a bidding process at search sites,
and whenever a consumer searches for that word,
their advertisement shows up somewhere on the
page
NETWORK KEYWORD ADVERTISING
(CONTEXT ADVERTISING) publishers accept
ads placed by Google on their websites and receive
a fee for any click-through from those ads
SEARCH ENGINE OPTIMIZATION (SEO)
techniques to improve the ranking of web pages
generated by search engine algorithms
PANDA change in the Google algorithm to
eliminate low-quality sites from search results
PENGUIN change in the Google algorithm to
eliminate sites with low-quality backlinks
HUMMINGBIRD semantic search component of
Google’s search algorithm
KNOWLEDGE GRAPH function in Google’s
search engine that displays a selection of facts
related to your search term that you may be
interested in knowing more about
POSSUM algorithm update that varies local results
based on searcher's location
FRED algorithm update that targets websites that
violate Google guidelines
SOCIAL SEARCH effort to provide fewer, more
relevant, and trustworthy results based on the social
graph
VISUAL SEARCH uses artificial intelligence
technologies, such as machine learning and
computer vision, to help people search for
information based on visual images rather than
through text search
VOICE SEARCH uses artificial intelligence
technologies, such as natural language processing,
to help people to search for information through
spoken voice commands rather than typing
CLICK FRAUD occurs when a competitor clicks
on search engine results and ads, forcing the
advertiser to pay for the click even though the click
is not legitimate
CONTENT FARMS companies that generate large
volumes of textual content for multiple websites
designed to attract viewers and search engines
LINK FARMS groups of websites that link to one
another, thereby boosting their ranking in search
engines
BANNER AD displays a promotional message in a
rectangular box at the top or bottom of a computer
screen
RICH MEDIA AD ad employing interactive
features that engage the user
VIDEO AD TV-like advertisement that appears as
an in-page video commercial before, during, or after
content
SPONSORSHIP a paid effort to tie an advertiser’s
name to information, an event, or a venue in a way
that reinforces its brand in a positive yet not overtly
commercial manner
NATIVE ADVERTISING advertising that looks
similar to editorial content
CONTENT MARKETING creates a content
campaign for a brand and then attempts to secure
placement on a variety of websites
ADVERTISING NETWORKS connect online
marketers with publishers by displaying ads to
consumers based on detailed customer information
HOW AN ADVERTISING NETWORK
WORKS
1. Consumer requests web page from ad
network member site
2. Merchant server connects to ad network ad
server
3. Ad sever reads cookie; checks database for
profile
4. Ad server selects and serves an appropriate
display ad based on profile
5. Ad network follow consumer from site to
site through use of tracking files
AD EXCHANGES auction-based digital
marketplace where ad networks sell ad space to
marketers
PROGRAMMATIC ADVERTISING automated,
auction-based method for matching demand and
supply for online display ads
REAL-TIME BIDDING (RTB) PROCESS used
to match advertiser demand for display ads with
publisher supply of web page space
AD FRAUD falsifying web or mobile traffic in
order to charge advertisers for impressions, clicks,
or other actions that never actually occurred
DIRECT E-MAIL MARKETING e-mail
marketing messages sent directly to interested users
SPAM unsolicited commercial e-mail
AFFILIATE MARKETING commissions paid by
advertisers to affiliate websites for referring
potential customers to their website
VIRAL MARKETING the process of getting
customers to pass along a company’s marketing
message to friends, family, and colleagues
LEAD GENERATION MARKETING uses
multiple e-commerce presences to generate leads
for businesses who later can be contacted and
converted into customers
ONE-TO-ONE MARKETING
(PERSONALIZATION) segmenting the market
based on a precise and timely understanding of an
individual’s needs, targeting specific marketing
messages to these individuals, and then positioning
the product vis-à-vis competitors to be truly unique
BEHAVIORAL TARGETING involves using
online and offline behavior of consumers to adjust
the advertising messages delivered to them online
INTEREST-BASED ADVERTISING (IBA)
another name for behavioral targeting
RETARGETING showing the same or similar ads
to individuals across multiple websites or apps
CUSTOMIZATION changing the product, not just
the marketing message, according to user
preferences
CUSTOMER CO-PRODUCTION in the online
environment, takes customization one step further
by allowing the customer to interactively create the
product
FREQUENTLY ASKED QUESTIONS (FAQS) a
text-based listing of common questions and answers
REAL-TIME CUSTOMER SERVICE CHAT
SYSTEMS a company’s customer service
representatives interactively exchange text-based
messages with one or more customers on a real-time
basis
AUTOMATED RESPONSE SYSTEM sends e-
mail order confirmations and acknowledgments of
e-mailed inquiries
LAW OF ONE PRICE with complete price
transparency in a perfect information marketplace,
there will be one world price for every product
PRICING putting a value on goods and services
DEMAND CURVE the quantity of goods that can
be sold at various prices
PRICE DISCRIMINATION selling products to
different people and groups based on their
willingness to pay
VERSIONING creating multiple versions of
information goods and selling essentially the same
product to different market segments at different
prices
BUNDLING offers consumers two or more goods
for a reduced price
DYNAMIC PRICING the price of the product
varies, depending on the demand characteristics of
the customer and the supply situation of the seller
LONG TAIL EFFECT a colloquial name given to
various statistical distributions characterized by a
small number of events of high amplitude and a
very large number of events with low amplitude
INTERNET MARKETING TECHNOLOGIES
TRANSACTION LOG records user activity at a
website
REGISTRATION FORMS gather personal data
on name, address, phone, zip code, e-mail address,
and other optional self-confessed information on
interests and tastes
SHOPPING CART DATABASE captures all the
item selection, purchase, and payment data
IMPACT OF UNIQUE FEATURES OF E-
COMMERCE TECHNOLOGY ON
MARKETING
UBIQUITY - Marketing communications have
been extended to the home, work, and mobile
platforms; geographic limits on marketing have
been reduced. The marketplace has been replaced
by “marketspace” and is removed from a temporal
and geographic location. Customer convenience has
been enhanced, and shopping costs have been
reduced.
GLOBAL REACH - Worldwide customer service
and marketing communications have been enabled.
Potentially hundreds of millions of consumers can
be reached with marketing messages.
UNIVERSAL STANDARDS - The cost of
delivering marketing messages and receiving
feedback from users is reduced because of shared,
global standards of the Internet.
RICHNESS - Video, audio, and text marketing
messages can be integrated into a single marketing
message and consuming experience.
INTERACTIVITY - Consumers can be engaged in
a dialog, dynamically adjusting the experience to
the consumer, and making the consumer a co-
producer of the goods and services being sold.
INFORMATION DENSITY - Fine-grained,
highly detailed information on consumers’ real-time
behavior can be gathered and analyzed for the first
time. “Data mining” Internet technology permits the
analysis of terabytes of consumer data every day for
marketing purposes.
PERSONALIZATION/CUSTOMIZATION -
This feature potentially enables product and service
differentiation down to the level of the individual,
thus strengthening the ability of marketers to create
brands.
SOCIAL TECHNOLOGY - User-generated
content and social networks, along with blogs, have
created large new audiences online, where the
content is provided by users. These audiences have
greatly expanded the opportunity for marketers to
reach new potential customers in a nontraditional
media format. Entirely new kinds of marketing
techniques are evolving. These same technologies
expose marketers to the risk of falling afoul of
popular opinion by providing more market power to
users who now can “talk back.”
COOKIE small text file that websites place on the
hard disk of visitors’ client computers that allows
the website to store data about the visitor on the
computer and later retrieve it
DETERMINISTIC CROSSDEVICE
TRACKING relies on personally identifiable
information such as an e-mail address used to log
into an app and website on different devices
PROBABILISTIC CROSSDEVICE
TRACKING uses algorithms to analyze thousands
of anonymous data points to create a possible match
PROFILING profiling uses a variety of tools to
create a digital image for each consumer
DATABASE a software application that stores
records and attributes
DATABASE MANAGEMENT SYSTEM
(DBMS) a software application used by
organizations to create, maintain, and access
databases
STRUCTURED QUERY LANGUAGE (SQL)
industry-standard database query language used in
relational databases
RELATIONAL DATABASES represent 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 a database that collects a
firm’s transactional and customer data in a single
location for offline analysis
DATA MINING a set of analytical techniques that
look for patterns in the data of a database or data
warehouse, or seek to model the behavior of
customers
CUSTOMER PROFILE a description of the
typical behavior of a customer or a group of
customers at a website
QUERY-DRIVEN DATA MINING data mining
based on specific queries
MODEL-DRIVEN DATA MINING involves the
use of a model that analyzes the key variables of
interest to decision makers
BIG DATA huge data sets, often from different
sources, in the petabyte and exabyte range
HADOOP a software framework for working with
various big data sets
MARKETING AUTOMATION SYSTEMS
software tools that marketers use to track all the
steps in the lead generation part of the marketing
process
CUSTOMER RELATIONSHIP
MANAGEMENT (CRM) SYSTEM a repository
of customer information that records all of the
contacts that a customer has with a firm and
generates a customer profile available to everyone
in the firm with a need to “know the customer”
CUSTOMER TOUCHPOINTS the ways in which
customers interact with the firm
UNDERSTANDING THE COSTS AND
BENEFITS OF ONLINE MARKETING
COMMUNICATIONS
IMPRESSIONS number of times an ad is served
CLICK-THROUGH RATE (CTR) percentage of
people exposed to an online advertisement who
actually click on the banner
VIEW-THROUGH RATE (VTR) measures the
30-day response rate to an ad
HITS number of HTTP requests received by a
firm’s server
PAGE VIEWS number of pages requested by
visitors
VIEWABILITY RATE percentage of ads that are
actually seen by people online

UNIQUE VISITORS number of distinct, unique
visitors to a site
LOYALTY percentage of purchasers who return in
a year
REACH percentage of the total number of
consumers in a market who will visit a site
RECENCY average number of days elapsed
between visits
STICKINESS (DURATION) average length of
time visitors remain at a site
ACQUISITION RATE percentage of visitors who
register or visit product pages
CONVERSION RATE percentage of visitors who
purchase something
BROWSE-TO-BUY RATIO ratio of items
purchased to product views
VIEW-TO-CART RATIO RATIO of “Add to
cart” clicks to product views
CART CONVERSION RATE ratio of actual
orders to
“Add to cart” clicks
CHECKOUT CONVERSION RATE ratio of
actual orders to checkouts started
ABANDONMENT RATE % of shoppers who
begin a shopping cart, but then fail to complete it
RETENTION RATE % of existing customers who
continue to buy
ATTRITION RATE % of customers who purchase
once, but do not return within a year
VIEW TIME how long the video ad actually stays
in view while it plays
COMPLETION RATE how many viewers watch
the complete video ad
OPEN RATE % of customers who open e-mail
DELIVERY RATE % of e-mail recipients who
received e-mail
CLICK-THROUGH RATE (E-MAIL) % of e-
mail recipients who clicked through to the offer
BOUNCE-BACK RATE percentage of e-mails
that could not be delivered
CROSS-PLATFORM ATTRIBUTION
understanding how to assign appropriate credit to
different marketing initiatives that may have
influenced a consumer on the way to a purchase
COST PER THOUSAND (CPM) advertiser pays
for impressions in 1,000-unit lots
COST PER CLICK (CPC) advertiser pays
prenegotiated fee for each click an ad receives
COST PER ACTION (CPA) advertiser pays only
for those users who perform a specific action
EFFECTIVE COST-PER THOUSAND (ECPM)
measures return on investment from an ad by
dividing the total earnings from the ad by the total
number of impressions in thousands
MARKETING ANALYTICS SOFTWARE
collects, stores, analyzes, and graphically presents
data on each of the stages in the conversion of
shoppers to customers process on e-commerce sites
CHAPTER 7
SOCIAL, MOBILE, AND LOCAL
MARKETING
SOCIAL MARKETING - differs markedly from
traditional online marketing. The objectives of
traditional online marketing are to put your
business’s message in front of as many visitors as
possible and hopefully encourage them to come to
your website to buy products and services, or to find
out more information. The more “impressions” (ad
views) you get, and the more unique visitors, the
better. Traditional online marketing never expected
to listen to customers, much less have a
conversation with them, any more than TV
advertisers expected to hear from viewers.
THE SOCIAL MARKETING PROCESS
i. Fan acquisition
ii. Engagement
iii. Amplification
iv. Community
 v. Brand Strength (Sales)
DARK SOCIAL those forms of social sharing that
occurs off the major social networks, through
alternative communication tools such as e-mail,
instant messages, texts, and mobile messaging apps
FAN ACQUISITION attracting people to your
marketing messages
ENGAGEMENT encouraging visitors to interact
with your content and brand
INFLUENCERS people who have dedicated
followers on social media and who are viewed by
those followers as trusted experts or celebrities
INFLUENCER MARKETING a subset of social
media marketing, in which brands seek to leverage
the trust influencers have built up with their
following to generate brand awareness and
engagement, and ultimately translate
recommendations and product mentions from
influencers into sales
AMPLIFICATION encouraging visitors to share
their Likes and comments with their friends
Requires payment. Buy button can also be
embedded in News Feed Page Post Ads.
Right-Hand Column Sidebar Ads – Fan
acquisition. Display ads in the right-hand column
(sidebar) similar to display ads elsewhere on the
Web. Requires payment.
Facebook Live – Fan acquisition and engagement.
Video streaming service within Facebook. Can be
used to stream live content that followers can
interact with by commenting, liking, and sharing.
Video can be saved on a brand’s page and followers
can continue to interact with it. Free.
Video Ads – Fan acquisition and engagement.
Video ads autoplay in silent mode on both desktop
and mobile News Feeds. Requires payment.
Facebook Watch – Fan acquisition and
engagement. Pre-roll and mid-roll video ads.
Requires payment.
Mobile Ads – Fan acquisition. Mobile News Feed
Page Post Ads are delivered to smartphones and
tablets. Requires payment.
Sponsored Messages/Broadcast - Fan acquisition
and engagement. Messages to customers who had
previously engaged with them via Messenger
chatbot or, in the case of small- and medium-sized
businesses, directly from the company. Requires
payment.

COMMUNITY a stable group of fans engaged and

communicating with one another over a substantial
period of time about your brand

SOCIAL DENSITY refers to the number of

interactions among members of a group and reflects
the “connectedness” of a group, even if these
connections are forced on users

REACTIONS BUTTONS give users a chance to

share their feelings about content and other objects
they are viewing

BASIC FACEBOOK MARKETING TOOLS

Reactions Buttons – Amplification. A feature that

allows users to express support (and other reactions
as well) for content on social networks to their
friends and friends of friends. The one tool that
marketers cannot control. Currently free.
Brand Pages – Engagement and community
building. Similar to a business web page, but much
more social by encouraging user interaction and
response; ongoing discussions among the
community of fans. Brand pages are currently free.
Shops tab for brand pages allows companies to
feature products and services for sale.
News Feed Page Post Ads – Fan acquisition. Paid
brand messages can be inserted into the News Feed.
 LOCATION-BASED SERVICES involve
providing services to users based on their location

GEO-AWARE techniques that identify the location

of a user’s device and then target marketing to the
device

PROXIMITY MARKETING techniques that

identify a perimeter around a physical location, and
then target ads to users within that perimeter,
recommending actions possible within the fenced-in
area

MOBILE MARKETING - involves the use of

mobile devices such as smartphones and tablet
computers to display banner ads, rich media, video,
games, e-mail, text messaging, instore messaging,
QuickResponse (QR) codes, and couponing. Mobile
is now a required part of the standard marketing
budget. Mobile devices represent a radical departure
from previous marketing technologies simply
because the devices integrate so many human and
consumer activities from telephoning or texting
friends, to listening to music, watching videos,
tracking location, and shopping.

LOCATION-BASED MARKETING targets

marketing messages to users based on their location