Page 154 - Electronic Commerce

Selling on the Web

advertising has increased steadily since the mid-1990s. As you will learn in Chapter 4,
online advertising is now well established as an important component of the advertising
mix used by businesses of all types. As online advertising grows, more and more Web sites
can use it as a revenue source, either alone or in combination with other revenue sources.
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The use of online advertising as the sole revenue source for a Web site has faced two
major challenges. First, there has been little consensus on how to measure and charge for
site visitor views, even after almost 20 years of experience with the medium. Because Web
sites can take multiple measurements, such as number of visitors, number of unique
visitors, number of click-throughs, and can measure other attributes of visitor behavior,
Web advertisers have struggled to develop standards for advertising charges. In addition to
the number of visitors or page views, stickiness is a critical element in creating a presence
that attracts advertisers. The stickiness of a Web site is its ability to keep visitors at the
site and attract repeat visitors. People spend more time at a sticky Web site and are thus
exposed to more advertising.
The second issue is that very few Web sites have sufficiently large numbers of visitors
to compete with mass media outlets such as radio or television. Although a few Web sites
have succeeded in attracting the large general audience that major advertisers have
traditionally wanted to reach, most successful advertising on the Web is targeted at
specific groups. The set of characteristics that marketers use to group visitors is called
demographic information and includes things such as address, age, gender, income level,
type of job held, hobbies, and religion. It can be difficult to determine whether a given
Web site is attracting a specific market segment unless that site collects demographic
information from its visitors—information that visitors often are reluctant to provide
because of privacy concerns.
One solution to this second problem has been found by an increasing number of
specialized information Web sites. These sites are successful in using an advertising-
supported revenue model because they draw a specialized audience that certain
advertisers want to reach. These sites do not need to gather demographic information
from their visitors because anyone drawn to the site will have the specific set of interests
that makes them a prized target for certain advertisers. In most cases, advertisers will pay
high enough rates to support the operation of the site and in some cases, the advertising
revenue is large enough to make these sites quite profitable.
Two examples of successful advertising-supported sites that appeal to audiences with
specific interests are The Huffington Post and the Drudge Report. Each of these Web sites
appeals to people who are interested in politics (liberal and conservative, respectively).
Advertisers that want to target an audience with a specific political interest are willing to
pay rates that are high enough to make these sites profitable enterprises. Online news
sites that focus their coverage on a particular town or metropolitan area can use the
advertising-supported revenue model successfully. Companies that want to reach potential
customers in that area would find such sites to be useful for targeted marketing, since the
Web sites would draw visitors with a specific interest in the geographic area.
Similarly, HowStuffWorks is a Web site that explains, as the name suggests, how things
work. Each set of Web pages in the site attracts visitors with a highly focused interest. For
example, a visitor looking for an explanation of how heating stoves work would be a good
prospect for advertisers that sell heating stoves. HowStuffWorks does not need to obtain

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