Page 221 - Electronic Commerce

Chapter 4

concerns if not done carefully. Sites that offer content spots to sponsors should
always identify the content as an advertisement or as provided by the sponsor.
Unfortunately, many sites do not use clear labels for sponsored content. This can
confuse site visitors who are unable to distinguish between editorial content and
advertising. Sites that offer medical information, for example, should be especially
196 careful to distinguish between information that is generated by the site’s reporters or
editorial staff and information that is provided by pharmaceutical companies or
medical device manufacturers.

Online Advertising Cost and Effectiveness
As more companies rely on their Web sites to make a favorable impression on potential
customers, the issue of measuring Web site effectiveness has become important. Mass
media efforts are measured by estimates of audience size, circulation, or number of
addressees. When a company purchases mass media advertising, it pays a dollar amount
for every thousand people in the estimated audience. This pricing metric is called cost per
thousand (CPM; the “M” is an abbreviation of “mille,” which is Latin for “thousand”).
Measuring Web audiences is more complicated because of the Web’s interactivity and
because the value of a visitor to an advertiser depends on how much information the site
gathers from the visitor (for example, name, address, e-mail address, telephone number,
and other demographic data). Because each visitor voluntarily chooses whether to provide
these bits of information, all visitors are not of equal value. Internet advertisers have
developed some Web-specific metrics for site activity, but these are not generally accepted
and are currently the subject of considerable debate. One alternative to CPM for online
advertising is called cost per click (CPC), in which the site monitors the number of
visitors who click an ad and charges for each click rather than for each time the ad is
shown on a Web page. However, CPC measures are difficult to compare with the CPM
measures used in all other (not online) modes of advertising. This limits general use of
CPC measures by advertisers who buy all types of advertising.
A visit occurs when a visitor requests a page from the Web site. Further page loads
from the same site are counted as part of the visit for a specified period of time. This
period of time is chosen by the administrators of the site and depends on the type of site.
A site that features stock quotes might use a short time period because visitors may load
the page to check the price of one stock and reload the page 15 minutes later to check
another stock’s price. A museum site would expect a visitor to load multiple pages over a
longer time period during a visit and would use a longer visit time window. The first time
that a particular visitor loads a Web site page is called a trial visit; subsequent page loads
are called repeat visits. Each page loaded by a visitor counts as a page view. If the page
contains an ad, the page load is called an ad view.
Some Web pages have banner ads that continue to load and reload as long as the page
is open in the visitor’s Web browser. Each time the banner ad loads is an impression.If
the visitor clicks the banner ad to open the advertiser’s page, that action is called a click
or click-through. Banner ads are often sold on a CPM basis where the “thousand” is 1000
impressions. Rates vary greatly and depend on how much demographic information the
Web site obtains about its visitors and what kinds of visitors the site attracts, but most

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