Page 223 - Electronic Commerce

Chapter 4

One of the most difficult things for companies to do as they move onto the Web is
gauge the costs and benefits of advertising on the Web. Many companies have developed
new metrics to evaluate the number of desired outcomes their advertising yields. For
example, instead of metrics based on the number of ads displayed (CPM) or click-
throughs (CPC), they measure the number of new visitors to their site who buy for the
198 first time after arriving at the site by way of a click-through. They can then calculate the
advertising cost of acquiring one customer on the Web and compare that to how much it
costs them to acquire one customer through traditional channels.

Effectiveness of Online Advertising
The effectiveness of online advertising is difficult to measure. In 2004, a joint task force of
the Interactive Advertising Bureau (IAB) and the Institute of Practitioners in Advertising
(IPA) created a set of media measurement guidelines that all online advertisers can use to
produce comparable ad view numbers. Although the task force guidelines have helped to
establish measures of ad views, it is difficult to assess the effectiveness of online
advertising because site visitors change their Web surfing behaviors and habits as they
gain experience using the Web. For example, an experienced Web user is far less likely
than a new Web user to click a banner ad. Declining click-through rates might not be a
good indicator of the success of online advertising, however. Many companies are finding
that online advertising can be an important element in a comprehensive marketing
strategy that uses several different media to deliver messages to potential customers.
Although few people would buy a car based solely on the content of an online ad, online
ads can be an effective way to build brand recognition, conveying a limited set of facts
about a product, or to add to a story theme about the product. You can learn more about
current developments in online advertising effectiveness by visiting the AdAge.com,
eMarketer, and Online Publishers Association Web sites.
Most marketing analysts do agree that online advertising is much more effective if it
is properly targeted. Online ads that reach site visitors who are looking for something
specific that is related to the ad’s message are much more successful than ads viewed
by a general population. Thus, market segmentation is an important element in online
advertising success. One useful marketing tool that uses market segmentation effectively
is e-mail marketing, the subject of the next section.

E- MAI L MARKETING
Sociologists and cultural anthropologists have proclaimed e-mail to be one of the greatest
tools for human communication to be developed in the twentieth century. Because
advertising is a process of communication, it is easy to see that e-mail can be a very
powerful element in any company’s advertising strategy. Many businesses would like to
send e-mail messages to their customers and potential customers to announce new
products, new product features, or sales on existing products. However, industry analysts
have severely criticized some companies for sending e-mail messages to customers or
potential customers. Some companies have even faced legal action after sending out mass
e-mailings.

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