internet advertising © 2001 ann schlosser, university of washington business school

Internet Advertising

© 2001 Ann Schlosser, University of Washington Business School

Agenda

• Permission marketing

• Yesmail.com

• Banner advertising

• Optimization

To Opt-In or Opt-Out

• Opt-in– Send messages only to those

who request them

– Default = not included in list

– Result: smaller lists (48.2% participate)

– Favored by consumers

– Risk missing new opportunities

– Policy employed by EU

• Opt-out– Send messages to people unless

they request NOT to get messages

– Default = included in list

– Result: larger lists (96.3% participate)

– Favored by firms

– Introduce to US Congress as baseline privacy law

“When I get a spam that only says ‘Click here to opt out,’ that really annoys me. That’s not permissions marketing.” – Seth Godin, author of Permission Marketing.

Dear cadrys,

Several times a month, eBay sends out valuable email communications with news, offers and special events that help you buy and sell. Unfortunately, we have noticed that an error occurred during your registration process that prevented you from receiving these communications. Many of your Notification Preference defaults were set to "no" rather than to "yes", which means that unlike other eBay members, you're not receiving these types of communications.

We'd like to resolve this problem quickly and efficiently. Therefore, on 1/8/01, we returned all your Notification Preferences to the standard default of "yes" to put you in line with the rest of the eBay community. However, we want you to choose your Notification Preferences rather than rely on our standard defaults and will therefore not include you in any communications until 1/23/01. This will provide you with some time to evaluate these choices and modify your Notification Preferences. You will, however, continue to receive certain administrative emails that are part of executing your eBay transactions.

eBay : Where "Opt-out" Means "Keep Trying"

Posted at http://slashdot.org/articles/01/01/09/1648257.shtml

Familiarity with E-Mail Marketing Models

Retention Acquisition

Member Registration

Customization and Testing

Business Process Rules

Proprietary Network, Partner Network or Hybrid?

Individual consumers

Partner websites

Clients

??Arguments based on:

•Economics

•Branding

•Data quality

Arguments for Proprietary Network

•Economics•Average case: Preferred to partner network if R > $6MM per month

•With 2 messages/week (each generating 25cents), need over 3 million members

•Optimistic case: Preferred to partner network if R > $4.16MM per month•With 8 messages/week (each generating 25cents), need over 520,000 members

•Branding•If defend consumers against marketing abuse, then serve consumers

•Data quality•Those registering at yesmail.com likely willing to provide rich data and are receptive to promotional emails

Individual consumers

Clients

Arguments for Partner Network

•Economics•Proprietary network: If spend $3MM on banner ads (CPM = $30 and CTR of 1%), grow by 1 million members per month•Partner network: With 80 partners, each with 25,000 new registrations per month with 50% opt-in, get 1 million members per month

•Branding•Associate with well-liked brand•Avoid mass advertising to drive traffic to yesmail.com

•Data quality•Quality data if users are involved in partners’ sites/brands•Where register is additional important data

Individual consumers

Clients

Partner sites

Member and Client Benefits

• Members– Valuable promotions

– Really avoiding spam?

• Clients– eTrack

– Flat rate of 25 cents per email

Attitudes toward Permission vs. Unsolicited E-mail

Future of Agents such as Yesmail?

• Potential pitfalls:– Trust– Demand– Feasibility

Yesmail Update

• Summer 2000: commit to using double opt-in to avoid appearing on Maps’ (Mail abuse prevention system LLC) list of spammers

Date Membership size

Average monthly growth

Partner Network size

May 2000 11 million 665,600 104

Feb 2001 14 million 1 million NA

Rich Media E-Mail Ad

Sent to 100,000 prospects using yesmail.com list

165,000 responses

Conversion Costs Across Medium

Death of Banner Ads?Paid vs. In-House Ads

Banner Ads

Full CRM = $28.28

Vertical banner CRM = $54.17

Half CRM =$26.51

Micro CRM = $16.94

New: Skyscraper

Greatest Difficulties in Adopting Online Advertising

4.0

2.93.4

3.93.3

4.2

2.5

3.4

0.0

1.0

2.0

3.0

4.0

5.0

Lack

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Cos

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Diff

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ate

Diff

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Ban

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Low

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Lack

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ood

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Agency Grand Total

Greatest

Least

Average of responses on 5-point scale where 1 = least problematic and 5 = most problematic

Ad Strategy Across Industries

Branding

Behavior-based

Banner Ads Enhance Awareness and Image

B2B Advertising

Share of advertising impressions = 7%

Number of B2B advertisers making up 50% of online advertising = 18

Concentration of B2B Advertising and Work Users

Reaching Target Audience

Online Media Reveals Three Action Profiles

Qualified prospects

Traditional advertising targets a qualified audience

Online advertising targets readyand motivated consumers

All consumers All consumers

Ready

Motivated

Qualified prospects

Different Media Approaches for Different Profiles

Optimization

Sample Report from Ad Server Avenue A