Chapter Eleven. Breakthrough in the Digital Advertising. 2. Understand the opportunities and challenges related to Digital Advertising.

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1 Chapter Eleven Breakthrough in the Digital Advertising Learning Objectives: 1. Develop an overview of Digital Advertising. 2. Understand the opportunities and challenges related to Digital Advertising. 3. Be acquainted with advantages & limitations of Online Advertising. 4. Know about the types of online ads. 5. Understand how various promotional tools are used online. 6. Find out how revenues are generated through online ads and their pricing mechanism 11. Introduction 1.1 Introduction When you refer names like Flipkart.com, Amazon.com, Snapdeal.com, Localbaniya.com, RelianceFreshDirect.com, OLX.com and news like Arvind Mills to enter online retails what come to your mind? Off course, it s the digital era unfolding in front of you. Thus, digital is not only revolutionizing how business gets done but also giving rise to new services. Business of brands is transforming due to a sweeping digital wave. Government of India s initiatives like Digital India, increasing penetration of high speed internet connecting Tier II,

2 III cities and rural areas besides urban centers will propel the digital reach. The consumers are actively using social media & internet to make purchase decisions. Brands are shifting to digital media as it offers engagement with customers. Digital has changed the way brands are built. The core of what makes a brand is the same people perceive premium value in the product or service that hey ascribe to the brand, and that brand comes to encompass that value. What has changed is that brands are now built online by consumers. Brands are what people say about to themselves but that space is now digital space. Today you need to join, guide and lead conversations that shape your brand perception. Online Advertising Growing Fast Online advertising originates from online companies as well as from offline retailers who want customers and prospects to visit their website. Some common site selection tips for placing an ad are namely visitors to site must match with customer profile, good viability and longetivity of the site, site content must be compatible with the image of the company and site must have performed well for similar companies in the past Meaning of Online Advertising Online advertising is a form of advertising which uses the internet to deliver marketing messages to consumers and increase sale. It s a marketing strategy that involves the use of internet as a medium to obtain traffic, target and deliver marketing messages to the customers. Online or the digital medium acts as information provider or a direct response media, whereby consumers engage across the internet to communicate, buy

3 and sell. Two-way communication is possible thus interaction can take place Advantages of Digital Advertising There are numerous advantages of digital advertising as follows; a) Target ability: It has the capacity to engage customers by providing customized content and focus on users from specific customer segment. A consumer can interact with product, see the product and buy the product online. Knowledge about digital preferences will enable you to present on an appropriate vehicles. Messages can be designed to appeal the specific needs of the target audience. Interested customers will interact some time. b) Interactivity: Companies and customers can engage in a dialogue c) Tracking: Never before the digital advertising, was any opportunity to measure the effectiveness of the advertising and know viewers interest possible. It is possible now to get complete idea about customers interaction with your advertisement. Customers leave digital footprints which allow knowing his likes and dislikes. Thus marketers can track how users interact with their brands and learn what is of interest to their current customers and prospective. d) Deliverability & Flexibility: Once a marketer releases the message, it stays online. People are online 24x7 as per their convenience. But as soon as they tap vehicle on which message is left, it gets delivered. Also, message can be changed instantly, if not producing desired result Disadvantages of Digital Advertising

4 a) Advertising fatigue: Currently digital advertising is complimentary form of advertising. People have watched your TVC, print ad, heard on radio that they get aversion to other forms including digital. They thus bypass, close or jump the ads/videos. Customer exercises control he has on digital media to refer or ignore the ads. Most browsers now have pop-up blockers, which is used by consumers. b) Website downtime: Slow internet, broadband, net connectivity etc will increase downtime, putting off consumers. Consumers can use websites and other apps on internet but their smart phone issues, compatibility issues, connectivity issues makes experience dull. c) Expensive ad prices: Pricing on online can range from inexpensive to exorbitant on popular site. These costs are dependent on traffic on your site, nature of visitors, site friendliness. Rigid packages like payper-click can be fatal if not productive. d) Too many options: Plenty of ways in which one can advertise thus it makes tasks very difficult and investments more dangerous. Evaluate channels like social media, directories and then decide nature of ads i.e. banner, pop-up then payment package i.e. pay per click 11.2 Profile of Internet Users in India India has surpassed Japan to be the world s third largest internet user with significantly very young user profile keen on brand engagement, entertainment and exchange. There were estimated 243 million internet users as on June Not only that, on an average 7 out of 8 accessing the internet from their mobile phones.

5 11.3 The Digital & Conventional Marketing Space However, many have reservation about digital media. They work without knowing what their marketing strategy is for the same. In the digital world, brand is meeting consumers directly. Relationship gets developed. A relationship gets strengthened based on experience with expectations fulfillment. But does an advertiser know the expectations? - Online experience either should have enhanced feeling or at least be like off line experience. Brandscape on the web should work in tandem with other elements and create synergy. In digital marketing, communication to feedback stages needs to be managed Difference between Traditional & Digital Advertising The fundamental difference lies in the process by which the observer of the advertisement can translate their interest into action on the web, if you like advertisement, you can click and taken to advertiser s page. Now here onwards it depends upon advertiser s marketing and media objectives. The delay between observing the advertisement, registering interest and experiencing the fulfillment of the interest has been reduced to few seconds Similarities between Traditional & Digital Advertising Matching the medium to message and audience is just as important in the virtual world as it is in conventional advertising sites have peculiar nature of audiences and if they match with your target audience, relevance is

6 established. Rather than spending on very popular sites, it is wise to spend on smaller sites with similar profile target audience This is like diversifying traditional ad expenditure over a number of different publications. Creativity will be just as important. You need reason to engage which is required also on virtual world media Types of Online Advertisements Banner ads As word describes it, banner ad layout appears on website s specific page. It s a graphic link to advertiser s website. Trekking technology now can identify website visitors and select from the variety of banners to display thus two people can see different banners at the same time. Vertical banner ads are known as Skyscrapers. The banner should be attractive with colors, graphics, logos, cartoons, animation etc. Certain golden rules of banner advertising needs to be followed Pop Ups & Pop Under When you access website, small window appears carrying an ad. Such windows are called pop-ups. When you log off the site, small window appears carrying an ad. That is known as Pop Under Interstitials It s another form of pop ups ad. It s an ad that pops up in a separate frame on a screen page. The user has to stop reading and click on it to eliminate it Corporate Advertising Websites Corporate website has evolved from simple static content to dynamic and interactive multimedia applications. Websites today are capable to integrate advertising and

7 communication strategies. It can combine multiple marketing functions Sponsorship There are two types of sponsorship advertising possible namely a) Regular b) Content sponsorship. Sponsorship falls in to several categories such as a) Spotlights b) Advergaming c) Content & Section sponsorship and d) Sweepstakes & contest Customizing message is possible. However, customer s permission is a must. Customer gives opt-in during download i.e. permission. Opt-in strategy has benefits like person is interested in communication coming from the advertiser and companies can ask questions to develop profile Social Networking Sites Sites line FB, LinkedIn, Twitter, Google +, Pinterest are social media sites. People can Like and later can be engaged Promotional Tools on the Digital Horizon Digital advertising can support other promotional activities. It can replace personal selling to increase sale. Web has two advantages over personal selling namely lower cost and better reach. Digital media can help in information sharing, leads generation, interaction, action. Digital media can help in public relations support, direct marketing by targeting specific group of customers, sales promotion offers, contest, and sweepstakes Revenue Models in Online Advertising

8 Seven different types of revenue models are present. a) Revenue from subscription access to content: Documents, data, articles, thesis can be accessed for a period for which access fees paid. b) Revenue from cost per impression: Advertiser pays each time the ad is displayed. Payment occurs for every single access to a document, video or music clip menu page is displayed. c) Revenue from CP display advertising on site: CPM stands for Cost per thousands. M Mille. Advertiser pays for exposure of their message to a specific audience. d) Revenue from CPC advertising on site: Also known as cost per click or pay per click. Advertisers are charged for number of times their ads are clicked. Advertiser needs to pay for every clicks and not every time ad was displayed. Here advertisers pay for the right to be listed under a series of target words that direct relevant traffic to their websites and pay only when someone clicks on their listing. e) Revenue from sponsorship of site section or content type: Typically fixed fee for a period paid by advertiser to media for allowing a sponsorship of a particular section HDFC Bank sponsoring a section on moneycontrol.com. This is for a fixed amount for a specific period. e) Affiliate revenue (CPA, but could be CPC): This revenue is commission based If you display Amazon books on your blog and receive around 5% of the cover price as a fee from Amazon. Also known as Cost per Affiliation.

9 f) Subscriber data access for marketing: The data site owner has data about its customers and thus same can be also used to send from the publisher or third party to its customers who have opt-in Pricing Mechanism Internet advertising is multi-tiered based on the results and tied to marketers objectives. Three pricing mechanisms are prevalent; a) Pricing per Exposure: Pay only for number of exposures, impression or ad views on their target customers. It is up to a publisher to know his strengths and extract premium rates. b) Price per Response: Pay only for the consumer responses i.e. click-through. The price will vary according to the types of user for the attractive site and how much advertisers are willing to pay for such click-through. c) Price per Action: Publisher might charge more for consumer downloading a song vis-à-vis one who just clicks the banner. It s a lead generation for the advertiser. Here onus for site performance is also put on publisher under risk sharing principle. Publisher offering such pricing also puts in efforts to promote his site. Broadcasters in traditional media do not share this kind of risk. If publisher can extract maximum from advertiser and delivers, his revenue increases The End

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