Display Advertising and Other Customer Acquisition Techniques Learning Objectives: By the time students complete this chapter they should be able to:
Explain the meaning and importance of customer acquisition as a marketing strategy.
List the major customer acquisition techniques, both online and offline.
Identify the major online advertising formats.
Explain ad serving and how ad serving networks are used to target online ads.
Identify the most common methods of targeting.
Explain the various types of behavioral targeting.
Discuss the benefits and drawbacks of advertising on Facebook, LinkedIn, and other social media networks.
Define event marketing, publicity, affiliate marketing, and portal sponsorships.
Chapter Perspective This chapter has changed a great deal from the second edition, due to broadband connectivity that permits new, more interactive formats and to better marketer understanding of how to use display (synonymous with banner) advertising. We all see a great deal of online display advertising on a daily basis, but most of us probably pay little attention. Like mass media advertising, we have become desensitized because of the volume of ads we see. That is a good time to get students to pause and pay attention; there is a lot to be learned from observation.
Internet Customer Acquisition Tools This is essentially the graphic used in both earlier editions with the addition of social media marketing. Two points are important:
Internet marketing has become so complex, so detailed, that email, search and social media marketing have all been given their own chapters in this edition. Their size, as represented by the portion of marketing budgets accounted for in Figure 6.2, warrants the expanded treatment. So does the increasing complexity of executing in each context.
The tools listed can all be used for acquisition. Some are more effective for other uses. Email for customer retention is the prime example.
Online Advertising Online advertising has become a part of the promotional mix of most companies, and both its absolute amount (6.2 a) and its percentage of the total continue to grow (6.2 b). Figure 6.2 (c) shows the number of tools that can be included under the heading on online advertising. Figure 6.2 (d) shows that the percentage accounted for by advertising on social networks, as well as by gaming there, is increasing globally at a rapid pace.
Figure 6.3 returns to an issue from Chapter 5; different tools—in this case online advertising—work better at different stages of the branding process. That can’t be overemphasized and students should be beginning to understand just how complex the planning and execution of online advertising can be.
Display advertising, both offline and online, tends to be the standard to which all other advertising is compared. Figure 6.4 points out that display and search are relatively close in expenditure but that display advertising has been gaining in recent years. Search advertising is popular because it works, in a direct-response sense. Has display advertising been gaining because of the new, more interactive formats mentioned in Chapter 5 and discussed later in this chapter? Probably so.
Figure 6.5 gives the basic formats. At this point students should recognize the Internet Advertising Bureau as the trade association responsible for standards that make it possible to create and place ads across the Internet. Without standardization of formats, all would be chaos.
The IAB Guidelines page has consolidated all the formats and links: http://www.iab.net/guidelines/508676/508767/displayguidelines. They have already changed the name of Rising Stars to Rich Media Branding Units, indicating acceptance by the industry. Each format is linked to an example and detailed specifications. It is worth students knowing where to access this information.
It will be harder to find the New Rich Media Branding Units, so you may want to assign Interactive Exercise 6.2 or use it in an exploration of the IAB guidelines.
If you have time, it is fun to go to a major portal page or content site and look to see what formats are used. A newspaper site is a good example; online advertising is becoming the lifeline of the struggling newspaper industry and even small local publications tend to do a good job of servicing advertisers. It is also a chance to make the point that not all sites, even the largest ones, accept all ad formats. Google’s DoubleClick Studio is a good place to see sample ad formats from numerous brands and it could be used as a pre-class assignment: http://studio.doubleclick.com. There are case studies and tools that could be used in various ways, in class and out.
Best practices for rich media (all) online ads include:
Do your research.
Keep it simple.
Tell a compelling story.
Have an effective call to action.
Make sure the landing page and the website make it easy to take the action. This is the subject of Chapter 10, but it is worth emphasizing now.
Keep the file size small so the ad will load smoothly and quickly.
Have a strong, attention-getting headline.
Choose colors that are appropriate for the sites on which your ad will appear.
Choose sites that are appropriate for your target audience.
Conduct tests of your ads on a continuous basis.
When you look at that list, is it really different from best practices for developing offline display ads?
Online Ad Serving and Targeting It is also worth taking some time to get students to try to verbalize their understanding of ad serving, which is usually pretty vague. I keep looking for a good definition and switched to this one from PC Magazine for in the new edition:
The hardware, software and personnel required to deliver advertisements to websites and ad-supported software. It also includes the monitoring of click-throughs and required reporting to the ad purchasers and website publishers.
When you add their definition of an ad network it hopefully begins to make sense.
Internet advertising organizations [that] act as a middleman between the advertiser and the Internet venues that display the ads. They sell the online campaign to the advertisers and then deliver the ads to the sites that display them. The site owners receive a royalty based typically on the number of times users click the ads.
If I had found a really good image to help explain the concept I would have used it. You might try this one: http://ianthomas.typepad.com/.a/6a00d8341bf6d253ef010535ed18fd970b-pi. If you find anything better, do post a link on the Google+ site!
Targeting Figure 6.9 lists the kinds of targeting. Demographic and Geographic are traditional segmentation/ targeting criteria. Contextual will be covered in the context of search. Channel sounds unique to the Internet—people who watch YouTube is one example—but if you stop to think about it, that’s not a lot different from targeting people who read GQ Magazine, for example. Retargeting is unique because of the data element, and it is part of behavioral. We put emphasis on that as a targeting method both from the belief that it is the most effective and also because it is the most controversial. Students really need to understand both the upsides and the downsides. The privacy implications are dealt with in Chapter 15 but mostly in the context of privacy in general.
The three kinds of targeting are:
Targeting identified users
Targeting unidentified users
Targeting with predictive models (which is can be used with either 1 or 2)
This is worth spending time on. You can start by asking students to identify the ways in which sites can identify their users. The fact that sites can then contact or direct ads to profile information is understandable and it helps to set the stage.
Understanding how sites can track and target anonymous users takes more effort. Figure 6.10 should be helpful, but it may not answer all student issues. They have to understand cookies. Again, I’ve never found a perfect image, but this one explains the basic issues: http://www.jaberson.com/internet-cookie-files-explained. This one then gets the issue of persistent vs. session cookies: http://blog.wisefaq.com/wp-content/uploads/2009/12/cookieprocessing.jpg. Again, if you find or develop better ones, let us know! I don’t think there’s any way to get this material across except to talk about it at length, asking the students questions and answering theirs.
There are other types of targeting of anonymous users listed. To the best of my knowledge, none are in widespread use, but who knows what the figure holds.
Targeting with predictive models takes us back to Chapter 4 and that link should be made. Again, it’s not something that’s easy for a lot of students to understand, so it doesn’t hurt to spend some more time on it. Akamai is used as an example, but they are not particularly good at explaining anything in layman’s language. Infosys has a good white paper about predictive banking which is interesting and has good graphics. They’ve posted it so it’s difficult to get a link; here’s a link to the Google Docs version or search predictive banking.
This would make a good case study if you can afford to spend that much time.
And as you end your discussion, it’s worth asking students if they are now more aware—more concerned?—about the amount of data companies hold about them.
Targeting on vertical networks seems to generally make sense to students. Looking at the Glam Media page in Figure 6.11 pretty much identifies the target audience. We couldn’t show the CBS Sports Network (they put all the college logos on a banner at the top of the page, making it an intellectual property disaster) but you can get an image and show it. The contrast is good and their home page reinforces the importance of ad formats: http://collegenetwork.cbssports.com/departments/advertising.
There are many opportunities for advertising on social networks. Many blogs accept advertising and the Bargain Briana blog shown in Figure 6.12 is a hoot, but the attraction for advertisers is obvious. Note that Google is advertising on the home page in this shot.
Once again, Facebook is the 800-pound gorilla in the space. You might want to search for recent data on expenditures on Facebook advertising; it just seems to continue to grow. The text explains the process of creating a Facebook ad. Facebook has a tutorial on this page, but it’s not very detailed: http://www.facebook.com/business. It is worth taking some time to create an ad in class or to assign students to do one outside of class so they can report on it. It’s of course a bit tricky to do it in front of an audience, so be sure you have a jpeg image handy and have practiced so you can make the point you want to make. This section doesn’t cover bidding for Facebook keywords. If you get that far in the ad creation process you can point out that all keyword bidding is similar and Google AdWords will be discussed in detail in Chapter 8.
The process on LinkedIn is similar: http://www.linkedin.com/advertising.
Miscellaneous Acquisition Techniques These miscellaneous techniques are given relatively brief treatment. You can add examples, case histories that emphasize tools you consider particularly important.
Marketing Events and Event-Triggered Marketing Events such as trade shows have always been important in some marketing sectors. Are they making a comeback across the board as a result of the ability to better reach, better target customers? Perhaps.
The consumer event portrayed in Figure 6.14 is one example. I am particularly fond of one my students attended in early 2001 in Boston: http://diy-marketing.blogspot.com/2011/11/timberland-aces-social-media.html. The blog post has a link to their Facebook tab page for the event. If it’s still up it is excellent. It also has a video which was used as a followup. It was a customers-only event with the invitations going out by email.
A Cisco virtual product launch is described in Chapter 9. B2B Online has an Events page where you can find more examples: http://www.btobonline.com/section/b2b_event_marketing. Just search Twestival for all kinds of nonprofit events.
Publicity Public relations activities find a great deal of support on the web. Figure 6.15 shows a template for a social media press release. I can’t see why any business would do anything else, although perhaps not everything here. We weren’t allowed to show an actual press release for reasons that escape me but you can find your own. The Ford Media Center has a lot of information, plus feeds, on the home page: http://media.ford.com/news. Individual press releases have various characteristics; all include suggestions for tags when content is published. This release even has a QR code: http://media.ford.com/article_display.cfm?article_id=35844.
Affiliate Programs Affiliate programs were a huge deal in the early days of the Internet when everyone thought they were going to make a lot of money doing everything. In a more sober world affiliate programs can be useful. If they are automated like Amazon’s they are scalable and don’t have to worry about the 80%. They can just cultivate the 20% (or less): https://affiliate-program.amazon.com.
Portal Relationships The same early popularity accrued to portal deals. They are a minor element of Internet programs at present. AOL is said to still offer portal sponsorships, but the trouble is that it’s hard to identify them. Should they just be considered sponsorships and drop the portal tie? Probably.
Or is it the amount charged on home pages like Yahoo! and YouTube? Facebook began to offer a display ad opportunity in early 2012. They are “log-out ads;” visitors only see them if they log out of Facebook. Cost for all log-out ads for a single day was rumored to be around $700,000 and they were not available separately, but as part of premium packages. This article suggests that Ad Age considers home page ads on portals to be portal ads, which may mean that the old terminology of portal deals is no longer viable: http://adage.com/article/digital/facebook-sets-high-price-log-ads-700k-a-day/233686/?utm_source=digital_email&utm_medium=newsletter&utm_campaign=adage.
Viral Marketing Viral marketing doesn’t get much treatment in this text because it’s difficult (impossible?) to create something and “make it go viral.” It does or it doesn’t and marketers have little control. I tell my students never to promise their boss that they will create a viral item; it’s career-threatening. That’s in spite of what you read giving pointers on how to make something go viral. That’s all they are, pointers. That said, you can think about the current viral rage—at this moment it’s KONY 2012—and either visit it in class or assign it to be reviewed outside class and discuss it as a case history. There will be reasons why it went viral, but, again, few of those are controllable.
Marketers should be vigilant so that the less ethical among them do not cause irreparable harm to user trust in the Internet as a medium. We will return to this important subject in Chapter 13 when we focus specifically on social and regulatory issues.
Discussion Questions 1. True or False: All businesses need to create a steady flow of new customers as part of their marketing strategy. Explain your answer. True. In spite of the greater ROI of CRM, customers do leave for a variety of reasons, some of which marketers can affect and some of which they cannot. I like to use diapers as an example. Of course, the diaper makers have long ago figured this out and have other products waiting in the wings. If they have an email address and the baby’s birthdate, the marketing opportunities are obvious.
2. Identify the main customer acquisition tools. The tools listed are:
Advertising, both online and offline
Portal deals (sponsorship?)
It is generally agreed that email and SEM are better at retention than acquisition, but they do have viable uses, especially when you can reach the contacts of your followers on social networks.
3. What is online display advertising, and how does it relate to offline display advertising? Display advertising is often referred to as banner advertising but I use display because that covers advertising both online and offline. The basic definition in both contexts is that it includes both images and text. Online has the huge advantage of potential interactivity in the ad itself and the ability to link directly to the product in question.
4. What is an online ad format? Why must marketers be familiar with the formats and understand what creating an online ad requires? The online ad formats describe elements like size in pixels, maximum file size, interactive elements allowed and more. Why? Because it isn’t easy. There’s a certain amount of tech understanding that is required along with all the understanding of audiences, messages, and other communications issues that also apply in offline display advertising. If you showed the CBS College Sports Network home page, it showed clearly that not all sites offer all formats and this has to be taken into account in both planning and creation of online ads.
5. What is a rich media ad? What benefits does it offer the marketer? Does it have any potential downsides? Rich media is anything that is not static—animation, audio, and video, primarily. Early IAB studies referenced in the second edition showed that use of rich media can lead to more attention and more response. They are touted as creating more audience engagement.
6. Why were additional new ad formats developed? What benefits do they offer the marketer? Do any of the formats have any potential downsides? That question was answered in the branding section of Chapter 5 and it is good to tie it back. Marketers want more engaging ad formats, otherwise they can just keep putting static ads in newspapers and magazines. So rich media came first and then “rich media on steroids”—the new Rich Media Branding Units.
7. How does a marketer go about placing an ad on Facebook or LinkedIn? Basically, you sign in and follow the directions/fill out the forms provided and your ad is created. It has to be paid for, of course, and has to be approved by the site owner. That obviously completely ignores the difficulty of creating compelling advertising with brief text and limited images. It’s important for students to realize that these, like Google AdWords, are self service, but it’s also important for them to realize how complex and difficult it is to do them well.
8. Why is ad serving an improvement over just placing an ad on a web page and just leaving it there? On local sites you sometimes do see ads that have been purchased for a long period of time and the content has not been modified during that time. I refer to them as “wallpaper.”
To answer the question directly, the ad serving networks have a greater reach than a single marketer could achieve with a media buy and they are likely to have more sophisticated targeting methods. It wasn’t emphasized in this chapter, but they also provide results in essentially real time, allowing marketers to tweak ads during a campaign.
9. Behavioral ad targeting is especially important on the Internet. Explain why and give a hypothetical example, perhaps based on your own experience. Can marketers do specific behavioral targeting—I just looked at shoes on a site—in mass media? No, they cannot come close to the rich behavioral data available on the web. Privacy issues are real, but if marketers do not use some variant of behavioral targeting they are missing out on a chief benefit of online advertising.
If you use Gmail, an easy example is to capture ads, and the other links at the bottom, on the basis of one of your emails. Just be careful what you choose!
10. Is demographic or behavioral or contextual advertising a better way to precisely target website visitors? Behavioral is almost invariably better.
It’s easy for me to use myself as an example because a lot of people in my demographic don’t use the web for extensive shopping, online bill paying, and mobile apps. On the other hand, quite a few of us do engage in these behaviors, regardless of our advanced demographic, and that’s what’s important.
Try to get your students to think about a demographic cohort, maybe their own, and the fact that members of that cohort behave differently in terms of various Internet-related activities. It’s important to target what they do, not how old they are.
11. True or False. Marketing events are necessarily held in the physical world, but they can be promoted on the Internet. Explain your answer. As stated, it’s False. Marketing events can be held on the Internet. In either event, the Internet is an excellent place for promotion them; email to the customer list and display advertising to attract new potential customers, for example.
12. Discuss whether or not generating publicity is one of the few marketing communications activities that has not changed much as a result of the Internet. It actually has changed a great deal. It used to be much more a matter of personal contact and persuasion between marketer and writer. Now it is a matter of providing the writer all the rich media and other content they need to write an article or blog post. Feeds and email notifications are used to draw the attention of writers to the content available.
13. Do affiliate programs tend to attract many websites or blogs that can generate a large volume of traffic that results in sales? Why or why not? Some sites do well from their affiliate programs, but the 80/20 rule invariably applies. T-shirt site CafePress seems to have a good one; it at least has a good description: http://www.cafepress.com/content/cp-partners. There are several directories of affiliate programs for site owners who want to make some extra money. A site called Affiliate Ranker has an interesting search engine: http://affiliateranker.com.
14. What is the importance of portal deals to Internet sites today? As explained in the text above, the importance of traditional portal deals has declined since the early Internet days. However, as additional sites like Facebook achieve “portal” status, the importance of expensive portal ads may become greater.
Internet Exercises 1. Internet Career Builder Exercise. 2. Visit a website you go to often, paying attention to the advertising this time. What kinds of ads do you see and why do you think they were placed on this particular site? Close out of the site and come back several times in quick succession. What do you see going on with the ads? How does it illustrate concepts discussed in the chapter? If you do this in class or assign students to do the exercise outside of class, specific spaces reserved for specific ad formats should be obvious. Different ads are likely to appear in these spaces for each of several specific reloads. They will hopefully see ads with content that is appropriate for the target audience of the site and that have interactivity that can engage the viewer and content that is compelling enough to create a click through.
3. If you have not already done so, make a contact with one of the three websites you are tracking. You could register, ask for information, or even purchase a product if you wish. Think about the experience you have as you interact with the website. Then keep a log of contacts that are made because of your initiative. How does the site appear to be using the data from your contact(s)? The first part of the question is intended to get students to think about customer experience in particular and site usability (to be discussed in Chapter 12s and 14) in particular. Students will know a poor experience when they see it, and the discussions are interesting.
If sites immediately send a welcome email and then follow with a planned program of communications, good for them. It is amazing how many sites still do not do the basics well, and a class discussion should uncover both good practices and lack of attention to a new registrant and poor use of the person’s data.
4. Visit the website of your local newspaper. Carefully examine the online media kit to understand what they offer that is the same as or different from the ad formats described in this chapter. Try your hand at developing an ad for one of the available formats. Especially f you don’t go live to a media kit in class, I’d recommend assigning this exercise. Assuming it’s a reasonable size market, the paper probably has a good media kit, although it may have fewer options than, say, the New York Times Online media kit: http://nytmarketing.whsites.net/mediakit. It has rates for print ads by section and specs for online ads by section. Unfortunately it no longer seems to have online rates. The reason is that they want to sell packages, not individual formats. Smaller local papers sometimes have online rates; it’s worth checking yours.
Trying to mock up an ad is an exercise in how hard it actually is to get it right. If the media kit doesn’t specify the maximum file size, the IAB standards give them. Most of us try to put way too much content in ads when we first try our hand at it.
Key Terms 80/20 rule rule of thumb that states that 20 percent of a phenomenon (customers) tends to produce 80 percent of the results (profits); also known as the Pareto curve.
ad serving process of supplying advertising elements while a page is loading on a user’s browser; ads are served by an advertising network and are placed on the basis of user
affiliate program a website that agrees to post a link to a transactional site in return for a commission on sales made as a direct result of the link.
behavioral targeting advertising displayed on the basis of anonymous Internet user profiles.
contextual advertising ads that are displayed based on the content being viewed at the time.
cookie a few lines of code that a website places on a user’s computer to return data about the user’s activities to the site
display advertising advertising that includes both text and visuals.
portal a large site with multiple services, ranging from news to directories to searches, that acts as an entry point onto the Internet.
re-targeting behaviorally targeting an ad to a person who looked at a product but did not complete a transaction.
rich media combination of text, images, video, and other interactive elements.
vertical advertising network ad serving network that specializes in a particular audience, for example B2B or women with young children.