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    E-Shopping and E-Business

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    1) As Marketing Director of your company, you have been given a budget of $10 million dollars to spend on Internet Advertising. How would you spread this money out across Paid Listings, Pay per Click, Paid Inclusion, and Search Engine Optimization? What reasoning did you utilize to make this distribution?

    2) You are starting an on-line business which sells children's books and your business falls into the "Brand Follower" category. You decide to hook customers into your website initially based on price. Now that you have hooked your customers in, present three (3) ways you intend to interest that shopper in returning to your website in the future.

    3) Following is a list of businesses or industry's that you may not traditionally think of as an e-business. From the list below, pick an industry (by circling it) and describe three (3) ways in which they might utilize a web site to supplement/enhance the value that they currently offer to their customers through a traditional business setting. In each of your 3 solutions, indicate if you feel it is an e-business or an e-commerce solution and explain why you feel that way.

    - High School Academic Tutoring - Convenience Store Chain
    - Sporting Goods Retailer - Tax Return Preparation Service
    - After School Child Care - Family Medical Care
    - Plant Nursery - Roofing Company

    4) What are some of the pros and cons of patients living in the United States being able to order prescription drugs from companies residing outside the U.S.? Should this industry be regulated? If so, by whom (remember this trade crosses traditional national border jurisdictions)?

    5) "Cookies" are small files that are written to your hard drive from web sites so they can identify you as a repeat visitor as well as for storing user and preference data. From the end-user's perspective, what are some of the benefits as well as areas of concern with the use of this type of technology?

    6) Should sales taxes on goods and services sold over the Internet be based on the location of the buyer or the seller (remember, it is possible the two may not reside within the same country)?

    7) What existing regulatory body/organization should govern quality and customer complaint issues for goods and services sold over the Internet?

    8) Describe 2 revenue models you could utilize if you owned an on-line radio station.

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    Solution Preview

    1) As Marketing Director of your company, you have been given a budget of $10 million dollars to spend on Internet Advertising. How would you spread this money out across Paid Listings, Pay per Click, Paid Inclusion, and Search Engine Optimization? What reasoning did you utilize to make this distribution?

    As Marketing Director of a company, I would use a budget optimizing method to allocate our $10m advertising dollars wisely. First, I would have an Online Advertising Objective with reasoning for distribution; advertisers generally hope that their online advertising efforts will achieve a number of things:

    1. Achieving a click-through. Where applicable, the advertiser will hope that a potential customer will see the advertisement and be interested or tempted enough to click on it and be taken directly to the advertisers web site. In this case the advertisement will have brought a customer that the web site may not have otherwise had. The advertisement is considered a real success if the customer then buys something also.
    2. Failing a click-through, advertisers will hope that the potential customer will register the ad in some way by noting the content of the ad and visiting the web site later or by at least being made vaguely aware of the product or service being advertised.
    3. The advertisement achieves brand recognition within the potential customer. This means that at the very least, when the customer is presented with a number of different products or services, he or she will select the advertisers brand simply because the customer has made aware of the brand through advertising.
    Measuring Advertising Success
    Advertisers will measure the effectiveness of a particular advertising campaign by seeing how well it has achieved the objectives outlined above. In order to do this, advertisers will consider:

    ? Click-throughs: The number of potential customers who clicked on the advertisement and were taken to the advertisers web site. This is particularly important as web sites often sell advertising space based on a cost-per-click (CPC) basis.
    ? Page views (page impressions): This is the number of times that the web page has been requested from the server. More simply, it indicates how many potential customers could have seen the ad. Let's say that you have 100,000 visitors to your web site a month, each visitor reading 6 pages on average. That is 600,000 impressions a month. A common way of selling ad space is cost per thousand impressions, or CPM (M = 1000 in roman numerals).
    ? Click-through rate (CTR): This is the ratio of the number of times a page was viewed, to the number of times the ad was clicked on. Usually it is given as the percentage of the total visitors to a page who actually clicked on the ad. Click-through rates range from under 1% to 5% depending on the type of advertisement. That is, for every 1,000 visitors between 10 and 50 will click on the ad. This is why advertisers consider the popularity of a web site as being so important
    ? Cost per sale: This measures how much advertising money is spent on making one sale.
    Although the importance of these measures may differ according to each advertiser, they are all considered important in evaluating the success of the ad.

    Buying Advertising Space
    There are various options for buying advertising space:
    ? Employ an advertising agency
    ? Approach other web sites yourself
    ? Join an ad network

    Each option has its own strengths and weaknesses that needs to be considered.

    Employ an Advertising Agency
    A real advantage of using an advertising agency is that they will do most of the necessary work of placing your ad for you. They will find suitable sites to place your ad, negotiate the ad space and assist you in planning your advertising campaign. If you want, they will also design and create the ads for you.
    Now, if you are a large company, the cost of using an advertising agency is something that should be covered within your budget as a necessary means of staying ahead of your competitors. You should also have little problems in finding an agency that will deal with you.

    If we are a smaller business, you may find yourself unable to contract the services of an advertising agency since they tend only to accept accounts with businesses of a certain size. You may find the cost prohibitive too. If you have a limited advertising budget, you may be better focusing on spending that money to achieve well placed ads, rather than a expertly designed ads and a full blown advertising campaign.
    Advertising agencies vary a great deal in price and account minimum so we must shop around and compare what is available.

    Approach other Web Sites Yourself
    This option takes time and effort on your part, but it does give you significant control over where your ads are placed. First you will have to research other web sites to determine if their content matches yours, but is hopefully not in direct competition with you. By working with the site you can also negotiate the best location for your ad.

    Don't just aim for the larger, more popular web sites. If the web site is specialist or small and doesn't attract many advertisers you will probably pay less for the advertising space. If you choose the site well, then even if there is less traffic on the site at least the visitors to that site will be interested in some of the same things that you are advertising. Selling rare stamps on a stamp collectors website could bring you more traffic than elsewhere.

    If you wish to place your ads on larger sites you may find that they sell set advertising packages that are not cheap and are based on a CPM basis. Prices and plans will vary considerably according to the type of ads you are placing and the size of the web site, but you can expect to pay upwards of 50 cents per 1000 impressions for a banner ad to $30 per 1000 impressions for a floating ad or unicast ad, with the number of impressions being sold ranging from 1,000 on smaller sites to 200,000 on larger sites.

    Selling Your Advertising Space
    Online advertising not only works to increase your sales and overall exposure. It is also a successful way of increasing your revenue.

    Allowing other web sites to advertise on your web pages can increase your earnings substantially. The more popular your web site, the more advertisers you are likely to attract and the more people will pay to advertise. This explains why many websites offer free information, services or products; the more people they can encourage to their web site, the more revenue they are likely to get from advertising.

    We can either opt to sell the space yourself or work with an ad network program such as a banner ad network to do the majority of the work for you. Since there are now more sites on the web selling ad space, than there are advertisers wishing to buy you will have to impress advertisers with things such as high traffic volumes and specialized content. If you plan to sell the space yourself, you should have ...

    Solution Summary

    This in-depth solution of 4,706 words discusses concepts of internet advertising, customer appeal, website utilization, prescription drugs online, cookies, sales taxes on goods and services, regulatory control and revenue models.