Week 1: Introducing E-Commerce & E-Advertising

E-Advertising (BBE307)

Objectives:

1. To understand the concept of E-Commerce and E-Advertising

2. To understand the connection between e-commerce and e-advertising
3. To evaluate the differences between traditional advertising and e-advertising

Introduction

Most of the businesses in today’s environment seem to grow and achieve the stage of maturity
in a fast pace.

As such, small businesses should keep up to this fast pace of change in order for long term
survival and increase of income for both the owner and for the economy.

To retain the competitive advantage, business – large, medium or small should incorporate
Internet (thus leading to e-commerce, e-retailing, and so on). Internet allows businesses to
promote, advertise and market their respective businesses in a cost-efficient manner.

1.1 E-Commerce

1.1.1 The world of E-Commerce

- E-Commerce began in 1994 when Jeff Bezos started Amazon.com out of his own
garage.
- Some of the well known e-commerce stores are eBay, Dell, Walmart and many
more.
- At any given time, there are approximately 8 million consumers worldwide that
actively shop and buy through Web based stores and retailers (nearly 1/10 of the
world population).
- Online studies have claimed that online retail revenues will surpass the quarter-
trillion-dollar mark by 2011.

1.1.2 Definition of Commerce

- E-Commerce, in short electronic commerce, is the process used to distribute, buy,

sell or market goods and services, and the transfer of funds online, through
electronic communications or networks.
- In short, e-commerce can be defined as any sale or purchase that takes place using
the internet or through electronic means.
- It is commonly referred to as Online commerce, Web commerce, eBusiness, eRetail,
eTailing, e-commerce, ecom or EC.

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1.1.3 Fundamental Web Site terminology and theory

- Before one can advertise their business’s products or services a potential customer
should visit the respective Web site. The following are some of the steps that owner
should consider.
a) Obtain a Web site domain name for the business/organization
(www.godaddy.com – premier service for domain management)
o Yahoo.com, Gizmo Graphics Web Design (www.gizwebs.com), GoDaddy
o Once domain name and a Web site established, one should ensure that the
domain name server for the domain name is updated to the Web hosting
company’s DNS servers
b) Development of a “static” Web site – contains vast amounts of data and images
about the organization’s product/service but do not offer any dynamic or advance
features such as shopping cart services or dynamically generated content
o A “static” web site should be appropriate if the site is designed to promote the
business and not to sell products directly off the Internet.
o To enable the web site for e-commerce, products or service provided should
be configured to a shopping cart and also the “check out” button (calculates
shipping costs, enters personal information and securely completing the
transaction)
c) The need to obtain a digital certificate when doing business on the Internet.
o It is also known as “secure socket layer server certificate”, or SSL certificate.
o It is used to protect any communication that the business has with their
customers that contains private information.

1.1.4 Benefits of E-Commerce

The process involved with conducting business on the internet and opening and
eCommerce shop to sell from have several benefits to both merchants and the
customers who buy from them.

The biggest benefits is the cheaper upfront cost to the merchant, it’s easier to set up and
open the store and it’s faster to get an Online business up, running and making sales.

a. Helps create new relationship opportunities

Can help to create a world of opportunity and helps to establish new relationships
with potential customers, potential business associates and new product
manufacturers.

Customers who don’t know you exist will know about you, product suppliers will
request you add their items and other businesses will approach you abouit
partnership opportunities.

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b. Open for business 24 X 7

The ability to have unlimited store hours, giving customers 24 hours a day, 7 days a
week access to shop and buy items from your online.
Some merchants choose to limit their hours to 5 days a week, but orders can still be
made over the weekend.

c. Increases brand or product awareness

Able to reach out to new markets and displaying your site prominently can help
increase your company/domain brand name and also increase awareness about
your product line. Users who have never heard of you will discover you exist and
help spread the word about you.

d. Helps establish customer loyalty

E-Commerce helps create an easier means for your customers to purchase the
items you sell. Customer through your unlimited service can enjoy your services,
thus leading to customer satisfaction and loyalty.

e. Potential to increase overall business sales

Selling Online opens up many opportunities for businesses both new and old. It is a
great way to increase sales, especially if you have a physical store.

f. Potential to increase company profits

SALES increase does not necessarily mean that company PROFITS will increase.
Online businesses do have a greater chance of increasing sales and profits.

g. Potential to decrease some costs

E-business owners can also reduce the costs of running their business by moving it
or expanding it into the Online world. E-Commerce stores can run with fewer
employees and do not need a physical location in order to stay operational.

h. Expands geographical or customer reach

Physical storefronts are limited to the city in which they are located, Online
businesses are not limited.
i. Allows for smaller market or niche targeting

Owning an Online store gives the merchant much control over who they target and
reach out to notify about the items for sale in their store.

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j. Allows for easier delivery of information

An Online store and Web brochure are great ways to deliver and display information
about your company and the products you sell. With an Online presence, customers
will have direct access to product information, company information, promotions and
much more information.

1.1.5 Ten Steps to Profitable E-Commerce

The following are some of the steps that can be used as a checklist to ensure that
everything is in place for doing business on the Internet.
a. List goals and ideas
o Determine what your goals are for using the Internet for the promotion of your
business and/or selling products on the Web
o At this stage, preliminary cost can be estimated and considered

b. Review the products and services you intend to sell

o Carefully review the products and services that you intend to offer.
o Some of the things that you may need to ask
a) What are the advantages and disadvantages to your business of selling
or advertising online?
b) Are you willing to accept payment online, and if so, what payment
methods?
c) What logistics will you have to consider about shipping your product,
including cost, method, etc?
d) Are you willing to consistently update and maintain your Web site to
reflect current products, market trends, and pricing

c. Compare e-commerce Web sites

o Find Web sites that are related to your business and take some time
checking them out – how they promote and advertise, layout of the Web site,
navigation, check out by using the web site to learn how smooth is the
process, look at how other countries handle e-commerce and many more

d. Determine your target market

o Determine what market of consumers you want to target with your Web site.

e. Budget for your Web site

o Have a predetermined budget so that you can stay within the guidelines of
what can afford – web site development, marketing, customer service,
maintenance, Web hosting, cost of merchant payment system, secure server
information, domain name, search engine submission, staff to maintain the
Web site and many more

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f. Determine your unique selling points

o There are many Web site that is selling the same product/service as yours,
and such we should determine what unique selling points are going to be for
our web site.
o What are the unique selling points that set them apart from their competitors?

g. Create a marketing planning plan

o An online marketing plan should address search engines and techniques for
improving a Web site’s visibility on the Internet.

h. Decide on a Web site structure

o Design on how you intend your Web site to do and how you want to achieve
that function.

i. Implement online Web services

o Have all the service that you’re going to need for your Web site ready to go –
Web hosting, a digital certificate, and the completed Web design.
o Ensure that ample amount of product in inventory ready for sale.

j. Launch your Web site

o Enter into the world of e-commerce.
o Keep a close eye on your Web site to catch any mistakes or areas that need
additions or improvements.

1.2 E-Advertising

1.2.1 Traditional Advertising

- Advertising is a type of marketing communication, which is a broad term that refers
to all the communication techniques marketers use to reach their customers and
deliver their messages.
- This includes public relations and sales promotion to direct marketing, events and
sponsorships, packaging, and personal selling.
- The definition of the traditional advertising has FIVE basic factors.
a. Advertising is usually paid for by the advertiser, although some forms of
advertising, such as public service announcement, use donated space and time.
b. Not only is the message paid for, but the sponsor is identified.
c. Advertising generally reaches a broad audience of potential consumers, either
as a mass audience or smaller targeted groups.
d. Most advertising seeks to inform consumers and make them aware of the
product or company. In many cases, it also tries to persuade or influence
consumers to do something. Persuasion may involve emotional messages as
well as information.
e. The message is conveyed through many different kinds of mass media, which
are largely nonpersonal. In other word, advertising isn’t directed to a specific

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person, although this characteristic is changing with the introduction of the

internet and more interactive types of media.
- Internet advertising, although new or growing in some parts of the world, has pulled
in double-digit percentage gains, in contrast to traditional media that have seen ad
spending growth in the 2 to 5 percent range.

1.2.2 Definition of E-Advertising

- It is also referred to as Internet Marketing.
- It means the use of Internet to advertise and sell products and services.

1.2.3 Purpose of E-Advertising

- Online advertising serves three primary purposes.
a) It provides a brand reminder message to people who are visiting a Web site.
b) It works like an ad in traditional media and delivers an informational or
persuasive message.
c) It provides a way to entice people to visit the advertiser’s site by clicking on the
banner or button on the Web site. This is called driving traffic to the Web site.

1.2.4 Types of E-Advertising

- Internet advertising can be delivered as a traditional ad just like the ones seen in a
magazine or can be presented in the following format.
a) Banner Ads
o Banner ads are small ads on other Web pages on which people can click to
move the advertised Web site.

b) Other formats
i) Skyscrapers
 The extra-long, skinny ads running down the right or left side of a Web
site.

ii) Pop-Ups and Pop-Behinds

 Pop-up ads open on the computer screen either in front of or behind
the opening page of the Web site – they may present games or
product.

iii) Mini-Sites
 Mini-sites allow advertisers to market their products without sending
people away from the site they are visiting.

iv) Superstitials
 It is designed to work like TV ads.
 When you go from one page on a Web site to another, a 20 second
animation appears in a window.

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c) Interactive Formats
o Originally banner ads were jazzed up using relatively simple animation
techniques to make elements move.
o New technologies – including plug-ins, Java script, Flash, and media
streaming – provide even more active components

1.2.5 Benefits of E-Advertising

a. Cheaper than Print advertising

Traditional advertising is still a quality form of marketing, however it is not always

cost effective, especially for small businesses. Print advertising can get expensive as
there may be a need to update regularly, which requires new work be planned and
generated. It is much quicker and more cost effective to update and maintain
eCommerce.

b. Interactive Ads

The ability to develop and improve a number of interactive advertising or marketing

campaigns designed to reach out and engage shoppers.
Videos, flash, presentations, graphics, moving animations – all can be used as
interactive devices to help entice shoppers to drop in and shop around for the
products or services offered.

c. Helps build brand credibility

E-Commerce advertising may increase brand awareness and credibility among

shoppers looking for what is sold online.

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