Influence of Online Advertising on Sales - Essay Example

CADCAM Technologies Memorandum The CEO, CADCAM Technologies 05 December 2008-12-05 How online marketingcan help improve our sales I take this opportunity to bring to your notice the advantages of online advertising and how we can use it as an effective tool to increase the sales of our textbooks on computer applications software to reach a global audience at very cost effective rates. Online advertising: The latest trend in marketing Before I present my case on how online advertising can help us increase the sales of our textbooks, let me first substantiate that online advertising is the latest trend in marketing which "provides better opportunities for companies to establish distinctive strategic positionings than did previous generations of information technology" (Michael E. Porter 4). "With the internet entering households almost as rapidly as television once did, its use as a marketing communication tool is becoming increasingly popular" (Julie Napoli, 2). "Although advertising expenditures on the Internet remain relatively small in contrast to standard media, this figure is approaching that of outdoor advertising and represents nearly a three-fold increase over the last two years" (Xavier Drze, Fred Zufryden). According to a November 2007 report by comScore (NASDAQ: SCOR), a leader in measuring the digital world, press release dated January 17, 2008, "more than 75 percent of U.S. Internet users watched a video online (including both streaming video and progressive downloads), averaging 3.25 hours of video per person during the month. Google Sites, which includes YouTube.com, increased its video market share by more than two percentage points to 31.3 percent from October to November" (comScore Video Metrix). Top U.S. Online Video Properties* by Videos Viewed November 2007 Total U.S. - Home/Work/University Locations Source: comScore Video Metrix Property Videos Viewed (MM) Share (%) of Videos Total Internet 9,491 100.0% Google Sites 2,966 31.3% Fox Interactive Media 419 4.4% Yahoo! Sites 328 3.5% Viacom Digital 245 2.6% Time Warner Network 184 1.9% Microsoft Sites 181 1.9% Disney Online 96 1.0% ABC.com 88 0.9% ESPN 87 0.9% Break 47 0.5% *Rankings based on video content sites; excludes video server networks. Online video includes both streaming and progressive download video. According to the report, in total, 138 million Americans - approximately three in four U.S Internet users - viewed online video in November. Top U.S. Online Video Properties* by Unique Video Viewers November 2007 Total U.S. - Home/Work/University Locations Source: comScore Video Metrix Property Unique Viewers (000) Percent of all U.S. Internet Users Total Internet 138,383 75.9% Google Sites 76,187 41.8% Fox Interactive Media 46,349 25.4% Yahoo! Sites 37,300 20.5% Time Warner Network 31,212 17.1% Microsoft Sites 28,470 15.6% Viacom Digital 23,522 12.9% Disney Online 10,361 5.7% ESPN 10,128 5.6% ABC.com 9,969 5.5% CBS Corporation 8,336 4.6% *Rankings based on video content sites; excludes video server networks. Online video includes both streaming and progressive download video. Online advertising "opens up new communication possibilities for personalized messages to be delivered to targeted individuals (Davis 2000, 113). It can help us "create a customized, common information technology platform for all your company's activities-resulting in unique, integrated systems that reinforce the strategic fit among your firm's many functions. Even better, competitors can't easily imitate these systems" (Michael E. Porter 2). That online media as an effective source of advertising can be gauged from the fact that the second generation of Internet ("Web 2.0") companies such as MySpace, Facebook, Linked/In and YouTube that set shop three years ago, today have more users than the entire U.S. population. This trend adequately highlights the fact that we can target the online community for creating customer loyalty, promoting sales and services and building and strengthening our brand awareness. So powerful is the online advertising tool that today Corporations such as IBM, Toyota and Johnson & Johnson have joined the online advertising band wagon to establish their own affiliated social networks for retaining customer loyalty. Studies reveal that there are many companies today that are launching some kind of online community, wiki or blog strategy to promote their products and services, strengthen brand awareness, retain existing customer loyalty or to reach potential ones. According to Tom Hayes and Michael S. Malone, "With this shift toward self-organization by consumers, national advertising campaigns as we know them will increasingly become a waste of time and money for many companies. The trick for brands is to cohabit social spaces with these consumers" (Wall Street Journal, 28 November 2008) Online advertising tools for promoting and selling our textbooks Based on the above facts, I take the liberty to suggest that we compliment our traditional advertising channels with an online advertising mix to push up sales of our textbooks on Computer applications software to reach our target audience of colleges and universities across the globe. Some of the online advertising options that can help increase our sales and provide effective methods to strengthen our brand awareness are: Google AdWords: We can explore options such as pay per click advertising on Google AdWords. Our advertisements will be displayed on the search engine results and content sites of the Google network such as AOL, EarthLink, HowStuffWorks, & Blogger. Let me for example say, we create an online campaign for our book on AutoCAD. When a visitor enters the word AutoCAD in the search bar, our advertisement will be displayed as a sponsored link on the right. It will also appear on other publishing sites with similar but non-competing sites on the content network. This will give us the opportunity to reach our target audience manifold and also open the way for a rise in sales. The advantage of pay per click advertising is that there is no monthly charge and we simply have to pay a nominal activation fee. Then we need to bid for an amount for relevant keywords, for example in our case, AutoCAD textbook, and based on our bidding amount, our advertisement will be placed as a sponsored link advertisement on the right side of the result page. We then have to pay the amount only when our visitor clicks on our advertisement. Google AdWords is just one such option of online advertising. We can also explore other options such as email advertising, and press releases to make our presence felt on the Internet. Email advertising: This is one of the most effective and low cost tool we can use to provide personalized and interactive services to our existing and potential customers. For example, we can mass mail our clients about our new edition of our AutoCAD textbook resulting from the upgradation of the software. We can also provide information on discounts and other special deals for our previous editions of our textbooks. Then again, we have the option of sending e-newsletters and other promotional material to our targeted sales group. An advantage of email advertising is that we can target specific groups of our customers, or in other words, the people who are actually interested in our updates and new publications. Unlike forced advertising methods which can have a negative impact on sales if the consumers are not interested in our products, we can provide information to those who actually look forward to receive it. The benefit of this is that our email advertising campaign will have a better chance of sales conversion than any other form of advertising. Online press releases: There are many websites that have dedicated communities of members interested in a particular subject. In our case, there are communities for each our textbooks: AutoCAD, SolidWorks, Catia, and Solid Edge. WE can reach our potential customers by providing press releases in websites dedicated to these communities. Here, I can give you the example of a website www.tenlinks.com that has a large registered audience of software users as its members. While most websites allow us to place our press releases for free, there are others that do charge a nominal cost. The advantage is that at very low rates, we can target a global audience and create a bigger market for our textbooks. I rest my case by saying, "Internet technology makes both giving and collecting feedback very easy, which further encourages two-way communication" (Y Liu, LJ Shrum 7) between the business entity and the consumers providing opportunities for mutually beneficial relationships, better sales and promotion of goods and services. I sincerely hope my arguments would convince you to exploring online advertising as an effective method to compliment our traditional advertising channels and pave the way for better growth in terms of sales and customer loyalty. Thanks References Julie Napoli. The media habits and Internet practices of the net generation. Xavier Drze, Fred Zufryden. Is Internet Advertising ready For Prime Time < http://www.xdreze.org/Publications/webgrp.pdf comScore Video Metrix. Davis, J. 2000. A Guide to Web Marketing: Successful Promotion on the Net. UK: Kogan Page Limited. ISBN 0749431857 Michael E. Porter. Harvard Business School Publishing Corporation, Strategy and the Internet Tom Hayes and Michael S. Malone. The Wall Street Journal Y Liu, LJ Shrum. Journal of Advertising, 2002 http://www.yupingliu.com Read More