Hi, this is what's been happening this week:
----- Original Message -----
From: amraa shanzbaatar
To: snowfactory@seed.net.tw
Sent: Wednesday, October 29, 2008 12:26 AM
Subject: Dear 蘇立文、黎懿慧
Dear 蘇立文、黎懿慧
My name is 鄯安宇. I am 4th year undergraduate student of National Taiwan University (NTU),
Department of Business Administration. For the second to last semester in college, I am
taking Professor 黃俊堯(Chun-Yao Huang) 's Network Marketing, which introduces
marketing activities, especially advertising on the internet, to MBA and 4th year undergraduate
students in English.
For the term project, Professor asked us to come up with a local business that has website on the
internet and we should advertise it on the internet using keyword advertising platform provided by
Google Adwords. All of the monetary expenses will be covered by the department. In addition,
students who took this course last semester participated in Google's adWords challenge 2008
and been awarded as the regional winners and went to Google's office in Sydney Australia.
Our group members have come up with several businesses already, but I, who personally had your
yogurt introduced to me through 李伊 of Natioanal Cheng Chi University (NCCU), Master of Philosophy,
would like to try to advertise your business on Google (for free), and am asking your permission
to let us direct Google users to your site. I hope that with your approval, this cooperation will lead to
our good grades and your increased brand awareness and sales not only in the local market, but
all over the world. If you agree to let us develop and run advertisement campaing on Google for you
for free, please reply to this mail by stating your name with your approval before Friday October 31st.
Sincerely
鄯安宇 B94701155
National Taiwan University
Department of Business Administration
Re: Dear 蘇立文、黎懿慧
From: 雪坊優格 (snowfactory@seed.net.tw)
Sent: Friday, October 31, 2008 3:36:45 PM
To: amraa shanzbaatar (amraa@hotmail.com)
We are glad to let you and your team members to develop and run the advertisement campaign on google for us. We believe that you will do a great job! If you have any question about us, please contact with us anytime.
Sincerely,
黎懿慧
Snowfactory Home-made Yogurt
So, snowfactory is on the list.
Friday 31 October 2008
Before we decide a company....
I think we could firstly ask some questions to ourselves:
˙Who will be our target customers group?
˙Targeting at specific group or the general public, which will bring us more
clicks?
˙People "need" or "want" or "demand" that products?
such like this:)
˙Who will be our target customers group?
˙Targeting at specific group or the general public, which will bring us more
clicks?
˙People "need" or "want" or "demand" that products?
such like this:)
[Notes]10/28 Discussion after class
Followings are some points that we've discussed last week
Select a company that:
1) its products do not have too many categories or it would be hard to choose the keywords.
2) has attractive website
3) they could provide us data that we need
4) small & low-profile business would be better
5) Our goal si to boost the sales and get more clicks
6) we could come up with many keywords about the products
7) both English or Chinese website will do
8) its headquarter should be in Taipei (easy to approach)
Select a company that:
1) its products do not have too many categories or it would be hard to choose the keywords.
2) has attractive website
3) they could provide us data that we need
4) small & low-profile business would be better
5) Our goal si to boost the sales and get more clicks
6) we could come up with many keywords about the products
7) both English or Chinese website will do
8) its headquarter should be in Taipei (easy to approach)
[Notes] 2008 Google finalist
A) Decide a company
bakery (know its revenue per day; numbers of staff)
B) Set goals
improve sales & gain brand popularity
C) Define major consumer group
student nearby
D) Understand its current marketing status
E) Analysis online users and decide when to put the ads on
Weekend: all day
Weekday: only afternoon till midnight
F) Suggestion for us
promote products related to special day and then edit the webapge to match the ads
Monday 27 October 2008
To Shelly
For the first question:
I support to use the Microsft brand name since they have a well known name and leverage the other services of Microsoft both Expanding Live Search and Msn advantage
for the second question:
I support the Digg. com idea but they should also catch up the other areas besides technology again by the advantage of live search and msn
see u tomorrow
I support to use the Microsft brand name since they have a well known name and leverage the other services of Microsoft both Expanding Live Search and Msn advantage
for the second question:
I support the Digg. com idea but they should also catch up the other areas besides technology again by the advantage of live search and msn
see u tomorrow
adWords suggestions
As one thinks of local brands that are solid in quality but less known,
food processors come to mind first. What's more, the winners of the
previous campaign chose almost identical industries (bakers).
Being in Taiwan, I was thinking of electronic appliance makers.
1. www.alibaba.com offers comprehensive results for finding OEM or ODM
firms, the fields where Taiwan is famous.
When I was looking for sites, good in content, but less known were the
main criteria. My girlfriend suggested some sites:
2. www.duo.com.tw seemed to be a rather cool site. Its content varies from
shopping to designer's biographies.
3. Also, http://liyihui.myweb.hinet.net/newstore2.html is a yogurt company.
The owner of the firm graduated from NTU MBA. I had their yogurt once.
Although a little expensive 45NT$ for a cup with home made jam, it tasted
pretty good. Their site needs a little design, but ok.
4. www.yabook.com.tw is a 2nd hand book, DVD, CD site.
5. As for non-profit organizations, http://www.blood.org.tw/index.php?action=english&PId=21 might work. It is the blood bank of Taiwan.
food processors come to mind first. What's more, the winners of the
previous campaign chose almost identical industries (bakers).
Being in Taiwan, I was thinking of electronic appliance makers.
1. www.alibaba.com offers comprehensive results for finding OEM or ODM
firms, the fields where Taiwan is famous.
When I was looking for sites, good in content, but less known were the
main criteria. My girlfriend suggested some sites:
2. www.duo.com.tw seemed to be a rather cool site. Its content varies from
shopping to designer's biographies.
3. Also, http://liyihui.myweb.hinet.net/newstore2.html is a yogurt company.
The owner of the firm graduated from NTU MBA. I had their yogurt once.
Although a little expensive 45NT$ for a cup with home made jam, it tasted
pretty good. Their site needs a little design, but ok.
4. www.yabook.com.tw is a 2nd hand book, DVD, CD site.
5. As for non-profit organizations, http://www.blood.org.tw/index.php?action=english&PId=21 might work. It is the blood bank of Taiwan.
To Shelley
1.
Utilizing Microsoft Brand name, and stick with the Live Search.
Combine Microsoft software with adCenter's ads.
Simplify the adCenter registration procedure.
2.
I have done a calculation.
Utilizing Microsoft Brand name, and stick with the Live Search.
Combine Microsoft software with adCenter's ads.
Simplify the adCenter registration procedure.
2.
I have done a calculation.
Sunday 26 October 2008
some websites for adwords challenge
YANNICK (亞尼克)
English version: http://en.yannick.com.tw/?page=products
Chinese version: http://www.yannick.com.tw/empty.htm
also a famous chain store
--------------------------------------------------------------------------------------------
L'AMOUR http://www.lamour.com.tw/cake01.php (They also have a blog.)
Cheese cake & afternoon tea restaurant (about $500 for cakes)
*People can directly place an order on the website and has three method of payment
--------------------------------------------------------------------------------------------
MR. MARK (馬可先生麵包)
Chinese: http://www.mrmark.com.tw/
They use food grain powder instead of refined white flour to make breads.
My family used to buy their bread as our breakfast.
---------------------------------------------------------------------------------------------
香帥蛋糕 http://www.scake.tw/
They are known for "taro cake"
but only can order online.
----------------------------------------------------------------------------------------------
also a famous bakery
-----------------------------------------------------------------------------------------------
Coda http://www.coda.tw/home.html
American and Italian food restaurant (about $180~$350, dont' have to pay 10% service fee)
pros:
1. A popular restaurant near NTU
2. "Coda" is "Bongos" branch, serving similar food
cons:
1. The location is not easy to find
2. They could put more effort on designing their pages....
To reach a consensus
Dear all,
Maybe we should reach a consensus about the view points before I merge everyone's articles in one.
1) What approaches we're gonna take?
The options:
a) recruiting advertisers
b) recruiting small publishers to show contextual ads
c) recruiting premium publishers to show contextual ads
d) recruiting major search engines
e) leveraging other Microsoft services
f) differentiation
g) expanding live serach traffic
2) For or against the deal with Digg.com?
Thank you all. :D
Cheers,
Shelley
Maybe we should reach a consensus about the view points before I merge everyone's articles in one.
1) What approaches we're gonna take?
The options:
a) recruiting advertisers
b) recruiting small publishers to show contextual ads
c) recruiting premium publishers to show contextual ads
d) recruiting major search engines
e) leveraging other Microsoft services
f) differentiation
g) expanding live serach traffic
2) For or against the deal with Digg.com?
Thank you all. :D
Cheers,
Shelley
Microsoft adCenter case summary (Shelley's)
1) You are Doug Stotland. What approach (or approaches) do you favor? Why?
Due to Microsoft’s late arrival to search engine advertising, it faced a fierce competition among other search engines, especially Google, which already builds up the relationship between advertisers and thus brings more and more internet traffic. It was not easy to serve as a profitable platform if advertisers don’t come and as a new comer, it would be much more difficult for Microsoft to surpass Google to be a leader in online advertising. Therefore, the challenge Microsoft confronted was recruiting advertisers and publishers as many as possible at the same time.
To evaluate the strategic options, Microsoft firstly has to recognize itself as number one software company in the world. They have a strongest team of technical experts and are skilled at marketing so that the general public has a strong awareness toward their brand name. If I were Doug Stotland, I would choose to adopt three following approaches: recruiting premium publishers to show contextual ads, leveraging other Microsoft services and differentiation.
Firstly, recruiting premium publishers gives more opportunities for Microsoft to access large amounts of visitors. To maintain its brand image, it would be more appropriate to select those publishers consistent with Microsoft’s culture and thus control quality. No matter what types of content that publishers focuses on, it would be easier for Microsoft to execute a quality control as well as differentiate themselves, comparing to the services that recruiting small publishers as Google and Yahoo had already provided. Secondly, lots of people in the world use MSN as a platform to communicate so that Microsoft could use its own strength to leverage its services. As the top seller of display advertising, Microsoft could provide some benefit for display advertisers also advertise on online pages. (Figure: Worldwide instant messenger users)
An estimate users of instant messenger:
˙AOL: 53 million
˙MSN: 27 million
˙Yahoo: 22 million
˙Google: 866,000
2) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
What Doug Stotland concerned was Digg traffic was not enough for adCenter as a newcomer in online ad market. Obviously, if Microsoft had to sign up with premium publishers, the quantity of traffic that publishers offer did matter. However, the reasons why Microsoft wins the software competition are not only because they are good at marketing but also they require the advantage of technological expertise. Therefore, to cooperate with publishers in similar background would help Microsoft developing and strengthening the relationship with those advertisers. In an initial stage, cooperation with Digg.com would be a conservative step but would still bring profit to Microsoft.
Due to Microsoft’s late arrival to search engine advertising, it faced a fierce competition among other search engines, especially Google, which already builds up the relationship between advertisers and thus brings more and more internet traffic. It was not easy to serve as a profitable platform if advertisers don’t come and as a new comer, it would be much more difficult for Microsoft to surpass Google to be a leader in online advertising. Therefore, the challenge Microsoft confronted was recruiting advertisers and publishers as many as possible at the same time.
To evaluate the strategic options, Microsoft firstly has to recognize itself as number one software company in the world. They have a strongest team of technical experts and are skilled at marketing so that the general public has a strong awareness toward their brand name. If I were Doug Stotland, I would choose to adopt three following approaches: recruiting premium publishers to show contextual ads, leveraging other Microsoft services and differentiation.
Firstly, recruiting premium publishers gives more opportunities for Microsoft to access large amounts of visitors. To maintain its brand image, it would be more appropriate to select those publishers consistent with Microsoft’s culture and thus control quality. No matter what types of content that publishers focuses on, it would be easier for Microsoft to execute a quality control as well as differentiate themselves, comparing to the services that recruiting small publishers as Google and Yahoo had already provided. Secondly, lots of people in the world use MSN as a platform to communicate so that Microsoft could use its own strength to leverage its services. As the top seller of display advertising, Microsoft could provide some benefit for display advertisers also advertise on online pages. (Figure: Worldwide instant messenger users)
An estimate users of instant messenger:
˙AOL: 53 million
˙MSN: 27 million
˙Yahoo: 22 million
˙Google: 866,000
2) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
What Doug Stotland concerned was Digg traffic was not enough for adCenter as a newcomer in online ad market. Obviously, if Microsoft had to sign up with premium publishers, the quantity of traffic that publishers offer did matter. However, the reasons why Microsoft wins the software competition are not only because they are good at marketing but also they require the advantage of technological expertise. Therefore, to cooperate with publishers in similar background would help Microsoft developing and strengthening the relationship with those advertisers. In an initial stage, cooperation with Digg.com would be a conservative step but would still bring profit to Microsoft.
Furthermore, if Doug Stotland decided to take those three approaches: recruiting premium publishers, leveraging other services and differentiation, Microsoft had better signed with Digg.com as a new partner to sell and serve the ads. On Digg’s side, they would be glad to cooperate with such large organization to reach a win-win situation.
Saturday 25 October 2008
Deniz's Microsoft adCenter
1.) You are Doug Stotland. What approach (or approaches) do you favor? Why?
It is clear that Microsoft is a strong name which is well-known almost all over the world. Since they have an advantage of this name, it may be more effective for any campaign to use this brand name. So if I were Doug Scotland I would favor to choose the leveraging the current services of Microsoft or expanding the Live Search traffic, rather than a competition or repetition of Google services. First of all as I mentioned before Microsoft is already a brand. When we examine the world population net searching behaviors (exhibit 2) it is clear that the first impression on people s mind is Google. Relevant to this Google has a good impression for the advertisers to reach the target mass. However similar to Google s brand recognition Microsoft has also its own popularity by its services like MSN, Windows Live and windows Live Messenger, Live search.. Instead of imitate Google s model they may use their own name by developing their current system. For this reason as mentioned in the case Natala Menezes’s “differentiation” idea related to demographic targeting can be a good way for the company. Besides this ‘make it easy to reach the sytem’ can be a good way for the new comers. Basically, by taking the advantage of display advertising through MSN (in which Google is not as experienced as Microsoft) can also be an opportunity for Microsoft. Secondly, Microsoft has its credibility for the advertisers. Google has a large scale of advertisers which makes quality control a bit more difficult. Most of the advertisers have complaints about the place of their advertisements on Google site. However Microsoft has the company principles to avoid this bad image. It can be a reason to get some of Google advertisers. Since Microsoft already its credibility and well known services the users (as well as advertisers) already have fidelity to the company. Microsoft can use all these advantages to keep its current status and to obtain the new comers, too. Third of all, Microsoft has a lot experiences than any other company do on computer and internet technology. It is much more open to develop or renew itself. On the other hand Google, even it is also big company it does not have enough experience as Microsoft. Microsoft consumer support system is more reliable than the others. Microsoft can also use its experience and reliability even to support advertisers too.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
Since Microsoft has reputation and reliability in technology a publisher focused on a particular content like technology can be a good choice for Microsoft. Digg.com which is a technology news site and has visitors in technology can be useful for Microsoft. This is why Microsoft has strong relationship with the technology companies; it is easy to recruit the advertisers easily. Comparing to Goggles large but without quality constraints advertisement system can make Microsoft to persuade technology advertisers to add ads on its web site. As soon as they can increase the volume of advertisement it will ease to compete with Google in pricing too. However besides all this advantages the question appears: how will Microsoft will be able to manage the other fields? Since the competitors has a large scale of power.. can it fill the missing parts ? I think the answer of these questions can be related to first question. Since we all know MSN and Myspace are high potential social network systems. In which people spent hours and use for anything Microsoft can enrich the empty parts of ads system by using the advantage of the high popularity of these web sites..
It is clear that Microsoft is a strong name which is well-known almost all over the world. Since they have an advantage of this name, it may be more effective for any campaign to use this brand name. So if I were Doug Scotland I would favor to choose the leveraging the current services of Microsoft or expanding the Live Search traffic, rather than a competition or repetition of Google services. First of all as I mentioned before Microsoft is already a brand. When we examine the world population net searching behaviors (exhibit 2) it is clear that the first impression on people s mind is Google. Relevant to this Google has a good impression for the advertisers to reach the target mass. However similar to Google s brand recognition Microsoft has also its own popularity by its services like MSN, Windows Live and windows Live Messenger, Live search.. Instead of imitate Google s model they may use their own name by developing their current system. For this reason as mentioned in the case Natala Menezes’s “differentiation” idea related to demographic targeting can be a good way for the company. Besides this ‘make it easy to reach the sytem’ can be a good way for the new comers. Basically, by taking the advantage of display advertising through MSN (in which Google is not as experienced as Microsoft) can also be an opportunity for Microsoft. Secondly, Microsoft has its credibility for the advertisers. Google has a large scale of advertisers which makes quality control a bit more difficult. Most of the advertisers have complaints about the place of their advertisements on Google site. However Microsoft has the company principles to avoid this bad image. It can be a reason to get some of Google advertisers. Since Microsoft already its credibility and well known services the users (as well as advertisers) already have fidelity to the company. Microsoft can use all these advantages to keep its current status and to obtain the new comers, too. Third of all, Microsoft has a lot experiences than any other company do on computer and internet technology. It is much more open to develop or renew itself. On the other hand Google, even it is also big company it does not have enough experience as Microsoft. Microsoft consumer support system is more reliable than the others. Microsoft can also use its experience and reliability even to support advertisers too.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
Since Microsoft has reputation and reliability in technology a publisher focused on a particular content like technology can be a good choice for Microsoft. Digg.com which is a technology news site and has visitors in technology can be useful for Microsoft. This is why Microsoft has strong relationship with the technology companies; it is easy to recruit the advertisers easily. Comparing to Goggles large but without quality constraints advertisement system can make Microsoft to persuade technology advertisers to add ads on its web site. As soon as they can increase the volume of advertisement it will ease to compete with Google in pricing too. However besides all this advantages the question appears: how will Microsoft will be able to manage the other fields? Since the competitors has a large scale of power.. can it fill the missing parts ? I think the answer of these questions can be related to first question. Since we all know MSN and Myspace are high potential social network systems. In which people spent hours and use for anything Microsoft can enrich the empty parts of ads system by using the advantage of the high popularity of these web sites..
Friday 24 October 2008
AdCenter Case
1. You are Doug Stotland. What approach (or approaches) do you favor? Why?
First of all, being a successful (mostly visited) ad-agency on the internet requires high brand equity or brand recognition. The word Google has become a phenomenon of searching information on the internet. The majority of people do not search on Google because of its technical ability, but because of its strong brand image. If Microsoft is really looking for establishing its empire on online advertising sector, it might as well use its already established Windows brand name to penetrate to ad-clickers more effectively and quickly. It is known that not every internet user surfs on Google, but almost all internet users use computers running Windows operating system. According to cybernetnews.com/2008/07/02/, PC OS market is divided into: 90.9% Windows, 7.9% Mac; Internet Browser market: 73% Microsoft Internet Explorer, 19% Firefox, 6.3% Safari. With so much “Microsoft users”, adCenter can target everyone through placing ads on Windows components. The new version of MSN messenger already has Live Search button, but adCenter may further utilize the latest Windows Vista’s highly customizable Side-Bar. Text ads or banners could be placed on Vista side-bar according to the user’s demography. What’s more, internet retailers (Amazon, Facebook…) have been pouring millions of dollars on developing algorithms that measure one’s interests accurately. Compared to websites that are situated on the internet, Microsoft is in much better position of targeting prospective customers. Through every single copy of Microsoft Office’s connection to the Office Development center, they can have access to every single office file created by a user. By analyzing the content of the files, adCenter can target customers more accurately than almost anyone.
Second, although Exhibit 1 states that the growth rates of both Search and Display ads seem to have slowed down, but according to BCG Matrix mentality they have become “cash cows” (the total revenue has grown rapidly), that is to say that either means of ad promotion will secure stable revenues over the long run. Microsoft’s expertise or perhaps its core competence lies on display advertising. And in order to compete with such a strong incumbent – Google, adCenter should choose high differentiation. They should focus on promoting display advertising (banner) on the Live Search. Customer awareness will build up gradually over time. AdCenter should wait patiently. MySpace, world’s second largest social community (after Facebook), has a stand-alone instant messaging software called MySpaceIM for Microsoft Windows. This relationship should be highly utilized by adCenter and offer advertisers the grand choice of targeting specific demographic groups among 25 million MySpace daily visitors.
Third, the current ad import function for those who already have information on other search engines is way beyond average advertiser’s ability. Exporting files from Google takes 9 steps and another 6 steps to import it back to adCenter. With their programming ability, it should be piece cake for Microsoft engineers to design 2 steps method for those who would like to import ad information to adCenter, or even running ads on different search engines simultaneously.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
As of June 30, 2008, there were 1,463,632,361 ( http://www.internetworldstats.com/stats.htm) internet users on the world. 0.23% (http://www.alexa.com/data/details/traffic_details/digg.com) of world internet users visited Digg.com daily. More than half of the users are from United States. AdCenter, with contextual ads placed on Digg.com for a year, will have its contextual ads shown to 123 billion visits. Although attracting users to its main Live Search engine; advertising through syndication or broad contextual sites are important for adCenter’s future, but clicks from 123 billion visits will definitely increase their revenue.
First of all, being a successful (mostly visited) ad-agency on the internet requires high brand equity or brand recognition. The word Google has become a phenomenon of searching information on the internet. The majority of people do not search on Google because of its technical ability, but because of its strong brand image. If Microsoft is really looking for establishing its empire on online advertising sector, it might as well use its already established Windows brand name to penetrate to ad-clickers more effectively and quickly. It is known that not every internet user surfs on Google, but almost all internet users use computers running Windows operating system. According to cybernetnews.com/2008/07/02/, PC OS market is divided into: 90.9% Windows, 7.9% Mac; Internet Browser market: 73% Microsoft Internet Explorer, 19% Firefox, 6.3% Safari. With so much “Microsoft users”, adCenter can target everyone through placing ads on Windows components. The new version of MSN messenger already has Live Search button, but adCenter may further utilize the latest Windows Vista’s highly customizable Side-Bar. Text ads or banners could be placed on Vista side-bar according to the user’s demography. What’s more, internet retailers (Amazon, Facebook…) have been pouring millions of dollars on developing algorithms that measure one’s interests accurately. Compared to websites that are situated on the internet, Microsoft is in much better position of targeting prospective customers. Through every single copy of Microsoft Office’s connection to the Office Development center, they can have access to every single office file created by a user. By analyzing the content of the files, adCenter can target customers more accurately than almost anyone.
Second, although Exhibit 1 states that the growth rates of both Search and Display ads seem to have slowed down, but according to BCG Matrix mentality they have become “cash cows” (the total revenue has grown rapidly), that is to say that either means of ad promotion will secure stable revenues over the long run. Microsoft’s expertise or perhaps its core competence lies on display advertising. And in order to compete with such a strong incumbent – Google, adCenter should choose high differentiation. They should focus on promoting display advertising (banner) on the Live Search. Customer awareness will build up gradually over time. AdCenter should wait patiently. MySpace, world’s second largest social community (after Facebook), has a stand-alone instant messaging software called MySpaceIM for Microsoft Windows. This relationship should be highly utilized by adCenter and offer advertisers the grand choice of targeting specific demographic groups among 25 million MySpace daily visitors.
Third, the current ad import function for those who already have information on other search engines is way beyond average advertiser’s ability. Exporting files from Google takes 9 steps and another 6 steps to import it back to adCenter. With their programming ability, it should be piece cake for Microsoft engineers to design 2 steps method for those who would like to import ad information to adCenter, or even running ads on different search engines simultaneously.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
As of June 30, 2008, there were 1,463,632,361 ( http://www.internetworldstats.com/stats.htm) internet users on the world. 0.23% (http://www.alexa.com/data/details/traffic_details/digg.com) of world internet users visited Digg.com daily. More than half of the users are from United States. AdCenter, with contextual ads placed on Digg.com for a year, will have its contextual ads shown to 123 billion visits. Although attracting users to its main Live Search engine; advertising through syndication or broad contextual sites are important for adCenter’s future, but clicks from 123 billion visits will definitely increase their revenue.
Wednesday 22 October 2008
Microsoft AdCenter Case (Andrea's Input)
1.) You are Doug Stotland. What approach (or approaches) do you favor? Why?
Since the main challenge confronting Adcenter is to deliver large quantities of traffic to advertisers I have chosen an approach of obtaining the most advertisers while Microsoft’s high quality. If Doug I would recruit premium publishers to show contextual ads focusing on the broad sites. The broad sites would increase inventories across all categories. The large amount of consumers we could contact as long as the longer times users spend at these broad content sites should increase profits. I would choose this approach rather than recruiting major search engines due to losses from guaranteed revenues to advertisers. As for differentiation I would choose demographic targeting of which competitors don’t use.
In order to lower cost is to have Microsoft’s staff recruit advertisers rather than outsourcing the job. I would take advantage of Microsoft’s current services by optimizing both text ads and display ads. By leveraging display ads Microsoft could offer higher payments to advertisers. Again in order to lower costs I favor using LiveSearch for direct traffic.
One key to moving for Microsoft adcenter to gain advertisers is what Natala Nenezes said “We need to lower the barriers to advertiser entry to their absolute minimum. I interpret this as requiring the least amount of effort from advertisers when joining adcenter.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
Going along with the deal with Digg probably makes it more difficult for Microsoft to reach their goal growth and profit margins. The economic cost of investing in Digg is the opportunity cost. This opportunity cost is what they could have been gaining from investing the money in a broader area, not just technology. On the other hand if adequate funds were invested in publishers in conjunction with the technology area Microsoft should be in a positive position. Determination of where adCenter will be in 12 months shouldn’t based solely upon Digg there are many other factors.
Since the main challenge confronting Adcenter is to deliver large quantities of traffic to advertisers I have chosen an approach of obtaining the most advertisers while Microsoft’s high quality. If Doug I would recruit premium publishers to show contextual ads focusing on the broad sites. The broad sites would increase inventories across all categories. The large amount of consumers we could contact as long as the longer times users spend at these broad content sites should increase profits. I would choose this approach rather than recruiting major search engines due to losses from guaranteed revenues to advertisers. As for differentiation I would choose demographic targeting of which competitors don’t use.
In order to lower cost is to have Microsoft’s staff recruit advertisers rather than outsourcing the job. I would take advantage of Microsoft’s current services by optimizing both text ads and display ads. By leveraging display ads Microsoft could offer higher payments to advertisers. Again in order to lower costs I favor using LiveSearch for direct traffic.
One key to moving for Microsoft adcenter to gain advertisers is what Natala Nenezes said “We need to lower the barriers to advertiser entry to their absolute minimum. I interpret this as requiring the least amount of effort from advertisers when joining adcenter.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
Going along with the deal with Digg probably makes it more difficult for Microsoft to reach their goal growth and profit margins. The economic cost of investing in Digg is the opportunity cost. This opportunity cost is what they could have been gaining from investing the money in a broader area, not just technology. On the other hand if adequate funds were invested in publishers in conjunction with the technology area Microsoft should be in a positive position. Determination of where adCenter will be in 12 months shouldn’t based solely upon Digg there are many other factors.
Microsoft AdCenter Case (Andrea's Input)
1.) You are Doug Stotland. What approach (or approaches) do you favor? Why?
Since the main challenge confronting Adcenter is to deliver large quantities of traffic to advertisers I have chosen an approach of obtaining the most advertisers while Microsoft’s high quality. If Doug I would recruit premium publishers to show contextual ads focusing on the broad sites. The broad sites would increase inventories across all categories. The large amount of consumers we could contact as long as the longer times users spend at these broad content sites should increase profits. I would choose this approach rather than recruiting major search engines due to losses from guaranteed revenues to advertisers. As for differentiation I would choose demographic targeting of which competitors don’t use.
In order to lower cost is to have Microsoft’s staff recruit advertisers rather than outsourcing the job. I would take advantage of Microsoft’s current services by optimizing both text ads and display ads. By leveraging display ads Microsoft could offer higher payments to advertisers. Again in order to lower costs I favor using LiveSearch for direct traffic.
One key to moving for Microsoft adcenter to gain advertisers is what Natala Nenezes said “We need to lower the barriers to advertiser entry to their absolute minimum. I interpret this as requiring the least amount of effort from advertisers when joining adcenter.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
Going along with the deal with Digg probably makes it more difficult for Microsoft to reach their goal growth and profit margins. The economic cost of investing in Digg is the opportunity cost. This opportunity cost is what they could have been gaining from investing the money in a broader area, not just technology. On the other hand if adequate funds were invested in publishers in conjunction with the technology area Microsoft should be in a positive position. Determination of where adCenter will be in 12 months shouldn’t based solely upon Digg there are many other factors.
Since the main challenge confronting Adcenter is to deliver large quantities of traffic to advertisers I have chosen an approach of obtaining the most advertisers while Microsoft’s high quality. If Doug I would recruit premium publishers to show contextual ads focusing on the broad sites. The broad sites would increase inventories across all categories. The large amount of consumers we could contact as long as the longer times users spend at these broad content sites should increase profits. I would choose this approach rather than recruiting major search engines due to losses from guaranteed revenues to advertisers. As for differentiation I would choose demographic targeting of which competitors don’t use.
In order to lower cost is to have Microsoft’s staff recruit advertisers rather than outsourcing the job. I would take advantage of Microsoft’s current services by optimizing both text ads and display ads. By leveraging display ads Microsoft could offer higher payments to advertisers. Again in order to lower costs I favor using LiveSearch for direct traffic.
One key to moving for Microsoft adcenter to gain advertisers is what Natala Nenezes said “We need to lower the barriers to advertiser entry to their absolute minimum. I interpret this as requiring the least amount of effort from advertisers when joining adcenter.
2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
Going along with the deal with Digg probably makes it more difficult for Microsoft to reach their goal growth and profit margins. The economic cost of investing in Digg is the opportunity cost. This opportunity cost is what they could have been gaining from investing the money in a broader area, not just technology. On the other hand if adequate funds were invested in publishers in conjunction with the technology area Microsoft should be in a positive position. Determination of where adCenter will be in 12 months shouldn’t based solely upon Digg there are many other factors.
Sunday 12 October 2008
MedNet.com Case Review
1.) If Internet media is so measurable, how can Heather Yates and Bill Bishop be in such a predicament?
Yes, internet media is measurable but there are some parts (like reliability of the site, the perception of the web site visitors… and so on) that are not. Mednet's predicted ad success is measured through qualitative rather than quantitative ways. Due to the type of online company they are, they rely on Click-per-thousand impression (CPM). Mednet's user trusted website (reliable content, free scientifically based articles, evidence- based, and consumer health information) attracts committed customers. Competitors like Marvel have more of a general interest website, in which it justifies measuring profits by click through rate (CTR). Mednet's predicament was that they had to prove to Baker what they were offering, although not quantitatively strong, would produce higher profits through serious customers. Since Mednet fully relied on advertisements for profits, they had to convince advertising companies that their business model would provide very competitive sales over the long run.
2.) What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these?
It depends on what is more important for an advertiser, cheaper click-throughs or good sales leads that bring real sales dollars. Advertisement is a way of leaving impression in customer’s minds (brand awareness), which hopefully will result in lucrative and repetitive leads and increasing sales revenue. Leads are created through brand awareness. But what good is a lead (click throughs) if it doesn’t land a solid sales figure? As we saw in the case, Windham wanted to be charged by CTR, thinking this was the way to measure potential visitors ready to make an order. Yates proved to Windham that impressions bring in revenue over the long run, and this type of brand awareness is what they want. Ultimately advertisers want the conversion of ad-dollars to sales figures, which is the act of making purchase, repetitive if possible, from the ad-sponsor. They also want their customers to market the company through word-of-mouth and social networking.
Finding the best metrics for advertisers should be according to different needs of companies:
A) CPM (click-per-thousand impression)
For products or companies that are newcomers in perspectives of customers are suitable to use CPM if they put raising brand awareness as their first priority.
B) CTR (click-through rate)
If an advertising banner was delivered 1000 times and only 10 people clicked on it, then the CTR is 1 percent. However, this metric would be incorrect if “click fraud” happened or if one person clicked on the same advertisement ten times.
C) PPC (pay-per-click)
PPC is commonly used nowadays on search engines, blogs, social network or some specific web pages. Aside from traditional banner ads, keyword advertising makes it easier and accurate to reach the target customers. Although it still may cause “click fraud,” PPC is the best metric for advertisers with tight budget
3.) What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
Since there are different consumer behaviors depending on the business model we will discuss the 3 companies from the case.
A) MedNet.com:
If Mednet's business model is of targeting the "in crisis" customers then number of site visitors/sales should, if profitable, be an attractive result of customer behavior.
Another wanted behavior is Mednet customers spending more time browsing through medical information to deal with health problems. Once they visit MedNet, they click around the advertisements to find a better solution (tips as well as medicine). As Yates said: “our audience is attracted to your products, and we have reason to believe that our advertising partnership adds to your bottom line” (pg;6) We look for attractive customer feelings, of ones who are stimulated psychologically and ready to buy the products.
B) Marvel:
Initially, they wanted customers to search on subjects related to health and be led to a site that could advertise a specific drug. These search engines serve as a starting point for visitors to browse through general health-keeping information. Due to vast audience and free impressions offering to advertisers, Marvel got more click-throughs and posed a threat toward MedNet.
C) Cholesterol.com:
Cholesterol.com provided deeper health information which targeted at remedies for cholesterol problems only. Visitors could store their data and reviews; this behavior is attractive because it could eventually lead to customers marketing a company’s drug. If customers are discussing cholesterol issues online they probably also discuss it among personal contacts. The single focused business model as well as its focus on education has created these customer behaviors.
They obviously really want consumers to purchase an item after clicking on the advertisement. They also want consumers to recommend their product to friends and family. They want customers to market the quality and satisfaction to others.
4.) What steps can MedNet take to address emerging competitive threats?
Although content acquisition makes up 34% of total expense, MedNet should still focus on enriching its contents on alternative therapies, and scientifically based solutions with legal disclaimers. (To compete with U.S. National Library of Medicine and WHO)
Technology support is 12% of the expense. They should focus on changing the looks of the site. According to the case, viewers are divided into Western-Med based (chemical ingredients) and Alternative Health (organic, natural ingredients) based. MedNet can create two versions of the site (like AMD and ATi website) under the same URL for both customer bases. They should provide herbal medicine therapies, its related news and findings, and information for the original customers as well in easy to view and navigate way.
User friendliness and customer incentives are important factors as well. Although the survey revealed that 60% of viewers aren’t in favor of leaving personal information on the site, but the function of a “disposable” entry like blood pressure, body weight information that follows the user during the search will be seen as convenience. What’s more, as long as it doesn’t severely violate any related regulations, recommending suitable treatment would also mean another “user-friendliness”. They could offer memberships which would offer discounts, enlarged article accessibility and personal profile and feedback service.
Last, sales and marketing expense stands for 27% of the total expenses. They should look for alternative income methods. Besides selling contents, MedNet, by designing seamless framework, can sell doctor’s prescription and necessary drugs for the prescription (NTU Hospital website lets patients to fill out a survey like sheet and diagnose one’s health condition). MedNet could also offer lower-cost medical information service for companies. With their strong business network, MedNet should come up with pharmaceutical suppliers and medical doctors for those companies at cheaper price.
In the long run, MedNet should project for becoming global online pharmacy with solid information that sells medicine like Netflix does with DVDs, and prescribes doctor’s treatment like hospitals do for patients. They should expand internationally. They should also create ties with hospitals, pharmacies, corporations and NPOs.
They have to follow the new trends of advertising
• Try to stay ahead of their competitors and always keep their eye out
• Value proposition
• Increase the content of the site (again health related) so that by enlarging the subjects they may get more advertiser opportunity
• Enlarge their network
Yes, internet media is measurable but there are some parts (like reliability of the site, the perception of the web site visitors… and so on) that are not. Mednet's predicted ad success is measured through qualitative rather than quantitative ways. Due to the type of online company they are, they rely on Click-per-thousand impression (CPM). Mednet's user trusted website (reliable content, free scientifically based articles, evidence- based, and consumer health information) attracts committed customers. Competitors like Marvel have more of a general interest website, in which it justifies measuring profits by click through rate (CTR). Mednet's predicament was that they had to prove to Baker what they were offering, although not quantitatively strong, would produce higher profits through serious customers. Since Mednet fully relied on advertisements for profits, they had to convince advertising companies that their business model would provide very competitive sales over the long run.
2.) What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these?
It depends on what is more important for an advertiser, cheaper click-throughs or good sales leads that bring real sales dollars. Advertisement is a way of leaving impression in customer’s minds (brand awareness), which hopefully will result in lucrative and repetitive leads and increasing sales revenue. Leads are created through brand awareness. But what good is a lead (click throughs) if it doesn’t land a solid sales figure? As we saw in the case, Windham wanted to be charged by CTR, thinking this was the way to measure potential visitors ready to make an order. Yates proved to Windham that impressions bring in revenue over the long run, and this type of brand awareness is what they want. Ultimately advertisers want the conversion of ad-dollars to sales figures, which is the act of making purchase, repetitive if possible, from the ad-sponsor. They also want their customers to market the company through word-of-mouth and social networking.
Finding the best metrics for advertisers should be according to different needs of companies:
A) CPM (click-per-thousand impression)
For products or companies that are newcomers in perspectives of customers are suitable to use CPM if they put raising brand awareness as their first priority.
B) CTR (click-through rate)
If an advertising banner was delivered 1000 times and only 10 people clicked on it, then the CTR is 1 percent. However, this metric would be incorrect if “click fraud” happened or if one person clicked on the same advertisement ten times.
C) PPC (pay-per-click)
PPC is commonly used nowadays on search engines, blogs, social network or some specific web pages. Aside from traditional banner ads, keyword advertising makes it easier and accurate to reach the target customers. Although it still may cause “click fraud,” PPC is the best metric for advertisers with tight budget
3.) What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
Since there are different consumer behaviors depending on the business model we will discuss the 3 companies from the case.
A) MedNet.com:
If Mednet's business model is of targeting the "in crisis" customers then number of site visitors/sales should, if profitable, be an attractive result of customer behavior.
Another wanted behavior is Mednet customers spending more time browsing through medical information to deal with health problems. Once they visit MedNet, they click around the advertisements to find a better solution (tips as well as medicine). As Yates said: “our audience is attracted to your products, and we have reason to believe that our advertising partnership adds to your bottom line” (pg;6) We look for attractive customer feelings, of ones who are stimulated psychologically and ready to buy the products.
B) Marvel:
Initially, they wanted customers to search on subjects related to health and be led to a site that could advertise a specific drug. These search engines serve as a starting point for visitors to browse through general health-keeping information. Due to vast audience and free impressions offering to advertisers, Marvel got more click-throughs and posed a threat toward MedNet.
C) Cholesterol.com:
Cholesterol.com provided deeper health information which targeted at remedies for cholesterol problems only. Visitors could store their data and reviews; this behavior is attractive because it could eventually lead to customers marketing a company’s drug. If customers are discussing cholesterol issues online they probably also discuss it among personal contacts. The single focused business model as well as its focus on education has created these customer behaviors.
They obviously really want consumers to purchase an item after clicking on the advertisement. They also want consumers to recommend their product to friends and family. They want customers to market the quality and satisfaction to others.
4.) What steps can MedNet take to address emerging competitive threats?
Although content acquisition makes up 34% of total expense, MedNet should still focus on enriching its contents on alternative therapies, and scientifically based solutions with legal disclaimers. (To compete with U.S. National Library of Medicine and WHO)
Technology support is 12% of the expense. They should focus on changing the looks of the site. According to the case, viewers are divided into Western-Med based (chemical ingredients) and Alternative Health (organic, natural ingredients) based. MedNet can create two versions of the site (like AMD and ATi website) under the same URL for both customer bases. They should provide herbal medicine therapies, its related news and findings, and information for the original customers as well in easy to view and navigate way.
User friendliness and customer incentives are important factors as well. Although the survey revealed that 60% of viewers aren’t in favor of leaving personal information on the site, but the function of a “disposable” entry like blood pressure, body weight information that follows the user during the search will be seen as convenience. What’s more, as long as it doesn’t severely violate any related regulations, recommending suitable treatment would also mean another “user-friendliness”. They could offer memberships which would offer discounts, enlarged article accessibility and personal profile and feedback service.
Last, sales and marketing expense stands for 27% of the total expenses. They should look for alternative income methods. Besides selling contents, MedNet, by designing seamless framework, can sell doctor’s prescription and necessary drugs for the prescription (NTU Hospital website lets patients to fill out a survey like sheet and diagnose one’s health condition). MedNet could also offer lower-cost medical information service for companies. With their strong business network, MedNet should come up with pharmaceutical suppliers and medical doctors for those companies at cheaper price.
In the long run, MedNet should project for becoming global online pharmacy with solid information that sells medicine like Netflix does with DVDs, and prescribes doctor’s treatment like hospitals do for patients. They should expand internationally. They should also create ties with hospitals, pharmacies, corporations and NPOs.
They have to follow the new trends of advertising
• Try to stay ahead of their competitors and always keep their eye out
• Value proposition
• Increase the content of the site (again health related) so that by enlarging the subjects they may get more advertiser opportunity
• Enlarge their network
Saturday 11 October 2008
Shelley's writeup
Network Marketing CASE #2
MedNet.com Confronts “Click-Through” Competition
1. If Internet media is so measurable, how can Heather Yates and Bill Bishop be in such a predicament?
Heather Yates and Bill Bishop‘s predicament is based on numbers they found, using cost-per-thousand impression (CPM) and click-through rate (CTR) measuring the internet traffic and effectiveness of advertising on websites. However, they too much relied on numbers and might miss other possible metrics. MedNet’s business model was providing free content to audience and generates profits from advertising. Therefore, MedNet had to differentiate its self from other sites and to draw as many audiences as possible.
MedNet.com’s strategy was different from Marvel and Cholesterol.com mainly on the coverage of pharmaceutical information types it offered and online target customers. Most visitors turned to MedNet only when “in-crisis” and clicked around to research specific symptoms and those eyeballs became the source for MedNet to gain profit by counting CPM. For MedNet advertisers, CPM cost them almost six times higher than using CTR as Marvel provided; furthermore, consumer audiences’ click-through sometimes did not promise sales revenue. In this case, advertisers tend to find a cheaper platform but with more brand awareness and visitors. And it shows that Yates and Bishop analyzed the overall environment merely on numbers they got and thus put themselves in such a predicament.
2. What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these?
Factors an advertiser would take into consideration when selecting websites include method of measuring success of online advertising in order to lower the costs, eyeballs, credit of the websites, types of potential consumer audiences surfing the sites, etc. Those concerns are premise for advertisers to reach the purpose of gaining both sales leads and also brand awareness. Generally speaking, long-term goal for a company is to generate profit. More sales revenue and the lower costs and expenses bring more profit so that companies tend to promote their products through advertising for the purpose of boosting sales.
MedNet.com served as an intermediary for potential customers and suppliers; that is to say, provided a platform for sellers and buyers to trade. If an advertisement with well-known company selling something which customers are familiar with, then the advertisers will put more efforts on increasing sales leads. On the other hand, raising brand awareness will be top priority for a start-up company. And once people recognize the brand name, sales leads and brand awareness will be positive correlative just as snowball effect.
Finding the best metrics for advertisers should according to different needs of companies:
A) CPM (click-per-thousand impression)
For products or companies that are newcomers in perspectives of customers are suitable to use CPM if they put raising brand awareness as their first priority.
B) CTR (click-through rate)
If an advertising banner was delivered 1000 times and only 10 people clicked on it, then the CTR is 1 percent. However, this metric would be incorrect if “click fraud” happened or if one person clicked on the same advertisement ten times.
C) PPC (pay-per-click)
PPC is commonly used nowadays on search engines, blogs, social network or some specific web pages. Aside from traditional banner ads, keyword advertising make it more easier and accurate to reach the target customers. Although it still may cause “click fraud,” PPC is the best metric for advertisers with tight budget.
3. What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
Despite all three websites provided free pharmaceutical information to visitors and hoped to attract more advertising banner as possible, their business models to profit from advertisers sales are not the same. In this case, there are three types of business model with different consumer behaviors as follows:
A) MedNet.com
People go to MedNet to search certain symptom only when they are in crisis and tend to spend longer time on browsing through medical information to deal with their or their family‘s health problem. Once they visit MedNet, they click around the advertisements to find a better solution.
B) Marvel
Such search engine served as a starting point for visitors to browse through general health-keeping information. Due to vast audience and free impressions offering to advertisers, Marvel got more click-throughs and posed a threat toward MedNet.
C) Cholesterol.com
Cholesterol.com provided deeper health information which targeted at remedies for cholesterol problems only. Visitors usually know specific diseases they got and then go to the website to find further instructions. Unlike MedNet.com and Marvel.com, Cholesterol.com gave more details as well as professional knowledge about the issue. To distinguish from MedNet, visitors could store their data and got recommendations or other bonus from the website.
4. What steps can MedNet take to address emerging competitive threats?
Compared to other two competitors, Marvel had a vast audience and provided impressions for free while Cholesterol.com provided customized service for their target customers. Despite MedNet offered trustworthy information for consumers, it’s not enough to compete with Marvel and Cholesterol.com. Followings are some suggestions for MedNet to create more value-added service for their existing and potential consumers:
A) Create a interactive platform through:
a) Encourage visitors add themselves as a MedNet member.
b) Members can subscribe different categories e-paper selected by MedNet.
c) Members can get coupons and extra discount if they do online-purchasing.
d) Members can create personal profile and data on MedNet to get more related information and knowledge.
B) Cooperate with other organizations such as:
a) Hospital or pharmacy
Strengthen the links among such organizations to get more accurate and professional information.
b) Company
Provide employees up-to-date health information through the internet.
c) Non-profit organization or charity
Targets on health-keeping related NPOs or charities by supporting and promoting their ideas on MedNet. Then put MedNet’s link on their official websites so that they could create a win-win situation.
C) Establish a feedback system
Set up an online forum for members to discuss certain topics or issues. The forum serves as a platform for members to share their experiences such as feedbacks or comments on products. Also, if a member raised a question on that forum, his or her problem might be solved by other members. Such family-bound system may increase the return rate of MedNet members even they are not “in crisis.”
Friday 10 October 2008
Amraa's writeup
Q1.
Due to the information overflow phenomenon of the internet, mainly advertisements, consumers or internet surfers have developed a universal habit of ignoring, closing, or even blocking advertisements. Internet engineers have developed several ways of counting ad penetration, exposure, clicks as precisely as possible, but according to the unflinching warriors of MedNet.com, the value created behind each CPM, or click-throughs differs between websites due to different overall value-proposition by the site for the customers, which seem not to be well perceived by advertisers because that can’t be precisely measured by internet tools.
People find MedNet.com through search engines like Marvel.com (4.3M - MedNet vs. 19M Marvel). The viewer type is different for MedNet.com. They come to the site when “in crisis”, hence MedNet banners are more persuasive for them. What’s more, due to expertise information on the site, viewers believe that banners placed under MedNet brand is worth trying.
Q2.
What is more important for an advertiser, cheaper click-throughs or good sales leads that bring real sales dollars? Advertisement is a way of leaving impression in customer’s minds (brand awareness), which hopefully will result lucrative and repetitive leads that will produce increasing sales revenue. Leads are created through brand awareness. For mere brand awareness or brand recognition, banners placed on suitable sites will do just fine. But what good is a lead (click throughs) if it doesn’t land a solid sales figure?
Sales is and will be measured the same way everywhere, at any time – through figures on income statement - the sales revenue. Brand-awareness builds up as the exposure to add increases in the short and becomes brand-knowledge in the long run. Impressions or CPM is good enough for measuring brand awareness. But for measuring leads, obviously, click-throughs seem to be more feasible way. As the phenomenon mentioned above, not many people click on ad-banners, so those who click on banners do qualify the term of sales leads. But one should be aware that click throughs generated by condition-specific sites are more likely to be “real” sales leads.
Q3.
Obviously, what advertisers wait from ad-pages is the conversion of ad-dollars to sales figures, which is the act of making purchase, repetitive if possible, from the ad-sponsor. The more people are exposed to the ads of the advertiser, the more brand awareness builds up, the more the brand awareness, the more the leads and sales – hopefully larger market share. Since brand-awareness is so important, because ultimately it produces sales revenue, firms are in favor of building strong brand awareness. In our case, brand awareness is built through impressions from the sites, but every impression costs dollars. Word-of-mouth (advertising through the customers) is a cost-free way of advertising a brand; hence firms will be interested in websites, especially content-specific sites that are rich in content, and accurate at targeting customers with right ads at right moment. In other words, firms would want to see not only do customers purchase through the ads, but also forward the ads to someone else.
Also advertisers, due to limited funds, “unlimited” competitors and websites that offer similar contents and options, want to see customers to visit as few web-sites as possible before coming to a verdict. The more customers are exposed to different websites the higher is the probability of being attracted to another similar product.
Advertisers will also be interested in acquiring customers’ personal information, and registration to the site. That way, they are better equipped to attack them with not only new products but also with the attractive and right products.
Q4.
Although content acquisition makes up 34% of total expense, MedNet should still focus on enriching its contents on alternative therapies, and scientifically based solutions with legal disclaimers. (To compete with U.S. National Library of Medicine and WHO)
Technology support is 12% of the expense. They should focus on changing the looks of the site. According to the case, viewers are divided into Western-Med based (chemical ingredients) and Alternative Health (organic, natural ingredients) based. Whether or not a website is too crowded or overfilled with information (like yahoo.com.tw) lies on the cosmetics of the site. MedNet can create two versions of the site (like AMD and ATi site) under the same URL for both customer bases. They should provide herbal medicine therapies, its related news and findings, and information for the original customers as well in easy to view and navigate way.
User friendliness is also important. Although the survey revealed that 60% of viewers aren’t in favor of leaving personal information on the site, but the function of a “disposable” entry like blood pressure, body weight information that follows the user during the search will be seen as convenience. What’s more, as long as it doesn’t severely violate any related regulations, recommending suitable treatment would also mean another user-friendliness.
Last, sales and marketing expense stands for 27% of the total expenses. They should look for alternative income methods. Besides selling contents, MedNet, by designing seamless framework, can sell doctor’s prescription and necessary drugs for the prescription (NTU Hospital website lets patients to fill out a survey like sheet and diagnose one’s health condition). MedNet could also offer lower-cost medical information service for companies. With their strong business network, MedNet should come up with pharmaceutical suppliers and medical doctors for those companies at cheaper price.
In the long run, MedNet should project for becoming global online pharmacy with solid information that sells medicine like Netflix does with DVDs, and prescribes doctor’s treatment like hospitals do for patients. They should not only focus on the local market, but the 21st century core of the business world – Asia. Indians, being former colony to Britain, do have English background, but the rest of the Asia communicates through 漢字 – or Chinese Characters. MedNet should definitely run a Chinese version of the site.
Due to the information overflow phenomenon of the internet, mainly advertisements, consumers or internet surfers have developed a universal habit of ignoring, closing, or even blocking advertisements. Internet engineers have developed several ways of counting ad penetration, exposure, clicks as precisely as possible, but according to the unflinching warriors of MedNet.com, the value created behind each CPM, or click-throughs differs between websites due to different overall value-proposition by the site for the customers, which seem not to be well perceived by advertisers because that can’t be precisely measured by internet tools.
People find MedNet.com through search engines like Marvel.com (4.3M - MedNet vs. 19M Marvel). The viewer type is different for MedNet.com. They come to the site when “in crisis”, hence MedNet banners are more persuasive for them. What’s more, due to expertise information on the site, viewers believe that banners placed under MedNet brand is worth trying.
Q2.
What is more important for an advertiser, cheaper click-throughs or good sales leads that bring real sales dollars? Advertisement is a way of leaving impression in customer’s minds (brand awareness), which hopefully will result lucrative and repetitive leads that will produce increasing sales revenue. Leads are created through brand awareness. For mere brand awareness or brand recognition, banners placed on suitable sites will do just fine. But what good is a lead (click throughs) if it doesn’t land a solid sales figure?
Sales is and will be measured the same way everywhere, at any time – through figures on income statement - the sales revenue. Brand-awareness builds up as the exposure to add increases in the short and becomes brand-knowledge in the long run. Impressions or CPM is good enough for measuring brand awareness. But for measuring leads, obviously, click-throughs seem to be more feasible way. As the phenomenon mentioned above, not many people click on ad-banners, so those who click on banners do qualify the term of sales leads. But one should be aware that click throughs generated by condition-specific sites are more likely to be “real” sales leads.
Q3.
Obviously, what advertisers wait from ad-pages is the conversion of ad-dollars to sales figures, which is the act of making purchase, repetitive if possible, from the ad-sponsor. The more people are exposed to the ads of the advertiser, the more brand awareness builds up, the more the brand awareness, the more the leads and sales – hopefully larger market share. Since brand-awareness is so important, because ultimately it produces sales revenue, firms are in favor of building strong brand awareness. In our case, brand awareness is built through impressions from the sites, but every impression costs dollars. Word-of-mouth (advertising through the customers) is a cost-free way of advertising a brand; hence firms will be interested in websites, especially content-specific sites that are rich in content, and accurate at targeting customers with right ads at right moment. In other words, firms would want to see not only do customers purchase through the ads, but also forward the ads to someone else.
Also advertisers, due to limited funds, “unlimited” competitors and websites that offer similar contents and options, want to see customers to visit as few web-sites as possible before coming to a verdict. The more customers are exposed to different websites the higher is the probability of being attracted to another similar product.
Advertisers will also be interested in acquiring customers’ personal information, and registration to the site. That way, they are better equipped to attack them with not only new products but also with the attractive and right products.
Q4.
Although content acquisition makes up 34% of total expense, MedNet should still focus on enriching its contents on alternative therapies, and scientifically based solutions with legal disclaimers. (To compete with U.S. National Library of Medicine and WHO)
Technology support is 12% of the expense. They should focus on changing the looks of the site. According to the case, viewers are divided into Western-Med based (chemical ingredients) and Alternative Health (organic, natural ingredients) based. Whether or not a website is too crowded or overfilled with information (like yahoo.com.tw) lies on the cosmetics of the site. MedNet can create two versions of the site (like AMD and ATi site) under the same URL for both customer bases. They should provide herbal medicine therapies, its related news and findings, and information for the original customers as well in easy to view and navigate way.
User friendliness is also important. Although the survey revealed that 60% of viewers aren’t in favor of leaving personal information on the site, but the function of a “disposable” entry like blood pressure, body weight information that follows the user during the search will be seen as convenience. What’s more, as long as it doesn’t severely violate any related regulations, recommending suitable treatment would also mean another user-friendliness.
Last, sales and marketing expense stands for 27% of the total expenses. They should look for alternative income methods. Besides selling contents, MedNet, by designing seamless framework, can sell doctor’s prescription and necessary drugs for the prescription (NTU Hospital website lets patients to fill out a survey like sheet and diagnose one’s health condition). MedNet could also offer lower-cost medical information service for companies. With their strong business network, MedNet should come up with pharmaceutical suppliers and medical doctors for those companies at cheaper price.
In the long run, MedNet should project for becoming global online pharmacy with solid information that sells medicine like Netflix does with DVDs, and prescribes doctor’s treatment like hospitals do for patients. They should not only focus on the local market, but the 21st century core of the business world – Asia. Indians, being former colony to Britain, do have English background, but the rest of the Asia communicates through 漢字 – or Chinese Characters. MedNet should definitely run a Chinese version of the site.
Thursday 9 October 2008
Deniz: MedNet CAse- the 2nd Question-
HI Everybody..
I think the second question should be :
2.)What does an advertiser want? "Sales-leads", brand awareness? What are the best metrics for measuring these?
what do you think? because it may change the answer .. I sent an e mail to the prof. to ask .. as soon as I get the reply I will inform you ...
Deniz
I think the second question should be :
2.)What does an advertiser want? "Sales-leads", brand awareness? What are the best metrics for measuring these?
what do you think? because it may change the answer .. I sent an e mail to the prof. to ask .. as soon as I get the reply I will inform you ...
Deniz
Deniz's MedNet Case study
Hi guys!! These are my answers about the questions related to MedNet case.. I answered point by point to make it clearer:
1.) If Internet media is so measurable, how can Heather Yates and Bill Bishop be in such a predicament?
· First of all , yes internet media is measurable but there are still some parts (like reliability of the site , the perception of the web site visitors… and so on )which are not measurable
· ‘human psychology’ related issues are not easy to be quantified(forex: if a visitor has a specific health problem at the moment without thinking so deeply it is easier for him to purchase something through the advertisement on the site , and it is even more easier if the website-‘MedNet’ is a reliable one)
· Med Net is a highly focused “destination” content web site based on health however there are some other popular web sites like Marvel(general interest web site) which has more potential visitors (if the matter is quantity of the visitors; obviously such kind of sites will be a great deal of threat to MedNet click ratios )
· MedNet s revenue model is mainly depending on the revenues from the ads. So for the company the number of both advertisers and visitors are so important... and although in the early 2002, when the company founded, MedNet was leading the free information/advertisement revenue model, after 5 years there were so many challenging competitors which are offering unaffordable discounts for the advertisers. Moreover than that. There appeared some non profitable web sites which may decrease the number of visitors.
· In the beginning MedNet was ready to compete with its quality measures to rather than quantity... (like reliability of the articles, scientifically based medical information for free of charge, presented content was developed by 24 trained journalists, doctors, designers, adds come from the faculty of a prominent medical school .. and so on … ‘the award-winning web site was considered the best health web site for trusted, evidence-based, consumer health information’) however right after there appeared some other web sites which were providing the same quality and even much better.. (more specific areas / focused on particular problems or some new areas related to health: cholesterol.com clinicaltrials.com alternativehealth.com )
· For the internet media even it is easy to measure the number of visitors or number of clicks doesn’t really means the advertiser or the mentioned company really gets its target... (Target can be both sales and brand awareness…)
2.) What does an advertiser want? Sales-leads, brand awareness? What are the best metrics for measuring these?
· When we compare the advertising model of MedNet and Marvel which mainly effected Windham s decision to choose between them it can be helpful to understand that questions answer. MedNet was depending on cost-per thousand impressions-CPM basis. (‘one advertisement impression meant that one visitor requested from a web server a page that had a specific advertisement on it’) which was basically measuring the number of people who saw the advertisement or brand name..
· However Marvel s alternative model was click-through rate. –CTR. So the advertisers paid to the web site when visitors click on the advertisement to get more information about the product or company. Which means for the advertisers that visitors are more likely to buy a product from the web site . And it was offering free charge of impressions and charging the advertisers on the click-troughs which brought huge revenue to Marvel.
· After awhile some other advertisers started to ask other sites to charge only click troughs, Marvel s model. As we know from the case , Windham wanted the same thing from Mednet . It really proves us that advertiser mainly wants “sales-leads” which means they want the potential visitors who are ready to make an order. (at least has more probability to purchase something through the web site. For Windham(advertiser for that case )what really matters is click-troughs and so ; sales-leads as Baker said: “ They separate accidental observers of our ads from the serious prospects who proactively seek more product information and may buy our product” (Pg.4)
· Referring the problems above Mednet decided to check its value proposition for the advertisers. Yates: “ one worrisome fact is that Baker underestimates the genuine value that our impressions deliver to an advertiser. Visitor to Mednet see those ads in the context of a trusted and helpful site- and even if they do not buy right away, they are left with a positive impression of the advertiser and its products”(Pg:6) and as we know after the phone call with Baker , they made her mind and how importance a positive impression for the visitors .. (and they proved by evidence of redeemed coupons) so the importance of brand awareness is should not be underestimated for the advertisers too. (!!!at the end of the case cholesterol.com was an alternative by Windham just because of the above reasons.!!!)
FOR the second part of the question:
· Degree of actual sales and how the ads turn into a profit for the company is important for the advertisers too (that is the best metrics to measure )the company did it as below:
· Windham s bar code system established printable coupons can be a good metrics to recognize what way of advertisement is the best among the others. (by which channel the visitor reached these coupons can be identified by the Windham computer system : MedNet, Marvel, Online calls)
3.) What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
· ‘If the consumers actually buy something by using the ads channel’ may show the value of the chosen business model for the advertiser(to get profit)
· How the consumer feel about the web site : for that case the trusted medical information so trusted web site and the number of qualified visitors of the site (for a content destinations web site like MedNet)
· The visitors of MedNet web site are the ones who are looking for solution for a real health problem. (So the ones who are stimulated psychologically and ready to buy the products.)
· As Yates said: “ our audience is attracted to your products , and we have reason to believe that our advertising partnership adds to your bottom line” (pg;6)
4.) What steps can MedNet take to address emerging competitive threats?
· They have to follow the new trends of advertising
· Try to catch up the competitors and hot pursuit of them
· Value proposition
· Increase the content of the site (again health related) so that by enlarging the subjects they may get more advertiser opportunity
· Enlarge their network
1.) If Internet media is so measurable, how can Heather Yates and Bill Bishop be in such a predicament?
· First of all , yes internet media is measurable but there are still some parts (like reliability of the site , the perception of the web site visitors… and so on )which are not measurable
· ‘human psychology’ related issues are not easy to be quantified(forex: if a visitor has a specific health problem at the moment without thinking so deeply it is easier for him to purchase something through the advertisement on the site , and it is even more easier if the website-‘MedNet’ is a reliable one)
· Med Net is a highly focused “destination” content web site based on health however there are some other popular web sites like Marvel(general interest web site) which has more potential visitors (if the matter is quantity of the visitors; obviously such kind of sites will be a great deal of threat to MedNet click ratios )
· MedNet s revenue model is mainly depending on the revenues from the ads. So for the company the number of both advertisers and visitors are so important... and although in the early 2002, when the company founded, MedNet was leading the free information/advertisement revenue model, after 5 years there were so many challenging competitors which are offering unaffordable discounts for the advertisers. Moreover than that. There appeared some non profitable web sites which may decrease the number of visitors.
· In the beginning MedNet was ready to compete with its quality measures to rather than quantity... (like reliability of the articles, scientifically based medical information for free of charge, presented content was developed by 24 trained journalists, doctors, designers, adds come from the faculty of a prominent medical school .. and so on … ‘the award-winning web site was considered the best health web site for trusted, evidence-based, consumer health information’) however right after there appeared some other web sites which were providing the same quality and even much better.. (more specific areas / focused on particular problems or some new areas related to health: cholesterol.com clinicaltrials.com alternativehealth.com )
· For the internet media even it is easy to measure the number of visitors or number of clicks doesn’t really means the advertiser or the mentioned company really gets its target... (Target can be both sales and brand awareness…)
2.) What does an advertiser want? Sales-leads, brand awareness? What are the best metrics for measuring these?
· When we compare the advertising model of MedNet and Marvel which mainly effected Windham s decision to choose between them it can be helpful to understand that questions answer. MedNet was depending on cost-per thousand impressions-CPM basis. (‘one advertisement impression meant that one visitor requested from a web server a page that had a specific advertisement on it’) which was basically measuring the number of people who saw the advertisement or brand name..
· However Marvel s alternative model was click-through rate. –CTR. So the advertisers paid to the web site when visitors click on the advertisement to get more information about the product or company. Which means for the advertisers that visitors are more likely to buy a product from the web site . And it was offering free charge of impressions and charging the advertisers on the click-troughs which brought huge revenue to Marvel.
· After awhile some other advertisers started to ask other sites to charge only click troughs, Marvel s model. As we know from the case , Windham wanted the same thing from Mednet . It really proves us that advertiser mainly wants “sales-leads” which means they want the potential visitors who are ready to make an order. (at least has more probability to purchase something through the web site. For Windham(advertiser for that case )what really matters is click-troughs and so ; sales-leads as Baker said: “ They separate accidental observers of our ads from the serious prospects who proactively seek more product information and may buy our product” (Pg.4)
· Referring the problems above Mednet decided to check its value proposition for the advertisers. Yates: “ one worrisome fact is that Baker underestimates the genuine value that our impressions deliver to an advertiser. Visitor to Mednet see those ads in the context of a trusted and helpful site- and even if they do not buy right away, they are left with a positive impression of the advertiser and its products”(Pg:6) and as we know after the phone call with Baker , they made her mind and how importance a positive impression for the visitors .. (and they proved by evidence of redeemed coupons) so the importance of brand awareness is should not be underestimated for the advertisers too. (!!!at the end of the case cholesterol.com was an alternative by Windham just because of the above reasons.!!!)
FOR the second part of the question:
· Degree of actual sales and how the ads turn into a profit for the company is important for the advertisers too (that is the best metrics to measure )the company did it as below:
· Windham s bar code system established printable coupons can be a good metrics to recognize what way of advertisement is the best among the others. (by which channel the visitor reached these coupons can be identified by the Windham computer system : MedNet, Marvel, Online calls)
3.) What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
· ‘If the consumers actually buy something by using the ads channel’ may show the value of the chosen business model for the advertiser(to get profit)
· How the consumer feel about the web site : for that case the trusted medical information so trusted web site and the number of qualified visitors of the site (for a content destinations web site like MedNet)
· The visitors of MedNet web site are the ones who are looking for solution for a real health problem. (So the ones who are stimulated psychologically and ready to buy the products.)
· As Yates said: “ our audience is attracted to your products , and we have reason to believe that our advertising partnership adds to your bottom line” (pg;6)
4.) What steps can MedNet take to address emerging competitive threats?
· They have to follow the new trends of advertising
· Try to catch up the competitors and hot pursuit of them
· Value proposition
· Increase the content of the site (again health related) so that by enlarging the subjects they may get more advertiser opportunity
· Enlarge their network
Wednesday 8 October 2008
Andrea's case 2 writeup
If Internet media is so measurable, how can Heather Yates and Bill Bishop be in such a predicament?
Companies that rely on a large part of their revenue from advertisements on their webpage have to compete for companies. This is the case with Mednet since their service is free of charge, all their revenue comes from advertisements. Even though internet media is measurable it still has competition. Heather and Bill had the challenge of proving and showing Windham how they would produce higher profits. They had to prove the profits using non-financial support for example the reliability of the content in the website.
What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these? I think the number one thing advertisers want overall is sales that produce profits. Like Baker, sometimes companies concentrate too much on the money and don’t think about how and why the money comes. Advertisers should want to be charged on ads for committed and serious customers. They want consumer to have a positive impression of their company and products. They invest to shape consumers long-term perceptions and attitudes towards a product. They also want proof from a company that their money is being spent to bring in value and money. It definitely does want brand awareness which comes through loyal customers and reputation. Measures of their wants can include ways like the barcode system Mednet used. They can be measured by CTR (click-through rate) to track campaign performance. They use attitudinal research to track consumer attitudal response to advertisements. Reach and frequency a branding metric is also used.
What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?The time and how often a consumer visits a site could be a determination as for Mednet consumers serious about purchasing advertised products only visit the website during a crisis. At this time they spend more quality time searching through the site. Consumers actually purchasing an item after clicking on the advertisement is a consumer behavior wanted. They also want consumers to recommend their product to friends and family. They want customers to market the quality and satisfaction to others. Consumers who visit a site with an intention of looking for something is wanted.
What steps can MedNet take to address emerging competitive threats?
They can continually have their eye open to threats of new competitors, take advantage of technology shifts, develop new competence, keep up with the pace, detect signals and prediction markets. They need to track consumer trends, behaviors and attitudes. They can track success of their competitors.
Companies that rely on a large part of their revenue from advertisements on their webpage have to compete for companies. This is the case with Mednet since their service is free of charge, all their revenue comes from advertisements. Even though internet media is measurable it still has competition. Heather and Bill had the challenge of proving and showing Windham how they would produce higher profits. They had to prove the profits using non-financial support for example the reliability of the content in the website.
What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these? I think the number one thing advertisers want overall is sales that produce profits. Like Baker, sometimes companies concentrate too much on the money and don’t think about how and why the money comes. Advertisers should want to be charged on ads for committed and serious customers. They want consumer to have a positive impression of their company and products. They invest to shape consumers long-term perceptions and attitudes towards a product. They also want proof from a company that their money is being spent to bring in value and money. It definitely does want brand awareness which comes through loyal customers and reputation. Measures of their wants can include ways like the barcode system Mednet used. They can be measured by CTR (click-through rate) to track campaign performance. They use attitudinal research to track consumer attitudal response to advertisements. Reach and frequency a branding metric is also used.
What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?The time and how often a consumer visits a site could be a determination as for Mednet consumers serious about purchasing advertised products only visit the website during a crisis. At this time they spend more quality time searching through the site. Consumers actually purchasing an item after clicking on the advertisement is a consumer behavior wanted. They also want consumers to recommend their product to friends and family. They want customers to market the quality and satisfaction to others. Consumers who visit a site with an intention of looking for something is wanted.
What steps can MedNet take to address emerging competitive threats?
They can continually have their eye open to threats of new competitors, take advantage of technology shifts, develop new competence, keep up with the pace, detect signals and prediction markets. They need to track consumer trends, behaviors and attitudes. They can track success of their competitors.
Tuesday 7 October 2008
Case 2 - Mednet.com questions
1.If Internet media is so measurable, how can Heather Yates and Bill Bishop be in such a predicament?
2.What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these?
3.What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
4.What steps can MedNet take to address emerging competitive threats?
2.What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these?
3.What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants?
4.What steps can MedNet take to address emerging competitive threats?
Monday 6 October 2008
Group Member List
陳佳琳
Shelley Chia-Lin Chen
B95701129
ohshelley177@hotmail.com
柯亞林
Andrea Kaler
R97749034
andrea.kaler@gmail.com
鄯安宇
Amraa Shanzbaatar
B94701155
amraa@hotmail.com
Daniel Adam Hoing (Not sure)
R97749039
dahoing@gmail.com
孔海尼
Deniz Kundakci
R97749048
denizkundakci@gmail.com
Shelley Chia-Lin Chen
B95701129
ohshelley177@hotmail.com
柯亞林
Andrea Kaler
R97749034
andrea.kaler@gmail.com
鄯安宇
Amraa Shanzbaatar
B94701155
amraa@hotmail.com
Daniel Adam Hoing (Not sure)
R97749039
dahoing@gmail.com
孔海尼
Deniz Kundakci
R97749048
denizkundakci@gmail.com
Netflix case review
Q1. Would you buy Blockbuster stock or short it at the time of the case? How about Netflix? Why?
When deciding whether to invest in either of the movie distributors at the time when the case was written, assuming year 2007, we have summarized strengths and weaknesses of each company.
Blockbuster:
(+) It is a well known brand name, and has established a strong financial reputation that has presence in more than 30 nations around the world, including Taiwan.
(+) It has more stores around the nation that can and are serving as distribution centers to online orders.
(+) Movie rentals are impulsive decisions, and the overall market still prefers watching newest releases.
(+) Blockbuster has been meeting customer’s needs seamlessly when bringing new releases to the market as quickly and abundantly as possible.
(+) They have better agreements with the major studios, which will help a lot on keeping cost down.
(-) On the other hand, compared to Netflix, Blockbuster acted myopically when it came to embracing new technology, such as running an interactive web site, and promoting attractive pricing systems to retain the already existing customers and recruiting new ones. So rather than being a leader, it appears as a follower company, which may be seen as a bad signal and turn off many investors.
(-) No one can be sure of which mode of ordering and delivering movies to watchers will be most appreciated in the future, but had the Netflix’s model turned out to be sound, Blockbuster’s subscription rate of 2.2 million compared to Netflix’s 6.3 million would serve as a major disappointment for investors.
Netflix
(+;-) Obviously, Netflix’s popularity among movie renters has grown to such a degree, that Harvard had to write a case about its success. Therefore “brand-image”-wise Netflix is nearly as solid as Blockbuster. But compared to Blockbuster, Netflix’s operation only covers the United States.
(+) With their creative thinking, powerful management, systematic planning and careful execution of those plans, Netflix has grown from zero to profit in a mere 5 years. Their subscription rate, along with their stock value has been growing constantly since the late 2002. (See attachment)
(+) Their approach to capturing revenue is modest yet stable, as the case mentioned “positive cash flow before growing wildly”. Therefore, investors can be assured that the company won’t go bankrupt instantly.
(+) With more than warm intra-organizational atmosphere (naming offices by employees favorite movies); strong hold of the current and future technology (well appreciated online recommendation system); innovative actions to increase customer satisfaction, Netflix would have been among our investment portfolio.
Q2. Did Netflix offer same values for consumers that Blockbuster did? How did this evolve over time?
Blockbuster offers around 2500 newest movie releases on both VHS and DVD formats through each of its ten minute drive stores located all over the U.S.
Netflix, on the other hand, recommends more than 70,000 DVD titles to its subscribers based on their interests and past movie rental behavior, and delivers to most of them overnight without late return fee and unlimited monthly rentals for $18 a month. Although most of the movie rentals are new releases, Netflix observed that many customers never had chances to watch movies older than 6 months, and not only did they wish to watch those movies, but they were interested in lesser-known movies that didn’t make it to the box-office. To live up to the standards of its rivals and offer even more than that, Netflix systematically evolved over time.
-They started offering movies based on editorial reviews, which, after considerable amount of investment, was changed to more accurate algorithm + large user database recommendation system that has been receiving subscribers’ high appreciation ever since. With Netflix’s well thought, user friendly, versatile web site, anyone with internet access can easily subscribe, or unsubscribe (management decided to offer easier un-subscription to those leaving their service = less frustration, higher satisfaction, more recruitment) and make up a movie list, usually averaging 50 titles. The movies which are made of recommendation from the website are made sure that they are in house, hence no out of stock problem.
-At first, Netflix used a traditional video store pricing model, which included late return fees, but soon they changed it into unlimited rentals, no late-return fee package.
-They slowly increased the number of their distribution centers over the nation, and worked closely with USPS on shortening delivery and return time of DVDs. They claim that 90% of their over 6 million subscribers can be reached within a single business day.
-Instead of using store based inventory, they run national inventory, which doesn’t create over or under stock of titles at different regions.
-In order to decrease content acquisition cost, and increase the number of titles available, they collaborated with Ted Sorandos, who from Video City brought many personal experiences and relationships on acquiring titles from major studios.
-They work closely with lesser-known producers to help promote them, and in return acquire more variety of contents for relatively cheap bucks.
Q3. Compare Blockbuster’s and Netflix’s profit models. How might the differences affect the respective company’s strategies?
Blockbuster’s vision on making profit from movie rentals was:
Renting out new releases rather than old, or lesser known titles, since their demand was inconsistent and maximizing the days that any individual movie was out for rent, because about 10% of their income came from late return fees. They acquired each copy of new releases for 18$ and sold their previewed releases at a discount, generating incremental return on its investment and clearing shelf space for the next wave of new movies. Each one of its more than 5000 stores had to have several copies of new releases, which eliminates the need for mail delivery to customers, but creates over stock problem after a while.
Netflix’s model starts from subscription to the system, which generates cash on hand before any rental. They use the cash to acquire movie titles from major studios based not on the number of copies but for the number viewed. Through their Red Envelope Entertainment, they acquired copyrights to lesser-known titles at lower price, and enriched their movie selections for both new releases and lesser-known releases. Thanks to their national inventory system, no shelf space problem hinders their operation. What’s more, by combining movie queues based on recommendation system and national inventory, and well thought and fixed delivery method with USPS they don’t cause out of stock, or late delivery problems respectively. Their more titles, few copies, queues based on in stock titles, agreement with USPS on delivery and return make it possible for no late return fee and unlimited rental for subscribers.
Q4. As you examine each major shift in Netflix’s strategy, what might have been the assumptions that they might have at each stage? What assumptions will you make upon evaluating VOD?
1. DVD format - the next format for main stream entertainment
2. Mail delivery – being home entertainment provider means quick home delivery
3. More old, or less known titles – not everyone is interested in new releases, good movies never age
4. No late return fee; unlimited rentals – reward power is effective than coercive power; not everybody watches movies every night
5. Accurate, in stock recommendation system – movies are impulsive decision, yet if a system, based on past behavior, predicts one’s interest more accurately, obviously the act of “buying customers” succeeds
6. Easier un-subscription method – customer satisfaction increases with less frustration, and ease of use, ultimately it translates to better customer retention, and higher customer recruitment
With VOD, either it is live streaming, pay per view, or downloadable on several devices, the biggest problem will be content acquisition terms. Under current digital content distribution method, it is very unsecure to upload any content to the internet. As long as it is a digital content, there’s always a way to copy and redistribute it to the cyber citizens. Second, say that they come up with enough secure way of distributing the film, they should be aware that current internet speed or the cable is not fast enough to deliver high quality videos without lag or any other interruption. Third, going to the movies, or going to rental stores, walking through the movie isles, selecting titles, buying coke and pop corn, or ice cream cone might sound too old fashioned, but this has been part of American pop culture for the past several decades. If acquiring movies become a matter of a few seconds, what kind of consumption behavior will it produce? Had all of the above issues been handled correctly, would we be sure of the future of VOD.
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