How much money should a promotional email marketing campaign really cost?

How much money should a promotional email marketing campaign really cost? Nowadays, the business scenario is characterized by being always changing both due to the global economics and financial crisis, and, simultaneously, consumers are becoming more demanding. If, on one hand, advertisers must find new media solutions, with more impact and, necessarily, cheaper and more efficient, because of the crisis and the consequent revenues decrease, on the other hand, the consumer is more susceptible to advertising. This scenario, followed by an Internet growth, caused huge changes on the pricing negotiations established between advertisers and agencies. In this context, new types of media to promote goods and services emerged with the purpose of helping companies to succeed in a so dynamic environment. Email became thus one of the most relevant ways, used by advertisers, to interact with potential customers, making products/services and promotions known. Therefore, the questions that arise are related to the prices being charged by agencies, with respect to email marketing campaigns. Because of it, this dissertation focuses on understanding how agencies, in Portugal, establish the prices that they charge to advertisers and which factors should influence the price of promotional email marketing campaigns. From a detailed literature review, several research questions are identified. Subsequently, interviews are conduced to various players in the Portuguese advertising industry, including full service agencies, digital marketing agencies and advertisers. Throughout those interviews, it is possible to clearly understand the Portuguese email market, concluding about the impact of certain variables in the prices being charged. Finally, a multivariate analysis is developed in order to understand the real correlation between the variables obtained by the interviews and the prices being applied. From the results, it is possible to conclude that the Portuguese email industry is characterized by high information asymmetries, and the prices being charged are not in equilibrium: ads’ supply tend to be higher than demand. Actually, this industry is characterized by a high threat of new entrants as well as substitute products/services, being the bargaining power of buyers (advertisers) high and the suppliers’ (ESPs – Email Service Providers) bargaining power low. The high intensity of competitive rivalry also explains the phenomenon mentioned before. In fact, agencies in Portugal charge the prices of promotional emails taking into account their own expectations, prices being applied in the past and the industry benchmark. Additionally, the size of the advertiser, the number and type of form fields, and the campaign goal (level of persuasion), empirically, can also explain email marketing campaigns’ price.Quanto é que realmente deve custar uma campanha promocional de email marketing? Actualmente, o cenário empresarial encontra-se em permanente mutação, devido à crise mundial, e à procura cada vez mais exigente por parte dos clientes. Se, por um lado, a crise e, a consequente diminuição de receitas, obrigam os anunciantes a encontrarem novas formas de publicidade, com mais impacto e, inevitavelmente, mais baratas e eficientes; por outro lado, o consumidor tornou-se mais sensível. Este cenário, acompanhado pelo boom da Internet, causou alterações nas negociações entre anunciantes e agências, levando à criação de novas formas de promoção capazes de ajudar o cliente a triunfar neste ambiente de rápida mudança. O email deixou, assim, de ser uma mera ferramenta de comunicação, passando a ser uma das formas mais utilizadas pelos anunciantes para interagir com potenciais consumidores. Posto isto, a questão que se impõe encontra-se relacionada com os preços que têm vindo a ser cobrados pelas campanhas de email marketing. Assim, a presente dissertação visa perceber como é que os preços das campanhas de email marketing são determinados e que factores as agências têm em consideração e pensam ser cruciais na determinação destes preços. Neste sentido, várias questões de pesquisa são elaboradas a partir de uma revisão bibliográfica detalhada. Posteriormente, são conduzidas entrevistas a vários actores da indústria da publicidade em Portugal, incluindo agências de meios, agências especializadas em marketing digital e anunciantes. Através destas entrevistas procura-se perceber o mercado português de emails, assim como concluir sobre o impacto de certas variáveis na determinação dos preços das campanhas de email. Por fim, uma análise multivariada é desenvolvida de forma a perceber a correlação entre as variáveis obtidas através das entrevistas e os preços praticados. A partir dos resultados obtidos, conclui-se que a indústria portuguesa de emails é caracterizada por fortes assimetrias de informação, sendo que os preços cobrados parecem não estar em equilíbrio: a oferta de publicidade tende a ser superior à procura. De facto, a forte ameaça à entrada de novos players; a existência de diversos substitutos; o forte e o baixo poder negocial dos compradores e dos ESPs, respectivamente, e a concorrência crescente parecem explicar este fenómeno. As agências em Portugal cobram os preços das campanhas de email em função das expectativas de negócio, dos preços que têm praticado no passado e, considerando, o que a concorrência aplica. Além disto, o tamanho do anunciante, o número de campos existentes na página de submissão de dados e a tipologia destes campos (nível de confidencialidade), tal como o objectivo da campanha (nível de persuasão) parecem ser as principais variáveis que explicam o preço cobrado pelas campanhas de email em Portugal

Agent-orientated auction mechanism and strategy design

Agent-based technology is playing an increasingly important role in today’s economy. Usually a multi-agent system is needed to model an economic system such as a market system, in which heterogeneous trading agents interact with each other autonomously. Two questions often need to be answered regarding such systems: 1) How to design an interacting mechanism that facilitates efficient resource allocation among usually self-interested trading agents? 2) How to design an effective strategy in some specific market mechanisms for an agent to maximise its economic returns? For automated market systems, auction is the most popular mechanism to solve resource allocation problems among their participants. However, auction comes in hundreds of different formats, in which some are better than others in terms of not only the allocative efficiency but also other properties e.g., whether it generates high revenue for the auctioneer, whether it induces stable behaviour of the bidders. In addition, different strategies result in very different performance under the same auction rules. With this background, we are inevitably intrigued to investigate auction mechanism and strategy designs for agent-based economics. The international Trading Agent Competition (TAC) Ad Auction (AA) competition provides a very useful platform to develop and test agent strategies in Generalised Second Price auction (GSP). AstonTAC, the runner-up of TAC AA 2009, is a successful advertiser agent designed for GSP-based keyword auction. In particular, AstonTAC generates adaptive bid prices according to the Market-based Value Per Click and selects a set of keyword queries with highest expected profit to bid on to maximise its expected profit under the limit of conversion capacity. Through evaluation experiments, we show that AstonTAC performs well and stably not only in the competition but also across a broad range of environments. The TAC CAT tournament provides an environment for investigating the optimal design of mechanisms for double auction markets. AstonCAT-Plus is the post-tournament version of the specialist developed for CAT 2010. In our experiments, AstonCAT-Plus not only outperforms most specialist agents designed by other institutions but also achieves high allocative efficiencies, transaction success rates and average trader profits. Moreover, we reveal some insights of the CAT: 1) successful markets should maintain a stable and high market share of intra-marginal traders; 2) a specialist’s performance is dependent on the distribution of trading strategies. However, typical double auction models assume trading agents have a fixed trading direction of either buy or sell. With this limitation they cannot directly reflect the fact that traders in financial markets (the most popular application of double auction) decide their trading directions dynamically. To address this issue, we introduce the Bi-directional Double Auction (BDA) market which is populated by two-way traders. Experiments are conducted under both dynamic and static settings of the continuous BDA market. We find that the allocative efficiency of a continuous BDA market mainly comes from rational selection of trading directions. Furthermore, we introduce a high-performance Kernel trading strategy in the BDA market which uses kernel probability density estimator built on historical transaction data to decide optimal order prices. Kernel trading strategy outperforms some popular intelligent double auction trading strategies including ZIP, GD and RE in the continuous BDA market by making the highest profit in static games and obtaining the best wealth in dynamic games

Essays on Advertising

According to eMarketer, the total advertising spend in US alone was estimated to be over $238 billion. Firms invest large amounts of money in advertising to promote and inform consumers about their products and services, as well as to persuade them to purchase. The broad theme of advertising has been examined from many different angles in the marketing literature, ranging from empirically measuring effects of TV ads on sales to analytically characterizing the key economic forces stemming from enhanced targetability in online advertising. The purpose of my dissertation is to study some of the key questions which remain unaddressed in the advertising literature. In the first essay, I examine firms' choices of advertising content in a competitive setting. I demonstrate that competitive forces sometimes induces firms to choose advertising content that shifts consumers' perception of product quality. While this strategy hurts firms in a monopoly setting, it increases their profits under competition because it may increase the utility of their offering in comparison with the competing offering. In the second essay, I investigate the optimal mechanism for selling online ads in a learning environment. Specifically, I show that when ad sellers, such as Google, design their ad auctions, it is optimal for them to favor new advertisers in the auction in order to expedite learning their ad performance. In the third essay, I study the impact of tracking consumers' Internet activities on the online advertising ecosystem in the presence of regulations that, motivated by privacy concerns, endow consumers with the choice to have their online activity be tracked or not. I find that when ad effectiveness is intermediate, fewer ads are shown to opt-in consumers, who can be tracked and have their funnel stages inferred by advertisers, than to opt-out consumers, who cannot be tracked. In this case, consumers trade-off the benefit of seeing fewer ads by opting-in to tracking (positive instrumental value of privacy) with the disutility they feel from giving up their privacy (intrinsic cost of privacy). Overall, these findings shed light on novel strategic forces that provide guidance for marketers' advertising decisions in three distinct contexts

Keyword Competition and Determinants of Ad Position in Sponsored Search Advertising

Given the significant growth of the Internet in recent years, marketers have been striving for new techniques and strategies to prosper in the online world. Statistically, search engines have been the most dominant channels of Internet marketing in recent years. However, the mechanics of advertising in such a market place has created a challenging environment for marketers to position their ads among their competitors. This study uses a unique cross-sectional dataset of the top 500 Internet retailers in North America and hierarchical multiple regression analysis to empirically investigate the effect of keyword competition on the relationship between ad position and its determinants in the sponsored search market. To this end, the study utilizes the literature in consumer search behavior, keyword auction mechanism design, and search advertising performance as the theoretical foundation. This study is the first of its kind to examine the sponsored search market characteristics in a cross-sectional setting where the level of keyword competition is explicitly captured in terms of the number of Internet retailers competing for similar keywords. Internet retailing provides an appropriate setting for this study given the high-stake battle for market share and intense competition for keywords in the sponsored search market place. The findings of this study indicate that bid values and ad relevancy metrics as well as their interaction affect the position of ads on the search engine result pages (SERPs). These results confirm some of the findings from previous studies that examined sponsored search advertising performance at a keyword level. Furthermore, the study finds that the position of ads for web-only retailers is dependent on bid values and ad relevancy metrics, whereas, multi-channel retailers are more reliant on their bid values. This difference between web-only and multi-channel retailers is also observed in the moderating effect of keyword competition on the relationships between ad position and its key determinants. Specifically, this study finds that keyword competition has significant moderating effects only for multi-channel retailers

Search engine advertising in web retailing : an efficiency analysis

This study examines the efficiency of search engine advertising strategies employed by firms. The research setting is the online retailing industry, which is characterized by extensive use of Web technologies and high competition for market share and profitability. For Internet retailers, search engines are increasingly serving as an information gateway for many decision-making tasks. In particular, Search engine advertising (SEA) has opened a new marketing channel for retailers to attract new customers and improve their performance. In addition to natural (organic) search marketing strategies, search engine advertisers compete for top advertisement slots provided by search brokers such as Google and Yahoo! through keyword auctions. The rationale being that greater visibility on a search engine during a keyword search will capture customers' interest in a business and its product or service offerings. Search engines account for most online activities today. Compared with the slow growth of traditional marketing channels, online search volumes continue to grow at a steady rate. According to the Search Engine Marketing Professional Organization, spending on search engine marketing by North American firms in 2008 was estimated at $13.5 billion. Despite the significant role SEA plays in Web retailing, scholarly research on the topic is limited. Prior studies in SEA have focused on search engine auction mechanism design. In contrast, research on the business value of SEA has been limited by the lack of empirical data on search advertising practices. Recent advances in search and retail technologies have created datarich environments that enable new research opportunities at the interface of marketing and information technology. This research uses extensive data from Web retailing and Google-based search advertising and evaluates Web retailers' use of resources, search advertising techniques, and other relevant factors that contribute to business performance across different metrics. The methods used include Data Envelopment Analysis (DEA), data mining, and multivariate statistics. This research contributes to empirical research by analyzing several Web retail firms in different industry sectors and product categories. One of the key findings is that the dynamics of sponsored search advertising vary between multi-channel and Web-only retailers. While the key performance metrics for multi-channel retailers include measures such as online sales, conversion rate (CR), c1ick-through-rate (CTR), and impressions, the key performance metrics for Web-only retailers focus on organic and sponsored ad ranks. These results provide a useful contribution to our organizational level understanding of search engine advertising strategies, both for multi-channel and Web-only retailers. These results also contribute to current knowledge in technology-driven marketing strategies and provide managers with a better understanding of sponsored search advertising and its impact on various performance metrics in Web retailing

Agent-orientated auction mechanism and strategy design

Agent-based technology is playing an increasingly important role in today’s economy. Usually a multi-agent system is needed to model an economic system such as a market system, in which heterogeneous trading agents interact with each other autonomously. Two questions often need to be answered regarding such systems: 1) How to design an interacting mechanism that facilitates efficient resource allocation among usually self-interested trading agents? 2) How to design an effective strategy in some specific market mechanisms for an agent to maximise its economic returns? For automated market systems, auction is the most popular mechanism to solve resource allocation problems among their participants. However, auction comes in hundreds of different formats, in which some are better than others in terms of not only the allocative efficiency but also other properties e.g., whether it generates high revenue for the auctioneer, whether it induces stable behaviour of the bidders. In addition, different strategies result in very different performance under the same auction rules. With this background, we are inevitably intrigued to investigate auction mechanism and strategy designs for agent-based economics. The international Trading Agent Competition (TAC) Ad Auction (AA) competition provides a very useful platform to develop and test agent strategies in Generalised Second Price auction (GSP). AstonTAC, the runner-up of TAC AA 2009, is a successful advertiser agent designed for GSP-based keyword auction. In particular, AstonTAC generates adaptive bid prices according to the Market-based Value Per Click and selects a set of keyword queries with highest expected profit to bid on to maximise its expected profit under the limit of conversion capacity. Through evaluation experiments, we show that AstonTAC performs well and stably not only in the competition but also across a broad range of environments. The TAC CAT tournament provides an environment for investigating the optimal design of mechanisms for double auction markets. AstonCAT-Plus is the post-tournament version of the specialist developed for CAT 2010. In our experiments, AstonCAT-Plus not only outperforms most specialist agents designed by other institutions but also achieves high allocative efficiencies, transaction success rates and average trader profits. Moreover, we reveal some insights of the CAT: 1) successful markets should maintain a stable and high market share of intra-marginal traders; 2) a specialist’s performance is dependent on the distribution of trading strategies. However, typical double auction models assume trading agents have a fixed trading direction of either buy or sell. With this limitation they cannot directly reflect the fact that traders in financial markets (the most popular application of double auction) decide their trading directions dynamically. To address this issue, we introduce the Bi-directional Double Auction (BDA) market which is populated by two-way traders. Experiments are conducted under both dynamic and static settings of the continuous BDA market. We find that the allocative efficiency of a continuous BDA market mainly comes from rational selection of trading directions. Furthermore, we introduce a high-performance Kernel trading strategy in the BDA market which uses kernel probability density estimator built on historical transaction data to decide optimal order prices. Kernel trading strategy outperforms some popular intelligent double auction trading strategies including ZIP, GD and RE in the continuous BDA market by making the highest profit in static games and obtaining the best wealth in dynamic games.EThOS - Electronic Theses Online ServiceGBUnited Kingdo