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Creative OverviewCreative Overview

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Creative ProcessCreative Process

Product Selection Process

• Retention works with Inventory in an attempt to provide direction for inventory acquisition.

• Individual products are a major driver of promos, we work with Inventory team on pricing, special offers, etc.

• We have worked to give categories relatively balanced promotions, based on their sales performance.

• Promotions are then placed on 10 week calendar for planning and execution.

• Once promotion (email or onsite) is placed on calendar planning around creative development begins.

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Creative ProcessCreative Process

• We give direction to Creative Team (message, look/feel, desired effect, etc.) but let them use expertise to design promotions.

• We also test various elements, e.g. navigation, buy buttons, links vs. buttons, wording, pricing, etc.

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Email Segmentation StrategyEmail Segmentation Strategy

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Current Email StrategyCurrent Email Strategy

• Current Audience: Individuals who have registered via Half.com and are opted in to receive promotional emails

• Segmentation Strategy: Emails are sent to all individuals in current audience. Each individual receives same email treatment. Periodic emails are sent to special segments (I.e. Buyer’s of John Grisham novels)

• Frequency Strategy-Individuals in the current audience can receive from 1-2 emails a week

• Email Promotion Strategy: Weekly emails based on specific promotional theme. Themes can range from product specific (ex. Palms) to mixed meta emails.

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Email Results 2002Email Results 2002

• UGMS from all email campaigns-$5.7 million

• Average click-thru (all emails)- 1.47%

• Average Conversion (all emails)- 3.27%

• Average UGMS per recipient (all emails)- $0.02/email

• “Special segment” emails produced a higher average click thru and conversion rate.

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• “Online retailers are finding personalization and segmentation are more effective based on action instead of demographics”. –DoubleClick Feb. 2002

• Amazon tends to base a majority of their communications and personalization based on purchase history.

• Amazon and BN seem to send out 2 to 3 emails per week depending on the level of user activity.

• There are no major studies analyzing email segmentation and which approaches tend to work best.

Competitive ApproachesCompetitive Approaches

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Email Objectives for 2003Email Objectives for 2003

• Increase the relevancy of communications resulting in increased click-thru and conversion rates

• Allow for enhanced/managed cross selling• Increase GMS per email recipient• Minimize opt-outs and unsubscribes

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Proposed Email StrategyProposed Email Strategy

• Proposed Audience: Create targeted audiences (segments) based on demographic and buying data from current audience.

• Segmentation Strategy: Emails will only be sent to individuals with a propensity to purchase the items being promoted.

• Frequency Strategy-No individual will receive more than 1 meta promotion email a week.

• Email Promotion Strategy: Emails sent weekly and based on a specific product category (ex. Books, Movies, Music). Create multiple emails for specific product category to increase relevancy. Emails will cater to segments eligible for each weekly email.

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Segmentation: Approach and Definitions

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Segmentation ObjectivesSegmentation Objectives

• Whenever possible, segments will be based on the buying behavior of the individual eligible to receive Half promotional emails.

• Where buying behavior data is not available, demographic data will be used to create segments.

• Segments must be continuously tested to see which segments are best predictors of activation on promotion.

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Segmentation DevelopmentSegmentation Development

• To help meet objectives on last slide:

– Segments will be based primarily on whether individual has made a purchase or not. (Buyers vs. Non-buyers)

– Initially, primary segments for Buyer Group will be based on buying behavior such as product category preference (Meta Lovers) and price sensitivity (Bargain Shoppers vs. Premium)

– Possible additional segments for Buyer Group, to be tested periodically, are gender and source of registration (eBay or Half.com)

– Primary Segments for Non-Buyers will be gender and registration source (eBay or Half.com)

– Individuals who register via eBay or become eBay sellers will be treated differently than current audience.

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eBay Segments and DefinitionseBay Segments and Definitions

• Two eBay segments will be created:– eBay Registrants-individuals who registered via the

eBay site– eBay Sellers---(from static list)

• Email strategy development for these two segments are on-going with eBay direct marketing.

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Buyer SegmentsBuyer Segments

• Individuals who have made at least one purchase on Half.com will be considered a buyer.

• Buyers will be broken into two distinct groups:1. Active Buyers

2. Inactive Buyers

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Active Buyer Segmentations: Approaches and Definitions

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Active Buyers DefinitionActive Buyers Definition

• Active Buyers:– Opt-ins who make at least 1 purchase every 3 weeks

through purchase 1-2 and at least 1 purchase every 6 weeks through purchase 3+.

– This approach was approved early in 2002 and was developed due to data that showed there was a large drop off to inactivity in users who made purchase 1 or 2. By purchase 3, the percentage of individuals not making a future purchase on Half.com decreases significantly and flattens for the remaining purchase life cycle.

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Active Buyer/Meta Lover Active Buyer/Meta Lover SegmentationSegmentation

• Active Buyers will be primarily segmented by which product categories (Metas) they are likely to buy in. Categories include books, music, movies, games, computers, computer accessories and electronics.

• An individual likely to buy in a category is considered a Meta Lover for that category.

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Meta Lover SegmentationMeta Lover SegmentationDefinitionsDefinitions

• A Meta Lover in Books, Music, Movies, Games, and Electronics is defined as any individual who has 20% or more of their items purchased in a category.

• An individual can be a Meta Lover of multiple categories if they meet the conditions above in multiple categories.

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Active Buyer/Meta Active Buyer/Meta Lover-Bargain/Premium Lover-Bargain/Premium

SegmentationSegmentation• If a user meets one of the conditions mentioned

above for receiving an email that is meta specific in BMMG, an additional segmentation occurs based on the user’s price sensitivity.

• ASP will be determined for each meta and matched with the ASP for each user

– User’s ASP > ASP for Meta=Premium Buyer– User’s ASP< ASP for Meta=Bargain Buyer

• 2 Emails will be created for a BMMG category, one catering to bargain buyers, the other premium buyers.

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Computer and Electronics Computer and Electronics Segmentations and DefinitionsSegmentations and Definitions

• To enhance cross sell opportunities 2 additional segments will be developed for Computers and Electronics: 2 suggestions are: This is still to be determined….currently using entire buyer class.

1. BMMG Cross-Sell Segment -determined based on the historical average dollars spent in BMMG before making a first purchase in Computers or Electronics. Any active buyer who reaches the average dollars spent for either category will receive email promotion for that category.

2. Computers Accessories Segment-individuals who have made a computer hardware purchase in the last 6 months. Individuals in this segment will receive specific emails promoting computer accessories.

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Active Buyer/Cross Sell Active Buyer/Cross Sell SegmentationSegmentation

• If an opt-in active buyer does not meet the conditions for a meta lover but has purchased a trigger item that indicates a propensity to buy in a meta, the buyer will receive an email for that meta.

• Proposed Cross Sell Triggers include:– DVD Player Purchasers will be Movies Lover– Audio Equipment Purchasers will be Music Lover– Game System Purchasers will be Games Lover

• These individuals will be placed in the bargain segmentation for these respective metas.

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Active Buyer/Net Perceptions Active Buyer/Net Perceptions SegmentationSegmentation

• As each promotional email is prepared, the products being promoted will be entered into the Net Perceptions engine to suggest a list of qualified buyers for the email.

• Individuals, who are current opt-ins and that the Net Perceptions engine suggest have a high propensity to purchase one of the items being promoted, will receive the email. (60% probability or better).

• Since a proportion of these buyers may belong to an existing segment, duplicates will be removed prior to sending the email.

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Inactive Buyer Segmentations: Approaches and Definitions

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Inactive Buyers-DefinitionInactive Buyers-Definition

• Inactive Buyers:– Purchase 1-2: inactive 4 weeks post purchase– Purchase 3+: inactive 6 weeks post purchase

• Currently this process is automated, results have been successful compared with traditional email campaigns:– Traditional Email—Click Thru Avg 1%, Conv

Avg 2%– Inactive Auto Email-CT Avg .7%, Conv Avg

29%--10x the Traditional Email Activation Propensity

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Non-Buyer Segmentations: Approaches and Definitions

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Non-Buyers-DefinitionNon-Buyers-Definition

• Non Buyers:– Individuals opted in to Half.com promotional

emails who have not made a purchase on Half.com

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Non-Buyer SegmentationNon-Buyer Segmentation

• Non-Buyer class will be further segmented based on tests of:– Gender– Registration Origination

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Additional Segmentations: Approaches and Definitions

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Inside Scoop Participants

• Will receive a quarterly email based on the meta that was selected.

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Email Frequency Strategy

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Email Frequency Strategy

• General Guideline:– No opt-in will receive more than 1 meta email a week.

• Additional Guidelines:– Non-Buyers will receive an email once every 2 weeks.– Inactive Buyers will receive emails according to Inactive Buyer

schedule along with meta lover emails when applicable:– If on purchase 1 or 2 will receive automated email on 4th week of

inactivity and every 4 weeks until a purchase is made-but no more than 3 consecutive emails

– If on purchase 3 or more will receive automated email on 6th week of inactivity and every 6 weeks until a purchase is made-but no more than 3 consecutive emails

– An opt-in should receive at least one Half.com email promotion every 6 weeks.

– For all eBay segments, email frequency will adhere to yet to be developed eBay email communication policy.

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Email Promotion Strategy

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Email Promotion Strategy

• Active Buyers:– Will receive emails based on a specific product

category (ex. Books, Movies, Music, Games, Computers, or Electronics).

– Will receive emails up to once a week if the active buyer falls into a segment related to the specific product category for that week.

– Who are in the Meta Lover segment in Books, Movies, Music or Games, will receive either a premium or bargain email based on their ASP for that product category.

– When receiving an email, may receive periodic promotion from other product categories and/or Net-P generated “personalized” recommendations.

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Email Promotion Strategy

• Inactive Buyers:– Will receive “personalized” promotion based

on Net-Perception recommendations.– Will receive Meta Lover emails when

applicable.

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Email Promotion Strategy

• Non-Buyers:– Will receive emails with a focus on lower-

priced BMMG items, particularly books, along with some brand name computer and electronics items

– Will receive an email every 2 weeks

– Will receive an email catered to either gender or registration origination

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Segmentation Flows for Emails-Segmentation Flows for Emails-SummarySummary

eBay OriginYN

Opt-In TBDNY

No Email

Mixed Meta Email

Every 2 Weeks

Active Buyer

NY

Net-P Auto Email

B M M G C CeAcc

Meta EmailPremium v. Bargain

Meta Email

Cross Sell/Net P Segmentation(de-dup from meta lover email list)

Y N

No Email

Meta Lover

Y N

eBay SellerNY

TBD Purchases>0

N

Inside Scoop

Receive quarterly e-mail

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Email Segmentation Next Steps

• Trial and Test– We will run various segments, testing various

elements to identify what works well and capitalize and develop these approaches.

• Scale – Currently looking at resources and process to

identify gaps and enhance scalability.• Expand

– Working on contributor project to enhance relevancy of campaigns.

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Closer Look at Metrics

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2003 Email UGMS2003 Email UGMS

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Cross Sell SegmentCross Sell Segment

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Segmentation ChallengesSegmentation Challenges

• Scalability: Segmentation approach involves more emails to increase the effectiveness of the campaign.

• Perception: Ability to manage the perception of Inventory that they are getting smaller deployments, but more targeted ones. Also, manage the perception that we are solving for long term rather than short term revenue.

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Team Objectives

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Q1 ObjectivesQ1 Objectives

Must Do QTD Comments

Hit Targets Jan GMS: $15,988,958 (+9.5%)

Feb GMS: $8,927,484 (-3%)

Mar GMS: $8.780,670 (-14%)

Q1 GMS: $33,697,112 (-1%)

Positives: textbooks, laptops, game systems, palms, oscars, grammys

Negatives: war, tourney, warmer weather, inventory gaps

Develop enhanced email segmentation strategy and process.

Launched last week. This project will enhance the content and better manage the frequency of our promotional emails.

Recommendation technology upgrade to version 7.0.

Launched last week. This will enhance our recommendation technology and expand the applications of recommendations on Half.

Recommendation Center Development

Launched early March. Provides a centralized hub for users to get personalized recommendations

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Q2 ObjectivesQ2 Objectives

Must Do QTD Comments

Hit Targets Through April 2:

GMS To Date: $356,915

Run Rate: $8,256,127 (-6%)

War has significantly impacted traffic, coupled with the warmer weather. Positives: Free Ship Test, Textbook mini spike

Develop enhanced email tracking capabilities (open rate, etc.)

BRD submitted. On roadmap. Allow us to better manage email campaigns and test wider elements of our promotions.

Develop onsite tracking capabilities.

Working with prioritization to identify possible development resources.

Allow us to measure the effectiveness of onsite promotions and campaigns.

Textbook catalog Negotiations underway. Data sample with B&T, Follett, MBS

Provide for an ongoing data source for textbooks.

Email Contributor Project Development underway. Allow us to better target

Segments related to new product releases.