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E-MarketingE-COM301-Copy.pdf
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Seventh Edition
STRATEGY, IMPLEMENTATION AND PRACTICE
Dave Chaffey Fiona Ellis-Chadwick
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Seventh Edition
Dave Chaffey Fiona Ellis-Chadwick
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Library of Congress Cataloging-in-Publication Data Names: Chaffey, Dave, 1963- author. I Ellis-Chadwick, Fiona, author. Title: Digital marketing I Dave Chaffey, Fiona Ellis-Chadwick. Other titles: Internet marketing. Description: Seventh edition. I Harlow, England ; New York : Pearson, [2019]
I Earlier editions published as: Internet marketing : strategy, implementation, and practice.
Identifiers: LCCN 2018036531 I ISBN 9781292241579 I ISBN 9781292241586 (pdf) I ISBN 9781292241623 (epub)
Subjects: LCSH: Internet marketing. Classification: LCC HF5415.1265 .157 20191 DOC 658.8172--dc23 LC record available at https:/lurldefense.proofpoint.com/v2/url?u=https-3A_ Iccn.loc.gov_2018036531&d=DwiFAg&c=OYLnzTk WOdJiub_y7qAx8Q&r=DHV31B6NYyi5k520yd75rqJsjAntDLt1_ vXNeqFI9Y&m=Am4_NktDsuM3NeMdqGwx5w7uBiqqZeUqVcH aEoVST08&s-G-58NGhi6-GPW _Z5UYfGvBOKpg3Xx8peZXipfPTezco&e=
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NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
Brief contents
Preface
About t he authors
Acknowledgements
Part 1 Digital marketing fundamentals 1 Introducing digital marketing
xiii
xxiv
xxvi
2
4
2 Online marketplace analysis: micro- environment 46
3 The digital macro-environment 91
Part 2 Digital marketing strategy development 134 4 Digital marketing strategy 136
5 Digital media and the marketing mix 189
6 Relationship marketing using digital platforms 233
Part 3 Digital marketing: implementation and practice 2s2 7 Delivering the digital customer experience 284
8 Campaign planning for digital media 352
9 Marketing commun ications using digital media channels 396
10 Evaluation and improvement of digital channel performance 461
Glossary 503
Index 531
Contents
Preface About the authors Acknowledgements
Part 1 Digital marketing fundamentals
1 Introducing digital marketing Learning objectives I Questions for marketers I Links to other chapters
Introduction - how has digital marketing transformed marketing?
How will this book help me? Digital disrupters Definitions- what are digital marketing and
multichannel marketing?
Paid, owned and earned media Introduction to digital marketing strategy
Key features of d igital marketing strategy Applications of digital marketing
Benefits of digital marketing Alternative digital business models
What is the difference between e-commerce
and digital business? Different forms of functionality of digital presence Digital marketing insight 1 .1
Social commerce - how much do social
xiii xxiv
xxvi
2
4
Summary
Exercises Self-assessment exercises
Essay and discussion questions Examination questions
References Web/inks
2 Online marketplace analysis: micro-environment Learning objectives I Questions for marketers I
Links to other chapters 5 Introduction
Situation analysis for digital marketing 5 The digital marketing environment
7 Understanding how customers interact 7 with digital markets
Digital marketing insight 2.1 9 Resources for analysing the online marketplace
10 Customer analysis to understand the 13 digital consumer 13 Demand analysis and conversion marketing 13 Implications for marketing planning:
14 conversion models 17 Consumer choice and digital influence
Digital marketing insight 2.2 17 M-shopping can be thoughtful, motivated
19 and reluctant
networks influence purchase? 20
Customer characteristics Social media and emotions Consumer personas
Challenges in developing and managing digital marketing strategy 21
A strategic framework for developing a digital marketing strategy 22
Introduction to digital marketing communications 26 Using digital media channels to support business
objectives 26 The key types of digital media channels 27 Different types of social media marketing tools 29 Benefits of d igital media 30
Key challenges of digital communications 35 Key communications concepts for digital marketing 35 Case study 1 eBay thrives in the global marketplace 38
Digital marketing insight 2.3 How do your customers really feel?
Competitors The shape and nature of online competitive
markets Competitor analysis and benchmarking
Suppliers Digital marketing intermediaries
New channel structures Digital business models for e-commerce Digital revenue models Case study 2 Boo hoo - learning from the largest
European dot.com failure
41 42
42 42 43
43 44
46
46
47 48 49
51
54
56
57
57 60
61
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69
72 74 74 75 77
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viii Contents
Summary Exercises
Self-assessment exercises
Essay and discussion questions
Examination questions References
Web/inks
3 The digital macro-environment Learning objectives I Questions for marketers I
Links to other chapters
Introduction The rate of environment change
Technological forces A short introduction to Internet technology
URL strategy How does the Internet work? Infrastructure components of the Internet
Web standards Digital marketing insight 3.1
W3C
Text information - HTML (Hypertext Markup Language)
Text information and data - XML (eXtensible
Markup Language)
Javascript Application programming interfaces (APis) Cyber security
Digital marketing insight 3.2 The main website security risks
Approaches to developing secure systems Mobile and SMS messaging and applications
Mobile apps Digital marketing insight 3.3
JustPark changes the rules of the parking game
QR Codes Wi-Fi Bluetooth wireless applications Emerging technologies Assessing the marketing value of technology
innovation
Economic forces Market growth and employment Economic disruption
Digital marketing insight 3.4 E2E economy
Political forces Political control and democracy
Internet governance Taxation Tax jurisdiction Legal forces
Legal activities can be considered unethical 1 Data protection and privacy law
86 Digital marketing insight 3.5
86 86 87
87 87
89
91
92 92 94
94 94 95 96
96 97
97
98
98 98 99 99
100 101 103 103
105
105
Understanding cookies 2 Disability and discrimination law
3 Brand and trademark protection Digital marketing insight 3.6
How much is a domain worth? 4 Intellectual property rights
5 Online advertising law
Social forces Social exclusion Case study 3 Social media - do celebrities
call all the shots? Summary Exercises
Self-assessment exercises
Essay and discussion questions
Examination questions
References
Web/inks
Part 2 Digital marketing strategy development
4 Digital marketing strategy Learning objectives I Questions for marketers I
Links to other chapters
Introduction Understanding the impact of digital dis rupters Digital marketing strategy as a channel
marketing strategy Digital marketing insight 4.1
Retail digital channels and touchpoints
The scope of digital marketing strategy 105 Digital marketing insight 4.2 106 DHL and Sainsbury's Argos support 106 multichannel
Importance of integrated digital marketing
106 strategy and digital transformation 110 How to structure a digital marketing strategy 110 Situation analysis 111 Internal audit for digital marketing
Customer research 111 Resource analysis 112 Digital marketing insight 4.3 112 Consumer profiles
113 Competitor analysis 114 Intermediary analysis 115 Assessing opportunities and threats 115 Setting goals and objectives for digital
115 marketing 115 The online revenue contribution
119 122 122
123
124!
125 126 126
128 130 130 130
130 131
131 133
134
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136 137 138
139
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1441 146 148
150
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151
153 153 153
154! 156
Contents ix
Setting SMART objectives 156 Branding in a digital environment 199
Digital marketing insight 4.4 Success factors for brand sites 201
Black Friday, boost sales 157 Brand identity 202
Frameworks for objective setting 158 Brand names for online brands 202
Strategy formulation for digital marketing 160 Price 203
Decision 1 : Market and product development Digital marketing insight 5.2
strategies 162 Up up and away- for a price 204
Decision 2: Business and revenue models 1 Increased price transparency 204
strategies 164 Digital marketing insight 5.3
Decision 3: Target marketing strategy 166 Discounting options for online services 205
Decision 4: Positioning and differentiation 2 Downward pressure on price 206
strategy (including the marketing mix) 169 Digital marketing insight 5.4
Digital marketing insight 4.5 Price elasticity of demand 208
How did cardboard boxes singing 'give a 3 Innovative pricing approaches 210
little bit of my love' connect to the minds of 4 Alternative pricing structure or policies 211
millions of shoppers? 170 Place 212
Decision 5: Customer engagement and social media 1 Place of purchase 213
strategy 172 Digital marketing insight 5.5
Decision 6: Multichannel distribution strategy 173 Digital Town: localised search and
Decision 7: Multichannel communications strategy 175 collaborative trading 216
Decision 8: Online communications mix and budget 177 2 New channel structures 217
Decision 9: Organisational capabilities 3 Channel conflicts 217
(7S framework) and governance to support 4 Virtual organisations 218
digital transformation 178 Promotion 219
Strategy implementation 178 People, Process and Physical evidence 221
Assessing different digital projects including People 222
marketing technology 179 Process 223
The online lifecycle management grid 180 Physical evidence 225
Case study 4 ASOS shifts the focus of Case study 5 Spotify streaming develops new
high-street retailing 182 revenue models 225
Summary 185 Summary 228
Exercises 185 Exercises 228
Self-assessment exercises 185 Self-assessment exercises 228
Essay and discussion questions 186 Essay and discussion questions 228
Examination questions 186 Examination questions 228
References 186 References 229
Web/inks 188 Web/inks 232
5 Digital media and the 6 Relationship marketing using marketing mix 189 digital platforms 233 Learning objectives I Questions for marketers I Learning objectives I Questions for marketers I
Links to other chapters 190 Links to other chapters 234
Introduction 190 Introduction 234
What is the marketing mix? 190 Digital marketing insight 6.1
Product 193 The goals of marketing orchestration 235
1 Options for varying the core product 193 Structure of this chapter 236
2 Options for offering digital products 194 Using social media to improve customer
3 Options for changing the extended product 195 loyalty and advoc acy 237
Digital marketing insight 5.1 What is social media marketing and why is it
Digital players enter Hollywood? 195 important? 238
4 Conducting research online 196 What are the main social media
5 Speed of new product development 197 platforms? 239
6 Speed of new product diffusion 197 Social media activities requiring
The long tail concept 198 management 241
x Contents
The challenge of customer engagement 243 Initiation of a digital experience project 298 Benefits of using CRM to support customer Domain name selection and registration 298
engagement 244 Uniform resource locators (URLs) 299 Marketing applications of CRM 247 Selecting a hosting provider 299 CRM technologies and data management 247 Website performance optimisation 300 Using 'Big Data' and Artificial Intelligence to The availability of the website 301
support data-driven marketing 248 Defining site or app requirements 302 Artificial Intelligence for marketing 249 Business requirements 303 Customer lifecycle management strategy 253 Usability requirements 304 Permission marketing 254 Web accessibility requirements 306 Personalisation and mass customisation 261 Personalisation requirements 307 Using digital media to increase customer loyalty Localisation and cultural customisation 310
and value 262 Reviewing competitors' websites 313 Determining what customers value 263 Designing the information architecture 314 The relationship between satisfaction and loyalty 263 Card sorting 314
Measuring the voice of the customer in Blueprints 316 d igital media 264 Wireframes 316
Differentiating customers by value and engagement 265 Landing pages 318 Lifetime value modelling 267 Designing the user experience 320 Product recommendations and propensity Evaluating designs 321
modelling 274 Elements of site design 321 Case study 6 Dell gets closer to its customers Mobile design requirements and
through its social media strategy 275 techniques 323 Summary 278 Mobile app development and personalisation
Exercises 278 requirements 327 Self-assessment exercises 278 How loT, VR and AR experiences will integrate
Essay and discussion questions 278 with M2M interactions 328
Examination questions 279 Virtual reality and augmented reality 329 References 279 Site navigation schemes 329 Web/inks 281 Digital marketing insight 7.3
Taking the mobile site vs app decision 331
Part 3 Managing and testing c ontent 335 Criteria for selecting a content
Digital marketing: management system 335 implementation and practice 282 Testing the experience 336
Online retail merchandising 337 Site p romotion or 'traffic building' 338
7 Delivering the digital customer The impact of service quality on e-loyalty 339 . expenence 284 Tangibles 341 Learning objectives I Questions for marketers I Reliability and responsiveness 341 Links to other chapters 285 Assurance 341
Introduction 285 Multichannel communications preferences 342 Creating effective digital experiences 287 Empathy 342 Structure of this chapter 290 The relationship between service quality, Planning website, app design and redesign customer satisfaction and loyalty 344
proj ects 290 Case study 7 Refining the online customer
Who should be involved in a digital experience experience at i-to-i.com 344 project? 293 Summary 346
Digital marketing insight 7.1 Exercises 347 Improving site effectiveness 293 Self-assessment exercises 347
Prototyping 295 Essay and discussion questions 347 Agile software development 295 Examination questions 347 Digital marketing insight 7.2 References 347
Success factors for delivery 297 Web/inks 350
Contents XI
8 Campaign planning for digital media
Learning objectives I Questions for marketers I Links to other chapters Introduction
The structure of this chapter
The characteristics of digital m edia 1 From push to pull 2 Interactive dialogues
3 From one-to-many to one-to-some and one-to-one
4 From one-to- many to many-to-many
352
353 353 354
355 355 356
356
communications 356 5 From 'lean-back' to 'lean-forward' 357
6 The medium changes the nature of standard marketing communications tools such as advertising 357
7 Increase in communications intermediaries 359 8 Integration 359
9 Timing of campaign communications have
Case study 8 Facebook - a Titan of the digital age Summary
Exercises Self-assessment exercises Essay and discussion questions Examination questions
References Web/inks
9 Marketing communications using digital media channels
Learning objectives I Questions for marketers I Links to other chapters Introduction How is this chapter structured?
Digital marketing insight 9.1 How balanced is your referrer mix?
Search engine marketing What is SEO?
Advantages and disadvantages of SEO additional 'always-on' and real-time marketing components
Digital marketing insight 8.1 359 Best practice in planning and managing SEO
Digital marketing insight 9.2
#OpenYourWor1d shares individual's views Step 1. Goal setting and tracking for interactive
360 Is SEO a zoo of Pandas and Penguins?
marketing communications 361 Terminology for measuring digital campaigns 361
Examples of digital campaign measures 364 Campaign response mechanisms 367 Online response mechanism 367 Digital marketing insight 8.2
Chatbots help you to cook 369 Digital marketing insight 8.3
What's in a hashtag - #!? 369 Step 2. Campaign insight 370
Customer insight for digital marketing campaigns 370 Step 3. Segmentation and targeting 371 Step 4. Offer, message development and
creative 374
Content marketing 375 Step 5. Budgeting and selecting the digital
media mix 377
1 Level of investment in digital media techniques in comparison to offline promotion 377
2 Selecting the right mix of digital media communications tools 379
Digital marketing insight 8.4
Campaign tracking in Google Analytics 381 3 Level of investment in digital assets 383 Step 6. Integration into overall media schedule
or plan 385 Key activities in media selection and planning 386 Digital marketing insight 8.6
Different forms of campaign integration 386
Digital marketing insight 9.3 Reviewing the links into a site
Paid search marketing
Advantages and disadvantages of paid search marketing
Best practice in planning and managing paid search marketing
Online public relations and influencer
relationship management What is online public relations? Advantages and disadvantages of online
public relations
Best practice for online public relations and lAM Online partnerships including affiliate
marketing
Affiliate marketing Advantages and disadvantages of affiliate
marketing
Best practice in planning and managing affiliate marketing
Online sponsorship Interactive display advertising What is display advertising?
Advantages and disadvantages of display advertising
Best practice in planning and managing display ad campaigns
Opt- in email marketing and mobile messaging What is email marketing? Opt-in email options for customer acquisition
388
391
392 392 392 392
392 394
396
397
397 397
399 400 403
406 406
408
413
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415
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419 419
421
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430 431 432 432
434
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439 439 440
Contents x i
8 Campaign planning for digital media Learning objectives I Questions for marketers I Links to other chapters
Introduction The structure of this chapter The characteristics of digital media 1 From push to pull
2 Interactive dialogues 3 From one-to-many to one-to-some and
one-to-one 4 From one-to-many to many-to-many
352
353 353 354
355 355 356
356
communications 356 5 From 'lean-back' to 'lean-forward' 357
6 The medium changes the nature of standard marketing communications tools such as advertising 357
7 Increase in communications intermediaries 359 8 Integration 359
9 Timing of campaign communications have
Case study 8 Facebook - a Titan of the digital age Summaty
Exercises Self-assessment exercises Essay and discussion questions Examination questions
References Web/inks
9 Marketing communications using digital media channels
Learning objectives I Questions for marketers I Links to other chapters Introduction How is this chapter structured? Digital marketing insight 9.1
How balanced is your referrer mix? Search engine marketing
What is SEO? Advantages and disadvantages of SEO additional 'always-on' and real-time marketing
components Digital marketing insight 8.1
359 Best practice in planning and managing SEO Digital marketing insight 9.2
#OpenYourWorld shares individual's views Step 1. Goal setting and tracking for interactive
360 Is SEO a zoo of Pandas and Penguins?
marketing communications 361 Terminology for measuring digital campaigns 361
Examples of digital campaign measures 364 Campaign response mechanisms 367 Online response mechanism 367 Digital marketing insight 8.2
Chatbots help you to cook 369 Digital marketing insight 8.3
What's in a hashtag - #!? 369 Step 2. Campaign insight 370
Customer insight for digital marketing campaigns 370 Step 3 . Segmentation and targeting 371 Step 4 . Offer, m essage development and
creative 374 Content marketing 375 Step 5. Budgeting and selecting the d igital
media mix 377 1 Level of investment in digital media techniques in
comparison to offline promotion 377 2 Selecting the right mix of digital media
communications tools 379 Digital marketing insight 8.4
Campaign tracking in Google Analytics 381 3 Level of investment in digital assets 383 Step 6. Integ ration into overall media sc hedule
or plan 385 Key activities in media selection and planning 386 Digital marketing insight 8.6
Different forms of campaign integration 386
Digital marketing insight 9.3 Reviewing the links into a site
Paid search marketing Advantages and disadvantages of paid search
marketing Best practice in planning and managing paid
search marketing Online public relations and influencer
rel ationship management What is online public relations? Advantages and disadvantages of online
public relations
Best practice for online public relations and IRM Online partnerships including affiliate
marketing
Affiliate marketing Advantages and disadvantages of affiliate
marketing Best practice in planning and managing affiliate
marketing Online sponsorship Interactive d isplay advertising
What is display advertising? Advantages and disadvantages of display
advertising Best practice in planning and managing display
ad campaigns
Opt-in email marketing and mobile messaging What is email marketing? Opt-i n email options for customer acquisition
388 391
392 392 392 392
392 394
396
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397 397
399 400 403
406 406
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415
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x ii Contents
Opt -in email options for prospect conversion and customer retention (house list) 440
Digital marketing insight 9.4 SEAT combines email with display advertising
to increase awareness 440 Advantages and disadvantages of email marketing 441 Best practice in planning and managing email
marketing 442 Mobile text messaging and mobile push notifications 444 Social media and viral marketing 445 Viral marketing 446
Advantages and disadvantages of social media and viral marketing 449
Best practice in planning and managing viral marketing 449
Digital marketing insight 9.5 Is social media 'mostly a waste of time' and an 'infantile delusion'? 450
Offline promotion tec hniques 451
Advantages and disadvantages of using offline communications to support a-commerce 452
Incidental and specific advertising of the online presence 453
Public relations 454 Direct marketing 454 Other physical reminders 454 Word-of-mouth marketing 454
Summary 455 Exercises 456
Self-assessment exercises 456 Essay and discussion questions 457
Examination questions 457 References 457 Web/inks 459
10 Evaluation and improvement of digital channel performance 461 Learning objectives I Questions for marketers I
Links to other chapters 462
Introduction 462
Performance management for digital c hannels Stage 1: Creating a performance management
system Stage 2: Defining the performance metrics
framework Stage 3: Tools and techniques for collecting
insight, running processes and summarising
results Digital marketing insight 10.1
Focus on measuring social media marketing
Content management process How often should content be updated? Res ponsibilities for customer experience
and site management
Who owns the process? Who owns the content? Who owns the format? Who owns the technology?
Content management systems Case study 9 Learning from Amazon's culture
of metrics Summary
Exercises
Self-assessment exercises Essay and discussion questions Examination questions
References
Web/inks
Glossary Index
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487 489 491
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499 499 499
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531
Preface
Digital media and technology, an opportunity and threat
Digital marketing has transformed how businesses and other organisations communicate with their audiences. The 5Ds of digital markedug we introduce in Chapter 1 (digi t al devices, digital platforms, digital media, digit al data and digital technology) can be used, alongside traditional markering techniques, to get closer to audiences than ever before. Consumers now have access to a much wider choice of entertainment, products, services and prices from different suppliers and a more convenient way to select and purchase items. Organisations have the oppormnity to expand into new markets, offer new services, interact with audiences in new ways and compete on a more equal footing with larger businesses. Marketers working within these organisarions have the opportunity to develop new skills and to use these new tools to improve the competitiveness of the company.
At the same time, the Internet and related digital technology platforms give rise to many threats to organisadons. For example, online companies such as ASOS.com and Zalando (clothing) , Amazon.com (books and retail), iTw1es and Sporify (music) and Booking.com and Expedia (travel) have capmred a significant part of their market and struck fear into the existing players. Many consumers now regularly use social networks such as Facebook, lnstagram, Linkedln, Snapchat and Twitter as part of their daily lives, with the majority of access via smartphones. Engaging these consumers is an ongoing cilallenge but, as we will see, companies like those above have taken advantage of these opportunities to interact with customers and tlus has helped tl1em develop as worldwide brands.
(~M __ a_n_ag_e_m __ e_n_t _o_f _d_ig_it_a_l_m_a_r_k_e_ti_ng ____________________________________ ~J With the success stories of companies capturing market share following the rapidly incr.eas- ing adoprion of the Internet by consumers and business buyers, it is a prerequisite that all organisations must have an effective online presence to prosper, or possibly even survive! What Michael Porter said in 2001 is still valid today:
The key question is not whether to deploy Internet technology- companies have no choice if they want to stay competitive - but how to deploy it.
What are the marketing commtulications techniques that businesses need to master to make effective use of digital marketing? The proliferation of new media d1annels, digital technolo- gies and interaction options has given a challenge of understanding, prioritising and manag- ing many new digital communications techniques. To help summarise these at a top level of the customer lifecycle or classic marketing funnel, Chaffey (2010) defined the RACE plan- ning framework shown in Table P.l. RACE planning defines a structure of 5 X 5 = 25 key digital marketing techniques that need to be harnessed in most organisations to fully exploit digital marketing to reacl1, interact with, convert and engage online audiences across the customer lifecycle from generating awareness, conversion to sale (online and offline) and retention and growth of customers. RACE also emphasises the need to plan to create a coordinated, integrated approach to digital marketing, which is integrated with other com-
. . mumcattons acnvmes.
xiv Preface
Table P.1 The RACE planning framework for managing key activities for integrated digital marketing across the customer lifecycle
Plan Reach Act Convert Engage I
Create a digital Increase awareness, Generate interactions Achieve sales online Encourage customer marKeting strategy or drive website, mobile and leads or offline loyalty and advocacy transformation plan and social media
visits
1. 1 Situation review 2.1 Media 3.1 Customer 4.1 Retargeting 5.1 Customer (Chapters 2 and 3) effectiveness review journey effectiveness (Chapter 9) on boarding
(Chapters 8 and 1 0) (Chapter 7) (Chapters 6 and 7)
1.2 Set vision and 2.2 Search marketing 3.2 Data profiling 4.2 Personalisation 5.2 Customer objectives, evaluate (Chapter 9) (Chapter 6) (Chapter 7) experience (Chapters 4 and 1 0) (Chapter 7)
1.3 Strategy 2.3 Earned and 3.3 Content marketing 4.3 Mobile 5.3 Customer service (Chapters 4-8) Owned media (Chapter 8) experiences (Chapter 7)
(Chapters 6-9) (Chapter 7)
1.4 Segmentation 2.4 Paid media 3.4 Landing pages 4.4 Multichannel 5.4 Email marketing (Chapters 4 and 6) (Chapter 9) (Chapter 9) selling (Chapters 6 and 9)
(Chapter 4)
1.5 Value 2.5 Acquisition plan 3.5 Content strategy 4.5 Conversion rate 5.5 Social media Proposition and Brand (Chapters 8 and 9) and campaign plan optimisation marketing (Chapters 4 and 5) (Chapter 8) (Chapters 7 and 1 0) (Chapters 6 and 9)
Smart Insights (2010) IntroduCing RACE: a practical framewofk to improve your digital marketing. Slog post by Dave Chaffey, 15 July 2010, smartinsights.comfdigitaJ-marketing-strategy/race-a-practical-frameworlc-to-improve-your-digitaJ-marlceting
The table shows the range of differenr marketing activities or operating processes needed to supporr acquiring new customers through communicating with them on third-parry websires and social media, attracting them to a company website, mobile app or social network and converting interest into leads and sales and then using online media to encour- age furrher purchases and advocacy. You can see that applying social media and content marketing is a pan of RACE that can be deployed to support many activities, and therefore is one of the key management challenges in digital marketing, so we consider approaches to managing social media marketing throughout the text, with a focus in Chapters 6, 8 and 9. Applying digital platforms as parr of multichannel marketing to integrate customer journeys between traditional and 'new' media is also a major challenge and a theme through- our t hi s text. Management processes related to governance of d igital marketing include plann ing how digital market ing can be best resourced to contribute to the orga nisati on and integrating with other m arketing activities. The increased adoption of digital marketing also implies a significant programme of change that needs to be managed. New objectives need to be set, new communications stra tegies developed and staff developed th rough new responsibilities and skills.
Digital marketing - new skills required? 1
)
The aim of this text is to provide you with a comprehensive guide to the concepts, techniques and best practice to support all the digital marketing processes shown in Table P.l. This text (rhe structure of which is shown in Figure P.l) is based on emerging academic models together with best practice from leading adopters of djgital media. The practical knowledge developed through reviewing these concepts and best practice is intended to enable gradu- ates entering employment and marketing professionals to exploit the opportunities of digital marketing while minimising the risks.
Figure P.1 Structure of the text
Part 1 INTRODUCTION
Chapter 2 Online market place analysis:
micro-environment
Part2 STRATEGY
- Chapter 5
The Internet and the
marketing mix
Part3 IMPLEMENTATION AND PRACTICE
Chapter 8 Campaign
planning for digital media
Chapter 1 Introducing
Digital marketing
I
Chapter 4 Digital
marketing strategy
-
Chapter 7 Delivering the
online customer . expenence
Chapter 9 Marketing
communications using digital
media channels
Chapter 3 Internet macro-
environment
Chapter 6 Relationship
marketing using digital platforms
Chapter 10 Evaluation and improvement of digital channel performance
Preface XV
xvi Preface
Specifically, this rexr addresses the following needs:
• There is a need to know to what extent digital technology and media changes existing marketing models and whether new models and strategies can be applied to exploit the medium effectively.
• Market ing practitioners need practical digital marketing skills to marker their products effectively. Knowledge of the new jargon- terms such as 'marketing automation', 'click- through', 'cookie', 'uniques' and 'page impressions'- and of effective metl10ds of site
design and promotion such as search engine marketing will be necessary, either for direct 'hands-on' development of a sire or to enable comm wucarion with other staff or agencies that are implementing and maintaitung rhe sire.
• Given the rapidly changing market characteristics and best practices of digital marketing, web-based information sources are needed to update knowledge regularly. This text and the supporting companion website contain extensive links to websites to achieve this.
The text assumes some existing knowledge of marketing in the reader, perhaps developed through experience or by students studying introductory modules in marketing ftmdamen- rals, marketing commw1ications or buyer behaviour. However, basic concepts of marketing, communica tions theory, buyer behaviour and the marketing mix are outlined.
Summary of changes for the seventh edition
The acclaimed structure of previous editions has been retained since this provides a clear sequence to the stages of strategy development and implementation that are required to plan successfully for digi tal marketing in existing and start-up companies.
The main changes made for the seventh edit ion, based on feedback fro m reviews and our close monitoring of the trends and latest developments are:
• An Essential Digital Skills feature has been added near rhe start of each chapter that recommends skills required by employers that are relevant to the chapter and practical ideas to boost employabi lity by showcasing students' interests and experiences.
• Chapters 10 and 11 have been removed, and examples of B2C and B2B m arketing applications have now been integrated into the context of relevant chapters.
• The '50s of managing digital marketing' are introduced in Chapter 1 to help summarise which digi tal marketing activit ies businesses need to manage to exploit t he potential of digital marketing.
The main innovations included in the chapters are as follows.
Chapter 1 - Introducing digital marketing
• The 5Ds of digital marketing are added a t the start ro introduce the elements of digital marketing and customer interactions that need to be managed.
• New Figure 1.1 is a customer lifecycle visual that gives examples of digit al marketing touch points across different channels and platforms.
• The concept of digital dismption related to techno logies such as the Internet of Things (loT) and platforms is covered in this chapter.
Chapter 2 - Online marketplace analysis: micro-environment
• This chapt er is updated to include the latest customer research tools and sources forr students to use in tl1eir assignmenrs.
• Case studies have been updated to include intelligent home assistants and multichannel examples.
• The consumer behaviour section is updated to include more reference to social media.
Preface xvii
Chapter 3 - The digital macro-environment
• This chapter has been simplified and shortened. • A new case study on social media and four new activities are now included.
Chapter 4 - Digital marketing strategy
• The concept and reasons for digital transformation programmes are e.Kplained. • A new section, 'Digital marketing insight 4.3', has been added that covers consumer
profiles and digital targeting options. • The mnemonic VQVC has been introduced ro test that businesses are using the right type
of goa ls and measures. • The chapter has been simplified and shortened.
Chapter 5 - Digital media and the marketing mix
• New examples have been introduced and the Spotify case study ha s been updated. • This chapter has been simplified and updated.
Chapter 6 - Relationship marketing using digital platforms
• In line with reviewers' comments, this chapter now focuses less on CRM and more on encou raging audience engagement using interactions on social media, mobile and mar- keting automations.
• There is an expanded section on strategy and practice for organic social media for customer loyalty, PR and advocacy, with rhe section on social media in Chapter 8 limited ro paid social media. Chapter 6 has rhe main section on socia l media in the text as often social media is most effective for relationship marketing.
• The Big Data section has been extended and given more prominence ro explain and give examples of marketing applications of Artificial lnrelligence and Machine Learning.
Chapter 7 - Delivering the digital customer experience
• There is more emphasis on service quality and e- loyalry frameworks. • More coverage has been added on mobile design and the requi rements for mobile apps. • Information is given on how to use content audits, to improve rh e effectiveness of content
marketing. • There is more on globalisation and localisation. • The options for personalisation are explained through a personalisation pyramid. • Two new mini cases, for Metro Bank and Jack Wills, have been added. • New technologies are covered, which include JoT and machine interactions, AR and VR
and connected devices.
Chapter 8 - Campaign planning for digital media
• The concept of media attribution for reviewi11g channel impact is assessed. • The techniques of integration are expanded upon. • This chapter has been simplified and updated.
xviii Preface
Chapter 9- Marketing communications using digital media channels
• The coverage of search engine marketing, influencer marke£ing and programmatic adver- tising is updated ro reference latest best practices and tools - particularly those related ro smartphones, e.g. Accelerated Mobile Pages.
• The dared section on Web 2.0 has been deleted and replaced by a section on approaches ro influencer relationship managemenr {IRM ).
• New social media content and activi tie s include an examp le of Faceboo k viral .
campa~gns.
Chapter 1 0 - Evaluation and improvement of digital channel performance
• The concept of a marketing technology {manech) stack is expla in ed and the chal lenges of selecting martech are explored .
Table P.2 In-depth case studies in Digital Marketing, 7th edition
Chapter
1 Digital marketing fundamentals
2 M icro-environment
3 Macro-environment
4 Digital marketing strategy
5 Digital marketing mix
6 Relationship marketing
7 Digital customer experience
8 Campaign planning
9 Digital channel performance
Case study
eBay thrives in the global marketplace
Boo Hoo - learning from the largest European dot-com failure
Social media - do celebrities call the shots?
ASOS shifts the focus of high- street retailing
Spotify streaming develops new revenue models
Dell gets closer to its custom- ers through its social media strategy
Refining the online customer experience at i-to-i.com
Facebook - a titan of the d igital age
Learning from Amazon's culture of metrics
Themes
Business and revenue model, proposition, competition, objectives and strategies, risk management
Assessing a consumer market, business models, marketing communications
Companion vision, branding, target market, communicating the proposition, challenges and reasons for failure
Business models, proposition and online product range, target market strategy
Peer-to-peer services, revenue models, proposition design, strategy, competition, risk factors
Influence of website design on conversion, retention market- lng, personalisation, e-CRM, RFM analysis
Strategy, proposition, site design, on-site search capabilities
Ad revenue models, privacy
Strategy, measurement, online marketing communications, personalisation approach
I
Preface xix
( The structure and content of this text ]
The rexr is divided imo three parts, each covering a differcnr aspecr of how o rgan isations use rhe Internet for marketing ro help them achie,·e competitive advantage. Table P.3 shows
how the te<t is related ro established marketing topics.
Part 1 Digital marketing fundamentals (Chapters 1-3)
Parr 1 relates the use of the Internet to trarutionalmarkering theories and concepts, and ques- tions the valiruty of existing models given the differences between the Internet and other merua.
• Chapter 1 Introducing Digital marketing considers using the Internet as part of customer- centric, multichannel marketing; it also reviews the relationship between Internet marketing, digital marketing, e-commerce and e-business, and rhe benefits the Internet can bring to adopters, and outlines differences from other media and briefly introduces the tedmology.
• C hapter 2 Online marketplace analysis: micro-environme11t reviews how digi tal media and technology cha nges the immediate environment of an orga nisation, including the marketplace and chatmel structure. It describes the type of sintation analysis needed to support digital strategy by examining how customers, competitors and intermediaries,
and the imerplay between them, can be evaluated.
Table P.3 Coverage of marketing topics in different chapters
Topic
Advertising
Branding
Consumer behaviour
Channel and market structure
Communications mix
Communications theory
Customer service quality
Direct marketing
International marketing
M arketing m ix
M arketing research
Evaluation and measurement
Pricing strategy
Promotion
Public relations
Relationship marketing
Segmentation
Services marketing
Strategy and planning
Technology background
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xx Preface
• Chapter 3 The digital macro-environment reviews the impact of social, technological, economic, political and legal environmental influences on digital strategy and its imple- mentation. The emphasis is on privacy and data protection regulations and managing technology innovation.
Part 2 Digital marketing strategy development (Chapters 4-6}
Parr 2 describes the emerging models for developing st rategy and provides examples of the approaches companies have used to integrate the Internet into their marketing strategy.
• Chapter 4 Digital marketing strategy considers how the digital st rategy can be aligned with business and mru·keting strategies and describes a generic strategic approach with phases of situ arion review, goal setting, strategy formulation and resource allocation and
. . momronng.
• Chapter 5 Digital media and the marketing mix assesses how the different elements of the marketing mix can be varied in the online environment as pan of strategy formulation .
• Chapter 6 Relationship marketing using digital platforms details strategies and tactics for using the Internet to build and sustain 'one-ro-one' relationships with customers.
Part 3 Digital marketing: implementation and practice (Chapters 7-1 0}
Part 3 of the text explains practical approaches to implementing a digital marketing strategy. Techniques for communicating with customers, building relationships and facilitating elec- tronic commerce are all reviewed in some detail. Knowledge of these practical techniques is essential for m1dergraduares on work placements involving a website, and for marketing managers who are dealing with suppliers such as design agencies.
• Chapter 7 Delivering the digital customer experience explains how an online presence is developed to support branding and customer service quality objectives. The stages analy- sis of customer needs, design of the sire structure and layout and creating the sire are covered, togeth er with key techniques such as user-centred design, usability and acces- sibi lity design.lt also covers different service qualiry models used to assess experience.
• Chapter 8 Campaign planning for digital media describes the novel characteristics of digital media, and then considers different aspects of marketing communica tions rhar are important for developing a successfu l on line campaign.
• Chapter 9 Marketing communications using digital media channels covers techniques such as banner advertising, affiliate networks, promotion in search engines, co-branding and sponsorship, email, on lin e PR, viral and word-of-mouth marketing with particular reference to social networks.
• Chapter 10 Evaluation and improvement of digital channel performance reviews methods for assessing and in1proving the effectiveness of a si re, and communications in delivering busi- ness and marketing benefits. The chapter briefly covers process and tools for updating sites.
( Who should use this text? J l~~ ------======---
Students
This text has been created primarily as the main student text for undergraduate and post- graduate students raking specialist marketing courses or modules rhar cover e-marketing, Internet and digital marketing, electron ic commerce and e-business. The text is relevant to students who are:
Preface xxi
• undergraduates on business programmes that include modules on the use of the Internet and e-commerce, including specialist degrees such as Internet marketing, electronic com- merce, marketing, tourism and accounting or general business degrees such as business studies, business administration and business management;
• undergraduate project students who select this topic for final-year projects o r disserra- rions - rhis text is an excellent supporting tex't for these students;
• undergraduates completing a work placement in a company using the Internet ro prom ore irs products;
• students at college aiming for vocational qualifications, such as an HNC or HND in Business Management or Computer Studies;
• postgraduate students taking specialist master's degrees in clecrronic commerce or Inter- ncr marketing, generic MBAs and courses leading to qualifications such as rhe Certificate in Management or Diploma in Digital Marketing or Management Srudies that involve modules on electronic commerce and digital marketing.
Practitioners
Previous editions have been widely used by digital marketing practitioners including:
• marketing nwnagers or specialists such as e-commerce numagers or digital marketing managers responsible for defining digital marketing srraregy and implementing and main- raining rhe company website;
• senior managers and directors wishing ro understand the potential of digiraJ marketing for a company and who need practical guidelines on how ro exploit this potential;
• technical project managers or webmasters who may understand the technical details of building a sire, but have a limited knowledge of marketing fundamentals and how ro develop an Inrernet marketing strategy.
What does the text offer to lecturers teaching these courses?
The text is intended to be a comprehensive guide ro all aspects of using the Internet and othe r digital media to support marketing. The text builds on existing marketing theories and concepts, and questions the validity of models in the light of the differences between the Internet and other media. The text references the emerging body of lirerarure specific ro Internet marketing. Ir can d1erefore be used across sever:tl modules. Lecturers will find d1e text has a good range of case studies, activities and exercises ro support their reaching. Website links are given in the rexr and ar rhe end of each chapter ro provide important information sources for particular topics.
(~~-t_u_d_e_n_t_Je_a_m __ in_g_f_e_a_tu_re __ s ________________________________________ ~J A range of features has been incorporated into this text ro help the reader get the most our of it. Each fearure has been designed to assist understanding, reinforce learning and help readers find information easily, particularly when completing assignments and preparing for exams. The features are described in the order in which you will find them in each chapter.
At the start of each chapter
The ' Chapter at a glance' page provides easy navigation for each chapter. lr contains:
• Main topics: the main topics and their page numbers. • Case studies: the main cases and their page numbers.
xxii Preface
• Learning objectives: a list describing what readers can learn through reading the chap- ter and completing the exercises.
• Questions for marketers: expla.ining the relevance of the chapter for practitioners. • Links to other chapters: a summary of related information in other chapters.
In each chapter
• Definitions: when significant rerms are first introduced in the main text, there are succinct definitions of these terms in the margin for easy reference.
• Web references: where appropriate, web addresses arc given to enable readers to obtain further information. They are provided in the main text where they are directly relevant as well as at the end of the chapter.
• Essential digital skills: practical ideas to boost employability by showcasing students' interests and experiences.
• Case studies: real-world examples of how companies are using the Internet for market- ing. Questions at the end of each case srudy arc intended to highlight the main learning points from the examp le.
• Mini case studies: short fearures that give a more detai led example, or explanation, than is practical in the main text. They do nor contain supp lemenrary questions.
• Activities: exercises that give readers rhe opportunity to practise and apply the ted1- niques described in the main rext.
• Chapter summaries: inrended as revision aids to summarise the main learning points from the chapter.
Attheendofeach_c_h_ap __ t_e_r -===================~==~============~] • Self-assessment exercises: short questions that will test understanding of terms and
concepts described in the chapter. • Essay questions: conventional essay questions. • Discussion questions: these require longer essay-style answers discussing themes from
the chapter. They can be used either as ropics for individual essays or as the basis for seminar discussion.
• Examination questions: typical short-answer questions of the type that are encoun - tered in exams. These can also be used for revision.
• References: these are references ro books, articles or papers referred to within the chapter.
• Weblinks: these are significanr sires that provide further information on the concepts ;md topics of the chapter. This list does nor repeat a ll the website references given within the chapter, such as, for example, company sites. For clarity, rhe website address prefix ' http:!/' is generally omirred.
At the end of the text
• Glossary: comprehensive definitions of all key rerms and phrases used within the mam text.
• Index: all key words and abbreviations referred to in the main text.
Preface xxi ii
Support material
Free supplementary materials are available ar Dave Chaffey's webs ire at www.smartinsights. com/book-support ro suppon all users of the text. This regularly updated website contains advice, comment, support materials and hyperlinks to reference sires relevant ro the text. A companion website is also available for students and lecturers from the publisher at catalogue.pearsoned.co.uk/. T here is: a password-protected area for lecturers only ro discuss issues arising &om using the tex1:; additional examination-type questions and answers; a multiple-choice question bank with answers; additional cases with suggestions for disc us- sion; and a downloadable version of the Lecturer's Guide and OHP Masters.
Lecturers can also download an Instructor's Manual and supporting PowerPoint slides by going to www.pearsoned.eo.uk/chaffey.
References
Sma rt Insights (2010) Introduc in g RACE: a practica l framework to improve you r digita l marketi ng. Blog post by Dave Ch affey, 15 July 2010, smartinsights.com/digital -marketing- strategy/race-a -practical-framework-to-improve-your-digital -marketing.
Porter, M . (2001) 'Strategy and the Internet', Harvard Business Review (March), 62- 78.
About the authors
Dave Chaffey BSc, PhD, FCIM, FIDM
Dave is co-founder of Smart Insights (www.smartinsights.com), an online publisher and consul tancy providing advice and alerts on best practice and industry developments for marketers, digital marketers and e.-commerce managers. The advice is also created to help readers of Dave's books. The most relevant information is highlighted at www.smartinsights. com/book -support.
Dave also works as an independent digita l marketing trainer and consultant. He has con- sulted on digital marketing and e.-commerce strategy for companies of a range of sizes from larger organisations such as 3M, Bardaycard, HSBC, .Mercedes-Benz, Nokia and The North Face to smaller organisations such as Arco, Confused.com, Euroffice, HornbilJ and i-ro-i.
Dave's passion is educating students and marketers about latest and best practices in digital marketing, dms empowering businesses to improve d1eir online performance through getting the most value from their web analytics and market insight. In other words, making d1e most of online opportunities and avoiding waste.
He is proud to have been recognised by the Department of Trade and Industry as one of the leading individuals who have provided input and influence on the development and growd1 of e.-commerce and the Internet in the UK over the last ten years. Dave has also been recognised by the Chartered Institute of .Marketing as one of 50 marketing 'gurus' world- wide who have helped shape the fumre of marketing. He is also proud to be an Hononuy Fellow of the Chartered Institute of Marketing and Institute of Direct and Digital Marketing.
Dave has been a visiting lecturer on e.-commerce courses at different universities including Birmingham, Cranfield, Derby, Manchester Metropolitan and Warwick Universiries.
In total, Dave is author of five best-selling business books including Digital Business and £commerce Management, Digital Marketing: Strategy, Implementation and Practice, eMar- keting eXcellence (with P.R. Smith) and Total Email Marketing. Many of these books have been published in new editions since 2000 and translations include Chinese, Dutch, German, Italian and Serbian.
When offline, Dave. enjoys fell-running, in die guitar music and t ravelling with his family.
Fiona Ellis-Chadwick PhD, BSc, PGCE
Fiona Ellis-Chadwick has a successful professional busi.ness and academic career. She had a successful commercial career in retail management before becoming an academic in 1998 and completing her PhD in 2000. Since then she has been working on projects aiming t o advance research in the fields of digital marketing; online retail management and the digital high street. She is currently working with central, regional and local government authorities and leading technology and retail organisations on projects that aim to ensure the fumre sustainability of UK high streets.
Addirionally, as parr of her academic career, Fiona is a very active researcher and innova - tor who frequently leads the development of d10ught-provoking multi-media teaching mate- rials, bringing together her knowledge of research and business. Fiona's work has been widely published in national and international journals, including Journal of Business Research, European Journal of Marketing, International Journal of Retail Distribution and Management, Internet Research, Journal of Retailing and Consumer Services.
About the authors xxv
Fiona is passiona te abo ut business research and educat ion and creat ing value for society, h aving sta rted her work ing career as a young entrepreneur bui lding a ret ail business . She believes bringing ma nagement research to life is very impo rram , especially in her current ro le as D irector o f Impact at T h e School of Busi n ess & Econ o mi cs, Lou ghboro u gh Universiry.
Academic profile: http://www.lboro.ac.uk/departmentslsbe/staff/fiona-ellis-chadwickl Li nkedl n: https://www.linkedin.com/in/fiona-ellis-chadwick-6919136/
Acknowledgements
I am fornmate to have shared my journey of understanding how best to use digital marketing with thousands of students and marketing professionals and I th ank you for sharing your experiences with me. I'd particularly like to thank all the practitioners who have shared their experiences on applying digital marketing in the opening case smdy interviews in each chapter and on Smartlnsights.com.
Likewise, 1 appreciate the effort made by d1e digital marketing specialists who have shared their knowledge as expert com mentators on Smart Insights, including Mike Berry and Rich- ard Sedley (marketing strategy), Dan Barker, Ben Jesson and Pritesh Patel (analytics), Dan Bosom worth, Paul Fennemore, Katy Howell and Marie Page (social media marketing}, Rene Power (B2B marketing), Rob Thurner (mobi le marketing), Chris Soames, James Gurd and John Newton (search marketing), Mel Henson (copywriting), Paul Rouke (usability) and Mark Brownlow, Kath Pay and Tim Watson (email marketing). Also to the many occasional contributors who have shared their expertise and experiences.
The authors would like to thank the team at Pearson Education in Harlow for their help in the creat ion of this text, especially Tom Hill, Ei leen Srebernik (our acquisitions editors) and Andrew Muller who managed the text through the production process.
As always, special d1anks go to my family for supporting me in the ongoing updates.
Dave Chaffey
Acknowledgements xxvii
Publisher's Ac_k_n_o_w_le_d_g_e_m_e_n_t_s-----'========-========~]
xiv, 27, 249,260,374, 376, 385,399,426, 471 Smart Insights: With permission from digital marketing advice learning platform Smardnsighrs.com. 15, 28 Taylor & Francis: Chaffey, D. and Smith, P.R. (2017) Digital Marketing Excellence, Planning, Optimising and inregradngdigital marketing, 5th edition, ~ 2017. Used by permission of Taylor & Francis. 23 Altimeter Group: Altimeter, a Prophet cornpany. 147 Taylor & Francis: Chaffey, D. and Smith, P.R. (2012) Emarkering Excellence, Planning and optimising your digital market- ing, 4th edition, ~ 2012. Used by permission of Taylor & Francis. 30 Harvard Business School Publishing: Deighton, J. ,The future of interactive marketing, Harvard Business Review -(November-December) , 151~2. ~ 1996, Harvard Business School Publishing .. 37 Smart Insights: With permission from digital marketing advice lea rning platform Smart- ln sights.com. 38 Adestra: Improving Engagement 2018. Retrieved from https://www. adestra.com/resources/improvingengagement-2018/(accessed May 2018). 38,40 Forrester Research , Inc: Haven, B. ,Marketing's new key metric: engagement, 8 August,© 2007, Forrester. 39 eBay Inc: ebay's 2016 annual report, © 2016, eBay Inc. 41 U.S Securities and Exchange Commission: Form 10-K For the Fiscal Year Ended December 31, U.S Secur iti es and Exchange Commission, 2009. 41 Marketingweek: Ebay wants ro be 'all over TV like a rash' as it looks to rebuild the brand, © 2016, Marketing Week. 59 IMRG: Mulcahy, A & salmon, T., Moving towards audience-focused marketing, © 2017, A report researched and compiled by IMRG. 62 Crown Copyright: Chamberlin, G. (2010) Goog- ling the Present, Economic & Labour Review, December 2010, Office for National Statistics. All content is available under the Open Government Licence v3.0, except where otherwise stated. 64 John Wiley & Sons Ltd (UK): Rose, S. and Hair, N.C., © 2011, Online cus- tomer experience: a reveiw of the business-roconsumer online purchase context, Inter na- tional Journal of Management Reviews, 13 (1), 24-39. Reproduced with permission of John Wiley & Sons, Inc. 64 Susan Rose, Neil Hair, Moira clark: Rose, S., & Hair, N . C.,Online customer experince: A review of the business-ro-consumer online purchase con- text. International Journal of Management Reviews,© 2011 , John Wiley & Sons Ltd. 70,72 Harvard Business School Publishing: Michael E. Porter and James E. Heppelmann, How Smarr, Connected Products Are Transformi11g Competition, Harvard Business review, November 2014, pp. 2-23, © 2014, Harvard Business School Publishing. 73 Bowen Craggs & Co: www.bowencraggs.com. Used with permission from Bowen Craggs & Co. 78,82,193 Smart Insights: With permission from digital marketing advice learning platform Smart- lnsights.com. 84 Cengage Learning: New Media Age , Wi ll boo. com scare off the com- petition? by Budd Margolis, 22 J uly © 1999, Cengage Learning. 108 Gartner Inc.: Gantner Hype cycle, Retrieved from https://www.gartner.com/en/resea rch/methodologies/garmer- hypc-cycle, Gartner Inc. 118 Information Commissioners Office: Principles of the GDPR, Information Commissioners Office, © 2018, Information Commissio ners Office. 121 Crown Copyright: Confidentiality of Communications, All content is available under the Open Government Licence v3.0, except where otherwise stated. 123 Guardian News and Media Limited: Wray, R., Porn? Sex? Britons value cruises much more, Guardian, 6 February © 2008. Used with permission from Guardian News and Media Limited. 124 Creative Commons: Creative Commons, 2018 Retrieved from hrrps://creativecommons. orgllicenses/. 125 ASA and CAP: Retrived from hnps:// www.asa.org.ukladvice-onlinel celebrities.hrml, © 2017, ASA and CAP. 141 European Association for Education and Research in Commercial Distribution Conference (EAERCD): Hart C, Ellis-Chad- wick F, H aji I,The role of Digital in Town Centre Experience, © 2017, EAERCD. 142 Marketing Weelc Weed, K.,Markerers must follow the '5Cs' to connect with today's con- sumers, 25th September, © 2017, Marketing Week. 146 Elsevier: Makolm McDonald,
xxviii Acknowledgements
Marketing Plans: How ro Prepare Them, how to Usc Them, © 2009, Elsevier. 149 Smart Insights: Smarr Insights (hnp://bir.ly/smartbenchmarking). 165, 168 Dell Inc.: © 2018 Dell Inc. All Rights Reserved. 166 McGraw Hill : David Jobber, Fiona Ellis-Chadwick, Principles and Practice of Markering, © 2012, McGraw Hill. 174 Elsevier: Based on Dhola- kia, U., Kahn, B., Reeves, R., Rindfleisch, A., Stewart, D. and Taylor, E., Consumer behaviour in a multichannel, multimedia retailing environment, Journal of lnteracri\'e Marketing, 24, 86-95. © 2010, Elsevier. 204 Informs: Grandos, N.; Gupta, A. & Kaufmann, R. , Online and offline Demand and price elasticities: Evidence from the air travel industry, Informacion system research © 2012, Informs. 213 Harvard Business School Publishing: Evans, P. and Wurster, TS., Getting real about virtual commerce, Harvard Business Review (Novem- ber), 84-94, © 1999, Harvard Business Publishing. 215 Google Inc. : Coogle and the Coogle logo are registered trademarks of Coogle Inc. , used with permission. 226 Record- ing Industry Association of America: Ret rieved from hrrps://www.recode. net/2018/2128/ 17064460/spotify-i po-charts-music-streaming-dan iel -ek, Used with permis- sion from Recording Industry Association of America. 237 John Wiley and Sons: Solis, B., End of Business as Usual: Rewire the Way You Work to Succeed in the Consumer Revolu- tion, © 2011, John Wiley and Sons. 240 Smart Insights: With permission from d igital marketing advice learning platform Smartlnsighrs.com. 244 Urban Airship: How Push Notifications Impact Mobile App Retention Rates. Re-search report, © 2017, Urban Airship. 246 Google Inc.: Doubleclick, Nestle achieves brand goals in mobile app environment,© 2017, Coogle. 248 Data Science Central: Sou bra, D.,The 3Vs rhar define Big Data. Blog post published 5 July 2012, www.darasciencecentral.com/forum/ropics/rhe-3vs-thar-define- big-dara, © 2012. Used with permission from Data Science Central. 255 Simon and Schuster: Godin, S., Permission Marketing, © 1999, Simon and Schuster. 256 Smart Insights: With permission from digital marketing advice learning platform Smartlnsighrs. com. 259 Kath Pay: . 257 Harvard Business School Publishing: Kumar, V., Petersen, J. and Leone, R. (2007) How valuable is word of mouth?, Harvard Business Review, 85 (10), 139-46, © 2007, Harvard Bll5iness School Publishing. 271 Booklocker.com Inc: Novo,]. (2003) Drilling down: turning customer data into pro firs with a spreadsheet, © 7012, Book- locker.com Inc. 292 Smart Insights: With permission from digital marketing advice learn- ing platform Smartlnsights.com. 297 Andrew Chen: Chen, A. (2012) Is the growth hacker the new VP marketing, blog post by Andrew Chen, 27 April 2012. 306 Nielsen Norman Group: Jakob Nielsen, Usability 101: Introduction to Usability,© 2012, Nielsen Norman Group. 307 iPerceptions: Marker Wired Press release, August 2, 201IiPerceptions' 4Q Suire helps improve Thomas Cook Netherlands website performance and content, http:!/ www.marketwired.com/press-release/iperceprions-4q-suire-helps-improve-thomas-cook - netherlands-website-performance-content-tsx-v-ipe-1544666.htm, © 2011. Used by permis- s ion of iPercepdons. 309 Monetate: Monetat~: (2017) The Essentia l Guide to Personalization, IH tp://i n fo . monetate.com/ebookessential-gu ide-person a I iza tion. ht m l (accessed May 2018) .. Used by permission of Monerate. 312 Smart Insights: With permis- s ion from digital marketing advice learning platform Smarrlnsights.com. 314 O'Reilly Media, Inc.: Rosenfeld, L. and Morville, P; information Architecture for the World Wide Web, Sebastopol, CA; 2nd edition;© 2002; O'Reilly Media, Inc. 326 Google Inc: Coogle (20 17a) Why a progressive web app might be right for you, Jason Spero, July 2017 hnps:/1 www.thinkwithgoogle.com/marketing-resources/experience-design/progressiveweb-apps- benefit-brands/ (accessed May 2018). 328 Cisco: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2016-2021 \Vhire Paper, March 28th 2017. (hnps:// www.cisco.com/denlus/solutions/collateraUservice-provider/visuaJ-networking-index-vni/ mobile-white-paper-c11 -520862.htm1), ~ 2017; Cisco. 331 Luke Wroblewski: Wroblewski, L, Why separate mobile and desktop web design, blog post, 1 September, www.lukew.com/ fflenrry.asp? 1390; © 2011. Used by permission of Luke Wroblewski. 333 McGraw Hill: Pulizzi, J. and Barren, T, Get Content. Get Customers, Columbus, OH; © 2010; McGraw Hill. 315 Bazaar Voice: Bazaar Voice case study: htrp://bazaarvoice.com/cs_rr_conver- sion_figl eaves.html, Bazaar Voice. 354 Taylor and Francis: Chaffey, D. and Smith, P.R,
Acknowledgements xxix
£ -marketing Excellence: Planning and Optimising Your Digit al Marketing; 4th edition, © 2012; Taylor and Francis. 356 The Information Society: Hoffman, D.L. and Novak, T.P, A new marketing paradigm for electronic commerce, Special issue on electronic commerce, 13 (January-March), 43-54, © 1997; The Information Societ)( 356 American Marketing Association: Hoffman, D.L. and Novak, T.P, Marketing iu hypermedia computer-mediated environments: conceprual foundarions, Journal of Marketing, 60 (July), 50-68, © 1996; American Marketing Association. 360 Carnyx Group Ltd: Mortimer, N, Heineken' s social experiment aims to get consumers to 'focus on the things that unite us rather than divide us' , The Drum, 20th Apri l. http://www.thedrum.com/ news/2017/04/20/heineken-s-social- experiment-aims-get-consumers -focus-the-things-unite-us-rather, © 2017; Carnyx Group Ltd. 362 O'Reilly Media, Inc: Petersen, E, Web Measurement Hacks. Tips and Tools to Help Optimise your Online Business, Sebastapol, CA, www.oreilly.com/catalogue/webmeas- urehks/chapter/index.html, © 2004; O'Reilly Media, Inc. 368 Blue Sheep: Blue sbjp website, https :/I www. bluesheep.com/blog/blue-sheep-provides-marketing-in relligence-on -demand - with-blue-insight-0, © 2017. Used by permission of Blue Sheep. 382 Oktopost Technolo- gies: Screenshot of sociaJ dashboard, Oktoposr, https://www.okropost.com/. Used with perm ission of Oktopost Technologies. 382 Springer: Lee, G, Death of ' last click wins': media attribution and the expanding use of media data, Journal of Direct, Data and Digital Marketing Practice, 12(1), 16-26, © 2010; Springer. 382 Elsevier: Ghose, A. & Todri- Adamopoulos, V, Toward a Digital Attribution Model: Measuring the Impact of Display Advertising on OnJine Consumer Behavior MIS Quarterly Dec Vol 40(4) p889 , © 2016; Elsevier. 401 Google Inc: Reprinted by permission of Google, Inc. Google™ search engine is a trademark of Google, Inc. 402 Mozcast: "Mozcast: Google® SERP Fearure Graph" (hrrps://moz.com/mozcast!features) courtesy of SEOmoz, Inc. (Moz) Copyright 2018 © SEOmoz, Inc. All rights reserved. 403 Advanced Web Ranking: Advanced Web Ranking (2018) CTR study, available from https://www.advaJlcedwebranking.com/cloudlctrstudy/ (accessed May 2018). 413 Amp project: Besbris (2017) AMP: Two years of user-first web - pages, 19 October, https://www.ampproject.org/latest!blog/amp-two-years-of-user-fust- webpages (accessed May 2018). 413 Majestic: ALEXC@ MAJESTIC.COM. Used by permission of Majesric. com . 415 Google Inc: Google AdWords Quality Score. Google and the Google logo are registered trademarks of Google Inc. , used with permission. 420 PR Academy/ CIPR: Used with permission from Chartered Institute of Public Relations. 420 MCB UP Limited: Ranchhod , A., Gurau, C. and Lace,J, Online messages: developing an integrated communications model for biotechnology companies, QuaEtative Market Research: An International Journal, 5(1), 6-18, © 2002. Used with pernussion of MCB UP Limited . 426 Charles Arthur: Why I'm not reading PR emai ls to get news stories a11y more, The Guardian News. Used with permission of Charles Arthur. 431 ClickZ Media: Ryan , J. and Whiteman, N . (2000) Online advertising glossary: sponsorsrups, ClickZ Media- Selling channel, 15 May © 2002, ClickZ Media. 431 Taylor and Francis: Robinson, H., Wysocka, A. and Hand, C, Internet advertising effectiveness: the effect of design on click- through rates for banner ads, International Journal of Adver-tising, 26(4), 527-41, © 2007; Taylor and Francis. 436 iMedia Connection: Interview with ING Direct VP of Marketing, Jurie Pietersie, www.mediaconnection.com/conrent/1333.asp, © 2003; iNiedia Connection. 440 Ecircle: Display versus emru l. The SEAT fbiza campaign illustrating how to effec-tively allocate your onl ine advertising budgets. Research study published March, © 2011; Ecircle. 446 MQ transforming mental health(Facebook page): MQ transforming menral health through research, MQ transforming mental health. Used with penuission of MQ transforming mental health(Facebook page). 450 Smart Insights: With permission from digital marketing advice learning platform Smartlnsights.com. 451 Third Door Media , Inc: Freid, J, Using search and social ro support TV advertising Search Engine Land, May 18th 2017. hrrps://searchengi neland .com/using-search-social-support -tv-advertising -27 4870, © 2017. Used w ith permission of Third Door Media, Inc. 452 Hitwise: The Hitwise UK Media Impact Report, © 2006. Used with permission of Hirwise. 464 Financial Times: Neely, A., Adams, C. and Kennerley, M, The Performance Prism: The Scorecard for
xxx Acknowledgements
Measuring and Managing Business Success, Financial Times/Prent ice Hall, Har-low; © 2002; Financial Times. 465 TMM Data: Digital Analytics Association (2017) State of digital analy tics: research with TMM data, available from: https://content.tmmdata.com/analytics- survey-whitepaper. Used with permission of TMM Data. 469 Elsevier. Wilson, H, The Mulrichannel Challenge, Butterworth-Heinemann, Oxford, © 2008; Elsevier. 470 CRC Press I Taylor and Francis Group: Wilson, H, The MLtltichaJmel Challenge, © 2008. Used with permission of Taylor & Francis. 474 Altimeter Group: Altimeter, a Prophet company. 475 Hootsuite Media Inc: Hootsuite social and media management dashboard Custom Analytics. Used with permission of Hootsuit Media Inc. 492 Amazon Inc: Ama- zon 2016 full year reporr!SEC filing, Amazon Investor Relations site, published 12 December © 2017, Amazon. 488-89 Smart Insights: With permission from digital marketing advice learning platform Smartlnsigbts.com.
Image Credit:
16 HENN Alexanderstr: Used with permission HENN Alexanderstr.
• •
•
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I
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Digital marketing fundamentals
0
Chapter 1 introduces the opportunities and challenges of digital marketing and explains the different types of digital marketing
platforms and media channels available to engage audiences online. It also introduces a planning framework that can be used to structure
digital marketing strategies and case studies. Chapters 2 and 3 provide a foundation for developing an integrated digital
marketing strategy by reviewing how the online marketplace of an organisation can be assessed as
part of situation analysis.
·0 • •
Introducing digital marketing
Chapter 1 Introducing digital marketing 5
Questions for marketers
Key questions for marketing managers related to this chapter are:
• What are the options for digital marketing to grow our business?
• What are the key benefits of digital marketing?
• What differences do digital media introduce compared to existing marketing communications models?
links to other chapters
This chapter provides an introduction to digital marketing, and the concepts intro- duced are covered in more detail later in the book, as follows:
• Chapters 2 and 3 explain marketplace analysis for digital marketing plann ing and managing consumer concerns such as privacy.
• Chapters 4, 5 and 6 in Part 2 describe how digital marketing strategy can be developed.
• Chapters 7, 8 and 10 in Part 3 describe strategy implementation.
Introduction- how has digital marketing transformed marketing?
Internet of Things (ton A system of devices. software. objects. people or animals with unique identifiers that can transfer data over a network via machine-to- machine (M2M) interactions without human interaction.
Digita l media and ted 1no logy are no longer new - indeed, it's now mo re tha n 25 years since Sir Ti m Berners Lee created th e World Wide Web. Yet, over t his rime we have seen h uge
developm ents in digital media a nd marketing technology to p rovide new ways for busi nesses to com municate across the customer lifecycle. Over 3 bill ion people arou nd t he world now regularly use o nline services to fi nd products, entertainment, friends and rom ance, and con - sumer behav iour and the way companies ma rket to both consu mers a nd businesses have cha nged d ramatically.
To understa nd the importa nce of digi tal marketing t o the future of market ing in general, it's helpfuJ to think about w hat au dience interactio ns we need to understand an d m anage. D igi t al marketi ng today is about many more types of aud ience interaction than si m p ly websi tes. It involves h arnessing the fo llowing '5Ds of m anaging d igital marketi ng interac- tio ns', for wh ich we need to assess consum er ad option a nd how o ur business can ma nage t hem to supp ort ma rketing goals:
• Digital devices. Our audiences interac t w ith busin esses usi ng a co mbination of smart- phones, t ablets, laptops, desktop co mp uters, TV s, gaming d evices, virtu al ass ista nts (l ike Am azo n Echo) a nd other con nected devices fo rm ing the Internet of Things (loT) (see Chapter 7) .
6 Part 1 Digital marketing fundamentals
• Digital platforms. Most interactions on these devices :tre through a browser or apps from the major 'platforms' or online services, e.g. F:tcebookTM (and lnstagramThf), Goog)eTh1 (and YouTubeTM), TwitterThl, LinkcdlnTM, Apple™, Am:tzonTM and Microsoft Tht.
• Digital media. Different communications channels for re:tching and engaging audiences :tre av:~ilable, including advertising, email and messaging, search engines :tnd social net- works, which we'll introduce in this chapter.
• Digital data. The insight businesses collect about their :tudience profiles and their inter- :tctions with businesses now needs to be protected by l:tw in most countries.
• Digita l technology. This is the marketing technology- or martt:ch (see Chapter 10 for a c:ttegorisation) - that businesses use to create interactive experiences from websi tes and mobile apps to in-store kiosks and email camp:tigns.
Figure 1.1, which ourli11es the customer lifecycle, shows the practical opportunities and challenges of managing digital marketing roday. It shows some of the many ways available to communicate with prospects and customers ac ross different touch points in the customer li fecycle, which we w ill introduce in this chapter and exp lai n l:Her in the boo k. It shows the importance of integrating communication s, includin g paid, owned and ea rned media inte- grati ng with a web, mobile, email or in-store based experience.
Within each of these activities there a re many options for reaching a11d targeting audiences - for example, within social media there are paid :md organic options across all the seven main social n etworks (Facebook, Instagram, Linkedln, SnapchatThl, PinterestThl, Twitter and You Tube) .
The growth in digital communications is put into context by this trend analysis &om Cisco (2017), showing how in the early days of rhe global Internet, traffic in a day was less than 100 Gigabytes (Gb), \vhich today is the storage capacity of a smarrphone:
• 1992: 100GB per day • 1997: 100GB per hour • 2002: 100 GB per second • 2007:2,000 GB per second • 2016: 26,600 GB per second • 2021: 105,800 GB per second.
Figure 1.1 Customer lifecycle marketing touchpoint summary for a retailer
REACH
~ • Pa•d media -£! • Owned media "0 • Earned modoa 16 • Expenenoe "' c ~ I!! .e c
~ 0
~ • 0 EB f and ntent
Sauce: Smart lnsiglts (2017)
ACT CONVERT
tl •
.f. lrldec:lsrve Cusl01t1«
Time
Acti vity 1.1
Chapter 1 Introducing digital marketing 7
How will this book help me?
To succeed in the future, organisacions will need marketers, strategists and agencies wid1 up-to-date knowledge of how to integrate each of these '50s of digital' into their marketing comrnunicacions with their audience and develop new strategies to compete. They also need to address socio-cultural consu mer concerns including threats to their privacy, which are explored in Activity 1.1 .
The aim of Digital Marketing is to support students and professionals in gaining and developing th is knowledge. In t h is text, we will show how traditional marketing models and concepts can be applied ro help develop digiml marketing strategies and plans and where new models are appropriate. We will also give many practica l e-xamp les and best praccices fo r applying the '5Ds' to effect ively ma rker a n o rganisation's products a nd services using the Inte rnet and o ther digi tal medi a .
The challenge for ma rketers is to assess wh ich inn ovatio ns or digital d is rupto rs are most relevant to th e Lr o rgani satio n a nd to seek to ga in adva ntage through in trodncing them to a company such tha t d1e digital marketin g techniques inregrate effect ively wit h tradit io nal marketing commnnications.
This text will take you t h rough rhe questi ons to ask ::m d potential solutio ns step by step ro enable you to develop a ppropriate strategies. In this int roductory chapte r, a fter an initial scop- ing of d igital ma rketi ng, we review rwo ma in aspects of managi ng digital ma rketing. In the first pa rt of th is cha pter, we review the mai n strategic cha llenges and opportunities of digi tal ma rketing that must be managed by o rga nisations. We then go on ro Lntroduce cl1e commu- nications techniques for promoting compa nies o nl ine th rough digital technology platforms such as desktop, tablet and smarrpho ne devices (for e.xample, search engine marketing (SEM), and social media and display adver cising) using the unique characteristics of digital media .
Digital disruptors
Digital disruptors are innovarions in digital media, data and marketing technology which enable a change to a new basis for competition in a marker or across markers. D isruprors are also used to refer to startup o r existing companies that, through their agilit}; are good examples of impacting competitors t hrough disruption.
Balancing the growth in digital platforms against socio-cultural cust omer concems
Purpose
To introduce some of the most important platforms used for digital market ing today; to illustrate innovation in online business mod els and communications approaches that need to be balanced against consumer concerns. Table 1.1 shows the on line brands that we believe have had the biggest influence on digital business mod els in the US and Europe.
Questions
1 Think about the innovations you have witnessed during the time you have used digital p latforms. Which are the main sites used in your country that have changed the way you spend your time online?
2 What suc cess fac tors and b usiness mod els do these on line brand s share in common?
3 Which socio-cultural issues may concern consumers and require government legisla- tion given the dominance of some of these p latforms?
8 Part 1 Digital marketing fundamentals
Table 1.1 Timeline of online services that have acted as digital d isrupters due to innovation in business model or marketing communications approach
Year founded Company/service Category of innovation
1994 Amazon Retailer
1995 (March) Yahoo!TM Directory and portal
1995 (September) eBayTM Online auction
1995 (December) AltaVista rM Search engine
1996 HotmaitTM Web-based email Viral marketing (using email signatures to promote service) Purchased by Microsoft in 1997
1998 GoTo.Com First pay-per-click search marketing OvertureTM Purchased by Yahoo! in 2003
1998 Google Search engine
1999 BloggerrM Blog publishing platform Purchased by Google in 2003
1999 AlibabarM B2B marketplace with $1.7 billion IPO on Hong Kong stock exchange in 2007
1999 MySpaceTM Social network Purchased by News Corp in 2005
2001 Wikipedia rM Open encyclopedia
2003 SkyperM Peer-to-peer Internet telephony VOIP- Voice Over Internet Protocol. Purchased by eBay and then Microsoft.
2003 Second Ufe® lmmersive virtual w orld
2003 Unkedln Professional social network. Pur- chased by Microsoft.
2004 Facebook Social network which owns other social networks and messaging apps including lnstagram and WhatsApp.
2005 You Tube Video sharing and rating
2006 PayPalrM Paypal offers first mobile payment service
2007 iPhone® iOS and AndroidTM Apple launches the iPhone using the iOS operating system. In the same year Google unveiled rts Android mobile operating system
2009 AirbnbTM An online marketplace enabling prop- erty owners to rent out their houses to consumers
2010 UberrM Transportation and logistics company known for its taxi service, which operates in many major cities worldwide
I
Year founded
2011
2013
2017
The Future
Company/service
Snapchat
Apple iBeacon"" and CloudTags
New connected devices
Digital innovations and busi- ness propositions
Chapter 1 Introducing digital marketing 9
Category of innovation
A mobile photo messaging service where images are deleted after a set number of seconds
iBeacon uses low-energy Bluetooth to notify shoppers of items of interest. Cloudtags gives shoppers in-depth information about products via tablets
Google launched its Home voice- controlled devices joining Amazon Echo, Apple HomeKit devices and Microsoft Homehub
Innovation drives the digital economy and is set to continue into t he future. Digital has become mainstream and although there are opportunities, d isplacing existing global incum - bent platforms will be rare. For the latest developments see: www.the nextweb .com
-
For the authors of this text, digital marketing is an exciting area to be involved with, since it poses many new opportunities and challenges yearly, monthly and even daily. Innovation is a given, with rhe continuous introduction of new technologies, new busi - ness models and new communications approaches. Complete Activity 1.1 or look at T able 1.1 to see other examples of online startups showing the rate at which new innova - uons occur.
Definitions - what are digital marketing and multichannel marketing?
Digital media Communications are facil~ated through content and interactive services delivered by different digital technology platforms including the Internet, web, mob~e phone, 1V and digital signage.
Digital mark eting The application of digital media. data and tacmology integrated with traditional commurications to achieve marketing objectives.
Online company presence Ddferent forms oi onlne meda oontroled by a company inclucing thEW website, blogs. email list and social media presences. Today. commonly known as .owned media'.
The use of d igita l media , da ra and technology to suppon marketing activities has given rise to a bewildering range of labels and jargon created by both academics and profession- als. It has been called digital m arketing, Internet marketing, e-markering and web market- ing. For the fifth ed ition we changed the title of this rcxt from Internet Marketing to Digital Marketing since it shows the use of a range of digita l platforms to interact w ith audiences . Of course, what is important within a company is nor rhe term, but the activi ties that comprise digital marketing, which must be prioririscd according to their relevance to the business. So, in this chapter we focus on introducing these different digital marketing acttvltles.
Digital marketing can be simply defined as:
Achieving marketing objectives through applying digital media, data and technology.
This succinct definition helps remind us that it is the results delivered by technology that should determine investment in digital marketing, not the adoption of the technology!
In practice, digital marketing focuses on managing different forms of onlin e company pre sence, such as company websites, mobile apps and social media company pages, inte- grated with online communications techniques introduced later in this chapter, including search engine marketing, social media marketing, online advertising, email marketing and partnership arrangements with other websires. These techniques are used to support the
1 0 Part 1 Digital marketing fundamentals
Mini case study 1.1 New Look creates augmented reality mobile app to enable interactions with new styles and offers
New Look's UAE team launched an augmented reality (AR) campaign that encouraged users to scan their New Look Student Card to reveal special offers and interactive features. This included being able to 'create their own look' by mixing and matching New Look products on their mobiles. With social integration built in, the fashion retailer created a buzz around their offering while also capturing a range of contextual data that was fed back into subsequent campaign activity. We explore the options for creating mobile websites and apps in Chapter 7.
Customer relationship management (CRM) Using digital communications technologies to maximise sales to existing rustomers and encourage continued usage of online services through techniques including a database. personalised web messaging, customer services, chatbots. email and social media mar1<eti1g.
Multichannel (omnichannel) marketing Customer communications and product distribution are supported by a combination of cfJgital and traditional channels at different points in the buying cycle or 'path to purchase'. With the range of mobile and loT touchpoints, some have expanded the term to omnichannel marketing.
Paid media Also known as bought media, a direct payment occurs to a site owner or an ad networl< when they serve an ad! a sponsorship or pay for a click, lead or sale generated.
Owned media Different forms of online media controlled by a company including their website, blogs, ernall list and social media presence.
Earned media The audience is reached through editorial. comments and sharing on fine.
object ives of acquiring new customers and providing services to existing customers that help develop the customer relationship through custo mer rel ationship m anagement (CRM ). However, for cligital marketing to be successful there is st ill a need for integration of these techniques with rraclit iona l media such as prim, TV, clirect mail and human sales and sup - port as part of mult ichannel marketing com munications. Mini case smdy 1.1 gives an exam- ple of integration between a mobile app a11d traclitional media.
The role of cligital platforms in supporting integra ted multichannel (omnichannel) mar- keting is a recurring theme in this text , and in Chapter 2 we explore its role in supporting clifferent customer j ourneys through alternative commtm ications and distribution channels.
Online channels can also be managed to support the whole buying process from pre-sale to sale to post-sale and further development of customer relationships.
Paid, owned and earned media
To develop a sou11d digital strategy today involves understancling a more complex, more competitive buying environment than ever before, with customer journeys involving many clifferent for ms of online presence. To help develop a st rategy to reach and influence poten- tial customers on li ne, it's commonp lace to refer to three main types of media channels that marketers need to consider today (Figure 1.2) :
1 Paid medi a . These are bought meclia where t here is investment to pay for visitors, reach or conversions through search, display ad networks or affiliate marketing. Offline, tra- ditional media such as print and TV advertising and direct mail remain im portan t for some brands such as consumer goods brands.
2 Owned med ia. This is meclia owned by the brand. Online th is includes a company's own websites, blogs, email list, mobile apps or d1eir social presence on Facebook, Linkedln o r Twitter. Offline owned med ia may include brochures or retail stores. It's usefu l to think of a company's own presence as media in t he sense that they are an al ternat ive invest ment to ot her media and they offer oppornmities to promote products using simi- lar ad or edito ri al fo rm ats t<> other media. It emphasises t he need for aU organisations to become multichannel publishers.
3 Earned media. Traclitionally, earned meclia has been the name given to publicity generated through PR invested in targeting influencers to increase awareness about a brand. Now earned media also includes word of mouth that can be stimulated through viral and social media marketing, and conversations in social networks, blogs and other communit ies. It's useful to think of earned meclia as the sharing of engaging content developed through dif- ferent types of partners such as publishers, bloggers and other influencers including cus- mmer advocates. Another way of thinking about earned media is as clifferent forms of conversar.ions between consllUlers and businesses occurrin g both online and offline.
We will see at the end of t his chapter that content marketing has become a core integrated modern marketing approacl1 that involves communicat ions across paid, owned and earned media.
Customer journeys and the customer lifecycle The sequence of online and offline touchpoints a customer or buyer persona takes during a buying process or broader customer experience. Online this may include a range of digital platforms, communications media. websites, pages and engagement devices.
Application programming interfaces Method of exchanging data between systems such as website services.
Activity 1 .2
Chapter 1 Introducing digital marketing 11
Figure 1.2 The intersection of the three key online media types
Atom isation of content into ads
Digital properties Website(s)
Slogs Mobile apps
Social presence
Advertising Paid search Display ads
Affiliate marketing Digital signage
Owned media
Paid media
Earned media
Atomisation of conversations through shared APis and social widgets
Paid placements
Partner networks Publisher ed itorial Influencer outreach
Word -of-mouth Social networks
You can see in Figure 1.2 that there is overlap between t he three differem t ypes of media . It is impo rta nt to note th is since achievi ng this overlap requires integration of campa igns, resources and infrastruct ure. Content o n a content hu b o.r site can be broken down (some- ti mes described as microco nrenr) an d shared between other med ia types t hrough w idget s powered by progra m and da ta exchange APis (application programming interfaces) such as the Facebook API.
The latest marketing technology landscape
Purpose
To illustrate the range of systems available to support marketers and to explain the main categories of service available. We look at different forms of martech to support market- ing throughout the book and there is a dedicated section in Chapter 10.
Activity
1 Search for Scott Brinker's latest technology roadmap for the current year on his ChiefMartec.com site. For each of the six categories of service summarised in Fig-
ure 1.3, write a layman's description of how they can support digital marketing activi- ties by reviewing the proposition as described on the websites of the most popular services in the category (the most popular are listed first).
2 Make a note to understand the different types of service defined in each category. 3 Choose one or two vendor systems and visit their websites to see how they explain
the proposition and explain it to others in your group(s). Alternatively, identify the most popular service(s) in each category.
12 Part 1 Digital marketing fundamentals
Figure 1.3 Scott Brinker's categorisation of modem marketing technology options- digital platforms include Facebook, Google, Unkedln and Twitter
Marketing experiences Marketing operations
(Customer experience, digital media channel, voice of (Digital analytics,
c ustomer, personalisatlon, chat, sales enable, testing and attribution and dashboards optimisation) asset management,
audience and mar1<et data)
Marketing middleware (APis, data management. tag management, identity)
Marketing backbone platforms (CAM, mar1<eting automation, content management, e-commerce)
Infrastructure Internet (Databases, big data, cloud, mobile and web development) (Digital platforms)
Source: Wrth permission- Chiefmartec.com
Essential digital skills Keeping up-to-date with digital
At the start of each chapter you will find an Essential digital skills box that has practical ideas to improve your knowledge and recommendations to improve 'hands-on' digital skills, which are recommended by employers.
In this chapter, we recommend some techniques that marketers can use to stay up-
to-date with developments in digital marketing and with their competitors. We recommend you develop the following skills:
• regularly reviewing the latest trends in digital marketing techniques; • assessing the relevance to business of new features from the main digital marketing
platforms such as Faoebook and Google.
These are the techniques that Dave Chaffey uses to keep up-to-date with the latest developments:
• Use Twitter lists to get focused updates from the best websites or influencers, which are grouped into streams. I monitor these in Hootsuite.com, which you can also use to set up streams for competitors.
• Use a feed reader app such as FeedlylM to subscribe to different digital marketing news sites. The most popular articles are highlighted to help you filter out the biggest devel- opments. Install Feedly and you will get recommendations of the best marketing sites.
• Use Zest™ to be alerted to the most popular marketing articles in your browser.
You can populate your Twitter lists or feeds with recommendations at the end of the chapter. To audit your digital marketing skills across the RACE planning framework, use the Smart Insights Skills Assessment tool available at http://bit.ly/smartdigiskills.
Chapter 1 Introducing digital marketing 1 3
~ntroduction to digital marketing strategy J Positioning QJstomers' "'pel""rcep-.tt·ion of the product a'ld brand offering rela!Ne to !hose of compet~ors.
Target marketing strategy Evaluation and selection of appropriate customer segments and the development of appropriate offers.
Online value proposition (OVP) A statement of the benefits of online services that reinforces the core proposition and differentiates from an organisation's offline offering and those of competitors.
Value proposition The benefits or value a brand oilers to CUStomE!(S in its products and services.
The key strategic decisions for digital marketing a re in common with traditional business and marketing strategy decisions. As we will see in C hapter 4, which defines a process for de,·eloping a digital marketing strategy, customer segmenta tion, targeting and positioning are all key to effective digital marketing. These familiar target marketing strategy approaches involve selecting target customer groups and speci fying how to d elive r value to these groups as a proposition of services and products. As well as positioning o f the core product or brand proposition, online development of a compelling extended product or online value proposition (OVP) is also imporram (see Chapter 7). This defines how the online experience o f a brand is delivered through coment, visual design , inreractivity, sharing, rich media and how the online presence imegrares with the offline presence. All of the companies referenced in Table 1.1 have a clear, compelling OVP. Strategic d ecisio ns about th e future OVP a com- pany offers is a key parr of digital marketing strategy.
Key features of digital marketing strategy
The interaction and integration between digital channels and traditional channels is a key part of digital marketing strategy development. Dig iml marketing strategy is essentially a channel marketing strategy and it needs to be integrated with other channels as parr of multichannel marketing. It follows that an effective digital marketing strategy shouJd:
• be aligned with business and marketing strategy (for example, many companies use a rolling three-year plan and vision), with more specific annual business priorities and initiatives;
• use clear objectives for business and brand development and the online contribution of leads and sales for rhe Internet or other digital cha nn els - these s hould be based on models of the number using the channels;
• be consistent with the types of customers who use and can be effecti,·ely reached through the channel ;
• define a compelling, differential value prop osit ion for rhe channel , which must be effec- tively communicated ro customers;
• specify the mix of online and offline communication tools used to attract visitors to the com- pany website, or interact with the brand through o ther digital media such as email or mobile;
• support the customer journey through rhe buying process as they select and pllrchase products using the digit al channel in combination with other channels;
• manage the online customer lifecycle th rough rhe stages of attracting visitors ro rhe website, converting them into customers and retentio n and grow th.
Applications of digital marketing
For established multichannel organisations, digital med ia offer a range of opportunities for marketing products a nd services across rh e purchase cycle that co mpanies need ro review as part of their digitaJ strategy. Consider the example of a low-cost airline. DigitaJ media and technologies can be used as follows:
• Adver tising medium. Display ads on publisher sires o r social networks can be llsed to c rea te awareness of brands and demands for products or services.
• Direct-response medium. Targeted search advertising enables com panies ro driYe visits to a sire when consumers shows inrent ro purchase, such as sea rching for a flight to a destination .
• Platform fo r sales transactions. Online flight booking is now the most common method for booking flights, both for consumers and business travellers.
• Lead-generation method. For booking business flights, tools can be provided rhar help identify and follow up corporate flight purchases.
14 Part 1 Digital marketing fundamentals
• Distribution channel, such as for distributing digitaJ products. Today, airlines sell more
insurance services than previously, for example. • C u stom er service mechanism. For example, customers may 'self-serve' more cost-
effectively by reviewing frequently asked questions. • Relationship-building medium. H ere a company can inreracr with its customers ro better
unde rstand their needs and publicise relevant products and offers. For e..xample, easy JetTM uses irs email newsletter and tailored aJerts about special deals to encourage repeat flight bookings.
Benefits of digital marketing
The benefits of digital marketing in supporting marketing is suggested by applying the defi - niti on of marketing by r.he Chartered Institute of Marketing (www.cim.co.uk):
Marketing is the management process responsible for identifying, anticipating and satisfy- ing customer requirements profitably.
This defi niti on emphasises rhe focus of marketin g on the customer, wh ile ar rhe sa me time implying a need to ljnk ro o ther business operation s to achieve this profitabi lity. C haffey and Smith (2017) no te t hat illgiraJ marketing ca11 be used to support these a im s as follows:
• Identifying. The Internet can be used for marketing research to find our cusromers' needs
and wants (Chapters 7 and 10). • Anticipating. The Internet provides a n adill ti onaJ channel by which customers CaJl access
information and make purchases- evaJuating thjs demand is key to governing resource allocation toe-marketing (as explruned in Chapters 2, 3 and 4).
• Sati.sfying. A key success factor in e-marketing is achie,·ing customer satisfaction through the electronic channel, which raises issues such as is the sire easy to use, does it pe rform adequately, what is the standard of associated customer service and how are physical products dispatched? (These issues of customer relationship management are discussed
further in Chapters 6 and 7).
In Chapter 4, we show how ro quantify illfferent goaJs as part of developing digitaJ market- ing strategy. To introduce the typicaJ types of goaJs for digital marketing, see Table 1.2, which gives a basic framework for setting a nd reviewing different types of goals for digitaJ strategy development based on the 5Ss of Chaffey and Smith (2017).
A powerful method of evaluating rhe strategic marketing opportunities of using rhe Inter- net is ro apply the strategic ma rkecing grid of Ansoff (1957), as discussed in th e strategy formulation sectio n of Chapter 4. Thi s shows how the Internet can potentially be used ro achieve fo ur straregic directions:
1 Market penetration. The Internet can be used to sell more ex isting products into existing
ma rkers. 2 Market development. Here the Internet is used to sell into new geographical markets,
taking advantage of rhe low cost of advertising internationally w idlout the necessity for a support ing saJes infrastructure in rhe customers' countries.
3 Product develo pment. New products or services are developed that can be delivered by the Internet. These are typically illgitaJ products.
4 Diversification. In this sector, the Internet supports selling new products, which are devel- oped and sold into new markets.
Geyskens eta/. (2002) suggested an aJternative perspective- dlar there are rhree main forms of demand expansion for an exi sting company when it adopts di rect Internet channel.s_ TI1ese are:
1 Market expansion. This occurs when new segments of customers are reached who illd nor previously buy in a category - they give the example of Estee LauderTM, which hopes
Chapter 1 Introducing digital marketing 15
Table 1.2 The 5Ss of digital marketing
Benefit of a-marketing
Sell -Grow sales
Serve - Add value
Speak - Get closer to customers
Save - Save costs
Sizzle - Extend the brand online
How benefrt is delivered
Includes direct online sales and sales from offline channels influenced online. Achieved
Examples of typical objectives
Achieve 10 per cent of sales online in market Increase online sales for product by 20 per cent in
through wider distribution to customers you year cannot readily service offline or perhaps through a wider product range than in-store, or lower prices compared to other channels
Achieved through giving customers extra benefits online or inform product develop- ment through online dialogue and feedback
Creating a two-way dialogue through web interactions like forums and surveys and conducting online market research through formal surveys and informally monitoring conversations to learn about them
Achieved through online email communica- tions, sales and service transactions to reduce staff, print and postage costs. Sav- ings also accrue through 'web setf-service' where customers answer queries through online content
Achieved through providing new proposi- tions, new offers and new experiences online including building communities
Increase interaction with different content on site Increase dwell-time duration on site by 10 per cent
(sometimes known as 'stickiness') Increase number of customers actively using online
services (at least once per month) to 30 per cent
Grow email coverage to 50 per cent of current customer database
Survey 1 000 customers online each month Increase visitors to community site section by
5 per cent
Generate 1 0 per cent more sales for same communications budget
Reduce cost of direct marketing by 15 per cent through email
Increase web self-service to 40 per cent of all service enquiries and reduce overall cost-to-serve by 10 per cent
Improve branding rnetrics such as brand awareness, reach, brand favourability and purchase intent
Source: Chalfey and Smth (2017)
rhar rhe Clinique.comTM sire will attract customers who avoid buying ar a cosmetics coun- ter because rhey find the experience intimidating.
2 Brand switching. This is done by winning customers from competitors. 3 Relation ship deepening. This is sel ling more to existing customers.
For well-established brands with a loyal customer base, price reduction relative to other channels is nor necessarily essential, or some web-channel price reductions can be used, but they note rhar often competitive pressures rnay require lower online prices. These authors also note the potential benefits of reduction in transactional and distribution costs through
introducing a direct Internet channel once initial s tartup cos ts arc incurred. However, for manufacturer brands it is imporrant that consideration is given ro the advertising expendi- ture required to move goods through rhe supply chain o nce a brand is established online (Pei eta/., 2014). It is essenrial for brands to plan how th ey will manage potential channel conflict when establishing their brands online.
Digital marketing gives excellent opportunities to e nte r and grow a business by emering new markers, as the Zalandon 1 mini case study 1.1 s ho w s.
As well as assisting large corporare organis ations ro d evelop their markers, perhaps the
mos t exciting potential of digital media is to help exis ting s mall and medium emerprises (SMEs) ro expand. Read mini case study 1.2, which illustrates how one manufacturer has used digital media and technology ro build irs brand. Th e re is furrl1er dis cussion of the opportunities of digital communication at the end o f the chapte r.
16 Part 1 Digital marketing fundamentals
Mini case study 1.2 Zalando exploits the power of digital media and distribution to grow a multi-billion Euro business in less than five years
Once a single-country startup inspired by the successful business model of Zappos.com, Zalando was founded in 2008 by David Schneider, Rubin Ritter and Robert Gentz, with an early loan of €75,000 from German venture capital firm Rocket Internet SE. Zalando has become a €6 billion company and Europe's top fashion retail platform. In 2008, Zalando served only Germany; five years later it was serving 15 European countries.
Now, Zalando sells over 1,500 international brands, including international premium brands, as well as localised brands that are only available per country. For each of the 15 tailor-made websites per country it serves, it includes customised shipping, payment, fashion and marketing strategies unique to the culture and country. In early 2018 more than 70 per cent of site visits were from mobile devices.
Figure 1.4 The new Zalando campus in Berlin
Zalando is popular and successful for many reasons, including a media, content, merchandising and locali- sation strategy applied to each country, an effective customer satisfaction programme and focus on the mobile experience. Its Google Ads™ programme is particularly important as a method for it to gain rapid awareness in each country it has entered, since other online media techniques such as SEO (too slow to grow an audience rapidly in a competitive market) and social media (relatively poor at impacting online sales) can fail to gain traction in a market. Using Google Ads and offline advertising plus the distribution infrastructure requires a significant investment, so substantial initial backing is needed for an international e-commerce business like this, which is evident since it took four-plus years to break even in the core regions of Germany, Austria and Switzerland.
Business -t o-consumer (82C) Commercial transacbOns between an organisation and consumers.
Business-to-busi ness (828) Commoo::ial transactions between an organisation and other organisations rnter-organisational marl<eting).
Direct- to-c ust omer model A brand which has previously communicated to its customers via Intermediaries such as media sites or wholesalers communicates directly via digital media such as social networks, email and websites.
Consumer- t o· c onsumer (C2C) lnlormallonal or fnancaal transactions between consumers, but usualy medated tlvougl a business Site.
Consumer-t o-business (C28) Consumers approach the business wrth an offer.
e· government The use of lntemet technologies to provide government services to citizens.
Electronic c ommerce (e-commerce) AI fnancial and inlormational electronically mediated exchanges between an orgarisat100 and its external stakeholders.
Chapter 1 Introducing digital marketing 1 7
Alternative digital business models
As parr of strategy development, organisations require clarity on the type of business model they will develop.
Business and consumer business models
A basic aspect of the types of online business model explored in Chapter 2 is whether the proposition offered appeals to consumers or business. Because of this distinction, digital marketing opportunities are often described in terms of the extent to which an organisa tion is transacting wirh consumers (bus iness-t o -co ns umer, 8 2C) or other businesses (business- t o-business, 8 28 ).
Reference ro rhe well-known online companies in Table 1.1 initiall y suggests these com - panies a.re mainly focused on B2C markets. However, B2B commun ications are still impor- tant for many of rhese companies si nce business transactions may occur, as for example with eBay Business (http://busine ss.eb ay.com), o r the B2C service may need ro be sus rai.ned through advertising provided through B2B transactions, for exa mpl e Coogle's revenue is largely based on irs B2B Ads advertisi ng programme (http://ads.google.com/), which includes search ads, display ads and You Tube ads. Advertising service and advertising-based revenue is also viral to social network sites such as You Tube, Facebook and Twiner.
Digital media and technologies offer new opportunities for direct -to-cu st omer strategies where brands can communicate directly ro rheir consumers. For example, a publisher and authors can imeract wirh their readers, or food brands can interact directly with their pur- chasers via their websires or social media.
Figure 1.5 gives e..xamples of different companies operating in the business-to-consumer (B2q and business-to-business (B2B) spheres. Often companies such as easy Jet and BPTM will have products that appeal ro both consumers and businesses, so will have different parrs of their site ro appeal to these audiences. Figure 1.5 also presents two additional types of trans- action - those where consumers transact directly with other consumers (co ns um e-r-to consume r, C2C) and where they initiate trading with companies (consume r-t o -busi ness, C28 ). Common C2C interactions include transactional exchange (e.g. eBaynt, www.ebay. com), financial sen!]ces (e.g. ZopaTM, www.zopa.com.) and berting (e.g. Berfairn.1, www.betfair. com). In rhe early stages of the emlution of the web, Hoffman and Novak (1996) highlighted rhe porenrial importance of C2C inreracrions; the significance of their findings have been supported by the growth of social networks. More recently, Adjei et a!. (2010) found how brand commtmities can be effective tools for influencing sales :111d retaining customers and buildi ng confidence in new customers.
T he signifi cance of C2C inreracrions, which often involve creation of whar is known as UGC or user-generated conrenr), is illusU'ared in Activity !.3.
Figure 1..5 also includes governmenr and publi c-service organisation s rha t deliver online or a -government services. As well as the models shown in rhe figure, it has also been sug- gested that employees should be considered as a separate type of consu mer through the use of imraners, which is referred to as employee-to-employee or E2E.
What is the difference between e-commerce and digital business?
Electronic comme rc e (a-commerce) refers to both financial and informational electroni- cally mediated transactions between an organisation and any third parry ir deals with . So e-commerce involves management nor only of online sales transactions, but also of non· financial transactions such as inbound customer service enquiries and outbound email broadcasts, so you can argue that e-commerce is open ro all online organisations.
18 Part 1 Digital marl<eting fundamentals
Figure 1.5 Summary and examples of transaction alternatives between businesses, consumers and governmental organisatio ns
From: Supplier of contenVservice
Consumer or citizen Business (organisation} Government
c: Q)
Consumer-to-consumer (C2C) Business-to-consumer (B2C) Government-to-consumer (G2C) ~ ·- • eBay • Transactional: Amazon • National government u ... • Peer-to-peer (Skype) • Relationship-building: BP transactional : tax - H M 0 ... Q) • Slogs and communities • Brand-building: UnileverT" Revenue & Customs E • Product recommendations • Media-owned - News Corp • National government ;:, "' • Social network (Bebo™, • Comparison intermediary: information c: 0 Faoebook, Google+) Kelkoo™, Pricerunner™ • Local government information 0
Ql 0
• Local government services - ~ Ql c:- Consumer-t o-business (C2B) Business-to-business (828) Go vernment-to-business (G2B) ~ ,g .. c: ., • Priceline • Transactional: Euroffice • Government services and J!l -!!!
• Consumer feedback, • Relationship-building: BP transactions: tax c: c: 0 ~ communities or campaigns • Media-owned: Emap • Legal regulations 0 .... ~ business productions 0 .. "' • 8 28 marl<etplaces: EC21 Ql "' E Ql • Social network (Unkedln, ::J .5;
<I> ~ PlaxoT") c:
0 lXI 0 .. ~ Consumer-to-government (C2G) Business-to-government (B2G) Government-to-government (G2G) ... • Feedback to government • Feedback to government • Inter-government services c:
Q) through pressure groups or businesses and non- • Exchange of information E E individual sites governmental organisations ~ ~
Activity 1 .3 Why are C2C interactions important?
Purpose Sell-side e-commerce E-commerce transactions between a supplier organisation and Its customers.
To highlight the relevance of C2C transactions to B2C companies.
Buy-side e -commerce E-commerce transactions between a purchasing organisation and its suppliers.
Social commerce Social commerce is a subset of a-commerce lhat encourages participation and
interaction of customers '" rating. selecbng and buying products through group buying. This participation can occur on an e-commerce site or on third-party sites.
Act ivity
Consult with fellow students and share experiences of C2C interactions online. Think of C2C on both independent sites and o rganisational sites. How can C2C communications assist t hese organisations?
£ - commerce is often further subdivided inro a sell-side e-commerce perspective,
which refers t o transactions involved wit h selling products to an o r ganisation's custom -
ers, and a b uy-side e-cornmerce per spective, which refers ro business-to-business trans-
actions to procure resources needed by an organisation from its suppliers. T his is shown in Figure 1.6.
Social commerce is an increasingly imporranr part of e-comme rce for site owners, sin ce
incorporating reviews and racings into a sire and linking ro social networking sites can help
Chapter 1 Introducing digital marketing 1 9
Figure 1.6 The distinction between buy-side and sell-side e-commerce
E-business
Buy- side e- commerce
Sell-side a-commerce
Key
Internet and extra net
Intranet
Internet and extranet
Suppliers D Organisational processes and functional units 0 Customers Suppliers' suppliers ~ Intermediaries 0 Customers' customers
Electronic business (e· business) or digital business Electronically mediated information exohanges, both within an organisation and with extemal stakeholders supporting the range of business processes.
understand customers' needs and increase conversion to sale. It can also involve group buy- ing using a coupon service, as with Groupon™. There is much discussion on the extent to whjch social media interactions between consumers directly influence sales. Digital market- ing insight l.l outlines research hinting ar rhe complexity of understanding this relationship. We introduce social media marketing later in this chapter.
Electro nic bus iness (e-business) , now more common ly known as digi ta l busin ess, is si milar toe-commerce bur broader in scope and refers to using digital technology to mamage a range of business processes incorporating rhe sell -side and buy-side e-commerce shown in Figure 1.7, and also other key supporting business processes including research and devel- opment, marketing, manufacturing and inbound and outbound logistics.
Different forms of func tionality of digital presence
The form of digital strategy developed by a company will depend on rhe sector and scale of a business. Cbaffey (2015) identifies different rypes of digital presence and each has different objectives and functionality rhar are appropriate for different markets or indus- try sectors. Note that these are nor clear-cur categories of websites or mobile apps, since any company may combine these rypes as parr of their business model, but with a change in emphasis according ro rhe marker they serve. Increasingly, companies are using dedi - cated mobile apps and company pages on social networks such as Facebook, Twitter and
20 Part 1 Digital marketing fundamentals
Digital marketing insight 1.1 Social commerce - how much do social networks influence urchase?
Research published by the Harvard Business School, quoting Iyengar eta/. {2009), fo und that in Korea, where social networking and commerce were more established , social networks do influence purchase, but the degree of infl uence depends on the usage level and connectedness of a user. In summary, the research shows:
• For light users of social networks with few connections (48 per cent of users). purchases are unaffected by social network activity.
• For moderate users of social networks with average connections {40 per cent), pur- chases are infl uenced by social network interaction, boosting vendor sales for this group by 5 per cent.
• For heavy users of social networks with a high number of connections {12 per cent), purchases are also influenced by social network interaction , but negatively; these users avoid buying what their friends have bought and are talking about, leading to a 14 per cent drop in sales from this group for vendors.
We return to this question in Chapter 9, where we explore the effectiveness of different types of digital media in the Smart Insights (2015b) article ' Is this the social med ia backlash?'.
Linkedln to simi lar purposes. As you review websites and company soc ial presences, note how organisations have different parts of t he si re focus ing on these functions of sales transact ions, services, relationship-building, brand -building and providing news and enterta inmen t. The five main types of site or mobile app functions are as fo llows.
1 Transactional e-commerce
This enables purchase of products or services online and is typ ical in the retail, travel and financial services sector. The main business contribution of t he sire is tluough sale of these products. Tbe sites also support the business by providing customer service and informatio n for consumers who prefer to purchase product s offline.
• Visit these examples: an end -product manufactu rer such as Kia™ wi th an online 'Build your Kia' configurator (www.kia.com/uk) or an online retailer such as Zalando™ (www.zalando.com).
2 Services-orientated relationship-building for lead-building and support
This provides information to stimula te pmchase and build relat ionships. Products and services are not rypicaiJ}r available for purchase online. Rather, t his is typical in tbe business-to -business sect or and for high -value or complex conswuer products. Informa- tion is p rovided through the website and e-newsletters to inform purchase decisions. T he main business contribution is through encomaging offline sales via generat ing enqu iries or leads from potential cust omers. Such sires also add value t o existing customers by providing them with detailed information to help support them in their lives at work or at home.
• Visit these examples: B2B management consultants AccenrureTM (www.accenture.com) and B2C laser eye treatment company Oprimax™ (www.optimax.co.uk)
Stage models Models for the development of different levels of digttal services.
Brochureware site A simple site with limtted Interaction with the user that rep~cates offline marl<ating merature.
Transactional e-commerce s ites Sites that support onhne sales.
Chapte r 1 Introducing digital marketing 2 1
3 Brand-building
This type of sire or app provides an experience ro support rhc brand. Products are nor typically available for online purchase. The main focus is co supporr rhe brand by developing an online experience of the brand and it is rypically used for low-value, high-volume fast- moving consumer goods (FMCG) brands for consumers.
• Visit these examples: DurexTM (www.durex.com) and GuinncssTM (www.guinness.com).
4 Publisher or media site
This provides news, entertainment or information or news about a range of topics and typi- cally has an advertising or affiliate revenue model, as explained in Chapter 2. Previously termed 'portal' ro refer ro a gateway ro information, this rerm is not in common usage today. This is information both on the site and through links to other sires. Porta ls have a diversity of options for generati ng revenue including advertising, commission-based sales and sale of customer data (lists) .
• Visi t rhese exa mples: HuffPosrTM (www.huffingtonpost.com) (B2C) and Smarr Insights (www.smartinsights.com) (B2B).
These different types of sires tend ro increase in sophi sticatio n as organisations develop their digital marketing. In Chapters 2 and 4 we look at s tage models of the development of digital marketing services and capabilities, from srar ic b rochu reware sites to dynamic t ransactiona l e -commerce s ites that support interactions with customers.
5 Social network or community
These sires or parts of sires focus on enabling community inreracrions between diHerent consumers (C2C model). Typical interactions include posting comments and replies ro commenrs, sending messages, rating content and ragging conrent in particular categones.
Well-known examples include Facebook, ln stagram, Linked In , Snapchar and Twitter. In addition ro distinct social network sites such as these, social networks can also be integra red into other sire types.
Challenges in developing and managing digital marketing strategy
Some of the challenges in m anaging digital marketing strategy rhar are commonl y see n in many organisations (and should be managed) include:
• There are uncl ea r responsibi liti es for the many different d igital marketing activities (shown in Figure P.l in rhe Preface).
• No specific objectives are set for digi tal marketing. • Insufficient budget is allocated for digital marketing because customer demand for online
services is underestimated and competitors potentially gain marker share through supe- rior online activities.
• Budget is wasted as diHerent parts of an organisation experim ent with using different techniques, marrech suppliers without achieving economics of scale.
• New online value propositions for customers are not developed since rhe Internet is treated as 'just another channel to market' wirhout review of opportunities ro offer improved, differentiated online services.
• Results from digital marketing are not measured or reviewed adequately, so actions can - nor be taken ro improve effectiveness.
22 Part 1 Digital marl<eting fundamentals
Digital transformation A staged programme of business ir11>rovements to people, process and tools used tor nteg:ated digrtat marketing to maxmse the potential contrixlbon of d¢11 technology and media to business gowth.
• An experimental rather th an planned app roach is taken to using e-commuuications wirh poor integration between online and offline marketing communications.
Research by Smart Insights (2017) investigated the challenges of managing digital market- ing. It was found that many businesses do face challenges in these areas:
• Planning. Nearly half (44 per cent) of businesses surveyed do not have a defined digi- tal plan or strategy although rhey a re active in digital ma rketing, while nearly half (49 per cent) also don ' t have a defined marketing plan in the business against which to align strategy.
• Organisational cap abilities. Many businesses either already have introduced (30 per cent) or were planning to introduce (33 per cent) a digital transformation programme, alrhough a substantial number (37 per cent) of businesses don' t think it's relevant for them.
• Jntegration of d igital channels into marketi ng. O nl y a fifth of companies (20 per cent) were ha ppy with their level of integration of digital marketing a nd traditi o nal commu- ni cations. The main barriers to integration a rc: lack of intcgratt:d stra tegy and plans; reams struc tUied in silos; and lack of skills in inregrated co mmuni ca ti o ns.
• RO I evalu ation. A significant propo rtion (39 p er cent) see op portunities from digital m a rketin g, but find ROI measure me nt chall e ng in g - a key a rea fo r managers to address.
Given the futme importance of digital marketing, larger organisa ti ons have introduced d igital transformation programmes ro help manage these challenges. The approach has been discussed by many management consuJring groups, for example MJT Center fo r Digital Bu si ness and Capgemini Consulting (2011) and Altimeter Consu lting (2014).
Altimeter produced a visual proposing enablers and barriers to digital transformation (Figure 1.7). It shows how disruptive digital technol ogies such as social media, mobile plat- forms and real-time marketing should be harnessed ro create an effecti,·e digital customer expen ence.
Applying the 7Ss
The 7Ss are a useful framework for reviewing an organisation's existi ng and future capabili- ties to meet the challenges posed by the new digital channels, and some of rhe aspects of this are shown in Table 1.3.
You may have encountered the 75 framework, summarised by \'<laterman et al. {1980) and devdoped by McKinsey and Company consulranrs in the 1980s. It is often referenced when referring to the management of a business. Eco nsultancy (2005) summarised some of the strategic resource management issues that req uire co nsiderati on, as shown in Table 1.3 . T hese remain relevant factors for organisations to review roday sin ce m:m y busiJlesses are st ill Lmderraking digital transformation progra mmes.
A strategic framework for developing a digital marketing strategy
To realise the benefits of digital marketing and avoid the pitfalls rhar we have described, an organisation needs to develop a planned, structured approach . Consequently, this texr defines a strategic approach to digital marketing thar is inrcnded to manage these risks and deli,·er the opportunities available from o nl ine channels. In Figure 1.8 we suggest a process fo r de,·eloping and implementing a digital marketing plan rhat is based on our experience of strategy definition in a wide range of companies. This diagram highlights the key activi- ties and their dependencies, which are involved for the creation of 3 typical digital marketing strategy, and relates them to coverage in different ch:~pters in this text.
Figure 1.7 The drivers and barriers to digital transformation
Digital ethnography Focus on the new customer journey
Expand marltet opportunities
Digital darwinlsm Adapt to new
technology or die
Culture of innovation
Chapter 1 Introducing digital marketing 23
Internal collabotatJon
Cause-effect No dedicated resources
Competitive disadvantage
Data paralysis e Actionable insight need new support paradigm
No common vision
Tunnel vision e Silos prevent ex STOP collaboration , , Lack of sense of utgency
'- Soun:e: Altimeter ConsUting (:1.014}
Education Execs need to know 3&6' what they dont know
Broken experience
Digital darwinism Evolution
Table 1.3 Summary of some of the organisational challenges of digital marketing that need to be managed in the context of the 7S framework
Element of 75 model
Strategy
Structure
Systems
Application to digital marketing strategy
The significance of digital marketing in influ- encing and supporting the organisation's strategy
The modification of organisational structure to support digital marketing
The development of specific processes, pro- cedures or information systems to support digital marketing
Key issues from practice and literature
Gaining appropriate budgets and demonstrating/ delivering value and ROI from budgets. Annual planning approach
Techniques for using digital marketing to impact organisation strategy
Techniques for aligning d igital strategy with organisational and marketing strategy
Integration of digital marketing and a-commerce teams with other management, marketing (corporate com- munications, brand marketing, direct marketing} and IT staff
Use of cross-functional teams and steering groups lnsourcing vs outsourcing
Campaign planning approach-integration Managing/sharing customer information Managing content quality Unified reporting of digital marketing effectiveness In-house vs external best-of-breed vs external integrated
technology solutions
24 Part 1 Digital marl<eting fundamentals
Table 1.3 (Continued)
Element of 75 model
Staff
Style
Skills
Superordinate goals
Application to digital marketing strategy
The brealkdown of staff in terms of their back- ground and characteristics such as IT vs mar- keting, use of contractors/consultants, age and sex
Includes both the way in which key managers behave in achieving the organisation's goals and the cultural style of the organisation as a whole
Distinctive capabilities of key staff, but can be interpreted as specific skill sets of team members
The guiding concepts of the d igital marketing organisation which are also part of shared val- ues and culture. The internal and external per- ception of these goals may vary
Source: Econsunancy (2005)
Key issues from practice and literature
lnsourcing vs outsourcing Achieving senior management buy-in/involvement with
d igital marketing Staff recruitment and retention. Virtual working Staff development and training
Relates to role of digital marketing team in influencing strategy - is it dynamic and influential or conservative and looking for a voice
Staff skills in specific areas: supplier selection, project management, content management, specrric a-marketing approaches (SEO, PPC, affiliate market- ing, email marketing , online advertising)
Improving the perception of the importance and effectiveness of the digital marketing team among senior managers and staff it works with (marl<eting generalists and IT)
Figure 1.8 A generic digital marketing strategy development process
I A. Defining the online
opportunity
B. Selecting the strategic
approach
C. Delivering results online
a. Evaluate a-marketing performance
a. Define customer value
proposition
a. Implement customer
experience
Business objectives
1. Set a-marketing objectives
b. Assess online
marl<etplace
2. Define b. Define C )lo a-marketing C )lo a-communications
strategy mix
3. Implement b. Execute a-marketing , .. ~f-~)lo~l a-communications
plan
4. Profile, measure and
improve
Chapter 1 Introducing digital marketing 25
A: Opportunity: defining the online opportunity
Setting objectives ro define the potential is the core of this phase of strategy development. Key activities are:
1 Set digital marketing objectives (Chapters 4 and 8). Companies need to set specific numerical objectives for their online channels and then resource ro deliver these objec- ti ves. These o bject ives should be informed by and influence the business objectives and also the following two activities.
1a Evaluate digital marketing performance (Ch apters 4 and 10}. App ly web analytics rools ro measure the comriburion of leads, sales and brand involvement currently delivered by online communications such as search engine marketing, online adver- tising and email marketing in conjunction with the website.
1b Assess online marketplace (Chapters 2, 3 and 4). Situat ion analysis review of the micro- environment (custo mers, competitors, intermediaries, suppliers and internal capalbili- ries and resources) and the broader macro-environment d1at iJ1£luences strategy, s uch as legal requirements and technology iru10varion.
8: Strategy: selecting the strategic approach
2 Define digital marketing strategy (Chapter 4). Select appropriate strategies ro achieve d1e objectives set at stage Al.
2a Define customer value proposition (Chapters 4 to 7) . Define t he value proposi- rion available through rhe o nline channel and how it relates to the core proposition delivered by the company. Review segmentat ion and targeting opt ions. Review the marketing mix and brand values to evaluate how they can be improved onl ine.
2b Define digital communications mix (Chapters 4, 8 and 9) . Select the offline and online communications tools ro encourage usage of an organisation's online services and to generate leads and sales. Develop new o utbound communications and event-triggered toucn strategies to support customers through their relationship with the company.
C: Action: delivering results online
3 Implement digital marketing plan (Part 3). This details the implementation of the strategy.
3a Implement customer experience (Chapter 7) . Build rl1e website, mobile apps a nd create me email marketing co mmunications that form me o nl ine interactions custom ers make with a compm1y. Create o nline customer relationship management capabi li- ties w und erstand customers' characteristics, needs and behaviours and to deliver targeted, personalised value (Chapter 6) .
3b Execute digital communications (Chapters 8 and 9) . Manage the continuous online marketing commun ica tions such as search engine m arketing, partnership social media marketing, spo nsorships and affiliate a rrangements, and campaign-based e.-m arket ing communications such as online advertising, emai l marketing and micro- sires to encourage usage of the online service and to support customer acq uisition and retention campaigns. Integrate me digital media channels with traditional marketing.
4 Customer profiling (Chapter 6), monitoring and improving on line activities an d maintaining the o nline activit ies (Chapter 9) . Capture profile and behavioural data on customer interactions w ith rl1e company and summarise and disseminate reports and alerts about performance compared with object ives in o rder ro drive performance . Improvement.
You will see rl1at in the process diagram, Figure 1.8, many double-headed arrows are used, since the activities are often nor sequential, bur rather in form each other, so activity 1, set digital markering objectives, is informed by the activ ities around it but may also influence
26 Part 1 Digital marketing fundamentals
d1em. Similarly, activity 4, profile, measrne and improve, is informed by the execution of online activities but there should be a feedback loop to update rhe tactics and strategies used.
Introduction to digital marketing communications
Digital media channels Online communications
techniques used to achieve goals of brand awareness, familiarity, favourabilily and to influence purchase intent by encouraging users of digital media to visit a website to engage with the brand or product, and ultimately to purchase online or offlne through tlacitional media channels such as by phone or in· store.
Display ads Use of graphical or rich media ad units w ithin a web page to achieve goals of delivering brand awareness, familiarity, favourability and purchase intent. Many ads encourage interaction through prompting the viewer to roUover to p lay videos, complete an online form or to view more details before clicking through to a site.
Pay-per-click (PPC) PPC refers to when a company pays for text ads to be displayed on the search engine results pages as a sponsored link (typically albove, to the right of or below the natural listings) when a specific keyphrase is entered by the search users. It is so-called because the marketer pays each ume the hypertext link in the ad is clicked on. If a fink is clicked repeatedly, then this will be detected by the search engine as cfick fraud and the marketer will not be charged.
Search engine optimisat ion (SEO) A structured approach used to increase the position of a company or its products in search engine natural or organic resuhs tistings (the main body o f the search resutts page) for selected keywords or phrases .
For many years, marketing campaigns were based on traditional media including TV, print and radio ads and direct mai l supported by public relations. Bur, in a few short years, since the web concept was first proposed in the late 1980s by Sir Tim Berners-Lee, there have been huge changes in marketing commtmications. The digital equivalents of these traditional media, which are known as d igital media c hannels , are vital components of most marketing campaigns today. For example, in an on line campaign, marketers can use ads and content on social media to engage audiences: d isplay ads , the familia r banner and skyscraper ads seen on many onl ine publisher sites; pa y-p er-c lick (PPC) ads, such as th e Sponsored Google Ads adverts in Google; search e ngin e optimisat ion (SEO) to gain higher positions in the nattuallisti.ngs of Google; affiliate marketing, where sires rhar generate a sale for a merchant gain commission; and e mail market in g, which is most effective when messages are sent to an exist ing customer base- i.e. customers who have given t heir permission to receive them. Many of these digital communications techniques are analogous to their t radit ional equiva- lents- for example, display ads are broadly equivalent ro print or display ads and email marketing is equivalent to direct mail.
Bur the approaches used to target the on line audience are potentially very different, with personalisation based on the customer profile and previous interactions with commtmications giving many options to deliver more timely, relevant messages. (Personalised communica- tions are also effect ive on the webs ite, where la nding pages are commonly used to make the page more relevam to what rhe customer is seeking.) Leading websi res also provide great opportunities to engage rhe visitor through in-depth text content, rich med ia such as video and aud io and participation in customer commtmities.
Using digital media channels to support business objectives
Before we explain the different digital media channels, it is important to consider how rhe)• can support business goals. RACE (Figure 1.9 and Preface Figure P.1) is a practical frame- work developed by Smart Insights (2010) to help marketers manage and improve the com - mercial value that their organisations ga.in from digit al marketing. RACE is an evolution of d1e REAN (Reach-Engage-Activate-Nrnture) framework originally developed by Xavier Blanc and popularised by Steve Jackson in his book Cult of Analytics Uackson, 2009) . It is intended to help create a simplified approach to reviewing the performance of on line mar- keting and raking actions to improve its effectiveness. The measures introduced in Figure 1.9 are covered in more depth in Chapters 4 and 10, where we explore rhe power of using we b or digital analytics for improving marketing performa11ce.
RACE consists of four st eps designed to help engage prospects, customers and fans with brands throughout the customer lifecycle:
• Step 1: Reach- Build awareness of a brand, its products and services on other sires and in offline media and build traffic by driving visits to web and soc ial media presences.
• Step 2: Act - Engage audience with brand on irs website or other on line presence to encourage them to interact with a company or other customers. In many sectors, the aim of th e Act stage is lead generat ion, i.e. to gain permission to market to a prospect using email, SMS or mobile app notifications.
Affiliate marketing A cornrr;ss;on.based atangement where referring sites (p.i)ishers) reoeNe a c:::onYI"'SSio oo saes or leads by rnen::twds (relaiEws). Corm ission is usually based on a peioentage of ~-pnceora fixed atnOUlt for each •· rut may also be on a per· cick basis, for~ when an aggregator refers visits to merchants.
Email marketing Typcaily applied to outbound ConYTlU"'ications from a company to prospects or customers to encourage purchase or branding goals. Emalt marketing is most commonly used for malHng to existing customers on a houselist. but can also be used for mailing prospects on a rented or co-branded list. Emails may be sent as part of a one-off ~n or can be automated, event·based. triggered emails. such as a welcome strategy that can be broadcast based on riAes about intentals and rustomer charactens1ics.
Landing page A desmabon page when a user cicks on an ed or other form of lilt< from a refetmg site. It can be a home page rut more typicaly and desWably. a landi'lg page is a page with the messagi'lg focused on the offer in the ad. This will maximise conversion rates and brand favourabi~y.
Rich media Advertisements or site content that are not static, but provide animation, sound or lnterectivity. An example of this would be a display advertisement for a loan in which a customer can type in the amount of loan required, and the cost of the loan Is calctJated immediately.
Web (or digitaQ analytics Techniques used to assess and improve the contribution of dgital marketi'lg to a busness, roudng reviewi1g traffic volt.me, referrals. cickstreams, online reach data. customer satisfacbon suwys, leads and ~-
Ch apter 1 Introducing digital marketing 27
Fig ure 1.9 RACE: Reach-Act (lnteract)-Gonvert-Engage
(
ENGAGE Build customer and fan
relationships through time to achieve retention goals
KPis: • % active hurdle rates • Fan engagement • Repeat conversion
Source: Smart Insights (20 1 0)
REACH Build awareness on other sites and in offline media
and drive to web presences
KPis: • Unique visitors and fans • Audience share • Revenue or goal value
per visit
CONVERT Achieve conversion to
marketing goals such as fans, leads or sales on web
presences and offline
KPis: • Conversion rates • Sales • Revenue and margin
ACT Engage audience with brand on its website or other online presence
KPis: • Bounce rate • Pages per visit • Lead conversion
• Step 3: Convert - Achieve conversion ro generate sales on web presences and offline. • Step 4: Engage- Build customer relationships through time to achieve retention goals.
Digital channels always work best when they arc integrated with other channels so, where approp riate, digital channels shou ld be combined with the trad iti onal offli ne media and channels. The most importa nr aspects of integration are, first, using trad iti o nal media to raise awa1·eness of the value of the o nline presences at rhe Rea ch and Act stages and, second, at the Convert and Engage steps where customers may prefer to interact with customer . representatives.
The key types of digital media channels
There are many online communications tools rhar marketers must review as part of their commu11ications strategy or as pan of planning an online marketing campaign. To assist with plarming, Chaffey and Smith (2017) recommend that these online marketing tools are divided into six main groups, as shown in Figure 1.10.
ln Chapters 8 and 9, we review these tools in derail, bur this is the essence of each digital media channel:
28 Part 1 Digital marketing fundamentals
Figure 1.10 Six categories of digital communications tools or media channels
1 Search engine marketing • Search engine
optimisation (SEQ) • Paid search
Pay-per-click (PPC) • Paid-for inclusion feeds
Offline communications 1 Advertising 2 Personal selling 3 Sales promotion 4 PR 5 Sponsorship
4 Display advertising • Site-specific media buys • Ad networks • Contra-deals • Sponsorship • Behavioural targeting
2 Online PR • Publisher outreach • Community participation • Media alerting • Brand protection
Website and social presences
5 Opt-in email • House list emails • Cold (rented list) • Co-branded • Ads in third party
a-newsletters
3 Online partnerships • Affiliate marketing • Sponsorship • Co-branding • Unk-building
Offline communications 6 Direct mail 7 Exhibitions 8 Merchandising 9 Packaging
1 0 Word-of-mouth
6 Social media marketing • Audience participation • Managing social presence • Viral campaigns • Customer feedback
y Online communications y Offline communications Soutar. Chaffey and Smith (2017)
1 Search engin e marketing. Gaining visibility on a search engine to encourage dick-through to a website when the user types a specific keyword phrase. Two key search marketing techniques arc paid placements or sponsored links using pay-per-click, and placements in the natural or organic listings using search engine optimisation where no dJarge is made for clicks from rhe search engine.
2 On line PR. Maximisi ng favourable mentions of your compa ny, brands, products or web- sires on third-parry websites such as social networks, blogs, podcasts or feeds that are likely to be visi ted by your target audience. Also includes responding to negative men- tions and conducting public relations via a site through a social media news cemre or
blog, for exampl e. 3 Onli ne partnersl1ips. Creating a nd ma nagi ng long-term arrangemems to promote your
on line serv ices o n third-pa rty websites or th rough emai l commun ications. Different forms of partnership include link building, affi liate marketi ng, aggrcgarors such as price comparison sires like Moneysupermarket™ (www.moneysupermarket.com), online spon- so rship and co-marketing.
4 Display advert ising. Use of online ads such as banners and ri ch media ads to achieve brand awareness and encourage dick-through to a target sire.
5 Opt-in email marketing. Placing ads in third-party e-newslerters o r the use of an in-house list for cusromer activation and retention. Buying or renting lists of email addresses is considered as a spammmg technique and not permitted under rhe privacy legislation described in Chapter 4.
6 Social media marketing. Companies participate and ad\·errise within social networks and communities ro reach and engage their audience. Viral marketing or online word -of- mourll messages are closely related to this. H ere conrenr is shared or messages are for- warded ro help achieve awareness and, in some cases, drive response.
Social media marketing Monitomg and faciWtating customer-to-customer interaction and ~lion tllrolqlou1 the web to encouage posrtive engagement with a oompany and rts brands. Interactions may occtx on a company site, social networks and other third-party s-tes.
Activity 1 .4
Chapter 1 Introducing digital marketing 29
Soc ial media marketing is a n impo rta nt catego r y of digital ma rketi ng tha t i nvolves encouraging custo mer communications o n a company's own site, o r social p resences such as Facebook o r Twitter or in specialist publisher sites, blogs and foru ms. It can be app lied as a traditional broad cast medium - for example, companies can use Facebook or Twi tter to send messages to customers or parmers who have opted in. H owever, to take adva ntage of the benefi ts of social media ir is im po rtant ro starr and participa te in customer conversa- tions. T hese can be related to products, p romotions or customer service and a re aimed at learning more about customers a nd providing support, rhus improving the way a company is perceived.
T h e growth of social networks has been documented by Boyd and Ellison (2007), who describe social networking sites (SNS) as:
Web-based services that allow individuals to (1) construct a publ ic or semi-public profile within a bounded system, (2) articulate a list of other users with whom they share a co n- nection, and (3) view and traverse their list of connections and those made by others within the system.
The interactive capabilities to post comments o r o ther con tent and r ate co ntent are sur- pris in gly missing from this definition.
Different types of social media marketing tools
There a re many, many sites and too ls th at co mprise what we call 'social m edia' . To gain an idea of just how many, co mplete Activity 1.4.
A social media site is much m ore tha n si mply a website. From a technology viewpoinr, most of these sires can be considered as softwa re applications or web services, wh ich give access to users at different levels of permission and then enable management and storage of different forms of user-generated content. Messaging is also an important feature of many o f these sites, particularly the main socia l networks that will alert users when new co ntent related to their content or connections is published. A Pis for exchanging data with other web services interfaces are also a key featu re of socia l networks that enable them to be more useful and allows them and thei r mem bers to extend their reach and influence by incorporat - ing social comments into other sires.
According to Wei nberg and Ekin (2011), soc ial media is ne ither a perfect subs titute for tradit io nal marketing, no r is ir a one-size- firs-all. Markete rs can use social media effectively by rak ing their message directly to co nsumers a nd focus ing on traditional o b jecti ves. We will rev iew social media ma rketing o ptio ns in mo re detai l in Ch~lpters 6 and 9.
Assessing social media marketing platforms
Purpose
To explore the range of social media sites and tools, to categorise them and assess their business applications.
Activity
Visit the Conversation Prism (www.conversationprism.com), which is a visual map of the social media land scape. Identify the types of social media sites you and your colleagues use. How do you think the popularity of tools would differ for different types of 828 and 82C sites? Discuss how businesses should decide on the most important to invest in to achieve their goals.
30 Part 1 Digital marketing fundamentals
Benefits of digital media
ln the section on digital marketing strategy, we described some of the applications of digital marketing ro supporr communications with customers across the purchase cycle from generating awareness, achieving direct response for lead generation or sale and supporting customer service and rdationship marketing. In this section we explore key differences between digital media and traditional media that savvy marketers exploit.
Digital marketing communications differ significantly from convenrional marketing communications because digital media enables new forms of interaction and new models for information exchange. A useful summary of the differences between new media and rradirional media was originally developed by McDonald and Wilson (1999) and is still valid - they describe the '6Is of thee-marketing mix', which are practical benefits of digital
marketing rhat the marketer should exploit.
1 lnteractivity
John Deighton was o ne of the first au thors to identify these characteristics of a digital medium (Deighton, 1996):
• the customer initiates contact; • the customer is seeki ng information or an experience (p ull); • it is a h igh-intensity medium- rhe marketer will have 100 per cent of the individual's
attention when he or she is viewing a website; • a company can gather and store the response of the individual; • individual needs of the customer can be addressed and taken into account in furure
dialogues.
Figure l.ll(a) shows how traditional media are predominanrly pusl1media where the mar- keting message is broadcast from company to customer, although interaction can be encour- aged through direct response to phone, website or social media page. However, online it is often the customer who initiates contact and is seeking information through researching information on a website. In other words, it is a 'pull' mechanism where it is particularly important to have good visibility in search engines when customers are entering search terms
Figure 1.11 Summary of communication models for (a) t raditional media, (b) new media
(a)
(b)
Push
Company Customer
Direct response
Traditional TV, print, radio media Direct mail communications
Company
lnteractivity Dialogue not monologue
PuiVPush
Intelligence
TYtiO -way feedback
Customer
Inbound marketing The consumer is proactive in seeking out nformation for their needs. and interactions wrth br.w1ds are attracted lhrougl content. search and social mecja rnarl<etng.
Data lake and data warehouse A data lake is a storage reposftory that holds a diversity of raw data in its native format where It is available for analysis and reporting by people across a company. This contrasts to a data warehouse, which contains structured data.
Chapter 1 Introducing digital marketing 3 1
relevant to a company's products or services. Amongst m:arkering professionals this powerful new approach to marketing is now commonly known as inbound marketing (Shah and Hal- ligan, 2009). Inbound marketing is powerful since advertising w:astage is reduced. Content and search marketing can be used to target prospects with a defined need - they a re proactive and self-selecting. Bur this is a weakness since marketers may have less conrrol than in tra- ditional cornmw1ications where the message is pushed our to a defined audience and can help generate awareness and demand.
Figure l.ll(b) shows how digital media should be used to encourage two-way communi- cations, which may be extensions of the direct-response approach. For example, FMCG suppliers use their websi te or Facebook presence as a method of generating interaction by providing incentives such as competitions and sales promotions to encourage rhe customer to respond with t heir names, addresses and profile information such as age and sex.
2 Intelligence
Digi t al m edia a nd technology can be used as a re lat ively low-cost method of collect in g marketi ng resea rch , particula rly about custo mer perceptions of products a nd services, as descri bed in Cha pter 10 , which reviews d igital a na lytics a nd ma rker resea rch. interactio ns wit h consumers across all the differe nt touchp oin ts shown in Figu re 1.1. ca n be stored in data lakes o r data warehouses to provide insigh t collectively known as 'Big Dat a' .
3 lndividualisation
Another important fea ture of interactive marketing communications is rhar they can be tai lored to the individual (Figure 1.12(b)) at relatively low costs, unlike in traditional media
Figure 1.12 Summary of degree of individ ualisation for: (a) traditional m edia (same message); (b) new m edia (unique messages and more information exchange between customers)
(a)
{b)
Company
Same message to all customers (or customers in each segment}
Company
Different messages to each customer (or customers in micro-segment}
Customer
Customer
Customer
Customer I+
Customer I+ , __
Customer -
32 Part 1 Digital marketing fundamentals
Personalisation Delivering individualised content through web pages or email.
Sense and respond communications Customer behaviour is monttored at an indMdual level and the marketer responds wtth communications tailored to the individual's need.
Outbound digital communications Website, mobie push notifocations or email marketing are used to send personalised communications to customers.
Inbound digital communications Customers enquire through web-based forms, social media and email.
where the same message rends to be broadcast ro everyone (F igure 1.12(a)). This individuali- sation is based on d1e intelligence collected about site visitors and then stored in a database and subsequently used to target and personalise communications to customers to achieve relevance in all media. The process of tailoring is also referred to as personalisatio n - Amazon is the most widely known example, where the customer is greeted by name on the website and receives recommendations on site and in their emails based on previous pur- chases. This ability to deliver sense and respond commun ications is another key feantre of digital marketing and is explored further in Chapter 6.
4 Integration
The Internet provides further scope for integrated marketing communications. Figure 1.13 shows the role of the Imernet in multichannel marketing. When assessing rhe marketing effectiveness of a website, the role of the Internet in communicat ing witl1 customers and! other partners can best be considered from two perspectives. First, there is o utbo un d d igita l com munications from organisation to customer. We need to ask how does the Internet comp lement other channels in communicating me proposition for tl1e company's products and services to new and existing customers with a v iew to generating new leads and ret ain- ing existing customers? Second, inbo und digit a l communicatio ns from customer to organi- sation: how can the Internet complement other channels ro deliver customer service to these customers? Many companies have now integrated email response and website callback inro their exist ing call centre or customer service operation.
Some practical examples of how the Internet ca.n be used as an integrated communica- tions tool as part of supporting a multichannel customer journey (Figure 1.14) are the following:
• The Internet can be used as a direct- response tool, enabling customers to respond ro offers and promotions publicised in other media.
• The website can have a direct response or callback facility built into it. The Automobile AssociationTM has a feature where a customer service representative will contact a
Figure 1 .13 Channels requiring integration as part of integrated digital marketing strategy
Intermediary
Web
Company Email
Customer
Phone
Person
Disi ntermediation The removal of intermediaries such as distributors or brokers that formerly linked a company to its customers.
Reintermediation The creation of new intermediaries between customers and suppliers providing services such as supplier search and product evaluation.
Ac tivity 1.5
Chapter 1 Introducing d igital marketing 33
Figure 1.14 The role of mixed-mode buying in digital marketing
Mail, fax, phone, person
Offline
Product evaluation
Decision to purchase
I ~·
Specify purchase
Payment
I ~
Fulfilment
1
2
3
4
5
Online
Product evaluation
Decision to purchase
t Specify
purchase
Payment
-. Fulfilment (digital)
custom er by pho ne when tbe custo mer fil ls in their na me, phoue number and a su itable . .
nme to rmg. • The lmern et can be u sed to support the buying decisio n, even if the purchase does no t
occur via the website, th rough assisted selling via live chat or phone. For exa mp le, DeJ ITM b as a p romi nent web-specific phone number o n its webs ite that encourages customers t o ring a rep resentative in the call centre fo r support.
5 Industry restructuring
Disi ntermediation a nd reintermediation are key concepts of indu stry res truct uri ng tha t should be considered by a ny compa ny develop ing a digit al m arketing st rategy a nd are exp lored in more detail in C hap ters 2, 4 and 5.
For marketers defining their company's communications strategy it becom es very impor- tant to consider tbe com pan y's representati on on these intermediary si tes by answering
Integrating online and offline communications
Purpose
To highlight differences in marketing communications introduced through the use of the Internet as a channel and the need to integrate these communications with existing channels.
Activity
List communications between a PC vendor and a home customer over the lifetime of a
product such as a PC. Include communications using both the Internet and traditional media. Refer to channel-swapping alternatives in the buying decision in Figure 1.14 to develop your answer.
3 4 Part 1 Digital marketing fundamentals
questions such as '\Vhich intermediaries should we be represented on?' and 'How do our offerings compare ro those of competirors in terms of features, benefits and price>'.
6 Independence of location
Electronic media also introduce the possibility of increasing the reach of company com- munications ro the global marker. This gives opportunities ro sell into international markers, which may nor previously have been possible. The lnrerner makes it possible ro sell ro a country without a local sales or cusromer service force (although this may still be necessary for some products).
In terms of deploying campaigns, these are further benefits of digital communications:
• A ccountability. D igiralmedia are potentially more accountable through the use of meas- urement systems known collectively as web analytics. Google provides a free tool known as Google Ana.lytics™ (www.google.com/analytics) ro enable irs advertisers ro rest the
val ue generated from irs ads. • Testing. Porenriall y, testin g becomes more st raightforward at a lowe r cost with rhe option
to trial altern ative creative executions, messagi ng or offers. Google offers another free tool- rhe Website O ptimizer- ro test alternative landing pages.
Mini case study 1.3 Online pureplay startup Travel Republic™ achieves growth through taking advantage of benefits of digital marketing
Travel Republic is the highest ranking independent online travel agent in the UK, with over 2 million travellers booking every year. It's an example of a pureplay that has deployed digital marketing techniques such as search, social media and email marketing to grow both in the UK and internationally.
Travel Republic topped The Sunday Times Virgin Fast Track 100 list four years after the company was launched. The Kingston-upon-Thames-based business was set up in 2003 and is the brainchild of three uni- versity friends- Paul Furner, managing director, Chris Waite, IT director, and Kane Pirie, finance and operations director.
Today the company can no longer be termed a startup. It has been purchased by the Emirates group, with revenues increasing 14.5 per cent in 2014 to £67.5 million, giving it an operating profit margin of 20 per cent and with separate sites for local audiences in Spain, Italy and Ireland.
The company employs more than 150 staff. TraveiRepublic.co.uk appears in the IMRG-Hitwise Hot Shops List, which ranks the UK's top 50 most popular Internet retailers, across all sectors (ranked by number of web visitors). In the online travel agency sector TraveiRepublic.co.uk is more popular than Opodo ™ and ebookers. com™, although ExpediaTM and lastminute.com™ rank higher.
A major reason for the growth of Travel Republic is that it has taken advantage of the 'pull' effect of web communications. Through using sponsored links in search networks such as Google Ads, It has been able to target its offering precisely to an online audience looking for a competitive price on a holiday or a flight to a particular destination. Of course, this has to be backed up by a strong proposition, an easy-to-use, high- performance website and trust in the brand indicated by user reviews and holiday guarantees (Figure 1.15).
TraveiRepublic.co.uk caters for a broad range of customers including families, couples and groups. The website offers charter, low-cost and scheduled airlines, powerful rate-shopping technology for hotel rooms and apart- ments, plus hotel reviews and resort guides written by its customers.
Customers can save up to 50 per cent on the price of a comparable package holiday purchased online or on the high street. TraveiRepublic.co.uk works with over 100 different flight operators and offers flights to more than 200 destinations. The website also offers over 30,000 discounted hotels, apartments and villas plus a wide range of other services such as taxi transfers, airport parking and car hire. The website gives customers complete flexibility with flights, hotels and durations.
Permission marketing Customers agree (opt in} to be involved in an organisation's marketing activities, usually as a result of an incentive.
Chapter 1 Introducing digital marketing 35
• Flexibility. Campaigns can be more flexible, with the capability to change copy or offers during a campaign. Alternative ads can be served within Coogle to evaluate which works best. Coogle AdWords also offers dayparting, where ads can be displayed at djfferenr times of the day.
• Micro-targeting. Alternative messages can be delivered for different auruences according to what they are searching for. Potentially a company can show a rufferenr advert in Coogle AdWords for each te-rm seard1ed on.
• Cost-control. Costs ca.n be controlled for each group of search terms entered by custom- ers through the search engine, managed collectively, and bids made can be increased or decreased with the aid of software.
Key challenges of digital communications
It is sometimes suggested by some suppliers of digital media that they are ' quick, cheap and easy' to deploy. This is a great misconception since there are many challenges that need to be overcome when managing digital campaigns. Again referring to a Coogle Ads campaign as an example, these include:
• Complexity. To enable the benefits we have mentioned above- such as personalisation, testing and dynamic variation in ads through rime- rime has to go into configuring the campaign, although the search engines provide defaults to enable easy setup. This reqwres specialist expertise either in-house or at an agency to manage the campaign.
• Responding to competitors. Since competitors can also change their approach rearuly, more resou.rce has to be used to monjtor competitor activity Automated tools known as bid management tools can assist with thjs- they will automatically check amounts com- petitors are paying an d then adjust them according to pre-defined rules.
• Responding to changes in technology and marketing platforms. Coogle and the other ad-serving comparues umovate to offer better capabilities for their customers. Tlus means that staff managing campaigns need training to keep up-to-date. Coogle offers 'Adwords Qualified Professionals' so that companies can be certain of a minimum skills level.
• Cost. Although costs can be readily controlled, in competitive categories the costs can be high , exceeding €10 per click.
• Attention. While online paid search ads are highly targeted and there is arguably little wastage, not everyone will view paid adverts, indeed there is a phenomenon known as 'banner blindness' where web users ignore online ads (see Chapter 9 for more details). Engaging with tl1e audience with advertising is also a problem in social networks and other publisher sites, whjch can lead to a very low rare of people clicking on ads.
Key communications concepts for digital marketing
In this section, we int roduce three key co ncepts that underpin rugital comnnmicarions and jnbound marketing across the rugitalmedia we have introduced in this chapter:
1 permission marketing; 2 content marketing; 3 customer engagement.
1 Permission marketing
Permission m arketing is an established approach to online marketing that is srill highly relevant today as a practical foundation for CRM and audience engagement. 'Permission marketing' was a term corned by Seth Godin. Godin (1999) nored thar wlule research used to show we were bombarded by 500 marketing messages a day, with the digital media frag- mentation caused by the advenr of the web and digital TV, t!Us has now increased to over
36 Part 1 Digital marl<eting fundamentals
Interruption marketing Marketing COITYllUl1IC8tions lhat ~t cuslometS' ac!Mties.
Content marketing The management of text, rich media, audio and video content aimed at engaging customers and prospects to meet business goals published through pmt and digital media including web and mobile platforms wi'Ooh is repurposed and syndicated to different forms of web presence such as publisher sites. blogs, social media and comparison sites.
3,000 a day! From an organisation's viewpoint, rhis leads ro a dilution in the effectiveness of the messages- how can the commw1icarions of any one company stand out? From the customer's viewpoint, rime is seemingly in ever shorter supply; customers are losing patience and expect reward for their arrenrion, rime and information. Godin refers to the traditional approach as interruption marketing . Permission marketing is about seeking the rustomer's permission before engaging rhem in a relationship and providing soruerhing in exchange. The classic exchange is based on information or entertainment- a B2B site can offer a free report in exchange for a cusromer sharing rheir email address or 'Liking' a brand, while a B2C sire can offer a newslerrer or access ro their wall wirh valuable content and offers. We cover the principles of permission marketing in more derail and with examples related ro CRM in Chap ter 6.
2 Content marketing
Success in permission marketing requires excepti onal, compellin g content. To emphasise the importa nce of content marketing to gaining permission, encouragin g sharing and ongo- ing engagement through webs ites and socia l media , rhe concepts of content marketing and content strategy have d eveloped to describe best-pract ice approach es to engaging audiences and achieving business o utcomes thro ugh content. Today, by conten t we refer ro the combination of st atic content for ming web pages, but also dynamic rich med ia content that encourages interaction . Videos, podcasts, user-generated content and interactive prod- uct selectors and quizzes should also be considered as content that shou ld be refined ro engage 1ssues.
You can see the challenge content strategy presents, since today there are so many differ- em types of content delivered in different forms to different places on different access plat- forms, yet it is increasingly important ro engage customers in social media .
The definition suggests these elements of conrent marketing str:Hegy need to be planned and managed:
1 Goals for content engagement value. Which types of content will engage rhe audience and support com·ersion ro a lead or sale? Is it simple product or services information, a guide to buying or using a product or service, that will engage your audience at different poims in the lifecycle shown in Figure 1.1?
2 Content medi a. Plain text, rich medi a such as Flash or Rich Lnterner applications or mobile apps (see Chapter 3), audio (podcasrs) and hosted and streamed video. Even plain text offers different format options from HTML text to ebook formats and PDFs.
3 Con tent distribution . Major distriburion activities that a re a key part of content market- ing are pa id promotion of content through ads, for exa mpl e on Facebook, Google or Linkedln , and free organic promotion th rough SEO and socia l media. PR using iJ,Ulu- encer outreach is also important. Content can also be automati cal ly sy ndica ted to dif- ferent types of sites th rough feeds , APis, microform ats or embedded in si tes through widgets displaying information delivered by a feed.
4 Content interaction and participation. Effective content roday is nor si mply delivered for static consun1ption, it should enable interaction, commenting, rati11gs and reviews. These also need to be monitored and managed borh in the original location and where rhey are discussed elsewhere.
5 Content management platform. Content needs to be managed by reams and provided to users on different digital devices. \Ve explain how ro audit conrenr as part of the overall digital experience in Chapter 7.
Smart Insights (2015a) explains the key elements of a content hub using the diagram shown in Figure 1.15, or, as it puts it, a 'content marketing machine':
1 Create the right types of sharable conrenr formats to meet customer interests and com- pany commercial goals. The quality and range of content must be sufficient and
Content marketing hub A central branded location where your audience can access and interact with all your key content marketing assets. In a practical sense. the content hub can be a b log or new section, an online customer magazine or a resource centre.
Chapter 1 Introducing digital marketing 3 7
Figure 1.15 The content marketing hub
Source: Smart Insights (2015a)
sustained ro compere. (Jn Chapter 9, the Smart Insights Content Marketing Matrix is presented as a method of reviewing the most appropriate content formats to use.)
2 A defined branded content marketing hub or repository for accessing all relevant content marketing assets.
3 Invest in seeding content and working with partner sires and influencers to increase awareness a11d sharing of content.
4 Content marketing should be linked into search marketing and particular search market- ing, since if there is a regular stream of quality content Google will favour the site when searchers are looking for information or products.
5 The right people, process and tools need to be in place to monitor content and sharing effectiveness in social media. This should include following up on any comments from social media.
38 Part 1 Digital marl<eting fundamentals
Customer engagement Repeated intetaebons through the customer lifecyde ~ted by ot*le and offline COO'lfTlLnCSbOns aomed at sltengtheni1g the long- tenn emotional, psycholcl9cal and physical ffles!ment a customer has with a brand.
Case study 1
Context
3 Customer engagement
This difficulty in gaining and keeping rhe arrention of audiences across today's fragme nted media landscape has led to rhe emergence of rhe concept of customer engagement as a key challenge with which digital marketers are increasingly concerned.
We need to be car eful to precisely define engagement since the term is often used loosely to describe short-term audience engagement with a single communication, such as when a prospect engages wirh a single landing page, email o r social media update. While this short- term interaction is important to boost response from these communications, what is argu- ably more important to business success today, and far more challenging, is long-term engagement through time with our prospects, customers and subscribers. There are so many competing paid, owned and earned communications today across media si res, blogs, social media a nd email, th at content marketi ng is critica l to get initial em-through and then main- tai n o ngoi ng interactions as suggested by the li fecyclc in Figure 1.1.
Ades tra (2017) d escribes custome r engagement as:
Repeated interactions through the customer lifecycle prompted by online a nd offline com- munications aimed at strengthening the long-term emotional, psychological and physica l investment a customer has with a brand.
T his bu ilds o n the definitio n from H aven (2007), stat ing that customer engagement is:
The level of involvement, interaction , intimacy, and influence an ind ividual has with a brand over time.
The two biggest barriers to marketers achie,ring engagement, according to Adesu a {2017), are gaining a single data view {31 per cenr of respondents agreed) and lack of an integrated customer lifecycle engagement plan (according ro 25 per cent of respondents).
Arguably, the biggest difference in communications introduced by the growth of digital media and the web is rhe capabiliry, or m any would say necessiry, to include customer's conversations as an integral part of communications. Today, proactively managing consumer participation rhat occurs rhrough social networks such as Facebook, Twiner and Linkedin, video postings and comments on You Tube and myriad blogs and forums is essential, since when a positive sentiment is expressed by a real person independent from a company, rhis confers credibility o n rhe company.
Equally, there are negative senti ments or comments made by consumers on the web rha r need to be managed. Fo r exam ple, o n o ne s ire (www.haveyou rsay.com) a purchaser of a car was highly cri tical abo m a make of car a nd t he com ments appeared nea r the top o f the Google search results page when someone sea rched for the b rand, yet for several yea rs the ma nufac turer di d no thing ro manage thi s. We review techn iques to build relatio nships in order to increase a udience engagement th rough time in C hapter 6.
To condude rhis chapter, read Case Swdy 1 fo r t he background o n the success factors rha t have hel ped bui ld one of rhe bigges t o n lin e bra nds.
eBay thrives in the global marketplace
It's hard to believe that one of the most well-known dot.coms has now been established more than 20 years. Pierre Omidyar, a 28-year-old French-born software engineer living in California, coded the site while work- ing for another company, eventually launching the site
for business in September 1995 with the more direct name 'Auction Web'. Legend reports that the site attracted no visitors in its first 24 hours. The site became eBay in 1997. At the end of 2017 eBay had 168 million 12-month active buyers, an increase from 90 million active in 2010. Nearly two-thirds of transactions
are now international. This shows how established pureplays have continued to grow with global adoption of the web.
This summary and others in the text are based on the SEC filing of the business. The Security and Exchange Commission (SEC} required by company law in the US gives deep, relatively hype-free insights on the main online platforms based in the US and is recommended for students studying these types of business to show the success and risk factors.
Mission eBay describes its purpose as to 'pioneer new communi- ties around the world built on commerce, sustained by trust, and inspired by opportunity'. eBay's 2016 report describes the company's view on current marketing approaches of exploiting Big Data and Artificia l Intelligence:
To deliver the most relevant shoppjng experience, we continue our efforts to better understand, organ- ise and leverage eBay's inventory. With our struc- tured data initiative, we are able to begin organising our vast inventory around products rather than list- ings and aggregate insights into supply and demand. We continue to broaden the coverage of structured data, which enables us to create and start rolling out new consumer experiences that are modem, simple and differentiated. One of our goals is to deliver a more personalised shopping experience by deter- mining what products to show our consumers and highlight the incredible price and selection advan- tages that eBay often provides across categories.
eBay is best known for its retail marketplaces, with a core mission to 'create the world's online marketplace'. In its most recent annual report, it describes its vision as to be present where people spend t he majority of their time online, becoming part of the 'fabric' of their day-to- day online experience. Another marketplace owned by eBay is StubHub, one of the largest ticket marketplaces, with a footprint of 48 countries. PayPal is also part of eBay. The Paypal business was acquired in 2003 but was repurchased at a later date and now trades separately. This case focuses on the best known eBay business, the eBay Marketplace.
Revenue model The vast majority of eBay's revenue is for the listing and commission on completed sales. For PayPal purchases an additional commission fee is charged. The margin on each transaction is phenomenal since once the infra- structure is built, incremental costs on each transaction are tiny - all eBay is doing is transmitting bits and bytes
Chapter 1 Introducing digital marketing 39
between buyers and sellers. To grow revenue, eBay has acquired and developed other sites such as comparison site Shopping.com and StubHub (event tickets). eBay has also created vertical formats, such as Classifieds, Daily Deals, Fashion, Motors (vehicles, parts and accessories) and Electronics.
eBay also expanded into providing infrastructure for other retailers in 2011 with its purchase of GSI, a provider of e-commerce and interactive marketing services encompassing websites and fulfilment centres to enter- prise clients that include some of the world's leading brands and retailers covering merchandise categories including apparel, sporting goods, toys and baby, health and beauty and home.
Advertising and other non-transaction net revenues represent a relatively small proportion of total net reve- nues and the strategy is that this shou ld remain the case.
Proposition The eBay Marketplace is well known for its core service, which enables sellers to list items for sale on an auction or fixed-price basis, giving buyers the opportunity to bid for and purchase items of interest
Software tools are provided, particularly for frequent traders, including Turbo Uster, Seller's Assistant, Selling Manager and Selling Manager Pro, which help automate the selling process, the Shipping Calculator, Reporting tools, etc. Today over 60 per cent of listings are facili- tated by software, showing the value of automating post- ing for frequent trading. An example of a new Shopper feature that is part of its OVP is the eBay ShopBot on Facebook Messenger. This uses Artificial Intelligence to provide a personalised shopping assistant that helps people find the best deals from eBay's one billion listings.
Fraud is a significant risk factor for eBay. To respond , eBay has developed 'Trust and Safety Programs', which are particu larly important to reassu re customers since online services are prone to fraud. For example, the eBay feedback forum can help establish credentials of sellers and buyers. Every registered user has a feed- back profile that may contain compliments, criticisms and/or other comments by users who have conducted business with that user. The Feedback Forum requires feedback to be related to specific transactions, and Top Seller status was introduced in 2010 to increase trust in the service. There is also a Safe Harbour data protec- tion method and a standard purchase protection system.
eBay has increased use of mobile commerce since 2009 as consumer habits have changed. Mobile accounted for 20 per cent of purchases in 2014 and by
40 Part 1 Digital marketing fundamentals
the end of 2017 eBay related that more than 50 per cent of sales involved at least one mobile touch point.
According to the SEC filing, eBay summarises the core messages to define its proposition as follows:
For buyers
• trust; • value; • selection; • convenience.
For sellers
• access to broad markets; • cost-effective marketing and distribution; • access to large buyer base; • good conversion rates.
In 2007, eBay introduced Neighbourhoods (http:// neighbourhoods.ebay.com), where groups can discuss brands and products they have high involvement with . This social commerce experiment has now ended.
In January 2008, eBay announced significant changes to its Marketplaces business in three major areas: fee structure, seller incentives and standards, and feedback. These changes have been controversial with some sell- ers, but are aimed at improving the quality of experience. Detailed Seller Ratings (DSRs) enable sellers to be reviewed in four areas: (1) item as described; (2) com- munication; (3) delivery time; and (4) postage and pack- aging charges. This is part of a move to help increase conversion rate by increasing positive shopping experi- ences, for example by including more accurate descrip- tions with better pictures and avoiding excessive shipping charges. Powersellers with positive DSRs will be featured more favourably in the search results pages and will gain additional discounts.
Competition Although there are now few direct competitors of online auction services In many countries, there are many indi- rect competitors. The SEC filings describe competing channels as including online and offline retailers, dis- tributors, liquidators, import and export companies, auc- tioneers, catalogue and mail-order companies, classifieds, directories, search engines, products of search engines, virtually all online and offline commerce participants and online and offline shopping channels and networks. Amazon is one of the biggest competitors since it also has marketplace sellers integrated into its products listings. eBay's latest SEC filing notes: 'Con- sumers and merchants who might use our sites to sell goods also have many alternatives, including general ecommerce sites, such as Amazon and Alibaba, and more specialised sites, such as Etsy.'
Competitive factors today are listed as:
• ability to attract, retain and engage buyers and sellers;
• volume of transactions and price and selection of goods;
• trust in the seller and the transaction;
• customer service; • brand recognition; • community cohesion , interaction and size; • website, mobile platfonm and application ease-of-use
and accessibility; • system reliability and security; • reliability of delivery and payment, including customer
preference for fast delivery and free shipping and returns;
• level of service fees • quality of search tools.
Objectives and strategy The overall eBay aims are to increase the gross merchan- dise volume and net revenues from the eBay Market- place. More detailed objectives are defined to achieve these aims, with strategies focusing on:
1 Acquisition: increasing the number of newly regis- tered users on the eBay Marketplace.
2 Activati on: increasing the number of registered users who become active bidders, buyers or sellers on the eBay Marketplace.
3 Activity: increasing the volume and value of transac- tions that are conducted by each active user on the eBay Marketplace.
The focus on each of these three areas will vary according to strategic priorities in particular local markets.
eBay Marketplace growth is also driven by defining approaches to improve performance in these areas. First, category growth is achieved by increasing the number and size of categories within the marketplace, for example: Antiques, Art, Books and Business & Indus- trial. Second, formats for interaction: the traditional for- mat is auction listings, but it has been refined now to include the 'Buy-It-Now' fixed-price format. This fixed- price listing now accounts for well over half of all transactions.
eBay's growth strategy
In its SEC filings, success factors eBay believes are important to enable it to compete in its market include:
• ability to attract buyers and sellers; • volume of transactions and price and selection of
goods;
• customer service; • brand recognition.
According to its 2010 SEC filing:
Our growth strategy is focussed on reinvesting in our customers by improving the buyer experience and seller economics by enhancing our products and ser- vices, improving trust and safety and customer sup-
port, extending our product offerings into new formats, categories and geographies, and imple- menting innovative pricing and buyer retention strategies.
Search marketing is a key technique for eBay to meet its aim to become part of the 'fabric' of their customers' day-to-day online experience. If you search for 'low-cost
hair curlers' or similar you will see eBay features both in the sponsored results (Google Shopping ads with images) and within the organic results.
It also notes that in the context of its competitors, other factors it believes are important are:
• community cohesion , interaction and size; • system reliability; • reliability of delivery and payment; • website convenience and accessibility; • level of service fees; • quality of search tools.
This implies that eBay believes it has optimised these factors, but its competitors still have opportunities for improving performance in these areas, which will make the market more competitive.
Chapter 1 Introducing digital marketing 41
Updating brand positioning using tradit- ional media In an interview with eBay UK marketing director Gareth Jones in, Marketing Week {2016}, he explained that 'We don't want to be defined by that on line car boot sale repu- tation anymore. We need to get people to consider eBay in a completely different way. The UK is the petri dish for testing a new approach to rebuilding the brand globally. It is all about a shift away from the marketplace and over to being the ultimate shop.'
He is candid that a past focus on prioritising digital channels has had a 'small impact' on changing eBay's perception. Despite stating we' re in an age of digital- based marketing, he believes TV is the best channel for brand building. This is based on regional tests in the Summer that proved TV is the best place to get people to reappraise eBay as a brand:
TV is sti{{ on fire and a wonderful medium to get neu- rons into people's brands in order to rewire their per- ceptions. If you ask someone where they are shopping on Black Friday then TV is the best place to put eBay at the front of their consideration set.
Sautee: BBC (2005) eBay's 1 0-year rise to world fame. Robert Plummer story from BBC News, 2 September, http:l/ news.bbc.co.uk/go/pr/fr/ -/1/ hi/business/420751 O.stm (accessed May 2018); SEC (2008) United States Securities and Exchange Commission submission Form 1 0-K; eBay submis- sion for the fiscal year ended 31 December 2007.
Question Discuss how eBay has had to evolve its online brand proposition and communicate it to achieve contin- ued growth.
1 Digital marketing refers to t he use of digital media, technology and data to reach and interact with audiences using different digital devices and platforms, co1nbined with traditional media, to achieve market ing objectives.
2 A customer-centric approach to digital marketing considers the needs of a range of cus- tomers using techniques such as personas and customer scenarios (Chapter 2) to under- stand customer needs in a multichannel buying process. Tailoring to individual customers may be practical using personalisation techniques.
3 Electronic conunerce refers to bo th electronical ly mediated financial and informational . transacnons.
4 Digi t al business is a broader term referring to how technology can benefit all internal business processes and interactions with third parties. This includes buy -side and sell - side e-comrnerc.e and the internal value chain.
42 Part 1 Digital marketing fundamentals
Exercises
5 £-commerce transac tions include business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C) and consumer-to-business (C2B) transactions.
6 There are six key digital media channels: search marketing (including organic and paid); online PR; parmership (affiliate) marketing; display advertising; email; and social media marketing. These communications techniques are best used in an integrated form by applying the concepts of content, inbound and pe rmission marketing.
7 Digital communications are used to develop existing markets through enabling an addi - tional communications and/or sales channel with potential customers. They can be used to develop new intern ational markets with a reduced need for new sales offices and agents. Companies can provide new services and possibly products using the Internet.
8 Digiral marketing can support the full range of marketing functions and in doing so can help reduce costs, facilitate communication within and between organisations and . . 1m prove custo mer serv1ce.
9 Interact ion with custo mers, supplie rs a11d distributors occurs across the Internet. T he web and e ma il are particularly powerful if t hey can be used to create relevant, personal- ised comm unicatio ns.
10 T he ma rketing benefits the Intern et confers a re advantageous both ro the large corpo ra- tion a nd to the small o r m edium-sized enter prise. T hese include: • a new med ium for advertis ing a nd PR ; • a new cha nnel for dist ributi ng products; • opportunit ies for expansion into new markers; • new ways of enhancing customer service; • new ways of reducing costs by reducing the number of staff in order fulfilment.
Self-assessment exercises
1 Explain digital marketing. 2 Explain the importance of integrating digital and traditional communications chan-
nels through the customer lifecycle. 3 Outline different applications of digital marketing that can help meet business
goals. 4 Explain what is meant by electronic commerce, social commerce and digital busi-
ness. How do they relate to the marketing function? 5 Six digital media channels are introduced in this chapter. What are they and how
do they work to reach, engage and convert an audience? 6 Summarise the main communications differences between digital and traditional
media. 7 Distinguish between social media marketing, inbound and content marketing. 8 How can digital marketing be used to develop new markets and penetrate existing
markets? What types of new products can be delivered by the Internet?
Essay and discussion questions
1 Some would see digital media primarily as a means of advertising and selling prod- ucts. What are the opportunities for digital marketing?
2 'Digital marketing and inbound marketing represents a pull medium for marketing
rather than a push medium.' Discuss. 3 You are a newly installed marketing manager in a company selling products in the
business-to-business sector. Currently, the company has only a limited website containing electronic versions of its brochures. You want to convince the directors of the benefits to the company of investing in the website. How would you present your case?
4 Explain the main benefits that a company selling fast-moving consumer goods should gain from its website and integrated digital campaigns.
Chapter 1 Introducing digital marketing 43
Examination questions
1 Explain the scope of digital marketing. 2 Which digital marketing techniques can be used to increase awareness of a brand
and encourage interaction with the brand? 3 A digital marketing manager must proactively manage all the main methods
by which consumers may visit a company website. Describe these methods and corresponding communications techniques.
4 Imagine you are explaining the difference between digital marketing and e-commerce to a marketing manager. How would you explain these two terms?
5 What is the relevance of 'inbound marketing' for digital marketing? 6 Explain how digital platforms can be used to increase market penetration in existing
markets and develop new markets.
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Smart Insights (2017) What is customer lifecycle marketing? Blog post by Dave Chaffey, 8 November, https://www.smartinsights.com/ecommerce/web-personalisation/what-is-lifecy- cle-marketing/ (accessed May 2018} .
Waterman, R . H., Peters, T. J. and Ph ill ips, J. R. (1980} Structure is not orga11isation, McKinsey Quarterly In-house Journal, McKinsey & Co., New York.
\Veinberg, B. and Ekin, P. (2011) Social spending: managing the social media mix, Business Horizons, 54(3), 275-82.
[ Weblinks J ~- ----=--------======:::::::
Leading portals and blogs covering digital marketing developments
• Prop het (https://www.prophet.com/thinking/). US analys t w ith free reports on digital
transformat ion and socia l business. • Direct Marketing Association UK (www.dma.org.uk). Source of up-to-date data protec-
tion advice and how-to guides about online direct marketing. • Econsultancy.com (www.econsultancy.com}. UK-focused portal with extensive supplier
directory, best-practice wh ite papers and forum . • eMarketer (www.emarketer.com). Includes repo rts on media spend based on compilations
of other analysts. Fee- based service. • iMediaConnection (www.imediaconnection.com). Ankles covering best practice in digital
media channels . • Interactive Advertising Bureau (www.iab.net). Best practice on interact ive advertising. See
also www.iabuk.com in the UK. • The Interactive Media in Ret ail (www.imrg.org). Trade body fore-retailers reporting on
growth and practice within UK and European e-commerce.
Chapter 1 Introducing digital marketing 4 5
• M ary M eeker (www.kpcb.com/intemet-trends). An nnalyst :It Kleiner Perkins Caufield Byers who presents rrends and forecasts on digital technology yearly with a focus on mobile channels.
• M a rketing Sherpa (www.marketingsherpa.com). Case sn1dies and news about online marketing.
• O fco m (www.ofcom.org.uklresearch-and-data). The Office of Communication has an annual Communications Market reporr on the adoption of digital media including tel- ecommunications and rhe lntemer (including broadband adoption), digital television and wireless services.
• Smart Insights (www.smartinsights.com). Covers all developmenrs in digital marketing to support this book. Edited by Dave Chaffey. See www.smartinsights.com/book-support/ for resources recommended for each chapter.
Online marketplace analysis: micro-environment
Chapter 2 Online marketplace analysis: micro-environment 4 7
Questions for marketers
Key questions for marketing managers related to this chapter are:
• What are our capabilities for understanding our online marketplace?
• How can I develop better understanding of the potential significance of the behaviour of players in the micro-environment to the future of our business?
• How do I complete a marketplace analysis and how does this inform our digital marketing planning?
• How are customers' needs changing as digital platforms develop and what are the implications of such changes?
• How do I compare our digital marketing with that of our competitors?
• How do we find suitable intermediaries at the planning stage of a d igital marketing strategy?
Links to other chapters
• Chapters 2 and 3 provide a foundation for later chapters on digital marketing strategy and implementation.
• Chapter 3 builds on the concepts, frameworks and ideas introduced in th is chapter
• Chapter 4 explains how environment analysis is used as part of strategy development
• Chapter 5 considers the principal functions of the mix in digital strategy development.
(~l_n_tr_o_d_u_c_t_io_n _______________________________________________________ ~ Paths-to-purchase The different sites, channels and devices and information sources that consumers use to inform their purchase decision for a product or service. Also known as corwersion pathways on a site.
The dema nds o n m arketers who are respo nsible for planni ng d igital m arketing strategies are growing significantly as t hey work o ut how to manage com mercial contributions, t he com- plexities of the co mpetitive marketplace, digital social communities and innovative tech nolo- gies . T he growth in use of digital media and rechnology has led to new paths-to -purchase that are highly complex as purd1ase d ecisions are potentially influenced by ma ny toudlpoinrs (see Figure 1.1) . In the online marketplace, purch ase decisions are infl uenced by ma ny sources of information (e.g. search results, customer reviews, online word -of-mou d1, socia l
48 Part 1 Digital marketing fundamentals
Online marketplace Exchanges of information and commercial transactions between consumers, businesses and governments completed through different forms of online presence such as search engines, social networl<s, comparison sites and destination sites.
M ulti-screening A term used to describe simultaneous use of devices such as digitai 1V and tablet.
eWOM (electronic word of mouth) An extension of traditional face-to-face word-of· mouth, whereby communication exchanges between indi-viduals take place in digital en-vironments.
media conversations and company websires}. Additionally, potential customers are using multiple dev ices (sometimes simultaneously} ro garner informacion that wil l inform their purchase decisions - for example, using sma rtphones or tablets, willie watching TV. This process is known as multi-scr eening. The digital influences are also supplemented by expo- sure ro rraclirional communications such as TV, print or raclio advertising.
eWOM (electronic word of m outh), is a term used in academic research of cligiral dia-
logues, comments and conversations in consumer markets. Digiralmarkering practitioners often use socia l media networks and blogs to engage their target audience in eWOM
. conversations.
In the next two chapters we look at how organisations can assess rhe digital environ- ment and, in doing so, identify implications for digital marketing strategy and planning. In this chapter we focus on th e micro-environment and in Chapter 3 the macro-environ- ment. We begin by considering situation analysis and rhe digi t al mru·keting environment, then explore how customers interact with digital markets before looking ar each of the key sets of players in the micro-environment: customers, competitors and suppliers. This chapter concludes by exploring business models fore-commerce and how existing compa- nies can create business and revenue models rhat take advantage of digital marketplace opportwurt es.
Situation analysis for digital marketing
Situation analysis Collection and review of information about an organisation's external environment and internal resources and processes in order to refine its strategy.
The digital marketing environment or 'online m arketp lace' that an orgru1 isarion competes in is complex and dynrunic. Organisations should carefully analyse the market context in which they operate, identify opportunities and then plan how they can compere effectively. Understanding an organisation's environment is a key parr of situation analysis , and for m s a solid foundati on for all types of marketing planning but especial ly when devising a digit al marketing strategy, as shown in Figure 1.9.
What should be reviewed in situation analysis? From the perspecrive of a business creating a digital marketing plan, situation analysis shouJd review the following factors:
A Customers. Digital marketing propositions and communications should be based around rhe customer - their characteristics, technology usage, behaviours, needs and wants.
B Marketplace analysis. Including intermediaries, influencers and potential partners. This involves identifying and reviewing rhe main on lin e influences on purchase behaviour. There are many influences to consider, including search engines, publisher media sites, blogs, review sires and social networks. Marketplace ana lysis a lso involves reviewing opporttmiries and threats from cligitalmedia and technology, including new business and revenue models.
C Competitors. It is essential to understand how organisati ons compere in a par ricuJar marketplace; benchmarking customer proposi tions and communications activities against direct and indirect competitors and o ut-of-sector businesses can identify oppor- runiries for new approaches and digi t al marketing activities that need to be imp roved .
D Wider macro-environment. These are the broader strategic influences we cover in Chapter 3, including social, legal, environmental, politicaJ and technological influences.
E InternaJ review. Another major parr of rbe situation involves an inward-looking, internal review of rh e effect iveness of existing cligiral marketing approacl1es. This will include reviewing current resuJrs from digital marketing by review of key perfo rm ance indicators (KPis) and dashboards and the organisationaJ capabi liti es and processes used to manage cligi ral marketing, summarised as strengths and weaknesses. We explain how to review performance by selecting relevan t goals and KPi s in Chapter 4 (digi tal strategy} and Chapter 10 (digital analyrics}.
Chapter 2 Online marketplace analysis: micro-environment 49
Essential digital skills Marketplace analysis
There are a wealth of sites to help learn more about customers, competito rs and poten- tial partners. These sites can help w ith case study assignments and for marketplace analysis as part of d igital marketing planning.
We recommend you dev elop these skills:
• customer analysis using tools such as those in Table 2.1 to learn about customer profiling, behaviour, technology usage and its influence on the p aths-to-purchase;
• c ompetitor and partner analy sis to benchmark their popularity and to find opportuni - ties to apply their techni ques and improve o n them.
Practical ideas to boost employability by showcasing your interest and experience:
• Understand how the concept of personas can be applied in practice to create more relevant communications by studying examples of how businesses use them.
• Use the Google Keyword Planner to show you know how to review consumer search intent.
• Use tools for backlink analysis (such as Moz™, M ajesticrM, Buzzsumo™, see Chapter 9) to understand competitors' content marketing and organic SEQ techniques and opportunities.
To aud it your d igital marketing skills across the RACE planning framework, use the Smart Insights Skills Assessment tool available at: http://bit.ly/smartdigiskills.
( The digital marketing environment
Micro-environment The players (actors) and their interactions. which influence how an organisation responds in ~s marl<etplace.
Macr o-environment Broad forces affec~ all organtsabons In the marl<etplace. rduding social, tecllnologiCal, economic, political, legal and ecologicallnftuences.
Before exploring how the influencing factors shape rhe digital marketing environment, it is important to underst and how firms operate in different contexts. While digital has become mainstream and the d istinc t ion between on- and offline has been eroded, it is important to recognise th at no t a ll orga n isations arc fu ll y digitall y engaged an d the importance of digi tal cha nnels differs between industry sectors. T herefore, each o rganisa- tion has it s own u niq ue space within t he onlin e and offl ine world, wh ich should be co n- sidered when a na lysi ng its marketing enviro nm ent ::~ nd p lanni ng a d igita l m a rketing stra tegy. Underst a ndin g tl1e nu a nces of this space is key to defini ng how to interact w ithin t heir own bu si ness, w ith co mpeting busin esses a nd th e wider fo rces shapi ng the marketin g
. env 1ron ment.
T he (digital) ma rketing envi ro nment invo lves two major elements: 1) mic ro-environment and 2) mac ro-environment (Figure 2 .1). The micro-envi ronmem is known as the operating environment, and focuses on the players that shape rhe immediate trading environ m ent. T hese players include the customers whose needs and wanrs are to be satisfied, along with rhe competitors, intermediaries and suppliers. These groups of players shape the online marketplace and a digital marketer needs to understand rheir behaviour and interpret this correctly in order to build and adapt an efficient and effective digital marketing strategy.
The macro-environment, sometimes known as 'rhe rcmO£e environment', consists of external forces thar can significantly affect success. These forces originate from the m ar- ketplace that is largely beyond the immediate control of an organisation (e.g. economk conditions, changes to international trade legislation, technological developments and innovations, social change and political interventions). It is important to note the growing
50 Pa rt 1 Digital marketing fundamentals
Fig ure 2.1 The digital marketing environment
Macro-environment International • Economic factors • Legal constraints • Cultural factors
Micro-environment D D D Technology • Innovation • Trends
~ '\ / ' J Organisation ~ ~ ~~ -; y -; \ " ./ "
/
Society • Public opinion • Moral constraints • Ethical constraints
DO D Country specific
• Economic factors • Legal constraints • Cuhural factors
Key 0 Suppliers D Competitors 6 Intermediaries 0 Customers
Environmental scanning The process of continuously monitoring and analysing events in an organisation environment(s), that have impflcations for planning.
Click ecosystem Describes the customer behaviour or flow of online visitors between search engines, media sites and other inte rmediaries to an organisation and its competitors.
Online market ecosystem Interactions between different online systems related to a specific hardware or software technology, which may be independent or developed by a particular brand.
APis Application programming interfaces, which facil~ate digital interactions by automatically sending and receiving requests and responses electronically.
influence of social media networks, which are increasing the capacity of digital channels to inform and shape opinion on a global scale. For more detailed discussion, see Chapter 6. We also study the parts of the macro-environment that are significant to developing digital strategy in Chapter 3.
The marketing environment can have a profound impact on performance; conse- quently, an organisation shou ld continually monitor both micro and macro influences. This process is called environm ental scann ing in traditional marketing and online. Marketplace analysis helps to define the nature of th e digital competitive market, or click ecosystem . Major online players such as Facebook, Google, Apple and Amazon have developed their own infrasrrucmre or online m arket ecosyst ems that connect websites through data exchange, givi ng opportunities to enhance th e customer experience a nd extend the firms' reach and influence. For example, Facebook uses APis (e.g. Graph and Marketing) which enable companies to create audience profiles and run digital marketing campaigns. The various functions of these APis are to facilitate greater level s of auto- mated interactions between Facebook users' newsfeeds, and profile pages. Google has developed its own ecosystem related to search marketing and mobile and is utilising the proliferation of new digital devices owned by individuals and firms: Google's voice - activated Assistant and Google Home devices offer hands-free commands that can con- trol various smart home devices. Apple have offered vertical integration of its devices for a number of yea rs and Amazon has irs own offer: the Alexa ecosystem, which is deliver- ing voice-activated computing into many homes (see Mini case study 2.1: Alexa, what's the weather for today?). As parr of marketplace analysis, companies shonld evaluate the relat ive importance of these ecosystems, the required resources and the integration of their online services. Digital marketing insight 2.1 recommends marketplace analysis data sources and Activity 2.1 gives an example of how ro apply them.
(
Chapter 2 Online marketplace analysis: micro-environment 5 1
Mini case study 2.1 Alexa, what's the weather for today?
The Amazon Alexa t M app started out as an Amazon connected speaker; today it has evolved into an Intelligent Personal Assistant (IPA), which is expanding the Amazon ecosystem. It is popularised through products such as the Amazon Echo, a device that can play back music, tune into radio stations, find local weather forecasts, read the news, link into smart technology-enabled devices within the home, or remotely, order takeaway food , search for flights and travel information and order a ride from Uber, p lus lots more.
Alexa App has enabled Amazon to integrate thousands of third-party suppliers in the Alexa suite of skills , giving the ecosystem the capability to grow very quickly. New target markets for the IPA are constantly emerg- ing but digital marketers should never forget the importance of the marketing environment and the needs and wants of the end consumer if they are to succeed.
For example, Toy manufacturer Mattei™ developed Aristotle, a sophisticated all-in-one voice-controlled baby monitor, which promised to mind the baby as well as educate children as they grow. Mattei had plans for a child-centre smart hub, using artificial intelligence, which could dim room lights to sooth a crying baby, help children with their school work and respond to multiple learning needs. But toymaker Mattei withdrew the Aristotle in the autumn of 2017 as concerns were raised about personal privacy and parental concerns about the device interrupting how children naturally learn to play.
Alexa's IPA offers many opportunities to stimulate interaction with emerging markets: it is currently bilingual and can understand spoken English and German. Other languages (e.g., Hindi and Japanese) are in develop- ment. But this case study highlights that it remains important to consider the context of new markets and understand the micro and macro influences in the marketing environment if negative outcomes are to be avoided.
Source: Wi<ipedoa (2017) Amazon Alexa https://en.wikipediaorglwiki/Amazon_Aiexa (accessed December 2017); Tsukayama, T. (2017) Mattei has cancelled plans for a kid-focused AI device that drew privacy concerns, The Washington Post, 4 October 2017, https:J/www.washington- post.com/newslthe-swi tch/wp/2017/1 0/ 04/ mattel-has-an-ai-device-to-soothe- babies-experts-are-begging-them-not -to-sell-it/?utm_ tenn=.ea560655e223 (accessed December 2017).
Understanding how customers interact with digital markets '-~-
In the physical world, 'going ro the shops' is a well-understood concept, but less is known about the range of uiggers and influences that can shape a shopper's journey and inform their ultimate purchase decision . In the digital world, the same basic principles are t rue, but the online cusrome.r encounters many more 'touch points' (digiraJ triggers and influences), which influence their decision making (e.g., websites, social media content and blogs) . With increasingly w idespread use of digital teclmology, the digital rouchpoints extend beyond digi - tal chan nels a nd can influence purchase decisions before, during and after a shopping enco un- ter. It is the modern marketer's job to make the bt:st investments to fea ture their bra nds and provide releva nt content to support this d ecision-making process at every stage of cl1e cus- tomer jou rney, especially as customers are interacting with brands in com mercial and social conrexts across multiple touch points (Lemon and Verhoef, 20 16; Edelman and Singer, 2015) . To help understand customers' interactions with physical and digital rouchpoints, t riggers and influences, journeys maps are increasingly used to model behaviour of different types of target audiences. (See Figure 2.2 for an example of a customer journey map.)
To help understand the influences on online customer journeys it is useful to produce an online marketplace map, as shown in Figure 2.3, which summarises how target customer segments might be influenced by different types of digital sires. The main elements of the online marketplace map are:
1 Customer segment.s. The marketplace analysis helps identify and outline different target segments, which ha\'e implications for digital marketing, and helps ro understand the target group's online media consumption, behaviour and relevant types of digital con- rent. In a digital campaign or website design project, personas can be used whelp under- stand the preferences, characteristics and onli11e behaviours of different target markets.
52 Part 1 Digital marl<eting fundamentals
Figure 2.2 An example of a customer journey map
Traditional communication
Digital communication out-of-store
Digital communication in-store
Product experience
Share of search The audJOOCe share of Internet searches achieved by a particular audience n a partiCUlar marl<et.
TV
Awareness Stimulus and
inspiration
Consideration Develop
preference
'-'->orrroao-ccnt..,. ~by Facebockor -social meda
Pwc:hase Buy ln-stOte or
online
&perlence product On-pack interaction
Social discovery 0 \-
Display \
\
\
I I I 1 lDop dosed- share
\ I -~-
1 potSOnal ._.-or &larch 0 ,
- ; oa ... "' social I I ... , Online vatue proposition I I
Website/mobile -.....:..t-,:------i drives vkiit to website
' 0 based CWI content or off• I I~ ,.
On·pad< promotion encourages lntetaction on smartphone. tablet or desktop
' Ad remar1<eting Buy produca I 1 I
I I
Email ----1-- Slto vtsfio.- added to
'cookie pool' - sees ad on I 1·----------------~ l ~·
remar1<etlng ---j
social netwM or publisher site
I
0 Smartphone So8s local ad CK trial
0014>00 sent by SMS
SubSCr11>os to CRM - amal otttwS. events and nulritkln Wormation
Interactive display
---1-------+--- ln-siOfe interactive At home or at di$play o11tn trial wor1<
2 Search intermediaries. The main search engines a rc rypically Coogle, Yahoo!, Bing™ and AskTM, but others are important in so me markers such as China (Bai duTh1) and Russia (YandexT~'>~) . There are companies that provide speciali st audience data to enable a digital marketer to discover the relative importance of particular search engines (a nd other types of site) in different countries (e.g. ComScoreTh1, HitwiscTh1, SimilarWcbTM and N ielsen™). Search engines have become so significant that their sea rch trends are used to predict future sales volume. Choi a nd Varian (20P) note that Coogle Trends data on search volumes through rime is very useful for predicting levels of spend ing. They argue that 'these query indices (Coogle Trends data) are often co rrelated with various economic indicators and may be usefuJ for short- term economic predictions'. These authors are not s uggesting that Coogle data can be used to predict th e future but that it can be useful for predicting th e present: nowcasting. The releva nce ro di gitalm:uketers is the capacity to understand and identify s pecific purchasing tri gge rs, which can influence economic perfo rmance. According to Aswani et al., (2018), it is important for firms to use reliable sources of sea rch anaJyrics such as customer search data , rankings and links between s ites. Compa - nies should know which sites are effective in ha rnessi ng sea rch traffic and either partner with them or try to obtain a s hare of rhe search traffic using rhe search engine marketing a nd affiliate marketing techniques explained in C hapter 9. Well-known, trusted brands that have developed customer loyalty are in a good position to succeed o nline since a common consumer behaviour is to go stra.ight to the sire through entering a URL or from a bookmark or email. Alternari,·ely, they may search for the brand o r URL. By evaluating the type and volume of phrases used to search for products in a given m arket , it is pos- sible to calculate the rotaJ potenrial opportunity and the current share o f search terms for a company. Share of search can be determined from web analytics reports from the company site, which indicate the preci se key phrases used by visitors to actually reach a site from different search engines.
Cha pter 2 Online marketplace analysis: micro-environment 53
F igu re 2.3 An online marketplace map
(
1 Customer segments
Different customer segments with specific needs
Create personas for key audiences
Existing vs new
Web savvy Non-web savvy
Demographic segmentation
Utecycle segmentation
Psychographic segmentation
Aggregators M a~emative term to price-comparison sites. Aggregators Include product. price and service information comparing competitors within a sector such as financial services. retail or travel. Their revenue models commonly incklde affiliate revenues (CPA). pay-per-cliCk advertising (PPC) and display advertising (CPM).
Affiliates Companoes promotilg a merchant typically tiYough a commission-based arrangement either dorect or through an affiiate network.
2 Search 3 Intermediaries intermediaries and media sites
A:. Search flows natural and paid Different search types : • Generic search • Product -s pecific search • Brand search Search engines
Yahoo! Uve Ask
Other search
networks
Vertical search engines
Specialist r-directories
Purpose of mapping is to identity: • Main marketspace actors • Their relative importance • Relative visibility in marketplace
given different customer journeys
Horizontal portals or mainstream
media
Niche media sites or
social networks
Aggregators and
super-affiliates
Small-affiliates and blogs
t-
t-
8: Intermediary flows to different types of
intermediary
4 Destination sites
Company site
r+ ~ OVPs
Direct competitors
I~
OVPs
Indirect competitors
OVPs
OVPs= Online value propositions
3 Intermediaries, in fluencers and media or publisher sites. Media si tes a n d o ther i nter me - dia r ies s u ch as ind iv idu a l influe n cers, socia l n etwork s, aggregators a n d affiliates a re oft e n s u ccessful in a ttractin g v is itor s vi a c us t o m er search o r direct t o their we bs ites.
Compa nies n eed to a ssess p o te nti a l o nline m ed ia a n d d istr ibu t io n pa rtne rs in the catego- ries s h own in Fig ure 2.3: • Mainstream news media sites or portals. T h ese include traditio n a l (fo r exa mple,
FT.com, The T imes, Guardian} or p u rep lay (like Coogle News) . • N iche/vertical m edia sites. For exa m ple, Econsu lrancyTM, ClickZ.comTM and Market-
ing Land™ a re in a busi n ess-to-business niche in marketing. • Social net w orks. For example, Facebook, Tnstagram, Twitter, Linkedln. • Price-compariso n sites (also known as aggregators). For example, Coogle ShoppingTM,
PricegrabberTM, Gocompare n1, Shopping.com Thi, Confused .com n1, Mysupennarket. comnt.
• Super-affiliates. Affiliates gain revenue f rom a merchant they refer traffic ro by being paid commission based on a proponion of the sale or a fixed amount. They are
important in e- retail markets, accounting for tens of per cent of sales. • N iche affiliates or bloggers. These a r e often individuals, but they may be very influ-
ential. For example, in the UK, Marri n Lewis of Moneysavingexpert.com receives millions of visits every month . Smaller affiliates and bloggers can be imporram
54 Part 1 Digital marketing fundamentals
Key online influencers Celebrities, indMduals well known in their niche, or publishers to whom an onfine target audience listens to and interacts with. Online influencef outreach or 'blogger outreach' can help companies reach and engage a wider audience. Recently video bloggers {'vloggers' or 'You Tubers') have become popular among teenage audiences.
collectively. With the growt h in readersh ip and social imeractio ns on blogs, identify- ing key online influencers wit hin a market is im portant to help reach and engage ta rget a udie nces.
4 Destination sites and platforms . T hese are the sites that the marketer is trying to attract visitors to, including transactional si res by reta il, fina ncial service, travel, manufacturers and other com panies o r non-transactional si tes like brand or rela tio nship-bui lding sites, as introduced in Chapter 1. Desti nation sites also incl ude presence on oth er social sites such as Facebook a nd Twitter or mobile apps. Figure 2.3 refers to OVP or 'onli ne value proposition', which is a summar y of the un ique features offered by brands in their o nline services and presences - described in mo re detai l in C hapter 4 . T he OVP is a key aspect to consider within planning - marketers should evaluate their OVPs against competi tors' and think about how they can refi ne them to develop a uniq ue on line experience.
Digital marketing insight 2.1 Resources for analysing the online marketplace
Unique visitors Individual visitors to a site measured through cookies or IP addresses on an individual computer.
How to make sense of the volume of available data can be a big challenge for any online marketer. However, it makes sense when planning digital marketing campaigns to take up the opportunity to plan based on the actual marketplace characteristics rather than intuition. Nevertheless, in order to do this a digital marketer needs to know how and where they can tap into the wealth of research about current Internet use and future trends. Typi- cally, businesses use different tools for analysis of the online marketplace and customer behaviour as they access different websites as part of their customer journey. There are both free and paid-for analytical services available to help. Table 2.1 shows a selection of free and paid-for services that can be used for online marketplace analysis, and these resources can be used to assess the number of people searching for information and the popularity of different types of sites measured by the number of unique visitors.
By scanning the detailed results from searching information providers, a digital mar- keting planner can build an informed picture of what is happening at any given time and also make forecasts for strategic planning.
Table 2.1 Research tools for assessing digital markets
Search tool provider and sources of information
1 Google and Facebook tools See www.thinkwithgoogle. com/tools/ and Facebook. com/iq
Focus and services
Since these are two of t he largest platforms who are encouraging advertiser investment, they also provide the best sources of tree, accurate tools for marketplace analy- sis. Recommended Google tools are:
• Display planner t ool - this Google Ads tool shows relative size and aud ience composition of publishers in the Google program me.
• Google Trends- t rends in search volume by country- no sign-in required.
• Keyword Planner- this tool requiring registration in Google AdWords gives details on number of searches each month.
• Consumer Barometer - good-quality data on online shopping behaviour by country and device, but review when last updated.
The recommended tool in Facebook IQ is:
• Audience Insights - provides Facebook audience coun- try breakdown by gender, age, interests and job tit les, plus information on top page likes.
Activity 2.1
2 SimilarWeb {www.similarweb.com)
3 Socialbakers {www.socialbakers.com)
4 Nielsen {www.nielsen.com)
5 comScore (www.comscore.com)
6 Goog le Analytics (www.google.com/analytics)
7 Internet or Interactive Advertising Bureau (lAB) (US: www.iab.net UK: www.iabuk.com Europe: www.iabeurope.eu)
8 Internet Media in Retail Group (IMRG) {www.imrg.org)
9 Government sources
1 0 Non-government organisations
Chapter 2 Online marketplace analysis: micro-environment 55
Freemium tool enabling comparison of visitors to sites and which channels prompt the visits. Sample dependent on users of the toolbar. Paid alternatives are Alexa, Compete.com and Experian.com.
Freemium tool with some free tools for benchmarking brand social media popularity, e.g. in Facebook.
Paid-tor tool but free research data on search engines and i ntermediaries avail able from press release section focus in on what consumers buy. Panel service based on at-home and at-work users who have agreed to have thei r web use tracked by software. Top rankings on site gives examples of most popular sites in several countries.
Paid-for tool but free data on consumer behaviour on mobile and desktop for search engines and publishers available from p ress release section .
Free and paid-for services, which provide insights into website traffic. Includes competitor benchmarking.
Research focusing on investment in different digital media channels, in particular display ads and search marketing. Paid-for services.
The IMRG Capgemini Sales index provides statistics on UK a-retail sales, mostly limited to members.
Useful government sources include Eurostat {EU, http:// epp.eurostat.ec.europaeu), Ofcorn (UK, www.ofcom. org.uk excellent communications market reports and statistics.gov.uk) and Data.gov for the US.
Include Pew Internet Surveys (US, www.pewintemet.org, good for social media adoption) and International Telecoms Union (www.itu.int, a good source for mobile adoption).
Using digital research tools to assess variation in online demand by sector
According to the IMRG Capgemini Sales index online (https://www.imrg.org/data-and-
reportslimrg-capgemini-sales-indexes/), the volume of sales is continuing to grow and
the rate of growth overall is positive. But demand preferences for online purchase differ
by sector.
Purpose
To explore the value of digital research tools in assessing variation in consumer prefer- ence for online purchase.
Activity
Using the resources listed in Table 2.1:
1 Share example of searches from different sectors and use Google Trends or Keyword
Planner to understand long-term trends and seasonality for different product
categories .
56 Part 1 Digital marketing fundamentals
Activity 2.2
2 Clothing and footwear sectors show positive growth. Suggest why this might be and whether th is trend wiU continue for the next five years. From your use of chosen research tools, make a list of the limitations of the data and information you have been able to access.
So far, we have considered the context and the senings of the micro-environment; in the remainder of this chapter we examine the potential roles and actions of the players who shape the micro-environment:
• customers; • suppliers and intermediaries; • compentors.
\Yle will conclude the chapter by exploring busi ness and revenue models, which h ave rele- vance fo r digita l marketing plann ing.
Customer analysis to understand the digital consumer
\Yle have explained thar situation analysis in the world of digital marketing should focus on the customer by looking at how they engage with digital content and channels, the journeys they take and the touchpoims they encotmter. But this is just the beginning; in marketing, under- standing the trading situation is very important for setting realistic business and marketing objectives and it is important to not only consider customers' behaviour but also to know how to analyse reactions and responses.ln the digital wodd, customer actions are highly rrackable and quantifiable, so digital marketers should know how to measure customer behaviour in relation to marketing objectives in highly precise ways. These ideas are equally applicable in consumer, business and nor-for-profit markets senings, although the specific measurement and analysis tools will vary depending on the desired marketing outcomes. Complete Activity 2.2 to find our how business nen.vorks are changing the way we make successful connections.
Unkedln: making professional connections
Purpose
To consider the business potential of online networks.
Act ivity
Businesses rely on their connections to other businesses and key individuals to develop their business. In 2002, Reid Hoffman had an idea, which he turned into the largest professional network in the world , Unkedln. Today there are over 500 million professional individuals signed up to the network, in 200 countries worldwide and available in 24 languages.
Visit: https:l/business.linkedin.com/marketing-solutions/marketing-case-studies#all. Now answer these questions:
1 Find three examples of businesses that are using Unkedl n to access their target markets.
2 For each of your chosen businesses, outline their different digital market strategies.
l 3 For each of your chosen businesses, explain t he extent to which you feel the strategy
. ~rk~. J
Customer behaviour analysis In digital markets. this type of analysis involves research into the motivations, media consumption preferences and selection processes used by consumers as they use digttal channels together with traditional channels to purchase online products and use other online services.
Custom er insight Knowledge about customers' needs, profile, preferences and digital experiences from analysis of qualitative and quantitative data. Specific insights can be used to inform marketing tactics directed at groups of customers with shared characteristics.
Customer segm ents Groups of customers sharing similar characteristics, preferences and behaviours that are meaningful in terms of various market propositions, and which are defined as part of target marketing strategy and planning.
Demand analysis Quantitative determination of the potential use and business value from online customers of an organisation. Qualitative analysis of perceptions of onfine channels is also assessed.
Conversion marketing Using marketing communications to maximise conversion of potential customers to actual customers.
Chapter 2 Online marketplace analysis: micro-environment 57
From the micro-environmem perspective, customers are import ant players in a company's immediate trading environment, and analysis of rhei.r behaviour is central to understancling of the trading situation and, ultimately, cligiral planning. Cust omer behaviou r ana lysis can be considered from two perspectives:
1 Demand and gap analysis. This involves understanding the potential and actual volume of visitors to an online presence and d1e extent to which prospects convert to tactical and strategic outcomes, e.g. lead generation and sales.
2 Digital consumer behaviour. Here a marketer wants to understand the needs, character- istics and digital experiences or behaviours of target consumers. These variables are often collectively referred to as customer insight . Based on this analysis, c ustomer segment s can be created rhat wi ll be used to develop targeting approaches as part of strategy and planning (described in Chapter 4 onwards).
Demand analysis and conversion marketing
Digital marketing managers should w1derstand current trends and levels of use of the Inter- net and different online services and how they relate. to services and products the organisa- tion wishes to deliver online. Adclitionally, marketers need to be aware of factors that affect how customers actively use the digital services on offer. This evaluation process is called demand ana lysis. The benefits of this form of analysis are d1at companies can identify opportw1iries for influencing and delivering sales online based on actual use of digital media by individuals in the company's target market.
Assessing demand for digital services is done by looking at generic factors that enable marketers to set realistic strategic objectives for each target segment. In order to do this th e digital marketer also needs to assess the volume and share of customers who:
• have access to the cligital cha1mel; • use specific on li.ne services that may a.ffecr the purchase decision, such as price compari -
son sires, social networks and specialist blogs; • are influenced by us ing the digital channel but purchase using another channel as parr of
the multichannel buyer behaviour; • purchase or use other services using the digital channel .
Using information sources and tools, Li.ke those suggested in Table 2.2, plus any primary research a company decides to carry our, a digital marketer should be able to develop a sound understanding of the characteristics, needs and wants of the individuals (and/or compa11ies) in the target marker and their propensity to engage wi th digital channels. Once this foundation level of understanding is developed, it is possible to consider how to achieve marketing goals and objectives through the use of cligiral communications.
Implication's for marketing planning: conversion models
As part of situation analysis and objective setting, experienced digiraJ marketers build con- version or waterfall models of the efficiency of their web marketing. Using this approach, the total potential online demand for a service in a particular market can be estimated and then the success of the company in achieving a share of this marker determined. Conversion marketing tactics can be used ro convert as many potential sire visitors into actual visitors and then convert th ese into leads, customers and repeat customers. Conversion marketing metrics are discussed in detail in Chapter 10.
Multichannel conversion models
In real icy, conversion modelling is complex because ir needs to rake into account both online and offline behaviour. For example, an advertiser may use Google Ads to promot e irs
58 Part 1 Digital marl<eting fundamentals
Table 2.2 Impact of the Internet on the five competitive fomes
Bargaining power of Bargaining power of Threat of substitute Threat o f new Rivalry between buyers suppliers products and entrants existing competitors
services
The power of online When an organisation Substitution is a sig- Barriers to entry are The Internet encour- buyers is increased purchases, the bar- nificant threat since reduced, enabling ages commoditisation, since they have a gaining power of its new digital products new competitors, par- which makes it less wider choice and suppliers is reduced or smart products can ticularly for retailers or easy to differentiate prices are likely to be since there is a wider be readily introduced service organisations products forced down through choice and increased that have traditionally increased customer commoditisation due required a high-street knowledge and price to a-procurement and presence or a mobile transparency (see a-marketplaces sales force Chapter 5)
For a 828 organisa- The reverse argu- The introduction of New entrants must be Rivalry becomes more tion, forming elec- ments regarding bar- new substitute p rod- carefully monitored to intense as product tronic links with gaining power of ucts and services avoid erosion of mar- lifecycles decrease customers may buyers should be c arefully ket share and lead times for deepen a relationship monitored to avoid
Internet services are new product develop-
and it may increase erosion of market ment decrease easier to imitate than
switching costs, lead- share traditional services, The Internet facilitat es
ing to 'soft lock-in' Internet technology making it easy for the move to the global enables faster intro- 'fast followers' market, increasing the duction of products number of and services competitors
This threat is related to new business mod- els, which are covered in a later section in this chapter
product, but some shoppers will buy online while others will prefer to use other channels
to make their purchase, e.g. use the phone or buy in-store.
Therefore, it is useful to pur in place the means of monitoring cross-channel conversions
at different stages in the buying process as it can help a business to understand how it might
improve performance in borh online and offline channels by making the marketing spend
more effec tive.
Figure 2.4 shows a model of how this works. For exa mple, phone numbers that are w1ique
to the website can be used as an indication of the vol ume of ca ller s to a contact centre
Figure 2.4 M o d el showing conversion between the d igital chan nel and t raditional channels during the buying process
E-channel Traditional channels
REACH of channel 1,000,000 Drive to Drive t o 1,000,000 traditional a-channel
Response efficiency I 5.0% I 1.00% 5.00% I 10.0% I RESPONDENTS from channel I 100,000 I Unique visitors Offline inbo_u_nd I enqUJnes 110,000 I
Conversion to lead efficiency I 10.0% I 5.00% 1 .00% I 20.0% I LEADS generated from channel I 11 ,100 I Online leads Online leads I nooo I
Conversion to sale efficiency I 20.0% I 10.00% 0.50% I 40.0% I OUTCOMES from channel [ 2,355 I Online sales Online sales [ 11 ,910 I
Chapter 2 Online marketplace analysis: micro-environment 59
influenced by the website. This shows that o f th e 100,000 unique visito rs in a period , we can determin e that 5,000 (5 per ce nt) may actually become o ffline leads_ Now read abo ut how
to create successful cross -channel experie nces in M ini case study 2 .2.
Mini case study 2.2 Creating great cross-channel customer experiences
'No matter how brilliant the idea is, if your audienoe's needs aren't met you won 't keep them as a customer' (Mulcahy and Salmon, 2017).
To achieve success in the digital world it is important to consider the context before trying to create highly relevant content. A key challenge for the digital marketer is to understand the relevance of touch points in rela- tion to brand, in a highly complex environment where the average UK home has over eight connected devices through which to interact with a brand. This means that customer journeys and touchpoints can be fragmented and are typically across a number of different channels. Figure 2.5 shows how the share of sales by device can vary by the day. Therefore, the solution could be to look at the individual instead of the devices by taking an audience-focused marketing approach.
EpiphanyrM is a specialist search-based marketing agency based in London and one of its clients, Topps TilesTM, wanted to use digital marketing to encourage customers to go their local store (360 across the UK). Epiphany used local pay-per-click ad extensions, and the results showed that customers who used mobiles were 3.3 times more likely to visit a local store than those without the local extension. Post-campaign analysis showed the importance of mobiles in the Topps Tiles customer journey.
But search is not the only influencing factor when it comes to understanding cross-channel use and cus- tomer journeys:
• Time of day can also effect purchasing behaviour and choice of device. Mobiles are very popular in the morning as people are travelling to work; desktop computer use increases during the working day and then mobile and tablets increase in popularity again in the evening. It is also important to note the days of the week as there are peaks in conversion traffic at the end of the week for Epiphany's clients (see Figure 2.6).
• Site speed - digital campaigns with potential can peifonm badly if the speed for the destination site is per- ceived as slow; the majority of online users will look for an alternative.
Figure 2.5 Share of sales by device (total market) 17-27 December 2017
100%
90 %
80%
70%
60 %
50%
40%
30%
20 %
10%
0%
Sourr:e: (IMRG)
Device type:
- Desktop
- Tablet
- Smartphone
60 Part 1 Digital marketing fundamentals
Figure 2.6 Peak conversion times by device: smartphones and tablets
.. u u ..
• • • • • •
, . •
SMART PHONES ON WEEKDAYS SMART PHONES ON SATURDAY TABLETS ON WEEKDAYS TABLETS ON SATURDAY Traffic spread out <Net longer period Peak traffiC between 09:00 - 15:00 Peak traffiC between 19:00 - 21 :00 Peak traffic between 10:00-17:00 L traffiC between 10:00 - 22:00
Source: ~MRG)
In summary, it is important to go beyond looking at the channel to understand customer journeys; while channel is important, time of day and download speeds also influence the conversion of online users to pur- chasers. Also, as UK consumers spend more time using their smartphone than any other device, the distinction between online and offline purchasing is becoming obscured. Therefore, the greater the understanding of an individual user the higher the likelihood of successful digital campaigns.
Sautee: Based on Mulcahy and Salmon (2017); https:Jiwww.imrg.org/data- and-reports(IITlrg·capgemini-sales-lnclexes/
In this section we have been discussing customer conversion strategies; in the next secrion we delve further into consumer choices and digital influences.
Consumer choice and digital influence ..1
Consume r choice and t he subseq uent decision making are crucial ro the purchasing process (online and offline) bur digiraJ media (and especiaiJy Mobi le digital media - see Digital marketing insight 2.2) now plays an increasingly importam role in buying dec isions. Many buyers visit online firs t ro fi nd infor matio n th at will inform what they buy, so the web and social media are:
• a viral parr of t he research process, as Internet users now spend longer researching prod- ucts onli ne;
• used at every st age of rhe research process from the initial scan to t he more derailed comparison a nd final checking of specifications before purchase.
The result of this change in behaviour means that buyers are more informed, and refer ro a mulripliciry of sources to find information that will inform their fina.l purchasing deci- sion, e.g. brand websires, social media, review sires, traditional print media and personal recommendations (this topic is explored in derail in Chapter 9). Digital sources of informa - tion now play a more important role in shaping purchase decisions. So, companies have to think carefully how they can maximise the value of positive comments and reviews and reinforce consumer perceptions through product quality, and service experiences both on and offline.
The implications of this growth in the use of information in digit:~! channels in the selec· rion process means rbar it is important to ensure rhar products and services a re
Chapter 2 Online marketplace analysis: micro-environment 61
Digital marketing insight 2.2 M-shopping can be thoughtful, motivated and reluctant
Mobile shopping (M-shopping) has grown rapidly as the penetration of mobile phones, smartphones and tablets has increased dramatically. By 2019, it is predicted that 5 billion people will use a mobile phone and the penetration across the world's population will be 67.1 per cent. Mobile phone adoption has outstripped landline ownership and in some nations mobile phone penetration is over 90 per cent. While lower-income countries in Latin America, Middle East and Africa have lower penetration rates, mobile technology is liberating these markets as mobile technology provides wireless Internet access. Despite this rapid expansion in the uptake of mobile phones, digital marketers need to understand consumers' barriers and motivators to using a phone as a means of shopping if they are to effectively access their target markets. San-Martine, Lopez-Catalan and Ramon-Jeronimo {2013) found that there are three distinct groups of m-shoppers:
• Thoughtful m-shoppers. This group are reflective about the value of m-shopping and are not entirely sure about the value of this fonm of buying. They are concerned about the lack of interpersonal interactions but they are motivated by value. So to engage this type of shopper, marketers need to develop additional motivating offers
through the mobile channel. • Motivated m-shoppers. This group do not envisage any barriers to shopping in this
way, they are frequent users of technology and confident with remote shopping. This group can also be motivated by special offers but to a far lesser extent than the thoughtful group as they may not need to be incentivised in the same way.
• Reluctant m-shoppers. This group sees no advantage to m-shopping. They are concerned about lack of interpersonal interaction, and find it difficult to shop via a mobile phone. Marketers will find this group difficult to access via m-shopping.
Source: Based on eMarketer (2014): San-Martine, Lopez-Catala.n and Raroon-Jeronimo (2013).
well-represented in the digital channels used by target customers. The demand for informa- tion is likely to continue to imensify with the rise in significance of mobile and social net- work ing channels.
Figure2.7 shows that when consumers first use the web they tend to limit its use to search - ing for product information, bur as they become more confident d1ey are not on ly likely to involve t he Internet at a greater number of points in th e purchasing process bur are also likely to increase the value of the products they buy and the frequency with which they make purchases.
Developing an understanding of the processes involved in customer choice should enable marketers to identify how to tailor services to meet the needs of the custo mers so that they move to the transaction dimension.
The proportion of Internet users who will purchase different types of products online varies cons iderably based on the charact eristics and demographic profile of the consumers, the product category and the past exper iences of the shopper. There have also been many predictions about the development of online retailing and how it might fuel demand for online transactions. Convenience remains the biggest driver for on line shoppers. Figure 2.8 shows influences o n consumer purchasing made in the UK.
By tmderstauding the dimensions th at affect how constm1ers interact wit h onlin e trading environments, digital marketers can identify key points where they can seek to manage
. conversion .
When assessing online customer demand and characteristics for business-to-business products and services, there are addit ional considerations. The B2B market is different to business-to-consumer markets insofar as variat ion iu on line demand or research in the
62 Part 1 Digital marketing fundamentals
Figure 2.7 Development of experience in Internet use
Email; Research offline
Search purchases engines; e.g . travel, car
Surfing Make small low-involvement
purchase
Fast: simple search or decisions
Post f o a forum
Buy at auction
More frequent higher-value purchases
nme
Figure 2.8 Influences on online purchasing in the UK
100 - 80 ..
c: Gl 0 60 r- - r-... - Gl
40 a. E r- r- 0 20 '0 C) c:
0 2 I I I I I I
'0 Gl ~ - 20 - c: ::l -40 -
- 60 -
Source: Chamberlin (2010)
Sell at auction Favoured information
Download source software
Frequent Visit high-
government involvement sites purchases
Medium: research for complex
-------------------------------------·
-
I I
decisio ns
I I
LJ U
Slow: technically
L-.
complex or financially risky
I I I
- '---
-
I
Chapter 2 Online marketplace analysis: micro-environment 63
buying process will occur according ro different types of organisation and people within the buying unit in the organisacion. We need ro profile business demand according ro:
• Variation in organisation characteristics: • size of company - employees or turnm·er • indusuy sector and products • organisarion rype - private, public, government, nor-for-profir • application of service - which business activities do purchased products and services
support? • country and region .
• Role of the target individual in an organisation: • role and responsibility- job title, function or number of staff managed • role in buying decision- purchasing influence • deparr ment • product interest • demographics- age, sex and possibly social group.
So far, we have considered influences o n cusromer choice and conve rsio n models. In the next sectio n we explore ways of understanding consumer behaviou r beginning with
characteristics, which reveal how different t ypes of individual behaviour can affect engage- ment w ith rhe digital marketplace.
( Customer characteristics \.__
Understanding the individual nature of cusromers is fundamental to marketing practice and planning. In Chapter 4 you can read about segmentation approaches and how they can be used successfully as part of an integrated marketing strareg)( In this section we explore the acmal consumer behaviour variables that help build segmentation profiles.
Research has identified that there are many factors that influence online behaviour and over time the marker segments that use the Internet and digital services have changed significantly (Kan nan and H ongshuang, 2017), so it is important for digital marketers to a) be aware of important behavioural variables, and b) to understand how to model onli11e consumer behaviour.
Accordi ng to Doherty and Ellis-Chadwick (2010), the types of individuals using the web have changed significantly since 1995. In those early days, on line markers tended to be limited to young males, who we re generally better educated and wealthi er than their con- tempora ries. Now digital markets have globa l reac h and have penetrated every type of mar- ker segm ent. However, it has become increasingly im porta nt to precisely identify target markers. Research suggests a fruitful place to begin identifying consu mer target markers is to consider:
1 Demographic variables. D oherty and Ellis-Chadwick {2010) suggest that any personal attribu tes that rend to remain static throughout an individua l's life rime, or evolve slowly over time- such as age, gender, race etc.- can be defined as demographic variables. Key elements of a consumer's demographic profile that have been found to influence online behaviour include variables such as: income, education, race, age (Hoffman eta/., 2000); gender (Siyke, 2002); and lifestyle (Brengman eta!., 2005), cultural and social make-up that influnces online behaviour (e.g. Shiu and D awson, 2004).
2 Psychographic and behavioural variables. Any aspect of a consumer's perceptions, beliefs and attimdes that might influence online behaviour, and in particular a consumer's inten- tion to shop, can be defined as a psydJOgraphiclbehavioural variable. Indeed , there has now been a significant amount of recent work to explore how the consumer's character o r personality might influence their online behaviour (George, 2004). Cheung et a/.
64 Part 1 Digital marl<eting fundamentals
(2005) suggest !:hat the impact of a wide range of behavioural characteristics, such as knowledge, ani rude, innovativeness and risk aversion, can have a significant effect on a consumer's intention to shop. For example, it has been found that consumers who are primarily motivated by convenience were more likely to make purchases online, while those who value social interactions were found robe less interested (Swaminathan eta/., 1999).
By studying the variables that influence the consumer experiences in the online em·ironmenr it becomes possible to analyse their future intentions ro continue to use digital services and to shop online (Wolfinbarger and Gilly, 2003). For example, the impact of consumers' per- sonal experiences of convenience, sire design and security might affect their overall satisfac- tion with a particular website. Anorher important point is that by studying variables associated with a consumer's experiences, digital marketers begin to understand how to increase loyalty and trust through websires and online services. As use of the digital environ- ment has grown, further research has been carried out that gives us an even greater under- sta nding of the online customer experience.
According to Rose et al. (2011):
customer interactions with an organisation 's website creates opportunities for positive experiences that can lead to long-term relationship building.
The concept of online customer experience has been widely studied in contexts ranging from service delivery to retailing and tourism (e.g. Arnold et at. (2005); Tsai (2005)) . Figure 2.9 shows a framework for w1dersranding rhe concepts rhat motivate and influence the online consumer. An important point ro consider is that past experiences will provide the basis for future evaluations. According to Arnold eta/. (2005), the antecedents or back- ground to the online experience consist of an important list of concepts that can positively or negatively influence or motive the consumer ro engage with a digital offer:
1 Information processing (IP). This is very important as ir shapes how a consumer deals with available data and information that will shape rheir future behaviour. lP involves the mental processes and senses an individual uses ro interpret the world they inhabit (Wang and Benbasar, 2013).
2 Perceived ease-of-use. This also needs consideration by digital marketers, as the easier a website or mobile si re is to use, the more likel y a customer will have a positive online experience (C heung, Chan and Limayem , 2005).
Figure 2.9 Framework for understanding online customer experiences
Antecedent s
• Information processing
• Perceived ease- of-use
• Perceived usefulness
• Perceived benefits
• Perceived control
• Skill • Trust propensity • Perceived risk • Enjoyment
Sauce: Rose and Hair (20 11)
,
Experience
• Cognitive state • Affective state
Consequence
• Customer satisfaction
Consequence
• Re-purchase intention
J
Personas FICtional profies that represent a particular target au<ience - tht.mbnail summary of the characteristics, needs, motivations and enviromlel'll ol typical website users.
Chapter 2 Online marketplace analysis: micro-environment 65
3 Perceived usefulness. This refers to the ex tent to which the digital offer firs with rhe cus- tomer's daily life- for instance, shopping, online booking train tickers, banking (Arnold eta/., 2005). Ir is here that the digital marketer can really smrr to develop a path to con- sumer benefits.
4 Perceived benefits. If a customer feels they will be rewarded in some posirive way by engaging with a digital offer, this is likely to generate support for an online brand (Arnold eta/., 2005).
5 Perceived control. If a customer is a skilled user of the digital technology in question then they will feel they are able to function successfully in this envi ronment. Earlier in the chapter we discussed how some mobile shoppers are confident whereas others are noL
6 Skill. This refers to rhe customer ability to use the technology ro achieve their desired goals (Klein and Ford, 2002). It has been found that individuals learn by doing in the Internet environmenr and so build their skill set over time - for example, rhe more frequent the visitor is to a website the greater their exposure and the higher their ability ro engage with rhis digit al contenr.
7 Trust and risk. Both play an important role in how a customer behaves on line. Inexpe- rienced Internet users can feel vulnerable and fear the unknown. Customers should be able ro achieve their buying goals with or without feeling they arc exposed to undue risk (e.g., financial risk, social risk, personal risk). Marketers should seck ro find ways to limit the risk of engaging with their online offer and seek to build trust through developing onl ine relationships (Vize eta/., 2013).
8 Enjoyment. This is an outcome of a positive online experience.
A digital marketer should consider how each of these antecedents can influence a customer's motivations ro engage with the digital offer and also look for opportunities ro create com- petitive advantage by overcoming potential barriers. These eight antecedents can influence how the customer rhinks (cognitive state) and feels (affecrh·e stare) about rheir online experi- ence and affect the outcomes of any subsequent behaviour. If the customer has a positive experience this will increase the likelihood of the outcome of the customer being satisfied rhar rhey will have positive re-purchase intentions. Digital marketers need to be aware that it is important nor only to develop the functional aspects of an online offer bur also to con - sider how rhe emotional stare and past e.xperiences of the customer can affect cusromers' levels of engagement.
Social media and emotions
It is also important ro consider th at soci:tl media is in creas ingly influential for capturing and sharing consumer experiences and is a major conduit through which consurners share, recommend and feedback on th eir product and serv ice, choices and experiences (Zhang eta/. , 2018). Social media networks are giving access ro personalised recommenda- tions in real time, based on individual personal experiences, which can be highly influential (both positive and negative depending o n the nature of the recommendations). The use of social media nenvorks, such as Facebook, lnstagram, Twiner and Linkedln, have risen substantially since 2008. Social media has become important as a means of communicating and interacting online and also as a source of peer recommendations. The capacity of social media networks ro display our personal feelings is extensive. See Digital marketing insight 2.3 ro find our more about what cusromers really feel about rhe products rhey buy.
Consumer personas
Personas are fictional profiles rhar represent a particular target audience. Personas are a roo!, which can help understand online cusromer characteristics and behaviour and then create communications more relevant to your audience. Creating personas is a powerful
66 Part 1 Digital marketing fundamentals
Digital marketing insight 2.3 How do your customers really feel?
Researchers at Loughborough University have developed a software system, which can analyse thousands of tweets a second in order to extract emotional moods. Their system is called Emotive (Extracting the Meaning Of Terse Information in a Visualisation of Emo- tion) and it uses social media to detect eight fundamental human emotions: anger, disgust, fear, happiness, sadness, surprise, shame and confusion. The analysis enables the mapping and tracking of emotional moods.
Social media is frequently the first place to break news and is where individuals and companies share their reactions. Understanding the mood of a group can be a powerful indicator of behaviour. Emotive has been used successfully to predict the outcome of the 2017 general election in the UK and the US presidential election in 2016.
The potential benefits of this system to digital marketers are that it becomes possible to determine t he emotions of various target audiences -for example, a television audi- ence watching a major sporting event. With insights into viewers' moods in real time, the placing of commercials and product advertisements can become highly effective and feedback on what audiences feel about the products and services can also be gathered and analysed to inform future digital marketing initiatives. Emotive can be integrated into apps and websites to capture the emotional perspective of digital visitors and gamer their responses to various products and services.
Solxce: http:l/emotive.lboro.ac.ukl
technique for de,·eloping customer-centered online strategies, company presences and cam- paigns and forms pan of marketplace analysis.
Personas are essentially a 'thumbnail' description of a rype of person. They ha,·e been used for a long rime in research for segmentation and advertising, but in recent years ha,·e also proved effective for improving website design by companies that have applied the technique.
For an example of the application of personas, sec Mini case study 2.3 about student consumer personas.
Mini case study 2.3 Personas 'with wings'
AMP is a marketing agency that offers a full suite of services for brands wishing to communicate in the digital marketplace. It uses customer personas as a way of developing understanding of its clients' target audiences. It uses the persona to create a visual and contextual representation of the target audience, using demograph- ics and psychographies. In building this representation, AMP also looks at the use of social media and technology, which gives an understanding of the likely touchpoints the target audience will encounter.
According to Stokes (2015), the Red Bull student persona is:
'The thrill seeker He's 24 years old Graduated from college, 2 years ago with an English degree He is currently the assistant manager at a ski & board shop He makes £30,000 a year.
Whether it's jumping over cliffs into powder snow on a snowboard, racing down treacherous trails on a mountain bike or hitting the half-pike skateboard, he's there because he's a daredevil. He welcomes the
Chapter 2 Online marketplace analysis: micro-environment 67
new experiences and loves taking risks with adventurous activit ies like skyd iving and windsurfing. He likes to live a fast-paced life existence and he's always on the go. No matter how daring the challenge, he will always be there with a Red Bull in hand, on high energy and ready to jump.'
By developing a persona using data from a number of different variables it shou ld become possible for marketers, who are developing digital campaigns, to begin to empathise with a particular target audience and develop digital campaigns that not only attract but also meet the needs of the audience as well as delivering benefits for engaging with the campaign - thereby creating a win-win outcome for the company and its customers.
The buying process
According to Kotler eta!. (2008), t here are differenr stages in rhe buying process. At each srage rhe p u rpose (from bo th th e buyer and supplier perspective) is a part icu lar outcome:
• awareness; • mreres t; • evaluat io n; • trial; • adopt ion.
This set of outcomes has been considered in the digital marker and Chaffey and Smith (2017) describe them as:
1 problem recognition; 2 information search; 3 evaluation; 4 decision; 5 action (sale or use of online service); 6 post purchase.
Figu re 2.10 gives a summary of how the Internet can be used to support the different stages in the buying process. Note that social media can potentially support each stage as consum - ers ask others via social networks for recommendations or read reviews and ra tings. The boxes on the left show the rypical stages that a new prospect passes through, according to, for example, Robinso n eta/. (1967). A similar analysis was performed by Berthon eta/. (1998), who specu lated that the relat ive communications effectiveness of us ing a website in this p rocess gradual ly increased fro m 1 to 6.
It is wo rth wh ile reviewi ng each of the stages in the buying process referred to in Figure 2.11 in o rder t o h ig hl ight how effect ive rhe Internet can be when used at d iffere nt stages ro sup porr th e marketing comm un ications object ives. Of course, rh e exact stage of the buying decision varies fo r different products and different types of customers. In general, digiralmedia su pport d1e consu mer buying process as follows.
1 Consumer: unaware. Company: generates awareness (of need for product or service)
Conventionally, generating awareness of need is achieved principally through the mass media used in offline advertising. The Internet is relatively ineffecri,·e at this since ir rends to have a more limited impact and reach than television, radio or print media. However, display advcrrising or paid search marketing can be used to supplement offline awareness-building, as explained in Chapter 8. Online equivalents of word of mouth or recommendations from friends or colleagues, perhaps influenced by a viral marketing campaign, can also create awareness of need . Some companies have effectively developed brand awareness by means of PR and media mentions concerning their success on the lnrernet, wirh rhe result rhat even
68 Part 1 Digital marketing fundamentals
Figure 2.10 A summary of how digital media can impact on the buying process for a new purchaser
Stage in buying process
1 Unaware
2 Aware of product need, develop specification
3 Supplier search
4 Evaluate and select
5 Purchase
6 Post-purchase evaluation and feedback
Communications objectives
Generate awareness
Position features, benefits and brand
Lead generation (from range
of customers)
Assist purchase decision
Facilitate purchase
Support use and retain business
Digital marketing techniques
Display and PPC ads, E-PA, social
recommendations
Search engine marketing (SEO and
PPC). affiliate marketing
Aggregators, directories and other Intermediaries
Faceted search, buyers' t+--1 guides. detailed product info,
user reviews and ratings
Automated emall reminders, one-page payment
systems. offline options
Personalised website content and interaction
if a customer does nor have a current need for a product, that customer may be aware of the source when the need develops.
2 Consumer. aware of need, develops specification. Company: position features, benefits and brand
Once a consumer is aware o f a need and is consideri ng wh at fearun:s a nd benefits he or she requires from a product or on line service, t hen they may rurn straight ro the web to start identifying th e range of fea tures available from a particu lar type of product using a ge neric search on search engines such as Google and Yahoo! So, influencing consumers through search engine marketing and affiliate marketing is important at this stage. Specificat ion development effectively happens at the same time as supplier search and more suppliers can be evaluated in grea ter depth than traditionally.
3 Consumer. supplier search. Company: generate leads (engage and capture interest)
Once customers are actively searching for products, the web provides an excellent medium ro help them do this. It also provides a good opporruniry for companies to describe the benefits of their websites and obtain qualified leads. The Internet marketer must consider the methods that a customer will choose for searching and rhcn ensure that the company or its product is fearured prominently on these sires, whether rhey are search engines, aggrega- tors or affiliate intermediaries.
Chapter 2 Online marketplace analysis: micro-environment 69
4 Consumer: evaluate and select. Company: assist purchase decision
One of the most powerful features of websites is their facility ro carry a large amount of content at relatively low cost. This can be turned to advantage when custmners are looking to identify the best product. By providing relevant information in a form that is easy to find and digest, a company can use its website to help in persuading the custmner. Digital channels now enable this stage ro overlap with earlier stages. Brand issues are important here, as proved by research in the branding section of Chapter 5, since a new buyer narurally prefers to buy from a familiar supplier with a good reputation - it will be difficulr for a company ro portray itself in this way if it is unknown and has a slow, poorly designed or shoddy website.
5 Consumer: purchase. Company: facilitate purchase
Once a customer has decided ro purchase, then the company will not want to lose the custom at this stage! The website should enable standard credit-card payment mechanisms with the option to place the order by phone or mai l. Online retai lers pay great atrention to identifying facrors that encourage customers to convert o nce they have added a product to their 's hopping basket'. Security guarantees, delivery choices and free delivery offers, for example, can help increase conversion rates.
6 Consumer: post-purchase evaluation and feedback. Company: support product use and retain business
The Internet also provides great potential for rerammg custo mers, as explained in Chapter 6, since:
• value-added services such as free customer support can be provided by the website and these encourage repeat visits and provide value-added features;
• feedback on products can be provided ro customers; the provision of such information will indicate ro customers that the company is looking ro improve its service;
• email can be used to give regular updates on products and promotions and encourage customers to revisit the site;
• repeat visits to sites provide opportunities for cross-selling and repeat selling through personalised sales promotions messages based on previous purchase behaviour.
In this section we have reviewed simple models of the online buying process that can help Internet marketers convert more sire visirors to lead and sale; however, in many cases the situation is not as simple as the models.
Members of a community or social network will differ in the extent to which they are con- nected with others. The most influemial network members will be highly connected and will discuss issues of iJlterests w ith a wider range of contacts rhan those who are less connected .
The next sect ion exp lores other sets of players who shape the ll'licro-envixonmenr: competitors and then suppliers.
( Competitors ~ ~- -------~~
For any marketer, a key consideration is developing an understanding of how ro satisfy customers bener than rhe competition. In Chapter 4 we explore developing competitive advantage and the value chain in some derail. In this chaprer, we will focus on the srrucrure of comperiti,·e markers and the way competitors beha,·e.
The shape and nature of online competitive markets
According to Jobber and Ellis-Chadwick (2016}, 'an industry is a group of firms that marker products thar are close subsrirures for each other'. However, some industries are more
70 Part 1 Digital marketing fundamentals
profitable than others, some are reasonably stabl e, whi le others are highly volatile. The vari- aJlce between industrial sectors and specific markers is nor all down to the abilities of the compa nies within tbe market to product customer satisfaction. There are various forces rbar shape the rules of competition. Po rrer's five forces model (Porter, 1980) has been widely used to help analyse the shape of competition and it is the narure of the forces and how they combine, he suggests, tha t ultimately allows rhe five competitive forces to shape strategy and determine how companies compere (Porrer, 7008). More recently, Porter and Heppel- mann (2014) have discussed the ways in which information technology is revolutionising products and in doing so creating a new wave of technology-driven co mpetition. Smarr products have three core elemenrs: 1) the physical componenrs; 2) the smarr component; and 3) connectivity, for example a car tha t is linked ro a diagnostic machine, or continual moniroring of the vehicles performance, which then enables remote upgrades, as offered by Tesla. l11 ese authors also suggest rhar smarr-connected products have new capabilities, which have tremendous potential ro influence rhe comperirive marketplace: monitoring, co nrro l, optimisa tion and auronomy. For example, rhe iRobor Roo mba™ vacuum cleaner has se nso rs and software, which enables auroma red cleaning of multipl e room layouts. As such products develop, they become able ro learn and self-diagnose rhe service needs of the product owner and eventually the product can operate wirh very few human interventions. Automated cars are being developed, which will eve ntuall y operate completely autono- mo usly from the human passengers.
Po rte r and Heppelmann (2014) say rhat 's marr-co nnected products will have a trans- formative effect o n industry structure' . Bur th ey also a rgue rhar the well-established five forces model still provides a solid foundarion for understanding how technology is reshaping competi tion a nd industry structure (shown in Table 2.2). The five competitive forces are:
• bargaining power of buyers; • bargaining power of suppliers; • threat of substitute products and services; • threat of new entrants; • inre nsity of rivalr)~
Bargaining power of buyers
This force is important in both B2C and B2B trading siruations. From a B2C perspective, the bargaini11g powe r of the retail shopper is greatly increased when they are buying through digital channels such as the lmernet as rhey are able ro eva lu ate products and compare prices. This is particularly true for standardised products where offers from different sup- pliers can be readily compared through on line intermed ia ri es such as sea rch engines and price comparison sites, e.g. KelkooTM or PricerunnerTM. The In ternet has not only opened up opportunities for more customers (in both B2C and B2B sectors) ro take advantage of co mparing prices bur bas also extended the sco pe to commodities products. Furthermore, sm art-connected products are u1creasing opportunities fo r differentiation. The information provided through product connectivity enables manufactu rers to know more about how custo mers actually use their products and services and this insight enables the creation of bener-value goods and services. This knowledge ca n be used to become more efficient, alter distribution channels and become increasi11gly responsive to changes in market demand . More tailored and personalised products and services give firms the opportunity to provide more services to their customers and ultima rely to generate more profits.
Bargaining power of suppliers
Traditional trading relationships are being challenged in the digital marketplace. Leading tech brands, e.g. Google, Apple, AT&T""'t, h ave developed specific capabilities and resources, which they can deploy especially when the demand for connected products and services increases. This gives these firms hig h bargaining power, especially as the fearures of
Chapter 2 Online marketplace analysis: micro-environment 7 1
smarr products become more universal. For exampl e, General M ororsT111, AudiT111 and other major car m anufacturers joined together to use the Google Android operating system in rheir new cars (Porter and Heppelmann , 2014). The fundamenta l ch::mge thar is occurring is that rhe basis of co mperirion shifts away from a single product (from a single fi rm) towards a wider product system (multiple firms).
Threat of substitute products and services
This threat can occur from established or new companies. Smart digital products and ser- vices are creating new opporrunides for substitution as they can offer increased product capabi lities. For example, the Fitbit, a wearable fimess device, offers nor on ly the capacicy ro monitor activity performance (running, pedometer) bur also captures data on sleep pat- terns and o ther health-related data (Por ter a nd H eppelmann (20 14), enabling the user to va ry their behaviour depending on their lifescy le goa ls. As a resu lt, sma rr products can offer superio r performance.
Threat of new entrants
In the past it was argued tha t new entrants could benefit fro m low operating costs and the refore were able to challenge the market. The logic behind the a rgum ent is that these new entra nts have been able to enter th e market rapidly since they do nor have the cost of developing and maintaining a distribution network to sell their products a nd these products do nor req uire a manufacturing base.
However, to succeed, new en trants need to be marker leaders in executing markedng and customer service. These are sometimes described as barriers to success or hygiene factors rather rhan barriers to entry. But new entrants in the digitally connected world are now being chall enged by high costs associated with developing complex connected and integrated products and services. According to Porter and H eppelmann (2014), ba rriers ro entry increase when highly agile rech firms are able to leverage first-move r advantage (based on rheir superior capa bilides and resources). Bur barriers can go down when completely new digital products and services bypass the existing incumbents in a marker.
Intensity of rivalry
T he nature o f the rivalry between the companies trading onli ne is l::trgely determined by the number of players in a market and their rel ative sizes, the structure of costs and pricing, the sw itching costs customers will encounter if they chan ge, strategic objectives a nd exit barri - ers. The fl ex ibilicy and scope for sma rt digital products creates oppo rtunities for firms to differemiate fro m the competirion and to offer a greate r ra nge of va lue-a dded services, which hears up the imensity of the rivalry. Tailored a nd specia lised good s and services can :tlso increase the opporrunicy to delight target customers :t nd aga in ca use frict ion between firms providing similar product s. Smart-connected products often spa n traditional product boundaries and firms ca.n find themselves competi ng in completely new ma rket s. For exam- ple, the H o me Connect AppT111 links househo ld :tppliances, heari ng, lighting and other devices rogerher. Amazon Alexa, Tielsa, Nest, IFTTT, mytasre and drop are all parmers in rhe H ome Connecr ecosystem and they are ali com peting to be :1 chosen solutio n provider
in the connected home. By using the five forces model for analysing the strucrure and nature of rhe competidon ,
digital marketers can gain insights into how firms compete in a parricular marketplace. H owever, ir is imponant to be aware that actions h:tve consequences - for example, the introduction of a new featu re or service may stimulate a response from a competitor. There- fo re, the next step for the digital marketer is to de,·elop understanding of rhcir competitors :tnd how they might respond. But this is becoming a complex exercise as the boundary lines berween products services and firms are blurring. According ro Porter and H eppelmann (2014), the competitive boundaries are expanding to encompass sers of relared products and
72 Part 1 Digital marketing fundamentals
Competitor analysis Involves identifying the companies that are competing for our business and then reviewing what they are good at, what are their strengths, where are their weaknesses, what are they planning, where do they want to take the company and how do they behave when other companies try to take their market share.
Competitor benchmarking A structured analysis or the ontine services, capabilities and performance or an organisation withll the areas or customer acqUsition, conversion. retention and growth.
as a consequence the 'basis of competition rhus shifts from the functionality of a discrete product to the performance of a broader product system'. But these authors also remjnd us that it is important not to lose sight of the end user- for example, adding functionality that buyers don't wam ro pay for doesn't add value.
The next sub-section explores how to analyse competitors and assess their potential.
Competitor analysis and benchmarking
Compet itor a nalysis and benchmarking of competiror use of digital marketing for acquisi- tion and retention of customers js especially imponanr because of the dynamic nature of smart-connected djgital products. As Porter and Heppelmann (2014) have suggested, this dynamism enables new services to be launched and elements of the marketing mix, such as price and promotion, to be changed far more frequently in the digital era. Copying of con- cepts and approaches w ithin sectors is rife, but can sometimes be controlled through patent- ing. For example, Amazon.com has patented the 'One Click' approach to purchase, so this term and approach is not seen on other sites. The implications of this dynamism are that competitor be nc h marking is no t a one-off activity while deve loping a stra tegy, but it needs to be conrinuous.
Competitor benchmarking is the term used for structured comparison of digital market- ing approaches of a11 organisation's services within a market. Its purpose is ro identify threats posed by changes ro competi tor offerings, but also to identify opportunities for enhancing a company's own web services through lookin g at innovative approaches in non - competing companies. Competitor benchmarking is closely related to developing the cus- tomer proposition and brand experience and is informed by understanding the requirements of differem customer personas, as introduced earlier in this chapter.
Benchmarking of services has different perspectives that serve different purposes:
1 Internal capabilities: such as resourcing, structure and processes vs external customer- facing features of the sites.
2 Diffe rent aspects of the customer lifecycle: customer acquisition, conversion to retention. Capabilities are bench marked in each of the activities shown in Figure P.l in the Preface. For example, what are the capabilities of a competitor within search marketing through reviewing their presence in the paid and natural listings of the search engines?
3 Qualitative to quantitative: from qualitative assessments by customers through surveys and focus groups to quanti tative analysis by independent auditors of data across cus - tomer acquisition (e.g. number of site visitors or reach within m:uker, cost of acquisi- tion, number of customers, sales volumes and revenues and market share); conversion (average conversion rates) and retention such as repeat conversion and number of active customers.
4 In-sector and out-of-sector: bench ma rkin g against similar sires w ithin sector and review- ing out-of-sector to sectors that tend to be more advanced, e.g. onlin e publi shers, social networks and brand sites. Benchmarking services are avai lable for this type of compari- son from analysts such as Bowen Craggs Lndex (www.bowencraggs.com). An example of one of their benchmark reports is shown in Figure 2.1 1. You can sec that this is based on the expert evaluation of the suitability of the site for different audiences as well as meas- ures under the overall construction (which includes usability and accessibiJjry), message (which covers key brand messages and suitability for international audiences) and contact (which shows integration between different audjences). Although some research into site types is based on the presence or absence of a feanue, Figure 2.11 is based on an e.xpert review raking ten hours. The methodology stares: 'it is nor "tick box": every metric is judged by its existence, its quality and its utility ro the client, rather than " Is it there or is it nor?"'
5 Fin ancial to non-financial measures: through reviewing competitive intelligence sources such as company reports or tax submissions, additional information may be available on
Chapter 2 Online marketplace analysis: micro-environment 73
turnover and profit generated by digital channels. But other forward-looking aspects of rhe company's capabiliry rhar a.re incorporated on rhe balanced score measurement framework (see Chapter 4) should also be considered, including resourcing, innovation and learning.
6 From user experience to expert evaluation: benchmarking research should take two alter- native perspectives, from actual customer reviews of comem and usability to expert evaluations.
In the physical world, a company's competitors rend to be visibly active in any given marker and therefore are well known. However, in digital environmems there may be new entrants that have the potential to achieve significam marker share, which are less visible until they grow to a significant size. This is particularly the case with retail sales. For example, successhtl new companies have developed on rhe Internet that sell books, music, CDs and electronic components. As a consequence, companies need to review the Internet-based performance of both existing and new players. Companies should review:
• well-known local compet itors (for example, UK or European compe titors for British companies);
• well-known international competitors; • new Internet companies -local and worldwide (w ithin sector and out of sector).
As well as assessing competitors on performance criteria, iris also worthwhile categorising them in terms of their capability to respond. Deise eta/. (2000) suggest an equation that can be used in combination to assess the capabi lity of competitors ro respond:
agility x reach Competitive capability = t' t ark t
1me- o-m e
'Agility' refers to the speed ar which a company is able ro change strategic direction and respond to new customer demands. 'Reach' is rhe ability ro connect to or to promote prod- ucts and generate new business in new markers. 'Time-to-marker' is the product lifecyde from concept through to revenue generation or, more generally, ir can be considered how long it rakes to implement new digital marketing services, e.g. social network integration. Companies with a high competitive capability within rheir marker and competitive markers are arguably the most important ones ro watch.
In summary, it is important for digital markers to be able to identify and understand their competitors and in doing so be able to infer what rheir strategies and future activities might be. We revisit competi tor benchmarking in more detail in Chapters 4, 7 and 10.
Figure 2.11 Benchmark comparison of corporate websites
eo,..,.ny Conetruction MNNve Contact Senring Serving Serving the SeMng Serving Total Po$ society investors media job seek.,. cuttom.,.. URL Counlry .,..........,... eo 48 12. 32. 32 32 32 32 280 J
1 GSK .. 40 I 11 I 26 24 22 27 J 22 Z16 W!IJtW g&k-t:Om UK 2 Boyot 48 311 9 26 25 25 22 19 213 www.taawr com Germany 3 BP 411 38 8 26 ZT 19 22 24 213 WWWI;Q1com UK 4 _,. 45 I ., 11 28 23 25 I 20 20 213 www..~""lMt!f: com s- 5 Enl 45 39 11 ZT 26 22 20 22 212 www !Oih"'m l13ly 6 ,_ 47 39 9 26 25 19 21 23 209 WWW~t::IDIII UK 7 s..m.. 37 39 9 25 24 I 25 I 23 24 208 www.Mrnwll.com Germany a - 42 39 7 26 21 20 25 25 205 WW'W I tlil'f'wt (!i'lltl s-9 St.- 40 36 8 24 29 19 23 I 26 I 205 www abel O'X'r\ UK
10 8ASF 40 37 8 22 25 22 215 22 202 WWWbrft.qn Germany
'--- Source: Bowen Craggs & Co. (www.bowencraggs.com)
7 4 Part 1 Digital marketing fundamentals
( Suppliers
M arketing int ermediaries Firms that can help a company to promote, sell and distribute hs products or services, lor example publisher or media sites. comparison shes, search engines, social networl<s and blogs.
Destination sites Sites typicaly owned by merchants, product manufacturets or relaJiets proWing product information.
Online intermediary sites Websites that laciitate exchanges between consumer and business suppliers.
Traditionally. suppliers deliver the goods and services a business needs to carry out its busi- ness activities funber down the supply chain. In the digiral marketplace, the supply chain can take many different forms depending on whether physical or digital products are involved. The most significant aspect of monitoring suppliers in the context of digital mar- keting is with respect to the effect suppliers have on the value of quality of product or service delivered to the end customer. Key issues include the effect of suppliers on product price, availability and fea tures. D igital channels have had a significant impact in some business activity sectors, resulting in new channel structures for suppl)' chains and new types of sup- pliers, which offer specialist services to the digital industry as a whole. The new suppliers act as intermediaries a nd offer a wide ra nge of specialist services: websi te develop ment, tech nology management and inregratio n.
Digital marketing intermediaries
Marketing intermedi aries are fi rms th at ca.n help a compa ny to promote, sell a nd distribute irs products or services. They should no r be confused with Internet service providers, who develop websi tes and p rovide hosting services. [n the Internet context, o nl ine market ing intermediaries can be co ntrasted with destination sires, which are typic.1lly merchant sites owned by manufacturers or retailers that offer information and products (i11 reality any type of sire can be a destinat io n site, bur the term is generally used to refer to merchant and brand sires).
Online intermediary sites provide information about destination sites and are a means of connecting Internet users with product information. The best-known online intermedi- aries a re publishers or media sires covering general news and enrerrainmenr. Many of these have print and online versions, bur online-only publishers such as the Huffington Post, MashableTM and BuzzFeedTM have built up considerable reach and influence. Many special- ists online publishers and blogs h ave developed catering for specific consumer and business interests. Other consumer intermediaries such as Kelkoo (www.kelkoo.com) and BizrareTM (www.bizrate.com) provide p rice comparison for products, as described earlier in this chapter. Mini case st udy 2.4 gives an example of one of the most successful online intermediaries.
Mini case study 2.4 Alibaba TM provides a global market for all
Alibaba.com is one of the leaders of a-commerce transactions in China. It provides a marketplace connecting small and medium-sized buyers and suppliers from China and around the world. Its web presence includes an international marketplace (www.alibaba.com) which focuses on global importers and exporters and a China marketplace (www.alibabacom.cn) , which focuses on suppliers and buyers trading domestically in China.
From a launch in 1999 the marketplaces have grown such that Alibaba's consumer-to-consumer portal Taobao, similar to eBay.com, features millions of products and is one of the most-visited websites globally.
In November 2007, Alibaba launched on the Hong Kong stock exchange and raised HK$13.1 billion (US$1.7 billion) in gross proceeds before offering expenses making it the largest Internet IPO in Asia and the second- largest globally. In September 2017 , Alibaba's market value was measured as US$400 billion at a US IP.
Jack Ma's driving vision was to build an a-commerce ecosystem that allows consumers and businesses to do all aspects of business online. By 2006 he had done so well it caused one of its major competitors eBay to close its operation in China. The Alibaba Group's flagship company is a world-leading B2B a-commerce
Chapter 2 Online marketplace analysis: micro-environment 7 5
company and Taobao is China's largest online retail website, which provides a portal for shopping, socialising and sharing information. Alibaba also now provides cloud comput-
ing and a range of other computing services and has become one of China's leading Internet portals. Alibaba recently created a live entertainment business, taking it further away from its origins and into new markets.
Source: Ali Baba Press releases, Alibabacom Umited Trading Debut, 7 November 2007, http://resources.alibaba com/article/225276/Alibaba_com_Umited_ Trading_Debuthtm (accessed May 2018); Riding the Blind Tiger. The Unlikely Rise o f Alibaba CEO, Jack Ma. 8 January 2008, http:l/resources.alibabacom/article/246718/Riding_the_ Blind_ Tiger_ The_Unlikely_Rise_of_Ali baba_CEO_Jack_MA.htm (accessed May 2018).
On line intermediaries are businesses that support business and consumer audiences, so they can serve bod1 B2B and B2C information exchanges_ Auction sites are another rype of o nl in e intermediary that support the B2B a nd the C2C exchanges introduced in Chapter 1.
For marketers to extend the vis ibility or reach of their company on li ne, they need to be well represented by a range of imermediaries and publishers through using sponsorships, online adverts, PR and influencer outreach , content and search marketing, as explained in Chapter 8.
(~N_e_w __ c_h_a_n_n_e_l_s_tru __ c_t_u_re_s ____________________________________________ ~j Channel structure The configuration o f partners in a distribution channel.
Disintermediation The removal of intermediaries such as distributors or brokers that formerly linked a company to it s customers .
Reintermediation The creation of new intermediaries between customers and suppliers providing services such as supplier search and p roduct evaluation.
Channel structures descri be the way a manufacturer or selling organisation delivers prod- ucts and services to its cust omers. Traditionally, a distribution channel wi ll consis t of one or more intermediaries, such as wholesalers and retailers. For example, tradit ional ly a book publisher was unlikely to distribute its books directly to the end consu mer, instead using wholesalers that have a large warehouse of titles that are then distributed to individual branches according to demand. A company sell.ing business products may have a longer distribution channel involving more intermediaries.
The relationship between a company and its cha nnel partners can be dramatically altered by the opportun ities afforded by digital channels: web, mobile and social media networks . This occurs because the Internet offers a means of bypassing some of the channel partners. This process is known as disintermediation or, in plainer language., 'cutting our the middle- man' . For example, publishers such as Pearson now have t he option to sell texts such as t his or ebooks direct to students like you, removing the need ro pay distribution fees to who lesal- ers or retailers in this case.
Figure 2.12 illust rates disintermediat ion in a graphical form for a simplified retai l chan - nel. Further intermediaries, such as additional dist ributors , may occur in a business-to- business marker. Figure 2.13 (a) shows the former position where a company marketed and sold its p roducts by ' pushing' d1em through a sales channel; it also shows two differem types of disintermediation in which the wholesaler (b) or the wholesaler and retailer (c) are bypassed, allowing the producer to sell and promote direct to the consu mer. The benefits of disintermediat ion to the producer are clear- it is able to remove the sales and infrastruc- ture cost of sell ing through the channel, and some of these cost savings cru1 be passed on to the customer in t he form of cost reductions.
Moreover, since purchasers of p roducts still require assistance in the selection of products, this led to the creation of new intermediaries, a process referred to as reintermediation .
Following disintermediation, where the customer goes direct to different supp li ers to select a product, this becomes inefficient for t he consumer. Take the example of someone buying insurance- to decide on the best price and offer, they would have to visit say five
76 Part 1 Digital marl<eling fundamentals
Figure 2.12 Disintermediation of a consumer distribution channel showing: (a) t he original situation; (b) disi nter- mediation omitting the wholesaler; and (c) disintermediation omitting both wholesaler and retailer
(a) I Produ~ I ~ I Who~er I ~ I Retailer I ~ I Consumer I
Produ~ to- Retailer Consumer (b)
Producer to- I Wholesaler I Retailer ~ Consumer (c)
Figure 2.13 From (a) orig inal situation to {b) disintermediation or (c) reintermediat ion or countermediation
Company ..... E-----i-.~ ..... f---'1.,~ Customer
(a) ,__ _ _ _, Intermediary
Disintermediation Company Customer
(b) '-------'
Company ..... E-----i.,~ ... ._--!.,~ Customer (c) .__ __ ....J
Intermediary
Reintermediation
differe nt insurers and then return to rhe one they decide to pu rchase from. Rei nrermediation removes this Lnefficiency by placing an inrermed iary between the purchaser a nd seller. This inrermedia r y performs th e price eval ua tio n stage of ful fi lment since its database h as links updated fro m prices contain ed within the databases of different suppliers.
\XIhar are t he implicat ions of rei nrermediation for rh e Internet marketer? First, it is n eces- sary to make sure that a company, as a supplier, is rcpresenred with the new intermediaries operating within your chosen marker sector. This implies rhe need to integrate, using the Internet, databases conrainmg price information wirh that of different intermediaries. For example, Google through its Google Shopping Product listing Ads (PLAs) has become a major intermediary mediating access to reta.il inventory. This is well known and has given rise to anti-competition charges in Europe where Google has had to adjust its service. It l5 looking to grow irs influence Ln other sectors such as travel and financial services, where it can compare flights and credit card deals for example.
Secondly, it is imporranr to monitor rhe prices of orher suppliers within this sector (pOSSibly by USlng the lntermediary website for this purpose). Thi rdl); long-term partnering arrangements such as sponsorships need to be considered. Finally, ir may be appropriate for
Chapter 2 Online marketplace analysis: micro-environment 77
them to create their own inrermedia.ry tO compere with existing intermediaries or to pre-empt similar intermediaries. For example, rhe Thomson Travel GroupTM set up Latedeals.com (http://www.thomson.co.ukllate-dealsllate-deals.html) in direct competition with Lastminute. com (www.lastminute .. com).
rr-----------------------------~--~====================~
Digital business models for e-commerce \
Key performance indicators (KPis) Metrics used to assess the perfonnanoe of a process and/or wtlelhel' set goals are achieved.
Defining a clear business model is essential for starmp businesses trading in the rugital world to be successful. For existing businesses moving part or all of their operations online it is equally important to consider how ro refine their current business model or add new ser- vices in the Light of new opporruruties made possible by the Internet. The Business Model Canvas developed by Osterwald and Pigneur (2010) is a valuable framework for smnmaris- ing strategy for online businesses and in particular sta rtups, who have to smnmarise their bus in ess model to investors. It was published as parr of a co-creation project involving 470 practitioners from 45 countries. It's a lso available as an app and downloadable tem- plates on the Business Model Generation site (http://www.businessmodelgeneration.com).
The main sections of rhe canvas, in a logica l order to consider them, are:
1 Value proposition . This is at the heart of what the business offers to its auruences and is arguably most important to success. More derails are provided in a follow-up book by Osterwalder et al. (2014).
2 Customer segments. Different target auruences the value propositions will appeal ro. In the business model canvas, the alternatives recommended are mass market, niche marker, segmented (broken down further) or a range of diverse segments.
3 Customer relationships. The types of relationships that will be formed, for example self- service, automated services, communities or more personal assistance and this may include co-creation of content.
4 Channels. The methods by which an organisation's services will be delivered and the audiences reached.
5 Key p artners . To exploit online and offline value networks, forming partnerships gives an opportunity of expanrung reach and raking advantage of existing orgarusarions and online influencers that have builr an audience.
6 Activities. The main activities that need robe performed ro deliver rhe value proposition to develop revenue.
7 Resources. Different types of process and people to complete the activities to creare and deliver the val ue proposition.
8 Cost structure. Different cost-elements, which shou ld be checked against activities an d resources. Costs are classically broken down into fixed and variab le costs and economies of scale.
9 Revenue stream. This is rhe method by which a business derives income. Common online options are: ad revenue, subscription fees, sales of physical o r virtual goods or affiliate- based commission arrangements. Licensing and leasing are other alternatives.
An example of how rhese nine differenr elements of a business model can be applied is shown in Figure 2.14.
It's a great framework, bur ir's always worth considering what the missing elements of frameworks are. It's arguably missing a method of specifying key performance indicators (KPis) for evaluating performance of rhe business model. We recommend adding rhese ro the relevant sections, in particular for re,·enue stream, cost structure and key activities. Ir also doesn't direcrly consider the impact of differenr forms of competitors. To help here, it's also useful ro think through how the canvas would look for successful companies already active in this market.
78 Part 1 Digital marketing fundamentals
Fig ure 2.14 Example of a business model canvas summary
Business model sunvnary Created tor. Smarllnsigfrts.com By: Dave Chaffey
Dete: I" May 2013 Version: 1.0
KP: key partners • Experts-sector
specialists • Marl<eting agetaciGI-"It'ltY and
freelancers • Online Publishers
e .g. iMedia Connection • Publishing/conference
organise<S • Industry influencen and
blogg<n • Trade organisations
e .g. www tbeidm com
C: Cost structure Fixed costs • SaJary
KA: Key activities • Content aeation • Experience creation • SeMce pmmotion • SiMs maximisation
KR: Key resourc es • Content creation X2 • Development X2 • Marketing X1
VP: Value proposition • Help businesses grow
valJe by~ cross c:hanne! marketing COOVTUlications using recommendations trom ebooks. cot.WSeS and software
• Support individual learning and development
• Deliver specific consulting or trailing advice or mentoring
CR: Customer relationships
• Self-service • Oedlcated meniOring and
consultng • C<H:roatJOn - blog postS
andk>Mn
C: Channels • Search marketing • Email marketing • Partner arrangements • Social media marketing • Paid advertising
RS: Revenue stream
CS: Customer segments Businesses wanting to improve their returns from marketing
Rolr. · ~yawners • Matketilg managers • Digital marketing
managers • Consultants
Company type/sector • Con$ultant • Business type • Agency • 828 • Ecommercelretail • Not·fOf'·profit
• Annual subscription to compMies and Individuals • Individual product purchase
• Hosting and softwa"' costs • Ad revenue • Consulting and training (dinact and affiiate) • Licensed contact revenue
Variable costs • Content creation • Agency marketing tees • Advefstising fees
u
Sou-ce: Smartlnsights.com wrth petTTlission.
Online business model A summary of how a company will generate a profit - identifying its core product or service value proposition, target customers in different markets, position in the competitive online marketplace or value chain and its projections for revenue and costs.
\Vc will look furrher at how to define elements of the business model such as value propo- sition and targeting in Chapters 5 and 8.
A review of the different online business models made available through c-commerce is of relevance to ex.isting companies, but in particular srart-up companies a.nd online inter- mediaries. Venkatram (2000) pointed out that existing businesses needed ro usc the Internet to build on current business models, while at the same time experimenting with new business models. New business models may be important to gain a competitive advantage over exist- ing competirors, whi le a t the sa me t ime heading off simi lar bus iness models created by new entrants. More commonly, they may si mply offer a d ifferent revenue stream through a dver- tising o r charging for services i.n a new way. For digital starrups the viab il ity of a bus in ess model and in pardcular their sources of revenue will be crucia l to funding from venmre capitalists. But what is a business model?
Figure 2.15 suggests a different perspective for reviewin g alternative business models. There arc three different perspectives from which a bu siness model can be viewed. Any individual organisation can operate in different categories, as the examp les below show, bur most will focus on a single ca tegory for each perspective. Such a categorisation of business models can be used as a tool for formulating e-business strategy. The three perspectives, with examples, arc:
1 Marketplace position perspective. The book publisher here is the manufacrurer, Amazon is a retailer and Yahoo! is both a retailer and a marketplace intermedia ry.
2 Revenue model perspective. The book publisher can use the web to sell direct, while Yahoo! and Amazon can take commission-based sales. Yahoo! also has :~dverrising as a revenue model.
3 Commercial arrangement perspective. All three companies offer fixed-price sales, bur, in irs place as a marketplace intermediary, Yahoo! also offers alternatives.
Chapt er 2 Online marketplace analysis: micro-environment 79
Figure 2.15 Alternative perspectives on b usiness models
1 . Ma rketplace position 2. Revenue model 3. Commercial model
y
Manufacturer or Direct product Fixed-price
primary service sales of sale provider product or service
B B B A
y y
Reseller/retailer Subscription or Brokered or
(intermediary) rental of negotiated service deal
A B
y . . b d y Comm1ss1on- ase y
Marketplace/exchange sales Auction or
Revenue models Describe methods of generating Income for an organisation.
CPM (cost per thousand) The oost lo the advertiser (or the I'!MlnUEI recellled by the publisher) when an ad is served 1 ,000 tfmes.
(intermediary)
Media owner or publisher
(intermediary)
Supply chain provider
or integrator
Not-for-profit organisation
y
(affiliate, auction, marketplace)
Advertising (banner ads, sponsorship)
Sales of syndicated content or services (for media owner)
Digital revenue models
A
y
Key
spot
Product or service bundling
Loyalty-based pricing
or promotions
Y - Yahoo! A -Amazon B - Book publisher _j
Revenue mode ls specificall y describe d iffe rent techn iques for generation of income. For existing companies, revenue models have mai n ly been based upon the income fro m sales of products or services . T his may be eith er for selling direct from the manufacturer or su pp lier of the se rvice o r through an intermediary that wi ll take a cut of the sell ing price. Both of these revenue models are, of course, st ill crucial in o nline trading. There may, however, be digital options for generating revenue; a manufacturer may be able to sell advertising space or sell digital services that were nor previously possible.
Digital publisher and intermediary revenue models
For a publisher, there are many options for generating revenue online based around adYertis- ing and fees for usage of me online service. These options, particularly the first four in the list below, can also be reviewed by other rypes of business such as price comparison sites, aggregators, social networks and destination sires which can also ca rry advertising to supple- ment revenue. The main types of online revenue model are:
1 CPM dis play advertising on site. CPM stands for 'cost per thousand' where M denotes 'mille'. This is me traditional method by which site owners charge a fee for advertising. The site owner charges advertisers a rare card price (for example £50 CPM) acco rding to
80 Part 1 Digital marketing fundamentals
CPC (cost per click) The cost to the advertiser (or the reverue recerved by the p4ilisher) of each cfock of a IWlk to a ttWd- party site.
Cost per acquisition (CPA) The cost to the advertiser (or the reverue recaved by the p4ilisher) for each outcome such as a'-! or sale generated after a dick to a thord-party Site.
Digital rights management (DR M) The use of different technologies to protect the distribution of digital services or content such as software, music, movies or other cigitaf data
the number of times ads are served to site visitors. Ads may be served by the site owner's own ads server or more commonly through a third-parry ad network service such as DoubleClick (which is owned by Coogle).
2 C PC advertising on site (pay-per-click text ads). CPC stands for 'cost per click'. Ad,·ertis- ers are charged not simply for the number of times their ads are displayed, but according to the number of rimes they are clicked upon. Facebook has a choice of CPC or CPM for its advertisers. Coogle's AdWord programme is primarily CPC for sponsored ads dis- played to searchers, bur it offers CPM on content network of publishers known as the Google Display Network (GDN) . Google has irs AdSense (http://adsense.google.com) program for publishers that enables them ro offer text- or image-based ads typically on a CPC basis, but optionally on a CPM basis. Typical CPCs for search ads can be surpris- ingly high, i.e. they are in the range £0.10 to £4, bur sometimes up to £20 for some cat- egories such as 'life insurance'. The revenue for search engines and publishers from these sources can also be significant: Coogle's annual reporrs (http://i nvestor.google.com) show that this is around one fifth of Coogle's ad revenue.
3 Sp onsorship of site section s or content t ypes (typi call y fixed fee for a period) . A com- pany can pay to advertise a si re chru1nel or section. For exa mple, the healthcare firm Bupa sponsors healthcare advice on T he Guardian publisher site. This type of deal is often struck for a fixed amount per year. It may a lso be parr of a rec iprocal arrange- ment, sometimes known as a 'contra-deal', where neither party pays.
4 Affiliate revenue (CPA, but could be C PC) . Affiliate revenue is comm ission based- for example, 1 display Amazon books on my sire DaveChaffey.com and receive around 5 per cent of the cover price as a fee from Amazon. Such an arrangement is sometimes known as cost per a cquis ition (CPA). Increasingly, this approach is replacing CPM or CPC approaches where the advertiser has more negotiating power. For example, manufactur- ing company Unile,·er negotiates CPA deals with online publishers where it paid for every email address captured by a campaign rather rhan a traditional C PM deal. Howe\·er, it depends on the power of the publisher, who will often receive more revenue overall for CPM deals. After all, the publisher cannot influence rhe quality of the ad creative or the incentivisadon to click, which will affect rhe clickrhrough rare and so earnings from the ad.
5 Transaction fee revenue. A company receives a fee for facilitating a transaction. Examples include eBay and Pay Pal who charge a percentage of the transaction cost between buyer and seller.
6 Subscr iption access to content or services. A range of documents can be accessed from a publisher for a fixed period. T hese are often referred ro as premium services on websites.
7 Pay-per-view access to documents. H ere payment occurs for single access to a docu- me nt, video or music clip th at ca n be downloaded. It may or may not be protected with a password or digital rights mana ge me nt (DRM ). I pay ro access detailed best- practice guides on lnrernet marketing from Marketing Sherpa (www.marketingsherpa. com ).
8 Subscriber data access for email m arketing. The data a site owner has about its customers are also potentially valuable since it can send different forms of email to its customers if tbey have given their permission that rhey are happy ro receive email from either the publisher or third parries. The sire owner can charge for adverts placed in its newsletter or can deliver a separate message on behalf of the advertiser (sometimes known as 'list rental'). A related approach is ro conduct marker research wirh the site customers.
Forecasti ng revenue for an online business
Sire owners can develop models of potential revenue depending on the mix of revenue- generating techniques from the four main revenue oprions they use on the site given in the options above.
Chapter 2 Online marketplace analysis: micro-environment 81
Consider the capacity of a site owner to maximise revenue or 'monetise' their site- which factors will be important? The model will be based on assumptions abou t th e level of traffic and number of pages viewed plus the interaction with different types of ad unir. Their abil - ity to maximise revenue will be based on these factors, which can be modelled in the spread- sheet shown in Figure 2.16:
• Num ber and size of ad units. This is a delicate balance between the number of ad units in each site section or page- too many obtrusive ad units may present a bad experience for site users, too few will reduce revenue. Figure 2.16 has a parameter for the number of ad units or containers in each ad revenue category. T here is a tension with advertisers who know that the awareness and response they generate from their ads is maximised when they are as large as practical and in prominent placements. A more accurate rev- enue model would develop revenue for different page types such as the home page and different page categories, e.g. the money or travel sections.
• Capacit y to sell advertising. Figure 2.16 also has a parameter for the percentage of ad inventory so ld in each category- for example, for the CPM ad display revenue only 40 per cent of inventory may be sold . This is why you may see publisher sites with their own 'house ads'- it is a sign they have been unable to sell all their ad space. A benefit of using
the Google AdSense publisher program is rhar inventory is commonly all used. • Fee levels negotiated for different advertising models. These will depend on the market
competition or demand for advertising space. For 'pay-per-performance' advertising options such as the CPC and CPA models, it also depends on the response. In the first case, the sire owner only receives revenue when the ad is clicked upon and i.n the second case, the site owner only receives revenue when the ad is clicked upon and a product is purchased on the destination merchant sire.
• Traffic volumes. More visit ors equa te to more opportw1iries to generate revenue through serving more pages (which helps with CPM-based advertising) or more clicks to third- parry sites (whicl1 helps generate revenue from CPC and CPA deals).
• Visitor engagement. The longer visitors stay on a site {its 'stickiness'), the more page views that will accumulate, which again gives more opportunities for ad revenue. For a destination site a typical number of page views per visit would be in the range five to ten, but for a social network, media site or community the figure could be greater than 30.
Considering all of these approaches to revenue generation together, the site owner will seek to use the best combination of these techniques to maximise the revenue. An illustra- tion of this approach is shown in Figure 2.16.
To assess lww effective different pages or sites in their portfolio are at generating revenue using these techniques, sire owners will use two approaches. The first is eCPM, or effect ive cost per thousand. This looks at the total the advertiser can charge (or cost to advertisers) for each page or sire. Through increasing the number of ad units on each page this value wi ll increase. The other alternative to assess page or site revenue-generating effectiveness is revenue per click (RPC), also known as 'earnings per click' (EPC) . Alternatively, revenue can be calculated as ad revenue per 1,000 site visitors. This is particularly importan t for affiliate marketers who make money through commission when their visitors click duough to durd- party retail sites, and then purchase there.
Activ ity 2.3 explores some of the revenue models that are possible. To conclude this chapter, read the following case study about the dor.com failure
Boo.comTM. We can learn from studying the mistakes of others, and have chosen this exam- ple since ir shows what can happen when a company does not understand the marketplace and does not have clear goals.
82 Part 1 Digital marketing fundamentals
Figure 2.16 Revenue model spreadsheet
Ad revenue option Measure Site
Pages served 100,000
CPM (Cost Per Thousand) £2
% Inventory served 40%
Avg . Clickthrough (CTR %) 0. 10% Display
Ad units served per page 2 advertising (CPM)
Clicks - CPM ads 80
Revenue - display ads £160
Earnings per 1 00 clicks (EPC) £200
eCPM - display ads £1.60
% Inventory served 100%
Avg . Clickthrough (CTR %) 0.30%
Fixed Ad units served 1 1
run-of-site Clicks - fixed 300 sponsorship Revenue - fixed sponsorship £3,000
Earnings per 100 clicks (EPC) £1 ,000
eCPM - fixed £30
% Inventory served 100%
Avg. Clickthrough (CTR %) 1%
Avg. Cost Per Click £0.30
Text ad Ad units served per page 1 advertising (CPC) Clicks - CPC ads 1,000
Revenue - CPC ads £300
Earnings per 1 00 clicks (EPC) £30
eCPM - CPC ads £3
% Inventory served 100%
Avg . Clickthrough (CTR %} 0.50%
Ad units served per page 1
Clicks - Affiliates 500
Affiliate Destination conversion rate (%} 3%
commission Average order value £100
Commission % 10%
Revenue - affiliates £150
Earnings per 1 00 clicks {EPC) £30
eCPM - affiliates £1 .50
Clicks -total 1,880
Overall metrics Revenue - total £3,610
for site Earnings per 100 clicks (EPC}- total £192.02
eCPM-total £36.10
I Blue cells = input variables- vary these for 'what-if analysis I Orange cells = Output variables (calculated - do not overtype)
Source: Smartlnsights.com
Chapter 2 Online marketplace analysis: micro-environment 83
Act ivity 2.3 Revenue models at marketing membership sites
Purpose
To illustrate the range of revenue-generating opportunities for an online publisher. This site looks at three alternative approaches for publishing, referencing three different types of portal.
Activity
Visit the International Telecoms Union, free statistics section (http://www.itu.int), and find answers to these questions:
1 Which regions of the world have the highest and lowest number of Internet users as a proportion of the total population?
2 Which regions of the world have the highest and lowest number of mobile users as a proportion of the total population?
3 What are the implications for a digital strategist in a large organisation?
'
, Case study 2 Boo hoo - learning from the largest European dot.com failure
Context
'Unless we raise $20 million by m idnight, boo.com is dead.' So said Boo.com CEO Ernst Malmsten on 18 May 2000. Half the investment was raised, but this was too little, too late, and at midnight, less than a year after its launch, Boo.com closed. The headlines in the Financial Times the next day read: 'Boo.com collapses as investors refuse funds. Online sports retailer becomes Europe's first big Internet casualty.'
The Boo.com case remains a valuable case study for all types of businesses, since it doesn't only illustrate the challenges of managing a-commerce for a clothes retailer, but rather highlights failings in a-commerce strategy and management that can be made in any type of organisation.
Company background
Boo.com was founded in 1998 by three Swedish entre- preneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Malmsten and Leander had previous business experience in publishing, where they created a specialist publisher and had also created an online bookstore, bokus.com, which in 1997 became the world 's third- largest book a-retailer behind Amazon and Barnes & Noble. They became millionaires when they sold the company in 1998. At Boo.com, they were joined by Patrik
Hedelin who was also the financial director at bokus, and at the time they were perceived as experienced Euro- pean Internet entrepreneurs by the investors who backed them in their new venture.
Company vision The vision for Boo.com was for it to become the world's first online global sports retail site. It would be a Euro- pean brand, but with a global appeal. Think of it as a sports and fashion retail version of Amazon. At launch it would open its virtual doors in both Europe and America with a view to 'amazoning the sector'. Note, though, that Amazon did not launch simultaneously in all markets. Rather it became established in the US before providing local European distribution.
The Boo.com brand name According to Malmsten eta/. (2001), the ' Boo' brand name originated from film star Bo Derek, best known for her role in the movie 10. The domain name 'bo.com' was unavailable, but adding an 'o ', t hey managed to procure the domain 'boo.com' for $2,500 from a domain name dealer. According to Rob Talbot, director of marketing for Boo.com, Boo were ' looking for a name that was easy to spell across all the d ifferent countries and easy to remember . .. something that didn't have a particular meaning'.
8 4 Part 1 Digital marketing fundamentals
Target market The audience targeted by Boo.com can be characterised
as 'young, well-off and fashion-conscious' 18-to- 24-year-olds. The concept was that globally the target market would be interested in sports and fashion brands stocked by Boo.com.
The market for cloth ing in this area was viewed as very large, so the thought was that capture of only a small part of this market was required for Boo.com to be successful. The view at this time on the scale of this
market and the basis for success is indicated by New Media Age (1999):
The $60b USD industry is dominated by Gen Xers who are online and according to market research in need of knowing what is in, what is not and a way to receive such goods quickly. If boo.com becomes known as the place to keep up with fashion and can supply the latest trends then there is no doubt that there is a market, a highly profitable one at that, for profits to grow from.
The growth in market was also supported by retail
analysts, with Verdict predicting online shopping in the United Kingdom to grow from £600 million in 1999 to
£12.5 billion in 2005. However, New Media Age (2005) does note some res-
ervations about this market, saying:
Clothes and trainers have a high rate of retum in the mail order/home shopping world. Twenty-year-o/ds may be online and may have disposable income but they are not the main market associated with mail order. To date there is no one else doing anything similar to boo. com.
The Boo.com proposition In their proposal to investors, the company stated that 'their business idea is to become the world-leading Inter- net-based retailer of prestigious brand leisure and sports-
wear names'. They listed brands such as Polo™, Ralph Lauren™, Tommy Hilfiger™, Nike™, Filan.\ Lacoste™ and AdidasrM. The proposition Involved sports and fashion goods alongside each other. The thinking was that sports
clothing has more standardised sizes with less need for a precise fit than designer clothing.
The owners of Boo.com wanted to develop an easy- to-use experience that re-created the offline shopping
experience as far as possible. As part of the branding strategy, an idea was developed of a virtual salesperson, initially named Jenny and later Miss Boo. She would guide users through the site and give helpful tips. When
selecting products, users could drag them on to models,
zoom in and rotate them in 3D to visualise them from
different angles. The technology to achieve this was built from scratch, along with the stock control and distribu- tion software. A large investment was required in tech- nology, with several suppliers being replaced before
launch, which was s ix months later than promised to investors largely due to problems w ith implementing the technology.
Clothing the mannequin and populating the catalogue
was also an expensive challenge. For the year 2000, about $6 million was spent on content about spring/sum- mer fashion wear. It cost $200 to photograph each prod- uct, representing a monthly cost of more than $500,000.
Although the user experience of Boo.com is often criticised for its speed, it does seem to have had that wow factor that influenced investors. Analyst Nik Margo-
lis, writing in New Media Age (1999), illustrates this by saying:
What I saw at Boo. com is simply the most clever web experience I have seen in quite a while. The presenta- tion of products and content are both imaginative and offer an experience. Sure everything loads up fast in an office but I was assured by those at Boo. com that they will keep to a limit of eight seconds for a page to download. Bght seconds is not great but the question is will it be worth waiting for?
Today, as the majority of European users are con-
nected via mobile and fast broadband connections, these innovations could have become populate, but in the 1990s slow dial-up connections made it difficult if not impossible to to download the software to view products.
Communicating the Boo.com proposition Early plans referred to extensive 'high-impact' market- ing campaigns on TV and newspapers. Public relations
were important in leveraging the novelty of the concept and human side of the business - leander was previ- ously a professional model and had formerly been
Malmsten's partner. This PR was initially focused within the fashion and sportswear trade and then rolled out to publications likely to be read by the target audi- ence. The success of this PR initiative can be judged
by the 350,000 email pre-registrations who wanted to be notified of launch. For the launch, Malmsten et a/. (2001) explains that 'with a marketing and PR spend of only $22.4 million we had managed to create a world-
w ide brand'. To help create the values of the Boo. com brand, Boom,
a lavish online fashion magazine, was created, which required substantial staff for different language versions.
The magazine wasn 't a catalogue that d irectly supported sales, rather it was a publishing venture competing with
established fashion titles. R:lr existing customers the Look Book, a 44-page print catalogue, was produced that showcased different products each month.
The challenges of building a global brand in months The challenges of creating a global brand in months are illustrated well by Malmsten eta/. (2001). After an initial round of funding, including investment from JP Morgan, LMVH Investment and the Benetton family, which generated around $9 million, the founders planned towards launch by identifying thousands of individual tasks, many of which needed to be completed by staff yet to be recruited. These tasks were divided into 27 areas of responsibility fami liar to many organisations, including office Infrastructure, logistics, product infor- mation, pricing, front-end applications, call centres, packaging, suppliers, designing logos, advertising/PR, legal issues and recruitment. At its zenith, Boo.com had 350 staff, with over 1 00 in London and new offices in Munich, New York, Paris and Stockholm. Initially, Boo. com was available in UK English, US English, German, Swedish, Danish and Finnish, with localised versions for France, Spain and Italy added after launch. The website was tailored for individual countries using the local lan- guage and currency and also local prices. Orders were fulfilled and shipped out of one of two warehouses: one in Louisville, Kentucky and the other in Cologne, Ger- many. This side of the business was relatively success- ful, with on-time delivery rates approaching 100 per cent achieved.
Boo possessed classic channel conflicts. Initially, it was difficult getting fashion and sports brands to offer their products through Boo.com. Manufacturers already had a well-established distribution network through large high-street sports and fashion retailers and many smaller retailers. If clothing brands permitted Boo.com to sell their clothes online at discounted prices, then this would conflict with retailers' interests and would also portray the brands in a negative light if their goods were in an online 'bargain bucket'. A further pricing issue is where local or zone pricing in different markets exists - for example, lower prices often exist in the US than Europe and there are variations in different European countries.
Making the business case to investors Today it seems incredible that investors were confident enough to invest $130 million in the company and, at the high point, the company was valued at $390 million. Yet much of this investment was based on the vision of the founders to be a global brand and achieve 'first-mover advantage'. Although there were naturally revenue pro- jections, these were not always based on an accurate
Chapter 2 Online marketplace analysis: micro-environment 85
detailed analysis of market potential. Immediately before launch, Malmsten eta/. (2001 ) explains a meeting with would-be investor Pequot Capital, represented by Larry Lenihan who had made successful investments in AOL and Yahoo! The Boo.com management team were able to provide revenue forecasts, but unable to answer fun- damental questions for modelling the potential of the business, such as 'How many visitors are you aiming for? What kind of conversion rate are you aiming for? How much does each customer have to spend? What's your customer acquisition cost? And what's your pay- back time on customer acquisition cost?' When these figures were obtained, the analyst found them to be 'far- fetched ' and reputedly ended the meeting with the words: 'I'm not interested. Sorry for my bluntness, but I think you 're going to be out of business by Christmas. '
When the site launched on 3 November 1999, around 50,000 unique visitors were achieved on the first day, but only 4 in 1,000 placed orders (a 0.25 per cent conversion rate). This shows the importance of modelling conver- sion rates accurately. This low conversion rate was also symptomatic of problems with technology. It also gave rise to negative PR. One reviewer explained how he waited: 'Eighty-one minutes to pay too much money for a pair of shoes that I still have to wait a week to get?' These rates did improve as problems were ironed out - by the end of the week 228,848 visits had resulted in 609 orders with a value of $64,000. In the six weeks from launch, sales of $353,000 were made and conversion rates had more than doubled to 0.98 per cent before Christmas. However, a relaunch was required within six months to cut download times and to introduce a 'low- bandwidth version' for users using dial-up connections. This led to conversion rates of nearly 3 per cent on sales promotion. Sales results were disappointing in some regions, with US sales accounting for 20 per cent com- pared to the planned 40 per cent.
The management team felt that further substantial investment was required to grow the business from a presence in 18 countries and 22 brands in November to 31 countries and 40 brands the following spring. Turno- ver was forecast to rise from $1 00 million in 2000/01 to $1 ,350 million by 2003/04 which would be driven by $102.3 million in marketing in 2003/ 04. Profit was fore- cast to be $51.9 million by 2003/ 4.
The end of Boo.com The end of Boo.com came on 18 May 2000, when inves- tor funds could not be raised to meet the spiralling mar- keting, technology and wage bills.
Source: Prepared by Dave Chaffey from original SOU'OOS irdd1g Mamsten et al. (2001) and New MecjaAge (1999).
86 Part 1 Digital marketing fundamentals
Questions 1 Discuss which strategic marketing assumptions
and decisions led to Boo.com's inevitable failure?
3 Use the framework of the marketing mix to appraise the marketing tactics of Boo.com in the areas of Product, Pricing, Place, Promotion, Pro- cess, People and Physical evidence. 2 Compare and contrast the marketing strategy of
Boo.com with successful online travel and leisure retailer lastminute.com (also founded in 1998) and suggest what made the difference between success and failure.
4 In many ways, the vision of Boo's founders were 'ideas before their time'. Give examples of e-retail techniques adopted by Boo to create an engag- ing online customer experience that are now commonplace.
~~================~
Exercises
1 T his ch apter has explored the micro-env iro nm ent and how the digita l ma rketing environ - men t is constantly evolvi ng a11d therefo re shou ld be monitored by all organisations in order to be able to respond to cha nges in the micro-environment or the immediate marketplace. T he micro-enviromenr is within the reach of an organisation a nd therefore djgital marketers should be aware of the managemenr implications that arise from this arena. To be successful it is important ro understand consumer and competitor behaviour and which suppliers and intermediaries offer services that will enable a company to achie,·e its digital marketing goals.
2 We have explored each of the groups of players in the micro-environment. From a consumer perspecti\·e we have identified variables that arc likely to be the most effective foundation for developing targeting strategies.
3 Competitors are an imporrant group of players in the micro-environment and the Inter- net has created major changes to the competitive environment.
4 We have examined techniques for competitive benchmarking and how to analyse com- petitor behaviour, wruch has highlighted how it is important to understand the potential strengths and weak11ess of the companies a company might compete with online.
5 Suppliers and intermediaries also have an important role to play in djgital marketing. We have explored the services provided by these players and considered the oppornmjties provided.
6 Finally, we considered the impact of digi tal cha nn els on marketing activities.
Self-assessment exercises
1 Explain the components of the digital market environment. 2 Suggest reasons why environmental scanning is necessary. 3 Summarise how each of the micro-environment factors may directly drive the con-
tent and services provided by a website. 4 Explain how would you analyse demand for digital marketing services. 5 What is the difference between demographic variables and behavioural variables? 6 What are the main aspects of customer adoption of the Internet that managers
should be aware of?
7 What are the main changes to channel structures that are facilitated through the Internet?
8 How should a marketing manager benchmark the online performance of competitors?
Chapter 2 Online marketplace analysis: micro-environment 8 7
Essay and discussion questions
1 Discuss the importance of the marketing environment to a) digital marketing success, and b) digital marketing failure.
2 Internet access varies from country to country, suggest reasons why. 3 Discuss how a digital marketing entrepreneur might identify market opportunities. 4 Evaluate the usefulness of research tools for assessing digital markets. Suggest the
limitations of two search tools of your choice. 5 Perform competitor benchmarking for online services for an organisation of your
choice.
Examination questions
1 Identify and discuss potential changes to supply-chain relationships in the digital age.
2 Trading online involves developing multichannel strategies. Give three examples of potential channel conflicts that might arise from using the Internet. Illustrate your answer with examples.
3 Choose a business activity sector and then suggest how important it is for busi- nesses in this sector to trade online.
4 Porter's five forces model is well-established as a framework for analysis of the
structure of competition in offline markets. Discuss the extent to which this model is valid for assessing online competition.
5 Imagine you are responsible for managing customer experiences (for a company of your choice). Discuss how you would integrate real-world and digital touchpoints.
6 Imagine you are about to set up a business online. Set out a plan for investigating the micro-environment as part of your situation analysis.
7 You are a digital marketing consultant. Suggest how you would advise a business that wants to improve its exposur·e online.
(~R __ e_fe_~_e_n_c_e_s ________________________________________________________ ~J Arno ld , M . , R yno lds, K., Po nder, N. a nd Lueg, ]. (2005) . C ustomer delig ht in a retail con-
text: investiga ting delightful a nd ter rible s ho ppin g experiences, Journal of Business Resea rch, 58, 1,132-45.
Aswan i, R. , Kar, A.K., Ilawarasan , P.V. a nd D w ivecli, YK . (2018) Search en gine ma rketing is no t all go ld: insights from Tw itter a nd SEO C lerks, International Journal of Infor- mation Management 38, 107- 116, http://dx.doi.org/1 0.101 6/j.ijinfomgt.2017.07.005
Berthon , P. , Lane, N., Pi tt, L. and Watson , R. (1998) T he Wo rld Wide Web as an ind ustri al marketi ng co mmunications tool: mod els for the identifi cat ion and a ssess ment of oppo r- n rnities, Journal of Marketing Management, 14, 691- 704.
Bowen Craggs & Co, www.bowencraggs.com. Brengman , M ., Geuensb, M ., Weijtersc, C., Sm ith , S. and Sw inyardd , W. (2005) Segm enting
Internet shop pers based o n their web-usage-related lifestyle: a cross-cu ltural validatio n, Journa l of Business R esearch, 58(1), 79- 88 .
C haffey, D. a nd Smith , P.R. (2017) Digital Marketing Excellence, Planning, Optimising and Integrating Digital Marketing, 5th edn , Taylor & Fra ncis, Abingd on , UK.
C ha mberlin, G. (2010) Googl.ing the present, Economic & Labour Review, D ecember 2010, Office for Nati o nal Stat istics.
C heung, C.M.K., C han G .W.W. a nd Li mayem , M . (2005) A criti cal review of onl ine co n- sumer behaviour: empirical research , Journal of Electronic Commerce in Organizations, 3(4), 1-19.
88 Part 1 Digital marketing fundamentals
Choi H. and Varian H. (20U) Predicting the present with Coogle Trends, The Economic Record, 88, 2- 9.
Deise, M., Nowikow, C., King, P. and Wright, A. (2000) Executive's Guide toe-Business: From Tactics to Strategy, John Wiley and Sons, New York, NY.
Doherty .F and Ellis-Chadwick F.E (2010) Imernet retailing: the past the present and the furure, International Journal of Retail & Distribution Management, 38(11/P), 943-65.
Edelman, D.C. and Singer, M. (2015) Competing on customer journeys, Harvard Business Review, 88- 100.
eMarketer. (2014) Smarrphone users worldwide will roral 1.75 billion in 2014, eMarketer, http://www .emarketer. com/ Article/Smartphone-Users-Worldwide-Will -Total-17 5-B il-
lion-2014/1010536 (accessed January 2015). George, J. (2004) The theory of planned behaviour and Internet purchasing, Internet
Research, 14(3), 198-211. Hoffman, D., Novak, T and Schlosser, A. (2000) The evolution of the digital divide: how
gaps in Tmernet access may impact electronic commerce, journal of computer-Mediated Communicatio ns, 5(3) .
Jobbe r, D. and Ellis-Chadwick, F.E (2016) Principles and Practice of Marketing, McGraw Hill , Maidenhead.
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Klein, Land Ford, G. (2002) Consumer research for information in the digital age: an empiri- ca l study of pre-purchase search for automobiles, Advances in Consumer Research, 29, 1()()-101.
Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (2008) Principles of Marketing, 3rd European edn., Financial Times/Prentice Hall, H arlow.
lemon, K.N. and Verhoef, P.C. (2016), Understanding customer experiences through the customer journey, Journal of Marketing: AMA Special Issue, 80, 69-96.
Malmsten, E., Portanger, E. and Drazin, C. (2001) Boo Hoo: A Dot.com Story from Concept to Catastrophe, Random House, london.
Mulcahy, A. and Salmon, T (2017) Moving towards audience-focused marketing, a report researched and compiled by IMRG, loudon, Monmouth Street.
New Media Age (1999) Will Boo.com scare off the competition, by Budd Margolis, 22 July. New Media Age (2005) Personal lender, by Dominic Dudley, 18 August. Osrerwald, A. and Pigneur, Y. (2010) Business Model Generation Site: A H andbook
for Visionaries, Game Changers and Challengers, Wiley, london, UK, {http://www .businessmodelgeneration.com)
Osterwalder, A., Pigneur, Y. Bernarda, G. Smith, A., Papadakos, T (2014) Value proposition design: how to create products and services custorners wanr (Strategyzer). Avai lab le at: https://strategyzer.comlvalue-proposition-design.
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( Weblinks
Chapter 2 Online marketplace analysis: micro-environment 89
San-Martine, S., Lopez-Caralan, B. and Ramon-Jeronimo, M. (2013) Mobile shoppers: types, drivers and impediments, Journal of Organiwtional Computing and Electronic Commerce, 23(4), 350-71, hrrps://www.tandfonline.com/doi/abs/10.1080/10919392.2013 .837793
Shiu, E. and Dawson, J. (2004) Compa.ring the impacts of technology and national culrure on online usage and purchase from a four-country perspecti\·e, joumal of Retailing and Consumer Services, 11(6), 385- 94.
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A directory of Internet marketing links, including sources for statistics from the Internet enviromnent, is maintained by Dave Chaffey at http://www.smartinsights.com.
Sources for Internet adoption statistics
Online research aggregators and publishers
• Econ sultancy {www.econsultancy.com). Research reports on business and consumer adop- tion of digital marketing.
• eMarketer (www.emarl<eter.com). Includes reports on media spend based on compilations of other analysts. Fee-based service with some free dara available.
Government sources on Internet use and adoption
• European government: Digital Economy and Society (ht1p://ec.europa.eu/eurostaVstatis- tics-explainedlindex.php/ Oig ital_economy _and_ society).
• OECD (www.oecd.org). OECD broadband research (http://www.oecd.org/stilbroadband/ broadband-statistics/) .
• UK government (www.ons.gov.uk and https://visual.ons.gov.ukl). Statistics of individual and household use of the lnrernet as parr of the buying process.
90 Part 1 Digital marl<eting fundamentals
• Ofco m {www.ofcom.org.uk). Ofcom is the independent regulator and competition author- iry for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services. It produces annual in-depth reports on communications markers.
Online audience panel media consumption and use data
These are fee-based data, bur contain useful free dara within press release sections: • Comscore digital audience analyrics {www.comscore.com). Panel data of desktop and
smartphone use in different countries. • Nielsen digital audience insights {www.nielsen.com). Source of secondary research inro
the influence of digital media on consumers.
Other major online research providers
• The European Interactive Digital Advertising Allia nce (http://www.edaaeu/). A powerful pan-European trade orga nisat io n with surveys of media consumption.
• Interactive M edia in Retail Group {lMRG ) (https://www.imrg.org) E-reta il and delivery ch:mnel insights.
The digital macro-environment
92 Part 1 Digffal marl<eting fundamentals
Questions for marketers
Key questions for marketing managers related to this chapter are:
• How important are macro-environmental changes to my digital marketing strategy?
• How can I ensure my online marketing activities are consistent with evolving culture and ethical standards of online communities?
• How important is it for me to understand technological innovations?
• Which laws am I subject to when marketing online?
• How is social media marketing likely to impact on my business and what changes do I need to make in order to react to social changes in the online marketplace?
• What are the political influences that could influence my digital marketing planning?
• How do l keep up in a constantly changing marketing environment?
Links to other chapters
This chapter provides a foundation for later chapters on digital marketing strategy and implementation:
• Chapter 4 looks at the development of a digital marketing strategy.
• Chapter 5 considers the Internet and the marketing mix.
• Chapter 6 explores relationship marketing using the Internet.
• Chapter 7 looks at how to deliver the online customer experience.
• Chapter 8 describes campaign planning for digital media.
[ Introduction ~ '------ ____ _ __ _______.:.~
In C hapter 2 we r eviewed the influence of players who shape the imm ediate trading environ- ment. In thi s chapter, we review how macro-eco nomic forces ca n in flu ence digital marketing. T hese are forces that affect the tradin g environment but over whi ch co mpani es oper ati ng have limi ted dir ect influence.
We explore the macro-envi ronment fo rces, focusi ng on rhe potentia l relevan ce of each t o digital market ing st rat egy. In the m arket ing literatu re, t here are widel y used mn emon ics that aim to act as au aide-memoire for the macro-environmenta l forces (e.g. PEST, SLEPT and PESTL E), where each letter represents a slightly different arrangement of the following macro forces:
• Political forces; • Economic forces;
Chapter 3 The digital macro-environment 93
• Social forces; • Technological forces; • Legal forces; • Environmental forces.
For the professional digital marketer, the most important task is ro carry our a thorough assessment of the forces that are shaping the online marketing environment and identify which forces have implications for their own marketing planning and strategic initiatives. The chapter proceeds by exploring each of the macro-environmenra1 forces in the following order:
• Technological forces. Changes in technology that influence marketing opportunities, create new product development opportunities, introduce new ways to access target markets through channel integration and create new forms of access platforms and applications.
• Economic forces . Cause variation in economic conditions and affect trading opportwu- ties, influence consumer spending and business performance and have sigtuficant implica - tions for digital marketing planning.
• Political forces. National governments and transna tional organisations have a n imponam ro le in determining the future a doptio n a nd control of the Internet and the rules by which it is governed .
• Legal forces. Detemune t he meth ods by wh ich products can be promoted and sold online. Laws and ethical guidelines that seek ro safeguard individuals' rights ro privacy and busi- nesses' rights to free trade.
• Social forces. Cultural diversity among digital communities, that influences use of the internet and the services businesses provide onli ne.
The main reason for keeping rrack of changes in the macro-environment is to be aware of how changes in social behaviour, new laws and technological innovation can create opportunities or threats. Organisations that monitor and respond effecri,·ely to their macro- environment can create differentiation and competitive advanrages that enable the business to survive and prosper.
Essential digital skills The Internet macro-environment
The most important professional skill for reviewing the macro-environment is the ability to keep up-to-date with developments in marketing - in particular, knowing about the latest legal requirements for marketing communications in different countries.
We recommend you develop these skills:
• Understanding the types of laws that affect digital marketing. • Knowing specific requirements of disclosure for key activities, including privacy for
data capture, personal identification, ad serving and laws related to using influencers for social media.
Practical ideas to boost employability by showcasing your interest and experience:
• Register with the trade associations in your country that keep marketers up-to-date with relevant laws, e.g. Direct Marketing Association in the US and UK and FEDMA in Europe.
94 Part 1 Digital marketing fundamentals
• Find out the government portals that provide guidance on privacy laws in marketing, e.g. The Information Commisioner's Office (ico.gov.uk) in the UK.
• Use services such as Builtwith.comTM, SimilarTech™ and the Chrome extensions WapalyzerTM and GhosteryTN to understand the different types of marketing technol- ogy or cloud services (also covered in Chapter 1 0) integrated into websites.
To score and audit your digital mar1<eting skills across the RACE planning framework, use the Smart Insights Skills Assessment tool available at http://bitly/smartdigiskills.
[ The rate of environm_ e_n_t_c_h_a_n_g_e _____ _ -~
Strategic agility The capabiity to inncMlte and so gain competitive advantage wittin a marketplace by monitoring changes Wlthn an organisation's marketplace, and then efficiently evaluali1g alternative strategies, selecmg, reviewing and imp4ementng appropriate candidate strategteS.
In rhe digital world, changes in social culture and particularly pop cu lture (what's ' hot' and what's nor) rend to be very rapid. Introduction of new technologies and changes in their popularity rend to occur frequently and witl1 increasing speed from concept to commerciali- sation. Government and legal changes rend to happen over longe r rime scales. Therefore, digital marketers need to be alert to the forces that are important in the context of their own trading environment , so they can aim to ensure the competitiveness of the business. They shou ld develop the capacity to respond to environmental changes and the emergi ng oppor- tunities and threats by developing stra t eg ic a gility, a concept associated with knowledge managemenr theory, which requires inventing new business models and new categories rather than rearranging old products and categories (Weber and Tarba, 2014), based on developing a sound process for reviewing marketplace opportunities and threats and then selecting the appropriate strategy options.
Strategic agility invoh·es:
1 collection , disseminarion and evaluation of different information sources from the micro-
and macro-environment; 2 developing processes for generating and reviewing the relevance of new strategies based
on creating new value for customers; 3 research into potential customer value against the business value generated; 4 implementation of prototypes of new functionality to deliver customer value ; 5 measurement and review of results from prototypes to revise further ro improve proposi-
tion or ro end a trial.
( Technological forces -
Internet The physical network that 1n<s computers across the globe. It COOSISIS of the infrastruct...-e of netv;o<l( serwrs and COITlllllri::ation links between them that are used to hold and transport the vast amount of infonnation.
Marketers need to understand digital and Internet techno logy and terminology, as making mistakes can have significant consequences. In this section, we exp lore digital technology, the Internet, web and m obile technology and consider digital security and emerging techno- logy. These arc key factors, which currently have significant implicarions for digital marketing
planning.
A short introduction to Internet technology
l11e Inte rne t has existed since the late 1960s, when a limited number of computers were connected fo r military and research purposes in the United States ro form the ARPAner. The recent dramatic growtl1 in the use of the Internet occurred because of the development of
Wor1d Wi de Web The World Wide Web is a medil.nl for publishing infonnation and prQ'Jidlng ser\'ices on the Internet. It is accessed IIYough ~Neb brows!YS, >Mlic:h display srte content on different web pages. The content making ~ websttes is stored on web savetS.
Web server Used to store the web pages acx:essed by web browsers. They may also contain databases of customer or product information, which can be queried and retrieved using a browser.
Web brow ser Browsers such as Google Chrome"'· Mozilla F'uefox TM. Apple Safari® and Microsofl lntemet Explorer,... provide an easy method or accessing and viewing information stored as HTML web documents on different web servers.
Streaming media server A specialist server used to broadcast audio (e.g. podcasts) or video (e.g . tP1V or webcast presentatoons). Served streams <3'1 be unicast (a separate copy or stream as served for each recipient), rrulticast (recipients share streams) or peer-to-peer.
Uniform (universal) resource locator (URL) A web address used to locate a web page on a web server.
URL strategy A defined approach to forming URLs including lhe use of capitalisation. hyphenation em subdomains for different brands and different locations. This has i'nplications for promoting a website olfWle through promotJonal ~Ls. search engine optimisation and findabiity.
Chapter 3 The digital macro-environment 95
the World Wide Web . This became a commercial proposition in 1993 after development of the original concept by Tim Berners-Lee, a Brirish scientist working at CERN in Switzerland in 1989. Today, the main principles of web technology rhar a marketer needs to understand hold true. Web conrenr is stored on web server computers and then accessed by users who run desktop or mobile web brows er software such as Coogle ChromeTM, J\1icrosofr EdgeTM, Apple SafariTM or MoziUa Firefoxnt, which display the information and allow users to interact and select links ro access other websites. ltich media, such as audio or video content, can also be stored on a web server, or a specialist streaming me dia serverTM.
Promoting website addresses is important to marketing communications. T h e technical name for web addresses is uniform (unive rs a l) resource locator (UR L)TM.
Web addresses are structured in a standard way as follows:
http://www.domain-name.extensionlfilename.html
The 'domain-name' refers ro the name of d1c web server and is usually selected to be the same as the name of the company, and rhe e..xtension wi ll indicate its type. Th e 'e..xtension' is also commonly known as the generic top-level domain (gTLD).
Common gTLDs are:
• .com represents an imerna rional or American company (e.g. www.travelocity.com); • .org arc not-for-profit organisations (e.g. www.greenpeace.org); • .mobi was imroduced in 2006 for sites configured for mobile phones; • .net is a network provider (e.g. www.amakai.net).
There are also cowury code rop-level domains (ccTLDs) maintained by JCMTN e.g.:
• .co.uk represents a company based in the UK {e.g. www.thomascook.co.uk); • .au, .ca, .de, .es, .fi, .fr, .it, .nl, ere. represent other countries {the co.uk syntax is a111 anomaly!); • .ac.uk is aUK-based university or other higher education institution {e.g. www.cranfield.
ac.uk);
• .org.uk is for an organisation focusing on a single country {e.g. www.mencap.org.uk).
In 2011, lnterner Corporation for Assigned r ames and Numbers {ICANN), the nor-for- profit organisation dedicated ro registering, maintaining and coord inating the lnrerner addressing system, began a programme of expansion for g TLD names. Their a im is ro give Internet users more choice and create business opportunities. Use of gTLDs, cow1try-level domain names {ccTLDs) such as .au, .ca, .en, co.uk, co. nz, .de, .fr and the w1iversal .com for US and pureplay companies remain dominant since marketers perceive that consumers like the familiarity and trusr of companies using rhcse domains. However, by 2016 ICANN had released more than a 1,000 new gTLDs, creating opportunities for brands to take more control over d1eir corporate image online and increase innovation, choice and security.
Domain names are part of a company's brand property and digital brand managers shou ld protect brand abuse of domains by o rh er companies who might regisret· va riants of competitors' brand domain names. However, domain names do nor only represent threats to business and organisat ions {see Digital marketing insight 3.1).
URL strategy
Today marketers often need to discuss different options for describing addresses for their content for campaigns. For example, is a country or blog referenced on a sub-domain or a sub-folder? How are different rypes of content or products structured within a folder hierarchy? The defined methods used are known for businesses as URL strategy. Now complete Activity 3.1: What's in a URL? Describe some of the terminology you may encounter when finding a domain name..
A clean URL that fits many of these aims is http://www.domain.com/folder-name/document- name. Care must be rakeu with capitalisation since linux servers parse capitals differently from lower-case letters.
96 Part 1 Digital marl<eling fundamentals
Activity 3.1
Client-server The cfleflt- server architecture oonsists of dient computers such as PCs sharing resources such as a database stored on a 1110(8 powerful server computer.
Internet service provider (ISP) A provider enabling home or business users a connection to access lha Internet They can also host web-based applications.
Backbones High-speed communications finks used to enable Internet communications across a COLntry and internationally.
Static (fixed) web page A page on the web- that is 11'1118rianl.
Dynami c web page A page that is created Ill real tine. often with reference to a database query, in response to a user request.
Transaction log file A web setver fie that records all page requests.
What's in a URL?
Examples of URLs: http://www.hrsalons.eo.uk/ https://www.nissan.co.ul< https://www.nominet.uk/whois
Here are some of the components of these uris:
• http is the protocol at the foundation of the Web; https is the s ecure version; • the domain name is , for example, hrsalons.co.uk; or Nissan.co.uk; • the top-level domain or TW is uk (also known as gTLD). The uk domain is also
referred to as a country-code top-level domain or ccTLD; the subdomain is whois in the URL nominet.uklwhois;
• URLS provide information that enables us to have an understanding of how deeply we are navigating into a website(s).
Nominet UK™ is the o rganisation that manages the TDL and is the .uk domain reg istry. Visit https://www.nominet.uk/about and find out how this organisation manages a nd protects the UK domain.
Then use the WHOIS directory at https://www.nominet.uk/whois/ to look up the following domain names to find out who owns each domain, when it was registered, who was the registrar, the status of the domain and more:
1
L ~ tomatosoup.co.uk netaporter.co.uk yeovalley.co.uk
How does the Internet work?
ln this section, we briefly examine some of the fundamental aspects of inte rnet technology. Marketers should understand the technological underpinning of digital marketing. TL1is enables them to discuss technology options with systems vendors and technical staff and rake the right decisions about which techno logies to adopt. Ma ny digital marketers are active blogge rs or engaged in social networks, since t his enables them to ga in first-hand experience of the lates t developments.
T he Internet is a large-scale client- server system where content is trans mi tted fro m client PCs whose users request services from server compute rs that ho ld content, r ich media and host busi ness applica tions th at del iver th e services in respon se to requests. Client PCs w ith in homes and businesses are connected to th e Internet via loca l Internet service providers (ISPs), which, in turn, are link ed to larger ISPs with co nnectio n to the major national and inrernational infrastructure or backbones.
Infrastructure components of the Internet
Figu re 3.1 shows the basic process by which web browsers communicate with web servers. A request from the diem device (computer, rablet , mobi le) is executed when the user types in a web a ddress, clicks on a hyperlink or fiUs in an online form such as a sea rch. This request is then sent to the ISP and routed across the Internet to the destination server. The sen-er then returns the requested web page if it is a static (fixed) web page. If it requires reference to a database, s uch as a request for product informatio n, it will pass the query on to a data- base server and will then return this to the customer as a dynamic web page. informacion on all file requests such as images, rich media and pages is sto red in a transaction log file
Web analytics Techniques used to assess and improve the contribution of digrtat markel:ilg to a business. including reviewing llaffic volume, referrals. cickstrnams, online reach data rustomer satislacbon SLWVe'JS, leads and sales.
Content Content IS the design, text and graphical information that forms a web page. Good content is the key to attracting rustomers to a website and retaining their interest or achieving repeat visits.
Chapter 3 The d igital macro-environment 97
Figure 3.1 Information exchange between a web browser and a web server
User requests page
Client PC running web browser
http 'send ' communication
http 'get' communication
Transaction log file
Server returns page requested
0 ... Server running
w eb server software
HTMLand graphics files
Database and applications
servers
and via a web analytics system , such as Google Analyri cs (www.google.com/analytics) or Adobe Analyrics, which records rhe page requested and rhe rime and sour ce of rhe enquiry, as explained in Chapter 9. Today, rhe major iry of anal ysis by marketers is based on web an al ytics systems, nor log files.
Web standards
The information, graphics and interactive elements that make up the web pages of a sire are collectively referred ro as content . D ifferent standards exist for rexr, graphics and mul ti- media. ln previous editions we have explained these, bur GIFs and MP4s no longer need an introduction. I nstead we introdu ce concep ts such as Javascripr and AP1s, which are impor- tant for practising marketers.
Digital marketing insight 3.1 W3C
The World Wide Web Consortium fYY3C, www.w3.org) is an international community that enables the web to expand and develop by building an Open Web Platform to support and foster innovations and future sustainability for the web. Founded by Tim Bemers- Lee, the inventor of HTTP protocol, which underpins web technology, W3C is an organi- sation that works to maintain international standards for the web. W3C provides a forum for discussion on the development and growth of the web, facilitates software develop- ment and acts as an educational platform. W3C aims to ensure that protocols and standards are maintained between its members and organisations across the globe. For example, in 2018, W3C published a 'Roadmap of Web Applications on Mobile', which provides a summary of how various existing web technologies apply to mobile. Visit https:l/www.w3.org/2018/01/web-roadmapslmobile/ for further detailed information.
It is important for managers of company websites to be familiar with the latest stand- ards so they can assess and plan compliance with standards in the future.
Soutce: https://www.w3.org/; https://www.w3.org/2018/01/web-roadmaps/mobile/ (accessed May 201 8)
98 Part 1 Digital marl<eling fundamentals
HTML (Hypertext M arl<up Language) A standard format used to define the text and layout of web pages. HTML ties usualy have the exten51011 . HTML or .HTM .
Cascading style s heets (CSS) These enable web designers to define standard styles (e.g. fonts. spacing and colours) to hypertext markup lang- uage documents. By separating the presentation style of documents from the content of documents. CSS simplifies web authoring and site maintenance since style can be defined across a whole site (or sections of sites).
M etadata Literally, data about data - a format describing the structure and content of data.
XML {eXtensible M arl<up Language) A standard fOf transfening struchxad data, unik.e HTML which is purely presenta!Jonal.
J ava script A fOfm of programming language embedded Into webs~es using the <script> tag used to manage interactions and integrated different marketing technology.
Cloud Computing A term that Is a metaphor for shared computing resources, which require minimal management input and can be accessed via the internet. Relies on sharing of computing resources.
Text information - HTML (Hypertext Markup Language)
Web page content is formarred and rendered by th e browser software using HTM L (or XHTML), Hyp ertext Markup Language. HTML is an international standard established by the W3C intended to ensure that any web page wrirren according to the definitions in the standard will appear the same in any web browser .
Ca scad ing s1yle s heets (CSS) are now used by most websites to enable standard styling and interaction features across a site. Visit CSS Zen Garden (www.csszengarde n.com) or view Figure 7 .13 to see examples of how CSS effectively decouples sty le from content.
Text information and data - XML (eXtensible Markup Language)
When the early version of HTML was designed by Tim Berners-Lee at CERN, he based it on the existing standard for representation of documenrs. Whi le HTML proved powerful in providing a standard method of displayi ng information th:n was easy to learn, it was purely presentational. it lac ked the ability to describe t he data on web pages. A met a data la nguage providing data about data contained within p ages is much more powerfu l and is provid ed by XM L (e Xte ns ible Markup Language), produced in February 1998. This is also based o n SGML. The key word describing XML is ' extensible'. This mea ns that new markup tags can be created that faci litate the searching a.nd exchange of information. For example, product information on a web page couJd usc the XML rags <NAME>, <DESCRIPTION>, <COLOUR> and <PRICE>. The tags can effectively act as a sta ndard set of database field descriptions so that data can be exchanged through price compa rison sites.
We will see in Chapter 9 that the basic metadara that each page of a website can use is important for search engine optimisation (SEQ). SEQ is increasingly used by digital markets to ensue their websites get noticed by rarget audiences.
Javascript
J avasc ript is a technology that marketers should understa nd since it is so important to creat- ing more interactive experiences than are possible with traditional HTML. It is also important since Javascript tags are used by most of the different marketi ng technology or Cloud Com· putin g/Marketing Cloud services used to provide inreracrion and captu re insight from web users, as explained in Chapter 10 (see the section 'Selecting a martech stack for a business').
Let's take a look at an exa mple where Javascript is used on most websites. Googlc Analy- tics recommends pasting d1e fo llowing sni ppet r ight after the <head> H TML tag on each page of a site, replacing GA_ TR ACK ING_ ID w ith your own Google Analy tics tracking ID:
<l·· Globa l Site Tag (gtag.js) - Google Analytics --> <script async src=" https:/ /www.googletagmanager.com/gtag/js?id=GA_ TRACKING_ID"><Iscript> <Script>
wind ow.d ataLayer = window.datalaye r II [ ]; function gta g () {datalaye r.pus h(arguments);} gtag ('js', new Date()); gtag ('config', 'GA_TRACKING_ID');
<!script>
This recommended implementation uses the Google Tag M anager (GTM) to manage the Google Analytics tag. GTM and other rag managers are used to manage the tens to hun- dreds of tags used on some sites. Another common example of J avascript tags used by sites to collect insight and manage ad services arc the Faccboo k Pixel tags, which enable advertis- ers to se rve ads to previous site visitors.
Chapter 3 The digital macro-environment 99
Activity 10.1 gives an opporrw1jty to explore the range of marketing tedmology installed on a website in more derail.
Applicatjon programming interfaces (APis)
It's also useful for marketers to be familiar with the concept of A Pis. Here are some exam- ples &om retail, publishing and software companies where APis, sometimes known as the the 'Programmable Web', have been used ro help gain competitive advantage:
• Amazon Web Services (http://aws.amazon.com). One example of AWS allows affilia tes, developers and website publishers to use Amazon Product Discovery, which enables other sites ro incorporate data about Amazon products and pricing.
• Facebook and Twitter use their APis ro help other sires embed social content into rheir Sites.
• The Guardian Newspaper Open Platform (www.guardian .eo.uk/open -platform) enables sharin g of content and statistics from The Guardian. In one application , developed ini - tially as a student project, WhatCouldiCook.com uses recipes from The Guardian as part of an arra ngernent to share ad revenue.
• Coogle APis exist for a number of irs services, most notably Coogle Maps, which, accord- ing ro this directory (http://www.programmableweb.com/apis/directory), is one of the most popular mashups created through an API. The Coogle Analytics API has enabled many businesses aJld third-party application developers ro visualise web performance data in a more tailored way.
• Kayak is an aggregaror that allows third-parry sires ro integrate kayak.com searches and results into their website, desktop application or mobile phone application.
Cyber security
Security is a key tedmology factor for marketers ro consider as it is a major concern for Internet users everywhere. Digital marketers need to understand security issues and the risks they might encounter in order to manage their online operations effectively. From a con- sumer or merchant point of view, these are rhe ma.in security risks involved inane-commerce
. transaction:
• confidential det ails or passwords accessed on user's computer, for example through key- logging software or malware;
• transaction or credit card derails srolen in transit, for example through 'packer sniffing' software;
• custom er's credi t card details sto len from m ercha nt's server, for example through hacking;
• custo mer's details accessed by company staff (or through a hacker who is inlrhe building and has used 'social engineering' techniques to £ind information);
• merchants or customers are not who they claim ro be, and the i1mocent party can be drawn into a fraudulent rrading situation.
As Internet-derived commerce and communications play an increasingly important role in economic growth, the burden of ensuring secure and safe passage through the Internet is increasing. According to Rueda-Sabarer and Derosby (201 1), there are fi,-e features of the Internet's evolution to consider that add to risks of what they call the Axes of uncertainty:
1 Growth in the global economy and in rhe markers around the Internet will occur primar- ily in countries that we now categorise as 'emerging'.
2 Governance of the Internet with irs loose structure will be open to occasionallmerner disruptions, including malicious ones.
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3 Digital natives- people who have been raised on the l nrcrnet since late 1990 - will relate to the Internet in markedly different ways than do most of today's adults. Members of these web-savvy 'Net generations' will rend ro view rhe Internet as an extender of their own cogniri,·e capabilities and as a portal ro a virrual experience.
4 Today 's Q\VERTY keyboard and the language and interface hurdles it rep resents wiU no longer be the primary means of relating m the Internet. A combination of ,·oice recogni- tion, bio-sensing, gestural interfaces, much-screen versati lity and other technologies will aJiow us ro input data and commands withour keys.
5 Consumers will pay for the Internet connectivity in a much wider range of ways, both direct and indirect, comp ared to today 's predominant flat-price subscriptions. As high bandwidth applications explode, the need to allocate available network capacity effi - ciemly across time and users wiiJ be a major issue. The spread of wireless con nectivity will also open up ma ny new pri ci ng models for network access, such as easi ly bundling connectivity a nd se rvices.
The potential increase in security risks reinforces the need fo r everyo ne, no t just digital marketers, to w1derstand and be able to assess security ri sks. In this section we assess the meas m es that can be taken ro reduce t he risk o f th ese breaches of e-co mmerce security. We start by reviewi ng so me of the theory o f o nline security a nd rhen review the teclmiques used.
For a summary of the main security risks for a webs ire owner that must be man aged within the design, see the summa ry in Digital marketing insight 3.2 and complete activity 3.2.
Digital marketing insight 3.2 The main website security risks
Phishing (Pronounced 'fishilg1 is a specialised loon of onine identity theft. The most common loon of 'phishi'lg' is where a spam email is sent out purpor11ng to be from an organisation such as a bank ()( payment service.
1 Validation of input and output data
All data used by the website (from users, other servers, other websites and internal systems) must be validated for type (e.g. numeric, date, string), length (e.g. 200 char- acters maximum, or a positive integer), syntax (e.g. product codes begin with two letters and are followed by five digits) and business rules (e.g. televisions can only cost between £100 and £2,000, an order can contain at most 20 items, daily credit limit must not be exceeded). If this level of control fails, opportunities can be creat ed for a cyber attacker to trigger unauthorised execution or even gain access to sensi- tive data.
2 Sensitive data exposure
If data exist, they can potentially be viewed or extracted so it is important to ensure that sensitive data are stored using encryption to protect them from casual and unauthor- ised access e.g., data relating to payment cards should never be stored on a website.
3 Authentication and session management
Websites rely on identifying users to provide access penmissions to data and func- tions. If authentication (verification of identity, registration and logging in), authorisa- tion (granting access rights) and session management (keeping track of the identity of a logged-in user while browsing a website) can be circumvented or altered, then a user could access resources that are prohibited. Beware especially of how password reminders, remember-me, change password, log out and updating account details are handled, how session tokens are used and always have login fonms on dedicated and encrypted (SSL) pages.
Denial of service attack Also known as a distributed denial of service (DOOS) attack, these involve a hacker group taking control of many 'zombie' computers attached to the Internet whose security has been compromsed. Tljs 'botnet' is then used to maka many requests to a target server. so overloading it and prevenmg access to o ther visitors.
Botnet Independent computers. connected to the Internet. are used together, typically for malicious purposes through controlling software. For example, they may be used to send out spam or for a d enial o f service attack where they repeaiedly access a server to degrade ~s software. Computers are often initially infected through a virus when effective antivirus measures are not In place.
Ac tivity 3.2
Chapter 3 The digital macro -environment 1 01
4 Phishing Phishing, where users are misled into believing some other entity is or belongs to an own organisation (email messages and websites are the most common combination), is best tackled through user education, but the way the website is designed, its archi- tecture and how it communicates with users can reduce the risk.
5 Denial of service While malicious users might try to swamp the web server with a vast number of requests or actions that degrade its performance (filling up logs, uploading large files, undertaking tasks that require a lot of memory repeatedly), denial of service attack s include locking out valid user accounts or those caused by coding problems (e.g. memory leaks, resources not being released).
6 System information leakage Web servers, errors, staff, partner organisations, search engines can all be the source of important information about your website - its technologies, business logic and security methods. An attacker can use such information to their advantage so it is important to avoid system information leakage as far as possible.
7 Error handling Exceptions such as user data validation messages, missing pages and server errors should be handled by the code so that a custom page is displayed that does not provide any system information to the user. Logging and alerting of unusual conditions should be enabled and these should allow subsequent audit.
Security breaches in the cloud
Purpose
To reflect on the significance of security risks to the digital trading environment.
Activity
Cyber attacks are becoming more prevalent and consumers are becoming more aware of the potential threats. Compounding the risks are companies that do not have their digital presence sufficiently well protected and the increase in the number of different devices that are hooking up to the Internet via the cloud. This makes security an issue of concern for digital marketers.
PwC have assessed the risks of the growth of digital devices and how this is driving risk management. Visit https://www.pwc.com and read about how to address some of the most common pitfalls of cloud computing security. Make a list of the threats the security risk poses to the business in your examples, e.g. loss of trade, disruption to services, business closure.
Approaches to developing secure systems
Faced with the growing likelihood of secur ity ri sks, there are va rio us acti ons rhar might help reduce rhe risks.
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Digital certificates (keys) Consist of keys made up of large numbers that are used to uniquely identify individuals.
Symmetric encryption Both parties to a transaction use the same key to encode and decode messages.
Asymmetric encryption Both parties use a related but different key to encode and decode messages.
Digital signature A method of identifying individuals or companies using public-key encryption.
Certificate authorities (CAs) A certifocate is a valid copy of a public key of an individual or organisation together with identification informat ion. It is issued by trusted third party (TIP) certificate authority (CA). CAs make pubfic keys available and also issue private keys.
Digital certificates
There are two main methods of encryption using digital certificates (or keys):
1 Secret-key or symmetric encryption involves bot h parties having an identical (shared) key known only to them. Only this key can be used to encrypt and decrypt messages. l11e secret key has to be passed from one parry to the other before use. T his method is not practical for general e-commerce since it would not be safe for a purchaser to give a secret key to a merchant because control of it would be lost and it could not then be used for other purposes. A merchant would also have to manage many customer keys.
2 Public-key or asymmetric encryption . Asymmetric encryption is so called since the keys used by the sender and receiver of information are different. l11e two keys are related by a numerical code, so only the pair of keys can be used in combination to encrypt and decrypt informat ion . Figure 3.2 shows how public-key encry ption works in an e-com- merce context. A customer can place an order with a mercham by automatical ly looking up the publ ic key of the merchant and then using this key to encrypt the message contain- ing their order. The scrambled message is then sent across the Internet and on receipt is read using the merchant' s private key. In this way only the merchant who has the on ly copy of the private key can read the order. In the reverse case the merchant could confirm the customer' s identity by reading identity information such as a digital signature encrypted with the private key of the customer us ing thei r public ke)'
Digital signatures
Digital signatures can be used to create commercial systems by using public-key encryp tion to achieve aut hentication: t he merchant and purchaser can prove they are genuine . The purchaser's digital signature is encrypted before sending a message using their private key, and on receipt t he pub lic key of the purchaser is used to decrypt the digital signan1re. This proves the customer is genuine.
The public-key infrastructure (PKI) and certifi cate authorities
For digital signatures and publ ic-key encryption to be effect ive it is necessary to ensure the public key intended for decryption of a document actually belongs ro the genuine perso n whom you believe is sending you the document. A system of trusted tnird party (TTP} cer- tificates are used as a means of contain ing owner identificat ion information and a copy of the public key used to unlock the informat ion . T he TTPs are usuall y referred to as certificate authorities (CAs) - an example is VeriSign (verisign.com). The message is called a certificate and typically includes user and issuing authority identification data, user, public key; date and class of certificate.
Figure 3.2 Public-key or asymmetric encryption
Consumer Merchant
~ ~ ~ [:::, ~ (0) 7 "' c) -·- - (o"") c) -
Internet Original Public-key Encrypted Encrypted Private-key Original order merchant order order merchant order
Short M essage Service (SM S) The formal name for text messaging.
Short code Frve-digit number combined with text that can be used by advertisers or broadcasters to encourage consumers to register their interest. They are typically followed-up by an automated text message from the advertiser with the option to opt-in to further infotmation by amaH or to iri< throl.qlto a WP.P site.
Mobile apps A software application that is designed for use on a mobie phone. typicaly dowrioaded from an App store such as Google Play or the Apple App Store.
Chapter 3 The digital macro-environment 1 03
Secure Sockets Layer protocol (SSL)
SSL is the most common securiry mechanism used on transacrional websites in association with CAs like VeriSign who issue an SSL certificate that verifies the identity of the certificate owner. The SSL approach enables encryption of sensitive information dur ing online transac- tions using PKJ and digital certificates ro ensure privacy and authentication. H ere, when encryption is occurring they will see thar the web address prefix in the browser changes from http:// to https:/1 and a padlock appears folJowed by the word Secure before the URL
Ultimately, digital marketers should ensure a safe digital environment for their users. Once the security measures are in place, comem on the merchant's site can be used to reassure the customer.
Mobile and SMS messaging and applications
T he S hort Messa ge Service (SMS) , comm on ly known as 'texting', is, of course, a si mple for m of person-to-person commu n icatio n that enables messages to be transferred berween mob il e pho nes. Its use grew for m any years, but it is now on the decl ine as consumers n u n to nu:ssaging via social ne tworks a nd new mobi le m essag ing app lications such as WhatsAppTM a nd Viber™, which are bi lled as SMS replacements.
Texting became increasingly popular as a mea ns for brands to communica te wi th custo m- ers. High-street banks not ify customers of current account ba lances when they approach an overdraft limit, retailers send del ivery notifications and airlines send boarding aJ1d flight derails usi11g SMS. Text is also used by consumer brands to market their products and rex- ring can also be used in su pply chain management applications for notifying managers of problems or deliveries.
SMS applications
For the creative marketer who respects opr-in and privacy legislation, SMS has prm·ed a great way to get closer to customers, particularly rhose in the youth market who are difficult to reach with other media. These are some of the applications:
1 D atabase building/ direct r esponse to ads/ direct mail o r on-pack. This is one of the most signL6cant applications.
2 Locat ion-b ased services. Text for the nearest pub, club, shop or taJ~:i.ln London you can now text for the nearest available taxi, and pay the congestion charge through texting, once accounts are set up via the web!
3 Samplin g/triaL Used for encou raging consumers to trial new product s through promotions.
4 Sa les promotions. Timed e-coupons ca n be sem out to enco urage footfa ll in real and virtu al stores .
5 Rewarding with offers for brand engagement. Valuable content on mobiles can be offered via SMS- for exam ple, free ri.ngrones, wa ll paper, jav::1 games or credits can be offered to
. consumers v1a text.
6 Short codes. S hort codes are easy-to-remember five-digit numbers combined with text that can be used by advertisers or broadcasters ro encourage consumers to register their mterest.
7 O ffe rin g paid-fo r services and content. Any service such as a ringtone can be im'oked from a text message.
Mobile apps
Mobi le apps are a highly significant development in mobile communications, indeed all digital communications, since they highlight a change in the method of delivering interactive
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Social location-based marketing IMlere social media tools five users the option of shari:lg their location. and hence give businesses the opporttrity to use prolCimity or location· based marketing to deiNer targeted offers and messages to consumetS and colect data about thei- prefernnces and behaviour.
services and content via mobi le phones. Research by Flurry (Flurry, 2018) shows that 90 per cent of mobile time is used in mobile apps. Perhaps nor surprising sin ce the majority of app time is in social media applicat ions. Until the advent of apps, popularised by the Apple iPhone App Store® and then on Android phone$ via the Coogle PJaynt store, the web browser had been seen as the main model by most for delivering content via mobile phones. Today there are rivals to native mobile apps s uch as Progressive Web Apps (PWAs) and Accelerated Mobile Pages (AMPs), which we explore in the chapter on digital experiences (Chapter 7).
Through reviewing the types of apps that have proved popular, businesses can assess the potential for them to develop applications for their audiences.
The key questions to ask are:
1 Are apps a strategic priority for us? The goal of apps for most o rganisations will be to increa se awareness and sales, or publ isher's revenue from advertising or subscr iptions. Apps are only likely to be a priority for businesses who have the scale to gain incremental revenue because t hey have a n app tha t improves loyalty compared to ot her charmels For many co mpanies, it w ill be difficult to de monstrate the incremental revenue t h at t hey wi ll ach ieve com pared to other mobi le im eractions such as a mobile-responsive website. In these cases, apps won' t be a prior ity because they wi ll have to put budget into higher priority areas such as improv ing the experience on their deskto p and mobile site, or in their media investmenrs. Owing to volume of users reached through these other plat- forms, incremental improvements here are likel y ro give better returns.
2 Do tve build our own app and/or leverage existillg apps? C reati ng an app is only one of the marketing options - advertising and sponsorship options may be a more cost-effective method to build reach and awareness of a brand.
3 Free or paid apps? Retailers will generall y offer free apps offering choice and com·enience in return for loyalry. Brands offering enrerrainmenr will likely also go the &ee route to in crease customer engagement. But for publishers or software hou ses, a freemium approach of free app showcasing the service and paid app for improved features and content achieved through in-app purchase is the standa rd approach.
4 \Vhich category of application to target? As rou would expect, accessing social networks and music via apps is popular.
5 H ow to best promote mobile apps? The options for marketing apps were also researched by Nielsen (2010), who found tha t the most popu lar methods of app discovery are: • sea rching the app srore; • recommendations from friends and family; • mention on device or network carrier page; • emai l promotion; • offl ine mention in TV and pri nt .
6 How to refine apps in line with feedback.? T he success of apps is very dependent o n feedback in the App stores and the need to fi.x bugs and add en hanccmcnrs to compete shows d1e need for an ongoing development cyde with frequent updates. Careful review of hUl·dle rates for % user base who are using the app or its different function is go ing to be a KPI here.
See Digital marketing insight 3.3 UustPark) to find our how an innovative casbJess pay- men t app is changing the rules of paying for parking.
Social location-based marketing through mobile
In social location-based marketing there is a fusion of social and mobile marketing. Four- squa re, TripAdvisorTht and YelpTht are all options available ro consu mers, with Facebook and Coogle also offering options ro share intera ctions and reviews about businesses. If businesses can encourage consumers to lea,·e favou rable reviews and recommendations, then thi s may encourage new customers through ·social proof' and can increase visibility in local listings such as search engine results.
Chapter 3 The digital macro-environment 1 05
Digital marketing insight 3.3 JustPark changes the rules of the parking game
Quick Response (QR) code A two-dimensional matrix bar code. OR codes were invented in Japan where they are a popular type of two-dimensional code used for direct response.
Wi-Fi (w i reless fidelity) A high-speed w ireless local-area network enabling wireless access to the Internet for mobile, office and home users.
Figure 3 .3 JustPark
---- .. __ -
·-• -·- -• • --___ .,_ --~
...., ____ _ - ------·- ___ .... _
JustParkTM is an innovative tech company, which aims to deliver a positive parking
experience through its app. Traditionally, parking is managed and governed by an ethos of control and punishment. Local authorities manage public car parks and on-street parking and use fines and enforcement officers as a method of controlling use of space and driver behaviour. Private carpark operators adopt a similar approach. This can make a visit to a town, city or shopping centre a stressful experience for a driver as they must search for a space, usually pay and then monitor the time they have left before they must return to their vehicles in order to reduce fines.
JustPark's app is a customer-focused solution, which reduces the stress of parking. It helps drivers to find the best available spaces in an area; enables cashless payment through the app, so no more searching for coins; and drivers do not need to worry about whether time is running out as the app will prompt the driver that it is time to return to their vehicle or offer to extend the parking period.
Making parking a less stressful experience is just one of JustPark's aims. They are currently developing systems, using artificial intelligence that can predict parking space availability in real time and also developing collaborative solutions with local businesses, which helps build customer relationships.
QR Codes
Quick Response (QR) codes are barcodes publ ished in newspapers or billboards that can be scanned by a mobile phone camera and then linked direcdy through to a websi te. QR codes can be used in promotional initiatives to allow target consumers to have quick access to a variety of information, such as instant access to email addresses, phone numbers or business cards.
Wi- Fi
Wi- Fi (wireless f idelity) is rhe shor d1and often used to describe a high-speed wireless local area network. Wi -Fi can be depl oyed in an offi ce or home environment w here i t removes the
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Bluetooth technology A wireless standard for transmission of data between devices CMll short ranges (less than 10m).
Proximity marketing Matket11Q messages are deiliemd in real time accordng to customers· presence based on the technology they are ~ng. wearing 01 have embedded. Bluecasting is the best known example.
Ac tivity 3.3
need for cabli ng and adds flexibility. H owever, it has attracted most attemion for its potential for offering wireless access in airpo rts, shopping centres, cities and towns without rhe need for a fixed connection. Activity 3.3 considers t he marketing potential of 5G.
Bluetooth wireless applications
Bluetooth t echnology has potential fo r different forms of local marketing campaigns known as proximity ma rketing : (1) viral communication; (2) community activities (daring or gam- ing events); (3) location-based services - electronic coupons as you pass a store.
5G Assessing new technology options
Purpose
To illustrate the pro cess for reviewing the releva nce of new technology o ptions.
Act ivity
You work for an FMCG (fast-moving consumer goods) brand and are attending an industry trade show where you see a presentation about the next-generation (5G) mobile phones, which are d ue to launch in your country in one year's time. You need to decide whether your organisation adopts the new phone and if so when. Complete the following:
I 1 How would you assess the significance of this new technology? 2 Summarise the propos ition of the new access devices for both consumers and your
organisation.
L 3 What recommendations would you make about when to adopt and which services
to offer?
Emerging technologies
In addition to mo bile and W i-Fi access, lmernet access techno logies fo r tc.:levisio n and radio are avail able di gitally. Internet Tv, or IPTV, is increasingly pop ula r and as bandwidth , download speeds and access devices improve, the number and range of users is increasing. This technology creates challenges fo r the digital marketer as they need to access which technology thei r target audience is using to access which type o f co ntent, info rmation and digital services.
Assessing the marketing value of technology innovation
One of the challenges for digital marketers is how to successfully assess which new techno- logical innovations can be app lied to give compet itive advantage. For example, personalisa- tion technology (discussed in derail in Chapter 6) is intended ro enhance the customer's online expe rience and increase thei r loyalry. H owever, personalisation may require a large im·esrment in proprietary software and hardwa re technology for effecri,•e implementation. How does the manager decide \vherher to proceed and which technological solu tions to adopt? T here is more to digit al marketing rhan establishing and managing a website, and in Chapter 4 strategy decisions are exam ined, wh ile in Chapter 8 how ro make decisions to achieve t he best media mix is considered.
Early a dopters Companies or departments !hal f1vest in new tecllnologies and techniques.
Chapter 3 The digital macro-environment 107
A ma11ager may have read articles in the rrade and general press or spoken ro colleagues, which has highlighred rhe porenrial of a new technology-enabled marketing rechnique. They rhen face a difficuJr decision as ro \Werher ro:
• ignore the use of the rechnique complerely, perhaps because it is felt to be too expensive or untried, or because they simply don't believe the benefits will outweigh the cosrs;
• ignore the technique for now, bur keep an eye on rhe results of other companies thar are 0 0
startmg to use 1t; • evaluate the rechnique in a srructured manner and rhcn make a decision whether ro adopr
it according to the evaluation; • enrhusiasticaUy adopt the technique wirhout a derailed evaluation since the hype alone
convinces the manager that the technique should be adopted.
Depending on the attitude of th e manager, this behaviour can be summarised as:
1 Cautious, a 'wait a nd see' approach . 2 Lnrermediate, sometimes referred to as 'fasr-fo ll ower' approach. Let ot hers rake the
majority of t he risk, but if they are provi ng successfu l then rapid ly adopt the rechnique, i.e. co py th em .
3 Risk-taking, an early-ad opter approach.
Different beh aviours by d iffere nt adoprers wi ll resu lt in different numbers of adopters through rime. This diffusio n-adoption process (represenred by rhe beU curve in Figure 3.4) was identified by Rogers (1983) who classified rhose trialing new products as being innova - tors, early adopte rs , early majority, late majority, through to the laggards.
The diffusion-adoption curve can be used in rwo main ways as an analytical tool to help managers:
1 To understand the stage ar which customers are in adoprion of a technology, or any prod- uct. For example, rhe lmernet is now a well-esrablished tool and in many developed coun- tries we are inro the late majority phase of adoption , wirh large numbers of users of services. This suggests iris essential rouse this medium for marketing purposes. But if we look at WAP technology (see below) it can be seen that we are in the innovaror phase, so investment now may be wasted since it is not clear how many will adopr the producr.
2 To look at adoption of a new technique by other businesses- from an organisational pers- pective. For e-xample, an online supermarker could look at how many other e-railers have adopred personalisation ro evaluare wherher iris worrhwhile adopring the rechnique.
Figure 3.4 Diffusion-ado ption curve
~
1. Innovators (2.5%)
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2. Opinion leaders (13.5%)
3. Early majority (34%)
4. Late majority (34%)
5. Laggards (16%) - '0 0 Q) ~
0> .8 .E E '0 J <1l z Q) ..J
Conservative adopters
/, 2 3 4 5 Time
1 08 Part 1 Digital marketing fundamentals
Hype cycle A graptic representation of the maturity, adoption and busWless appfocation of specifiC teclvlofogies.
A commercial application of the diffusion of innovation curve was developed by technol- ogy analyst Gartner (2011) a nd has been applied to different technologies since 1995. They described a hype cycle as a graphic representation of the maruriry, adoption and business application of specific technologies.
Gartner (2011 ) recognised the foUowing stages within the hype cycle (Figure 3.5):
1 Technology trigger. The first phase of a hype cycle is the 'technology trigger' or break- through, product launch or other event that generates significanr press and inrerest.
2 Peak of inflated expectations. In the next phase, a fren:zy of publicity typically generates over-enrhusiasm and unrealistic expectations. There may be some successful applications of a technology, bm there are typically more failures.
3 T ro ug h of disillusionment. Technologies enter the 'trough of disillusionmenr' because they fail ro meet expectations and quickly become unfashionable. Consequently, the press usually abandons the ropic and the technology.
4 Slo pe of e nlighte nment. Although the press may have stopped cover ing the technology, some businesses continue through tl1e 'slope of en lj g htenmenr' and expe riment rounder-
stand the benefits and practical application of the technology. 5 Platea u of produ ctivity. A techno logy reaches the 'p lateau of productivi t y' as th e
benefits of it become widely demonstrated a nd accepted. The technology becomes increasingly s t able and evolves in second and third generations. The fina l height of the plateau varies according t o whether the technology is broadly applicable or benefits only a niche marker.
Figure 3.5 Different stages of a Gartner hype cycle
On the rise
I I I
: At the : Sliding into : I I I : peak 1 the trough : : Activity beyond :
Supplier : earty adopters : I I I
proliferation 1 : : I I I
Mass media i -f Negative press begins : I
hype begins ---!"1 1
Early adopters ! ~ investigate ---..
I I
: Supplier consolidation : and failures
Climbing the slope I
: Entering the plateau
High-growth adoption phase starts: 20 per cent to 30 per cent of the potential audience has adopted the innovation
I
First -generation products, high price. lots of customisation needed
Second/third rounds of venture capital funding
Methodologies and best : practices developing :
Start-up companies, first round of venture capital funding
I .J.
R&D__,/
Less than 5 per cent of the potential audience has adopted fully
I I
I I I
Second-generation
_y;_____.- 1
Third-generation products, out of the box, product suites
products, some services
___________________ ____ J ________ j __________________ _ J-------------------------- 1-----------------· Technology
trigger
Source: Gartner Group
Peak of inflated
expectations
Trough of disillusionment
Time
Slope of enlightenment Plateau of
productivity
Chapter 3 The digital macro-environment 1 09
The problem with being an early adopter (as an organisation) is that bei11g at the leading edge of using new redmologies is ofren also referred ro as the 'bleeding edge' due to the risk of failure. New technologies will have bugs or may integrate poorly with the existing sys- tems, or the marketing benefits may simply nor live up to their promise. Of course, the reason for risk taking is that the rewards are high - if you are using a technique that your competitors are not, then you will gain an edge on your rivals. For example, RS Componems (https:J/uk..rs-online.comlweb/) was one of the first UK suppliers of industrial componems to adopt personalisation as part of rheir e-commerce system. They have learned the strengths and weaknesses of the product and now know how to position it to appeal to customers. Ir offers facilities such as customised pages, access to previous order history and the facility to place repeat orders or modified re-buys. This has enabled them to build up a base of customers who are familiar with using the RS Components online services and are then less likely to swap to rival services in rhe furure.
So, what action should marketing and e-commerce managers rake when confronted by new techniques and technologies? There is no straightforwa rd rule of rhumb, other than that a balanced approach must be taken. Ir would be easy to dismiss many new reclmiques as fads, or classify t hem as ' not relevant to my market'. However, competitors are li kely to be reviewing new techniques and incorporating some, so a carefu l review of new tech- niques is required. This indicates that benchmarking of 'best of breed' sires within a sector and in different sectors is essential as parr of environmental scanning. However, by waiting for others to innovate and review the results on their website, a company has probably already lost 6 to 12 months. Figure 3.6 summarises rhe choices. The stepped curve shows the variations in technology through rime. Some changes may be small incremental ones such as a new operating system; others, such as the introduction of personalisation tech - nology, are more significant in delivering value ro customers and so improving business performance. Line A is a company that is using innovative business techniques, adopts technology early, or is even in advance of what the technology can currently deliver. Line C shows the conservative adoprer whose use of technology lags behind the available potential. Line B, the middle ground, is probably the ideal siruarion where a company monitors new ideas as early adopters, trials rhem and rhen adopts those that will positively impact the business.
Technological forces are significant and can influence digital marketing success significantly. In this section we have considered major factors that make up the forces likely to affect the digital marketer. ln the nexT section, we examine economic forces.
Figure 3.6 Alternative responses to changes in technology
C. Laggard
Time
11 0 Part 1 Digijal marketing fundamentals
( Economic forces ----------------------------------------
__ ] Global I)> economic influences affect the level of success of business. Economic forces affect supply and demand and consequendy it is imporranr for digitaJ markers ro identify which economic influences they need ro monitor. Classic economic factors (e.g., growth and unemployment, interest and exchange rates) can affect every aspect of business activity and are equally pertinent ro off- and online businesses. Tnrernarional marker growth and emerg- ing economies, for example Central and Eastern European markers, Indian and Asian economies, also have the potential ro influence digital marketing activities. ln this section we explore the implications of economic forces for digital marker growth and employment, interest and exchange rates and globalisarion.
Market growth and employment
The economic environment can have a critical impact on the success of companies through irs effect on supply and demand . Companies mu st choose those econom ic influences that are relevant to their business and monitor changes.
The impact of changes in demand can have far-reaching implications for digital marketing initiatives as this will affect the strength of marker growth. Sophisticated reclmology enables companies to analyse purchasing patterns and forecast future demand. But this is onJy part of the picture of conswuption that drives modern global economies. It is also important to monitor changes to trends (which affect marker growth) in order robe able to make realistic predictions about how consumers and companies are going ro behave in the future.
Economic growth
Throughout history there have been periods of strong economic growth followed by eco- nomic downturn and recession. The dot. com period of boom and bust at the beginning of the 21st century highlighted the fragility of high-tech markers and many of the emerging Internet companies, which had high-value stock marker valuations, crashed and no longer exist. However, from such dismprion has emerged an online economy that is fuelling growth. When there is economic growth during periods of boom, companies shouJd be prepared to experience increased demand for their products and services. During periods of slump, sales may decline as customers reevaluate their needs and spending requirements. For digital m:trkerers the challenge (from an economic perspective) is predicting the next boom or slump as they need to consider iJwestments, research :tnd development and if they fail to correctly anticipate the changiJ1g stare of the economy rhey may encounter difficuJries or miss opportunities. According to Jobber and Ellis-Chadwick (2016), retailers are often the first to be affected and la rge businesses such as CarrefourTM, Amazon and Walmart™ must plan to manage their national aud internati onal operations in anricip:ttion of rising and falling consumer demand. While retailers are the first to exper ience rises :tnd falls in demand, these changes quickly affect suppliers and manufacrurers in the supply chain. Consumers will also change their buying behaviour in response to economic changes. Discount food retailers AJdiTM and LidlTM benefited during rhe 2008- 13 recession as many shoppers moved from Sainsbury's TM and WaitroseTM to shop with the discounters, who offer lower prices bur 'no friJis' when it comes to the service.
Interest and exchange rates
Lnterest rates are a key monetary tool used by governments in conjunction with banks and financial institutions to manage a country's economy. Interest rares represent the price that borrowers have to pay lenders for the use of their money over a specified period of time Uobber and Ellis-Chadwick, 2016) . Western economics rend ro lower interest rates during hard times in order to stimuJare economic activity and encourage borrowing and lending, in the hope that they can avoid a downturn.
Globalisation The increase of International trading and shared social and cultural values.
Chapter 3 The digital macro-environment 111
Exchange rates are the price of trading one currency against another. Fluctuations in exchange rates mean that the price a consumer in one country pays for a product and/or the money that a supplier in an overseas counrry receives for selling that product can change. For example, if the exchange rare between the pound sterling and the euro changes, the pound may weaken. International suppliers and manufacturers often change their prices for a particular currency zone in order to ensure rhey maintain their prices at the required level. Digital marketers should carefully consider their markets in relation to currency fluctua- tions. Amazon has de,·eloped country-specific operations and trade in the national curren- cies associated with each domain.
Globalisation
ln recent years the world has become more accessible, g lobal expansion and exports across the world a re now possible and the Inte rnet has been an influencing factor in the growth in trad e.
In the digital world , g lobali sati on reflects rhc move towards in te rna tio nal trading in a si ngle global m arketpl ace and the blurring of socia l and cu ltu ral differences betwee n coun- tri es. In C hapter 2 we saw thar there is w ide va riati on in t he level of u se of t he lnrern er in different continents a nd co untries, pa rticul a rl y fro m t he consu mer pe rspective. Furth er- more, accordin g ro Do her ty eta/. (2003), a m ajor d river of Inte rnet adoptio n by comme r- cia l orga nisa tions is rhe o pportunity for marker expa nsion in do mestic a nd intern ation al markets. H owever, d igital market ers need to be awa re of rhe imp lications of t radi ng in global markets and co nsi der whether to develop bespoke branding a nd marketing ca m- paigns or whether to apply a st andardised approach, and should also not lose touch w irh the needs a11d wants of local markers. Now read Digital marketing insight 3 .-t abour the E2E economy.
Economic disruption
The previous section has identified key economic factors and considered their poten tial impact for digital marketers and rhe on line trading environment. T here are close links between economic factors such as interest rates and inflation on political influences. In the next section we explore political forces in rehrion ro digita l trading environments.
Digital marketing insight 3.4 E2E economy
According to research (Gorrell , 2014), the next digital transformation has already begun. The main thrust of the change is away from being specifically customer-centric towards an everyone-to-everyone economy (E2E). At the heart of this fundamental shift in focus are technological and social changes: Cloud Computing is facilitating universal access to applications and services; mobile technology is changing the digital marketing land- scape; advanced and intelligent analytics are providing highly specific and detailed insights on customer behaviour; digital ecosystems are creating trading environments where multiple buyers can engage with multiple and diverse suppl iers and service provid- ers; and there has been a social media explosion . And in this highly connected environ- ment, new connections can occur through open d ig ital communications channels .
Gorrell (2014) states that the E2E economy focuses on how to 'heighten expectations for seamless, connected experiences' and in order to fu nctio n in this d igital new world companies must work out how to deliver the best experiences, be able to respond to insatiable demand and work with open standards. Note that the focus on the customer is not lost, just reconfigured as companies should seek to delight their customers by reorganis ing and creating more free-flow ing business structures, which can respond faster and more flu idly as markets change.
112 Part 1 Digijal marketing fundamentals
Political forces
Political forces can have implications for digiral marketing strategy and pl:umi11g. The politi- cal environment is shaped by the interplay of government agencies, public opinion and consumer pressure groups and industry-backed organisations such as TRUST Arc (https:// www.trustarc.com).lnteracrion between these organisations helps to create a trading envi- ronment with established regulations and privacy controls. The poliricaJ environment has many factors that influence the trading environmem, such as taxation, investment and man- agement of business and public affairs. Political forces are closely intertwined with economic forces- for example, the governmenr sets financial goals for the Bank of England, which in turn sets interest rates to comrol inflation. The government's influence over the economy has an impact on overaJI economic performance and also business investment.
It is important for digital marketers to be aware thar political action enacted through govern ment agencies to control the adoprion of the Internet includes:
• promoting the benefits of adopting the Internet for cons umers and business to improve a country's economic prosperity;
• sponsoring research leading to dissemination of best practice among companies; • enacting legislation to regulate the environment, for example to protect privacy or control
taxa non; • developing stra tegies that create opportunities for growth and development of the digital
economy.
As an example of a recem iniciative, the Department for Business, Energy & Industrial Strategy (BEIS) launched the UK's IndustriaJ Strategy in No,·ember 2017, which proposes a vision that will transform tbe UK economy based on five foundations: ideas, people, infra- structure, business environment and places. TechnicaJ innovation and global trade in goods and services are key elements of the strategy and therefore of great signilicance to digitaJ marketers as cl1e Government will develop policy to support the achievement of its goaJs. For example, key policies focus on major investmem in harnessing the value of innovation, new skills training, developmem of the digiraJ infrastrucn1re and business growth (HM Government, 2017) .
In addicion to the lndustriaJ Sr.rategy, the Department for Digital, Culture, Media a nd Sport (DCMS) has produced the UK Digital Strategy (DCMS, 2017). This strategy focuses on business skills and other activities that support the Industrial Strategy. In order to achieve the Government's aims to become a world-leading digital economy, the Digital Strategy is built on seven strands:
1 Co nn ectivity 2 Skills and inclusion 3 The digital sector 4 The wider economy 5 Cy berspace 6 DigitaJ government 7 The data economy.
Again policy will focus on enabling this strategy ro succeed and it is important for digital marketers to be aware of the Government's focus. Now complete Activity 3.4: Making the UK a world-leading digitaJ economy.
Political control and democracy
Government action that can ha,·e a significant impacr on the online marketplace is conr.rol of intermediaries. This depends on the amount of regulation in a given country and in
Activity 3.4
Internet governance Control of the operation and use of the Internet.
Chapter 3 The digital macro-environment 113
Making the UK a world-leading digital economy
Purpose
To increase awareness of the political influence on the growth of a digital economy.
Activity
Review the DCMS plan for the UK economy and its seven strands, or an equivalent in your country. Your task is to discover what each strand means for companies and marketers involved in digital marketing. Visit: https://www.gov.uk/govemment/publica- tionsluk-digital-strategy
Research each of the UK Digital Strategy documents to answer the following questions:
1 How does the plan intend to improve connectivity? 2 What are the barriers to improving digital capabilities? 3 How will increasing Research & Development help grow digital business? 4 What are the four core digital activities that all businesses have to strive to achieve
to remain competitive? 5 What is the Government going to do to ensure high levels of cyber security? 6 What are the aims for GOV. UK Pay and what are the potential benefits and risks of
e-wallets? 7 How is citymapper creating value through using big data?
individ ual markets. Taking rhe UK as rhe example, regulation of diffe rent marketplaces occurs through these groups:
• Financial Conduct Autboriry. Aims to ensure that financial markets work effecti,•ely and fairly controls providers of banking products such as currem accoums, savings and loa ns (https:/ /www.fca.org.uklabout).
• Ofcom. Controls providers o f mobi le phone and broadband services (https://www.ofcom. org.ukl) .
• OfGEM. Conrrols energy consumpt ion (https://www.ofgem.gov.uk/).
In th e fina ncial services market, it is not necessary for a price co mpa rison inrermed iary to show all provid ers. So, fo r exa mple, o ne ma jor insurance prov ide r, D irect Linent, has decided nor ro be included. However, in the energy ind ustry it is req uired that all p roviders a re to be included due to rhe industry regulato rs, although links between th e intermediary a nd the suppli ers a re not.
Internet governance
Internet governance refers to the co ntro ls put in place to manage t he growt h of rhe Inter- ncr and irs usage. G overnance is tradi t ionall y undertaken by government, bur the global nature of the Internet makes it less practical for a governmenr to comro l online. No o ne runs the Internet and wh ile there are many individuals, businesses and organ isations th at have a vested imeresr in ensuring rhe stabiliry of the Internet, there is no central governing body. ICANN oversees rhe allocation of domain names and Internet prorocols and rhe US Departm ent of Com merce has some sway over decisions relating to the DNS root zone (top-level domain system) wit h ICANN; some academics argue that ultim ately the USA has the power ro have the fi nal word on decisions (Woltag, 2012). The Internet Engineering Task Force (IETF) is involved wirh t he mainte nance and development of technical standards.
114 Part 1 Digital marketing fundamentals
Network neutrality ·Net neu1Jaity' is the prrople of piO'J1Sion of equal access to different Internet services by telecomrTulicabOnS service prOYiders.
Ac tivity 3.5
The net neutrality principle
The net or network neutrality principle enshrines equal access to the Internet such that telecom providers do nor discriminate access to data or connectivity for different users based on their type or amounr of conrem and platforms. For example, restricting access to stream- ing services for people who cannot afford higher fees violates net neutrality. The most com- mon context for net neutrality is the desire by some telecommunications companies and ISPs to offer tiered access to particular Internet services. How net neutrality is implemented differs in different countries. The principle has been fiercely contested in the United States, where laws have been enacted both to enforce and repeal ncr neutrality (situation at rhe time
of writing). The second and less widely applied, bur equally significant, concept of net neutrality is
the wish by some governments (or other bodies) to block access to certain services or con- tent. For example, the govern ment in China limits access to certain types of content in what has been g li bly called 'The G rear Firewall of China' (Wired, 2007). T h is refers to the devel- opment of th e Go lden Sh ield, w hich is intended to mon itor, fi lter and b lock sensit ive o nl ine content. More rece ntl y, Google h as been criti cised for censo ring irs sea rch resu lt s in C hina for certain terms such as ' T iannam en Sq uare'. [n 2009/2010 Google considered w irhd.raw in g its busi ness fro m C hin a altogether.
Taxatio n
How to change rax laws to reflect the globalisarion through rhe Internet is a problem rhar many governments are grappling with. The fear is that the Internet may cause sign ificant reductions in tax revenues ro national or local governments if existing laws do nor cover changes in purchasing patterns. In Europe, the use of online betting in lower-tax areas such as Gibralta r has resulted in lower revenues ro gm·ernmems in the countries where consumers would have formerly paid gaming rax to the government via a betting shop. The UK Govern- ment aims to introduce new taxation laws to stop large Internet companies that legally avoid paying their taxes in rhe UK . ln the past both Google and Amazon have been accused of routing their tax affairs through low-tax jurisdiction economies; indeed, according to Good - ley (2017), Amazon has been found to be paying 11 rimes less corporation tax in the UK than other booksrores. Her Majesty's Revenue and Customs (HMRC) has been target ing digital business and it is claimed that since 2010 it has brought in £160 billion of additional
ra x revenue.
Do digital companies manipulate our behaviour?
Purpose
To evaluate the influence of major digital companies on consumer behaviour.
Task
Watch this lecture ' How Amazon, Apple, Face book and Google manipulate our emotions' by Scott Galloway of NYSU: https://www.youtube.com/watch?v=xRL2vVAa471 which discusses the increasing dominance of some businesses.
1 What is the combined level of influence of Google, Apple, Amazon and Facebook, in terms of global GOP?
2 According to Scott, what are our major concerns about this rising level of influence of the Big Four?
3 Discuss the extent to which the behaviou r of these firms is anticompetitive.
( Legal forces
Ethical standards Practices and behaviours that are morally acceptable to society.
Privacy A moral right of individuals to avoid intrusion into thEW personal affairs.
Identity theft The rrisappropriation of the identity of another person, without ~ knowledge a consent.
Chapter 3 The digital macro-environment 11 5
Tax jurisdiction
Tax jurisdiction determines which country gets the tax income from a transaction. Under rhe current system of international tax treaties, the right to tax is divided between the coun- try where rhe enterprise thar receives the income is resident ('residence' country) and that from which the emerprise derives that income ('sou rce' country). Laws on taxation are rapidly evolving and vary dramatically between countries.
Social media and political change
The rise of use of social media for political purposes is having far-reaching consequences. Individuals have mobilised various campaigns via social media that have brought about change - for example, 'Occupy, the Arab Spring' (Markham, 2016). Through social media there is a new form of political commtmication; politicians have direct contact with voters; campaigns can go viral and be shared with miJiions of social medi:.t users; adverrs can be free ly posted and shared via You Tube. Social rnedia allows peopl e ro join together and politi- ca l lobbyists are very aware of the power of social medi:l networks, when it comes down ro campaigning. T hese issues and more are explored in the case srudy at the end of th is
chapter. This section has explored some factors that contribute ro the economic fo rces that can
affect digital marketing initiatives. The next section considers lega l forces.
Laws develop in order to prm,ide a framework of control and regulations rhat aim to enable individuals and businesses to go about their business in a legal and ethical manner. However, laws are open to interpretation and there are manr legal and ethical considerations in the onli ne trading environments. J\4any laws aim ro prevent unethical marketing practice, so marketers have to understand and work within this regulatory framework. This section considers six of the most important legal issues for digital marketers (see Table 3.1).
Legal activities can be considered unethical
Digita l marketers should be com pliant wirJ1 the law and adhere to e th ical st a ndards bur the rare of technological innovation is rapid and consequently the law is often unclear. In th is case, marketers need ro rread carefuJiy since unethica l action can result in serious da mage ro the reputa tion of a company a nd negative sentiment can result in a reducrion in o nline audience or sales.
1 Data protection and privacy law
Privacy refers to a moral right of individuals to avoid intn.sion into their personal affairs by third parries. Privacy of personal data, such as our identities, likes and dislikes, is a major concern to consumers, particularly with the dramatic increase in identity theft.
Digital marketers can berrer understand their customers' needs by using this type of very valuable information. Through collecting personal information it becomes possible to develop highly targeted communications and de,·elop producrs that are more consistent with users' needs. Therefore how should marketers respond to this dilemma? An obvious step is to ensure that marketing activities are consistent with the latest data protection and privacy laws. Although compliance with the laws may sound straightforward, in practice different interpretations of the law are possible and since these are new laws they have not been tested
116 Part 1 Digital marketing fundamentals
Table 3.1 Significant laws that control digital marketing
Legal issue
1 Data protection and privacy law
2 Disability and discrimination law
3 Brand and trademark protection
4 Intellectual property rights
5 Contract law
6 Online advertising law
Viral marketing
Digital marketing activities affected
Collection, storage, usage and deletion of personal infonnation directly through data capture on fonns and indirectly through tracking behaviour through web analytics
Email marketing and SMS mobile marketing Personalisation based on data collected to deliver more relevant product offers
on a website or via an ad or email Use of viral marketing to encourage transmission of marketing messages
between consumers Use of cookies and other techniques for personalising content and tracking on
site Use of cookies for tracking between sites, for example for advertising networks Use of digital assets installed on a user's PC for marketing purposes, e.g .
toolbars or other downloadable utilities sometimes referred to as 'malware'
Accessibility of content such as images for the visually impaired within d ifferent digital environments:
• website • email • mobile • social media • IPTV
Accessibility affecting other forms of disability including hearing difficulties and motor impainnent
Use of trademarks and brand names within:
• domain names • content on site (for search engine optimisation) • natural search results • paid search advertising campaigns (e.g. Google Ads) • representation of a brand on third-party sites including partners, publishers
and social networks • defamation of employees
Protection of digital assets such as text content, images, audio and sounds through digital rights management (DRM)
Validity of electronic contracts relevant to:
• cancellations • returns • errors in pricing • distance-selling law • international taxat ion issues where the a-commerce service provider is under
a different tax regime to t he purchaser
Similar issues to traditional media:
• Claims about the offer • Use of endorsements, e.g. celebrity endorsements In social media and by
vloggers • Causing offence (e.g. viral marketing)
l
A marketing message is <Xlfm1lricaled from one pe.-son to another, faciitated by dlffetent media, such as word of mouth, en1all or websltes. It rnpiies rapid transmission of messages IS intended.
in courr. As a result, companies ha\·e to make their own business decisions based on the business benefits of applying particular marketing practices against the financial and repu- tational risks of less strict compliance. There is also rhe challenge o f compliance with different laws prevalent in different countries.
Effective e·commerce requires establishing a balance berween the benefits the individual customer will gain from their online experience through providing personal information
Mal ware Malicious software or toolbars, typically downloaded via the lntemet, which act as a 'Trojan horse· by executing unwanted activites such as keylogging of user passwords or viruses which may collect email addresses.
Chapte r 3 The digital macro-environment 117
and the amount and type of information that they are prepared for companies ro hold about them.
The main information types used by the digital marketer that are governed by ethics and legislation, are:
1 Com act info rmation. This is the name, postal address, email address and, for B2B com- panies, website address.
2 Profile info rma tion . This is information about a customer's characteristics that can be used for segmentation. It includes age, se.:oc and social group for consumers, and company characteristics and individual role for business customers (see Chapter 6).
3 Pl atfo rm usage infor mation . Through web analytics systems it is possible to collect infor- mation on type of compurer, browser and screen resolution used by site users (see Chapter 7).
4 Behavio ural information (on a single site) . This is purchase history and the whole of the buying process. Web a nalyt ics (Chapter 10) can be used ro assess the web and email content accessed by individuals .
5 Behavioural in formation (across multiple sires). This can potentiall y show how a user accesses multi ple si res and respo nds to adverts across sires. Typicall y these data a re co l- lected a nd used th rough an ano nymous profi le based on cook ie or lP addresses, wh ich are no t related to an in dividual .
Table 3.2 summarises how these different types of customer information are collected and used through technology. The main issue to be considered by the marketer is disclosure of the types of information collection and tracking data used. The first two types of infor- mation in the table are usually readily explained through a privacy statement at cl1e point
Tab le 3.2 Types of information collected online and the related technologies
Type of information
1 Contact information
Approach and technology used to capture and use infonnation
• Online forms- online forms linked to a customer database • Cookies - used to remember a specific person on sub-
sequent visits (see Digital marketing insight 3.5)
I
2 Profile information including personal information • Online registration forms collect data on social networks and company sites
3 Access p latform usage
4 Behavioural Information on a sing le site
5 Behavioural information across multiple sites
• Cookies can be used to assign a person to a particular segment by linking the cookie to a customer database record and then offering c ontent consistent with their segment
• Web analytics system - identification of computer type, operating system and screen characteristics based on http attributes of visitors
• Purchase histories are stored in the sales order database • Web analytics store details of IP addresses against clickst reams
of the sequence of web pages visited • Web beacons in email marketing- a single pixel GIF is used to
assess whether a reader opened an email • First-party cookies are also used for monitoring visitor behaviour
d uring a site visit and on subsequent visits
• M alware can collect additional information such as passwords
• Third-party cookies used for assessing visits from different sources such as online advertising networks or affiliate networks (Chapter 9)
• Search engines such as Google use cookies to track advertising; Google does it through its Google Ads pay-per-click programme
• Services such as Hitwise (www.hitwise.com) monitor IP traffic to assess site usage of customer groups within a product category
118 Part 1 Digital marketing fundamentals
Personal data Arrj information about an indillidual stored by . ' compames concerrung their customers or employees.
Notification The process whereby companies register with the data protection registrar to inform about their data holdings.
Spam Unsolicited email (usually b[jk-mailed and unta~geted).
Opt-in A customer proactively agrees to receive further information.
Opt-out A customer dedWles the offer to recave further information.
of data collection and, as we will see, rhis is usually a legal requirement. H owever, with the other types of information, users would only know they were being tmcked if they have cookie monitoring software installed or if they seek om the privacy statement of a publisher that offers advertising.
All of these issues arise in the next section, which reviews actions that marketers should take to achieve privacy and trust.
Data protection law
Data protection legislation is enacted ro protect the individual, to protect their privacy and to prevent misuse of their pe rs o nal data .
In the UK, the enactment of the European legislation is the Data Protecrion Act 1984,
1998 (DPA), which is managed by rhe legal requirements of rhe 1998 UK Dam Protection Act. The Information Commissioner's Office is the UK's independent authority, which 'upholds informacion rights in the public interest, promoting openness by public bodies and data privacy for individuals' (ICO 2018}. The 1CO provides derailed information at: https:/1 ico.org.uk/. This law is typical of laws that have evolved in many countries to help protect personal information. Any company that ho lds perso na l data on co mputers or on file about customers or employees must be registered with a data protecrion regisrrar (although there arc some exceptions that may exclude small businesses). This process is known as
notific ation . The guidelines on data protection law are set our in the General Data Protection Regula-
tion (2018). The GDPR applies to controllers of data and processors of data. The controller determines the purpose and means of processing personal dam and the processor is respon- sible for carrying our the processing on behalf of the Controller. The GDPR applies ro the gathering and using of personal and sensitive data and requires that personal data shaH be:
a processed lawfully, fairly and in a transparent manner in relation ro individuals; b collected for specified, explicit and legitimate purposes and nor further processed in a
manner that is incompatible with those purposes; further processing for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes shall nor be considered to be incompatible with the initial purposes;
c adequate, relevant and limited ro what is necessary in relation ro the pu rposes for which they are processed;
d accurate and, where necessary, kept up to dare; every reasonable step must be taken to ensure that personal data that are inaccurate, having regard to the purposes for which they are processed, are erased or rectified without delay;
e kept in a form that permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed; personal data may be stored for lo nger periods insofar as the personal data will be processed so lely for archiving purposes in the public interest, scientific or histori ca l research purposes or statistical purposes subject to implementation of the appropriate technica l and organisational measures required by the GDPR in order to safeguard the rights and freedoms of indi- viduals; and
f processed in a manner that ensures appropria te security of the personal data, including prorecrion against unauthorised or unlawful processing and against accidental loss, destruction or damage, using appropriate technical or organisational measures (TCO, 2018).
Anti-spam legislation
Laws have been enacted in different countries to protect individual privacy and with rhe intention of reducing spam or unsolicited commercial email (UCE). Originally, the best- known s pam was tinned meat (a contraction of 'spiced ham'), but a modern version of this acronym is 'sending persistent annoying email'. Spammers rely on sending our millions of
Permission marketing Customers agree (opt ·in) to be involved in an organisation's mat1<eting actMties, usually as a mstAI of an oncenbve.
Cold list Data about ndMduals that are rented or sold by a third party.
House list Data about exiS1ong rustomers used to matl<et products to encourage future purchase.
Chapter 3 The digital macro-environment 119
emails in the hope tha t even if there is only a 0.01 per cent response they may make some money, if not get rich .
Anri -spam laws do nor mean tbar email can not be used as a marketing tool bur the recipient has to agree to receive the mailing. This approach is called permission marketing . Permissi,-e emaiJ marketing is based on consent or opt-in by custome rs, and the option to unsubscribe or opt-out is the key to successful email marketing. Email lists can aJso be rented where customers ha,·e opted in to receive email. This is known as a co ld lis t , so called because the company that purchases the data from a third parry does not know you. Your name will also porentiaJiy be stored on an opt-in hou se list within companies you have purchased from where you have given your consent robe contacted by the company or given additionaJ consent to be contact ed by its partners (known as permission marketing).
Digital marketing insight 3.5 Understanding cookies
Cook ies Cookies are small text flies stored on an end-user's computer to enable webs~es to Identify the user.
Persistent cook ies Cookies that remain on the computer after a vis~or session has ended. Used to recog1ise retuming visitors.
Temporary or Session cookies Cookies used to manage a single visitor S9SSI()(l.
First-party cookies Served by the ~e currently in use - lypicaly for a-commerce sites.
Third-party cook ies Served by another site to the one being viewed - typically for portals where an ad network will track remotely or where the web analytics software places a cookie.
A cookie is a data file placed on your computer that identifies that individual c<>mputer. 'Cookie' derives from the Unix operating system term 'magic cookie', which meant something passed between routines or programs that enables the receiver to perform some operation.
Types of cookies
The main cookie types are:
• Persistent cookies. These stay on a user's computer between multiple sessions and are most valuable for marketers to identify repeat visits to sites.
• Temporary or session cookies (single session). Useful for tracking within pages of a session such as on an e-commerce site.
• First-party cookies. Served by the site visitors are accessing. These can be persis- tent or session cookies.
• Third -party cookies. Served by another site to the one being viewed, typically for publishers where an ad network will track remotely or where the web analytics soft- ware places a cookie. These are typically persistent cookies.
Cookies are stored as individual text files in a directory on a personal computer. There is usually one file per website. For example: [email protected]. This file contains encoded information as follows:
FLT _VIS IK:bapzRnGdxBYUUID:Jul-25-1999f british-airways.com/ 0 425259904 29357 426 1170747936 29284034 *
Although many web users may think personally identifiable information is stored. The information in the cookie file is essentially just an identification code that may link to a customer database and the date of the last visit, although other information could be stored.
Cookies are specific to a particular browser and computer, so if a user connects from a different computer, such as at work, or starts using a different browser, the website will not identify him or her as a similar user.
What are cookies used for?
Common marketing applications of cookies include:
• Personalising a site for an individual. Cookies are used to identify individual users and retrieve their preferences from a database according to an identifier stored in the cookie. For example, I subscribe to the Econsultancy service (www.econsultancy.com);
120 Part 1 Digital marketing fundamentals
each time I retum I do not have the annoyance of having to log in because it remem- bers my previous visit. Many sites feature a 'Remember Me' option, which implies using a cookie to recognise a returning visitor. Retailers such as Amazon can use cookies to recognise returning visitors and can recommend related books purchased by other readers.
• Online ordering systems. This enables a stte such as Tesco.c om to track what is in your basket as you order different products.
• Tracking within a site. Web analytics software such as Google Analytics, Adobe Analytics or Webtrends analyses statistics on visitors to websites and relies on per- sistent cookies to find the proportion of repeat visitors to a website. Webtrends and other tools increasingly use first-party cookies since they are more accurate and less likely to be blocked. Marketers should check whether use of first-party cookies is
possible on t heir stte. • Trac king across sites. Advertising networks use cookies to track the number of
times a particular computer user has been shown a particular banner advertise- ment; they can also track adverts served on sites across an ad network. There was an individual rights outcry in the late 1990s since Doubleclick was using this to profile customers. Doubleclick no longer operates an ad network, partly due to this.
Affiliate networks and pay-per-click ad networks such as Google Ads may also use cookies to track through from a click on a third-party site to a sale or lead being gener- ated on a destination or merchant site. These approaches tend to use third-party cook- ies. For example, if conversion tracking is enabled in Google Ads, Google sets a cookie when a user clicks through on an ad. If this user buys the product, then the purchase confirmation page will include script code supplied by Google to make a check for a cookie placed by Google. If there is a match, the sale is attributed to Ad. An alternative approach using third-party tracking is that different online campaigns have different tracking parameters or codes within the links through to the destination site, and when the user arrives on a site from a particular source (such as Google Ads) this is identified and a cookie is set. When purchase confirmation occurs, this can then be attributed back to the original source, e.g. Google Ads, and the particular referrer.
Owing to the large investments made now in pay-per-click marketing and affiliate marketing by many companies, cookie privacy laws and deletion are an area of concern for marketers since the tracking can become inaccurate. However, a sale should still
occur even if the cookies are blocked or deleted, so the main consequence is that the ROI (return on investment) of online advertising or pay-per-click marketing may look lower than expected. In affiliate marketing, this phenomenon may benefit the marketer in that payment may not need to be made to the third party if a cookie has been deleted (or blocked) between the time of original click-through and sale.
Privacy issues with cookie use The problem for digital marketers is that, despite these important applications, b locking by browsers or security software and detetion by users has increased dramatically. Research by Global Web Index {2014) suggests that almost half of online shoppers are now deleting cookies, while one in five say they are using tools such as DoNotTrackMe to prevent companies from monitoring their Internet activities.
It seems that many distrust cookies since they indicate a 'big brother' is monitoring their actions. Others fear that their personal details or credit card details may be accessed by other websites.
Privacy statement Information on a website explaining how and why Individuals' data are collected, processed and stored.
Chap ter 3 The digital macro-environment 121
Legal constraints on cookies
The PECR law, particularly its update in May 2012, gives companies guidance on their use of cookies. The original 2003 law states:
a person shall not use an electronic communications network to store information, or to gain access to information stored, in the terminal equipment of a subscriber or user unless the following requirements are met.
The requirements are: (a) the user is provided with clear and comprehensive informa- tion about the purposes of the storage of, or access to, that information; and (b) is given the opportunity to refuse the storage of or access to that information. Requirement (a) suggests that it is important that there is a clear privacy statement and (b) suggests that explicit opt-in to cookies is required - this is what we now see on many sites fol- lowing the implementation of the law in 2013. This was thought by many commentators to be a curious provision since this facility to delete cookies is available in the web browser. A further provision clarifies this. The law states: 'where such storage or access is strictly necessary for the provision of an information society service requested by the subscriber or user'. This indicates that for an e-commerce service session cookies are legitimate without the need for opt-in. It is arguable whether the identification of return visitors is 'strictly necessary' and this is why some sites have a 'remember me' tick box next to the log-in. Through doing this they are compliant with the law. Using cookies for tracking return visits alone would seem to be outlawed, but we will have to see how case law develops over the coming years before this is resolved.
With continuing use of cookies with limited information about their usage, another attempt was made in 2018-19 through a new ePrivacy initiative that followed the GDPR legislation, but had not been agreed at the time of writing this edition. This new law could have significant implications for marketers who currently make use of display advertis- ing, behavioural targeting and web analytics. The law followed press articles about cookie-based targeting and the ' Do Not Track Us' (http://donottrack.us/) campaign in the US supported by the Electronic Frontier Foundation, which aims to introduce a universal web tracking opt-out.
We conclude this section on privacy legislation with a checklist summary of the practical steps that are required to audit a company's compliance with data protection and privacy legislation. Companies should:
1 Follow privacy and consumer protection guidelines and laws in all local markets, and use. Use local privacy and security certification where available.
2 Notify or inform the site visitor before asking for information on: • who the company is; • what personal data are collected, processed and stored; • the purpose of collection; • how the site visitor can opt-out (be unsubscribed from email lists or cookies); • how the site visitor can obtain information held about them.
3 Ask for consent for collecting sensitive personal data, and it is good practice to ask before collecting any type of data.
4 Reassure customers by providing clear and effective privacy statements and explaining the purpose of data collection.
5 Let individuals know when 'cookies' or other covert software are used to collect information about them.
6 Never collect or retain personal data unless it is strictly necessary for the organi- sation's purposes. For example, a person 's name and full address should not be
122 Part 1 Digital marketing fundamentals
Accessibility legislation Legislation intended lo protect website users with disabilities, including visual disability.
Domain name regi stration The process of reserving a urique web address that can be used to refer to the company website.
required to provide an online quotation. If extra information is required for marketing purposes this should be made clear and the provision of such information should be optional.
7 Amend incorrect data when informed and tell others. Enable correction on site. 8 Only use data for market ing (by the company or third parties) when a user has been
informed this is the case and has agreed to this (known as opt-in) 9 Provide the option for customers to stop receiving information (known as opt-out).
10 Use appropriate security technology to protect the customer information on your site.
2 Disability and discrimination law
laws re lating ro disc riminating against cli sabled users who may find it mo re difficult to use websires because of audio, visual or motor irnpairmenr are know n as accessibili ty legislation . This is often contained within disability a nd di sc rimin atio n acts. In the UK, the releva nt act is the Disab ility Discrimination Act 2010.
Web accessibility refers to enabling all users of a website ro interact with it rega rdless of disabi liti es they may have or the web browser o r platform they are using ro access the site. T he visually impai red or blind are the main audience whom designing a n accessible website can help. Coverage of the requirements that accessibility places on web design are covered in Chap ter 7.
3 Brand and trademark protection
Online brand and tradem ark protection covers several areas, including use of a brand name within domain names and use of trademarks within other websires and in online adverts.
Domain name registration
Most companies are likely ro own several domains, perhaps for different product lines or countries or for specific marketing campaigns. Domain name disputes can a ri se when an individual or compan y ha s registered a d omain name that another co mpany claims they have the right to. This is sometimes referred to as 'cybersquatting'.
One of the best-known cases was brought in 1998 by Marks and Spencer and other high - street reta ilers, since another company, 'One In a Million Limited', had registered names such as ma rks&spencer.com, britishtelecom.net and sainsbury.com. l.r then tried ro sell these names fo r a profit. The companies already had sites with more fami liar addresses, such as marksand- spencer.co.uk, bur had not taken the precaution of registering all related domains wirh differ- em forms o f spelling and clifferenr top-level dom ai ns, such as .net. Unsurpri singl y, an injunction was issued against One in a Nlillion, which was no longer able to use these names.
T he proble m of co mpanies' names being misappropriated was common during the 1990s, bur companies sti ll need robe sure to register all related domain names for each brand, si nce new top-level domain names are created through time, such as .biz and .eu.
If you are responsible for websites, you need to check that domain names are automati- cally renewed by your hosting company (as most are tod ay). For example, the .co.uk domain must be renewed every two yea rs. Companies that don't manage this process porenrially risk losing rheir domain name since another company could potentially register it if the doma.in name has lapsed. A further option with domain registration is to purchase generic domain names of established sites thar may perform well in the search engines.
Chap ter 3 The digital macro-environment 123
Digital marketing insight 3.6 How much is a domain worth?
One of the highest values attached to a domain in Europe was paid in 2008 when the website c ruise.co.uk paid the German travel company Nees Reisen £560,000 for the rival name cruises.co.uk. Wray (2008) reported the new owner of cruises.co.uk as saying that he hopes to use the new domain differently - by turn ing the site into an online intermediary or community for cruising enthusiasts, while its existing cruise.co.uk will concentrate on offering the best deals for voyages . Explaining the valuation, cruise. co.uk's managing director, Seamus Conlon, stated:
'Cruises' is consistently ranked first on Google, with 'cruise' just behind. We wanted the top positions so that when Internet users are searching for cruise deals, reviews or news we are the first port of call. The cruise market is one of the fastest and most consistently growing sectors in the travel industry.
Since the commercialisation of the web, domain names have changed hands for high prices, for example:
• business.com for $7.5 million, December 1999 • AsSeenOnTv.com for $5.1 million, January 2000 • Credcards.com for $2.7 million, July 2004 • lnsure.com for $16 million, 2009 • sex.com for $14 million, October 2010 • casino.tt for $2.0 million, May 2011 • 360.com $17 million dollars, 2015.
(Young, 2016)
However, the release of many new gTLDs by ICANN means the relative value of domains has been drifting downwards. Recently, DVDs.com , which was registered in 1996 and sold publicly for $300,000, was listed in the auction at a starting b id of $50,000. Even at this dramatically reduced price the domain did not sell.
Reputational damage in advertising
Companies fear repurational damage through advertising on sites with which they wou ldn't W:lnt their brand associated because of ad buys on soci:1lnerworks or ad networks (Chap- ter 9) where it was not clear what comem thei r ads would be associated with. For exam ple, Vodafo ne removed all irs advertising from the socia l nerwork Facebook after irs ads appeared on t he group profile for the British Nati onal Parry. Many other advertisers withdrew their advertisi ng as a resulr.
M onitoring brand conversations in so cial networks and blogs
Online brand reputation management and alerting software tools offer real-time alerts when comments or mentions abour a brand are posted onl ine in different locations, including blogs and social nenvork s. Some basic tools are available including:
• Talkwalker AlensTM (www.talkwalker.com) and Coogle Alerts (www.google.com/alerts), which will alert companies when any new pages appear that contain a search phrase such as your company or brand names.
• BuzzsumoTM (www.buzzsumo.com) shows conrenr that is widely shared. • Social BakersTh1 (www.socialbakers.com) provides insights on which brands are most
shared in a category in social media.
124 Part 1 Digital marketing fundamentals
Intellectual property rights These protect the intangible property created by COI'pOI'ations or individuals that is protected Lnder copyright. trade secret and patent laws.
Trademark A ttademark is a unique word or phrase that distinguishes your company. The mark can be registered as plain or designed text, artwork or a oombination. in theory. colours, smells and SOLilds can also be trademarks.
There are also more sophisticated online reputation-management services rhar offer more in-depth analysis on whether the semimenr is positive or negati\'e and cover other issues such as unauthorised use of logos and use of trademarks. Examples include Brand24™, Radian6TM (Part of SalesforceThf) and BrandwarchTh1.
4 Intellectual property rights
Intellectual property rights (IPRs) protect designs, ideas and invenrions and include content and services developed for e -commerce sires. Closely rel ated is copyright law, which is designed to protect authors, producers, broadcasters and performers by ensuring they see some returns from their works every time they are experienced. The European Directive of Copyright (2001/29/EC) came imo force in many countries in 2003. This is a significant update to the law, which covers new technologies and approaches such as streaming a broad- cast via the lnrernet.
IP can be misappropriated in two senses on line. First, an organisation's lP may be misappropriated and you need to protect against thi s. For example, it is relatively easy to copy web content and re-publish on ru1other sire, and thi s practice is nor unknown among smaller businesses. Reputation management services ca n be used ro assess how an organisa- tion's co ntent, logos and trademarks are being used on other websites.
The Internet and the digitisarion of content has made it easy ro share (legall y or other- wise). ln 2002, Hal Plotkin published the first written piece rouse Creative Commom (CC). By 2018, there are an estimated 1.2 billion licensed works using the various Creative Commons options (Wikipedia, 2018); see Figure 3.7, which depicts the options offered by CC. The aim of the CC movement is to build a bener and more enriched body of work that provides an alternative to the standard copyright of 'all rights reserved'.
Figure 3 . 7 Creative Commons licence options
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• • •••••••••••••••••••••••
Attribution- ShartAllke CC BY· SA
········•······•·····••• Attribution - NoOerivs CC BYND
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Attribution- NonCommerclil CC BY·r-'<:
• • • •
Attribution - NonCommtrcill- SharebJite CC BY-NC·SA
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Attribution - NonCommerclil - NoOerlvs CC BY-NC·NO
Source: Creative Commons (2018)
Native advertising Onine content that it Is created to promote or enhance a brand such as a publisher article or social media update. Such content should be disclosed as advertising by law In many countries, but often ft isn't. However, this form of advertising is becorrWlg increasngly popular and rt is possille that Artificial Intelligence wil push the boundaries of this form of advertlsilg.
Chapter 3 The digital macro-environment 125
• Box 1 CC: Attribut ion Alone. Anyone can use, share, develop, reform work so long as they credit the original author.
• Box 2 CC: Attribution by SA (Share Alike). Anyone can use and de,·elop the published content so long as they credit the original author and any changes to the original must be offered under identical terms.
• Box 3 CC: Attribution by NC (Non-Commercial). Allows for use and de,·elopment of o riginal work bur non -commercially and should acknowledge the original creator.
• Box 4 CC: Attribution by NC SA (Non-Commercial Share Alike). Anyone can use and develop the published content for non-commercial purposes, so long as they credit the original author and any changes to the origina.l must be offered under identical terms.
• Box 5 CC: Attribution by ND (NoDerivs). This allows for redistribmion and none com- mercial sharing (of the whole origin al unchanged work).
• Box 6 CC: Attribution by NC ND (Non-Commercial NoDerivs).This is the most restric- tive of licences, which o nly allows ochers to down load and share your work w ith o thers as long as they credi t the originator. No changes can be made and it can not be used comm ercially.
5 Online advertising law
AdvertisiJlg sta11dards t hat are en forced by independent agencies such as the UK's Advertis- ing Standards Authority Code also apply in the Internet environment (although they are traditionally less strongly policed, leading to more 'edgy' creative executions online, which are intended to have a viral effect). In the UK, the ASA maintains a list of 'noncornpliant advertisers' until the offending sires have been updated: http://www.asaorg.uk/Rulings/Non- c ompliant-online-advertisers.aspx . Ar rhe rime of writing, non-compliant advertisers were diverse including: traditional Chinese medicine, car accesso ries, ticker agencies, clothing retail , online prize promotions and spas.
One particular challenge of online advertising for consumers is that marketing commu- nications must be obviously identifiable. Guidance covers these cases:
• Unsolicited email marketing communications muse be obviously identifiable as marketing communications without the need ro open rhem.
• Marketing communications must not falsely claim or imply chat the marketer is acti ng as a consumer (i .e. marketers should not leave reviews about their companies or competi- tors on behalf of their busi ness).
• Marketers and publishers muse make dear thar adverrorials are marketing commwlica- tions; fo r exam p le, by head ing t hem 'advertisement feature' . T his guidance is necessary since the increase i n native advertising has .-ueanr chat ma ny pieces of content masq uerad- ing as ads haven't been disclosed.
ln the US, the Federal Trade Commissio n (FTC) has defined native advertising as ' blending advertiseme nts with news, entert ain ment, a nd ocher ed itorial content in digi tal media', i.e. it is synonymous with 'sponso red content'.
In the UK, the Advertising StaJl dards Authority (ASA) has this guid.-mce and examples on celebrity endorsements, particularly applying co social media (https://www.asaorg.uk/ advice-online/celebrities.html), summarised as:
• Endorsements must be genuine. • Claims must be accurate. • Avoid rhe social media pitfalls. • Remember age matters (in alcohol and gambling ads). • Be aware of sector restrictions. • Be responsible. • Seek permission.
126 Part 1 Digital marketing fundamentals
( Social forces
Social exclusion Part of society IS excluded from the fadities avadable to the remailder.
The following are examples of native advertising and celebrity endorsement that have bro- ken advertising guidelines:
• In 2012, England footballer Wayne Rooney used his Twirler feed to mention his sponsor Nike, by passing off a promotional message as a personal comment without clearly show- ing it was an advenisemenr.
• In 2013, The Atlantic, the 157-year-old magazine, carried a story about the Church of Scientology on irs website celebrating the church's past year of worldwide expansion.
• In 2014, BuzzFeed featured an infographic '10 Quotes Every Grad Needs to Read' spon- sored by HarperCollins.
• In 2014, British 'vloggers' or 'You Tubers' including Phil Lester and Dan Howell were censured after featuring an OreoTM promotion 'Oreo Lick Race'.
Social forces are closely linked with culture and have signifi cant implications for digital marketing. Broadly speaking, the key factors that make up these forces arc soc ial comnmni- rics based on demographic profile, social exclusion and cultu ral factors.
Our interest here is in the wider impact of demographic influences: changes in popula- tions. Why this is important is that the size and growth rates of populations have implica- tions for digital marketing strategy and planning. One highly important shift in demographic trends is that for the first rime in the history of the world, over 50 per cent of the population lives in an urban setting.
The world population is estimated at 7.6 billion, with 25.4 per cent being 14 and under, 65.88 per cent between the ages of 15-64 and 8.68 per cent over the age of 65. Population growth is estimated to be 1.06. The world population is predicted to continue to expand, but while the population is ageing, fertility rates are declining, so the overall speed of growth is slowing. The expanding population means there is i11creasing demand on finite resources. Changes in population are important to marketers as they create new market opportunities. Currently, emerging marketing in Russia, India, Brazil and China represem market growth but there a re other demographic factors to consider before making a major investmenr in developing and emerging markets - for example, two thirds of the world's illiterate adults live in just eight countries: Bangladesh, China, Egypt, Ethiopia, Indi a, Indonesia, Niger ia and Pakistan (CIA, 2018).
Ana lysis of demographic trends can reveal important issues, such as there is a significant group in each national population of at least a quarter of the adult population that does not envisage ever using the Internet. C learly, the lack of demand for Internet services from this group needs ro be t aken into accow1t when forecasting future demand. Furthermore, this raises the questions of social isolation, or what the Oxford Internet In sti tute (https:// www.oii.ox.ac.ukl) has cal led in its research into Internet usage: ' Internet disengagement' . Others consider this to be an aspect of 'social exclusion'.
Social exclusion
The social impact of the Internet has also concerned many commentators because the Inter- net has the potential effect of accenruating differences in quality of life, both within a society in a single country and between different nations, essentially creating 'information haves' and 'informarion have-noes'. This may accentuate socia l e xc lu sion , where one part of society is excluded from the facilities available to the remainder and so becomes isolated.
Developed countries with the economies to support it are promoting the use of rT and the Internet through social programmes, such as the UK government's UK Digital fndusion strat- egy. Read Activity 3.6 to find out how Doteveryone is aiming to help get more people online.
Activity 3.6
Chapter 3 The digital macro-environment 127
Doteveryone measures basic digital skills
Purpose
To learn about assessing basic digital skills.
Activity
Doteveryone.org.uk is seeking to make the UK a place where everyone can get online. The organisation is a London-based thinktank founded by the Internet entrepreneur
Martha Lane Fox. Doteveryone uses a basic skill framework to assess the status of the digitally
capable population in the UK. Visit https://www.thetechpartnership.com/basic-digital- skills/basic-digital-skills-framework/ and read about the basic digital ski lls framework.
Find out about the digital skills of three of your friends or family by asking them to
complete the boxes across the top of the basic skills survey sheet below. Finally, suggest how you might encourage someone with low-level basic skills to
improve.
Basic skills survey sheet
Basic digital skills category
Managing information
Communicating
Transacting
Problem solving
Action
Use a search engine to look for online information
Download/save a photo you found online
Find a website you have visited before
Send a personal message to anoth- er person using email
Make comments and share informa- tion online
Buy items or services from a website
Buy and install an app on a device
Solve a problem you have with a device using online help
Verify sources of information you have found online
I have no idea what you are talking about
Could you do this?
I could do this if I was asked to
I couldn't do this if I was asked to
Have you done this in the last three months?
I have done this within the last three months
I haven't done this within the last three months
128 Part 1 Digital marketing fundamentals
Could you do this? Have you done this in the last three months?
Basic digital skiDs category
Creating
Action
Complete an online application that includes personal details
Create something new from exist- ing online images, music or video
I have no idea what you are talking about
I could do I couldn't do this if I was this if I was asked to asked to
I have done I haven't this within done this the last three within the months last three
months
As a conclusion to this chapter, consider the following case study, which highlights examples of how social media is changing the marketing landscape.
Case study 3 Social media - do celebrities call all the shots?
This case study explores how the reach and influence of social media is reshaping the marketing environment.
Our fascination with the personal and private lives of others has given rise to the increasing capacity of social media to influence every aspect of human activity (Alai- waneta/., 2017). But commercially, the management and governance of this type of digital communication media is often in a state of anarchy (Felix eta/., 2016). Neverthe- less, research suggests that digital marketing managers can position their organisations in such a way that their use of social media becomes coherent, consistent and more powerful than if they were to adopt social media in an unstructured manner. In this case we look at some evidence from high-profile social media cases and apply the strategic Social Media Marketing Framework (Felix et al. 2016) with the aim of looking into the complexity of this disruptive digital communications channel.
Social Media Marketing Framework (SMMF) This framework offers a holistic way to consider the stra- tegic application of social media. Felix et al. (201 6) pro- pose there are four dimensions to social media marketing:
1 Scope. This dimension focuses on the extent to which social media platforms are used as a one-way
communications tool, which provides content to entertain and inform end-users, or as an authentic collaborative environment, which facilitates recipro- cal interactions between end-users and companies.
2 Culture. This dimension distinguishes between use of social media as a traditional mass-marketing chan- nel or a more modernist approach of being open and flexible and embracing the style of social media platforms.
3 Structure. This dimension looks at organisation and how social media is deployed: is its applicat ion subject to centralised control and clearly defined protocols to assigned employees, or is It decentrat- ised and the responsibility of all employees, which removes the need for the rote of a marketing director?
4 Governance. This dimension relates to company rules and to what extent employees are told what they can and cannot say on social media platforms. This framework seeks to highlight the complexities
underlying the use of social media, and the importance of taking a multidimensional approach towards its appli- cation and management.
Now let's look as some recent high-profile social media activity to see if the SMMF helps shed light on the reach and success of each of our pieces of evidence.
Evidence 1: Celebrity engagement - Kylie Cosmetics
Social media platforms, from Facebook, Twitter and lnstagram to Unkedln, invite sharing of personal and commercial information, in various formats- text, pho- tos, videos, audio, blogs and messages. Today Kylie Jenner, USA reality television celebrity, and social media personality, reportedly wiped $1.5 billion dollars off the value of Snapchat by tweeting that she no longer reads these messages. Kylie, who seeks to con- stantly engage her audience, posted an indistinct image of her new baby daughter and got 11 million likes in just a few hours (BBC, Newsround, 2018). Kylie is related to Kim Kardashian, famous in the US for real- ity TV show Keeping Up With the Kardashians. Kim and the rest of the Kardashian-Jenner family have devel- oped a powerful social media presence, which is also financially valuable (Gajanan, 2017). Kylie has utilised the reach of digital social media to build a $400 million cosmetics business in under two years. On her Kylie Cosmetic website, customers are encouraged to use the #KylieCosmetics to share photos of themselves wearing the makeup products. Her interest in social media came from Youtube teen makeup tutorials and she utilised this knowledge and an online show to grow the cosmetics brand.
Evidence 2: Political campaigns- #graby ourwaiJet
Shannon Coulter launched a campaign to encourage shoppers to stop buying lvanka Trump apparel following derisory comments from Donald Trump about women. Her campaign, #grabyourwallet, called for action to boycott retailers stocking this fashion brand. As the social media campaign grew, more big-brand US retail- ers such as Neiman Marcus, Belk and Nordstrom recon- sidered whether they should sell this merchandise. Interestingly, none of these retailers actually reported on links between the boycott and how it had affected sales. But, allegedly, lvanka's brand has seen an increase in sales of 21 per cent since the launch of this social media campaign, which is attributed to category and market expansion. For Coulter, the campaign has bourgeoned into a much wider expression of 'anti-Trump sentiment' and an economic boycott against companies with con- nections to Donald Trump (Halzack, 2017). She sees this as being a way for consumers to get actively involved with others who share similar opinions.
Evidence 3: Financial compliance The financial services industry is typically risk averse, so initially social media represented a major threat and as a
Chapter 3 The digital macro-environment 129
result many banks, building societies and other financial institutions avoided being represented on social media platforms. But many of their customers had other ideas, as they increasingly demanded real-time responses from all of the companies and service providers they engage with. So, these firms began investing in financial technol- ogy (FinTech), which resulted not only in faster and improved services but also widespread use of social media. Facebook, Twitter and other platforms are used in a controlled way: as a channel that facilitates cus- tomer interaction; a marketing channel to improve target- ing and niche market expansion; a delivery channel for new products; and exploring new business models (Eldridge, 2017). But hereby is perhaps the biggest threat of all: by embracing social media, financial services have conceded 'customer mindshare' to GAFAMs (Google, Apple, Facebook, Amazon , Microsoft) and paved the way for none banks to replace the long-standing tradi- tional financial services firms (Birch, 2018).
Evidence 4: Social media local and personal
lnstagram launched in 2010, attracted 10 million mem- bers in year one and its membership has now reached over 800 million (active users), with the rate of its expan- sion growing faster and faster. This growth may be explained in part by the war between Facebook (owners of lnstagram) and Snapchat, which created new ways to communicate using personal images. lnstagram has added features, with greater opportunity to personalise photo galleries, and in doing so has become more like Facebook (Manjoo, 2017).
Questions 1 Use the dimensions of the SMMF to analyse the
following: a Kylie Jenner's cosmetics; b Shannon Coulter's #grabyourwallet.
2 Suggest how the SMMF helps to: a interpret what is happening in the financial
services industry in relation to its use of social media;
b provide strategic solutions for the use of social media that might help to protect banks and building societies from the GAFAMs.
3 Discuss the extent to which it is possible to stra- tegically manage social media using case evi- dence 1 to 4.
1 30 Part 1 Digital marketing fundamentals
Exercises
1 Environmemal scanning and analysis of the macro-environment are necessary in order that a company can respond to environmemal changes and act on the forces rhar shape the rrading envi ronmem.
2 Technological fo rces are arguably rhe most likely and mosr imporram for digital mar- kercrs ro warch and assess. Rapid variation in rechnology requires consram monitoring of adoption of rhe rechnology by cu sromers and compctirors and appropriare responses.
3 Economic forces considered in rhis chaprer i11clude classic economic facrors, i.e. employ- ment, interesr rares and m arket growth and emerging markets for digiral markerers.
4 Polir ical forces involve the role of governmenrs in promming e-commerce, bur also in tryi ng to resrr icr ir, w hich raises rhe question of democracy and rhe lmerner.
5 Lega l forces robe consid ered bye-com merce man agers include privacy a nd cla ra pro rec- rion, d isra nce-selling rules, taxation and brand repu rar io n protectio n, incl udi ng d o main na me registratio n a nd copyright.
6 Social forces in cl ude variation in usage of rhe In ternet, whil e et hica l issues include the need ro safegu ard consumer privacy a nd security of derails. Privacy issues incl ude col - lection and dissemi nation of custo mer information, cookies and the usc of direct email. Marke ters mus r acr within currenr law, reassure customers about their privacy and explain rhe benefirs of collection of personal information.
Self- assessment exercises
1 Summarise the key elements of the macro-environment that should be scanned by a digital marketing and e-commerce manager.
2 Give an example of how each of the macro-environment forces may directly drive the content and services provided online across multiple channels: web, mobile
and social media. 3 What actions should digital marketing managers take to safeguard consumer
privacy and security? 4 Give three examples of techniques digital channels can use to protect the user's
privacy. 5 How do governments attempt to control the adoption of the Internet and to what
extent does this impact on the democracy of information? 6 Suggest approaches to managing the rapid change of technological innovation.
Essay and discussion questions
1 You recently started a job as digital marketing manager for a major retailer. Produce a checklist of all the different legal issues that you need to check for compliance on the retailer's digital channels.
2 Discuss the influence of the UK Government on the growth of the digital economy.
3 Discuss th e legal constraints a marketer should consider when managing social media channels for a manufacturer brand.
4 Thinking about copyright legislation and controls, explain how to go about publish- ing online.
5 Debate the impact of digital technology on the way we live, work and enjoy our- selves by focusing on freedoms and limitations.
r References
'-~-
Chap ter 3 The digital macro-environment 131
6 From a macro-environmental perspective, c onsi der t he extent to which d igital channels are replacing physical channels.
Examination questions
1 Summarise the macro-environment variables a company needs to monitor when operating a) an information-only website, b) a trans actional e-c ommerce site and c) a social media site.
2 Discuss the potential significance of economic influences on the development of d igital marketing initiatives.
3 Discuss the imp lications of not conducting environment sc anning when launching a new brand.
4 Imagine you are a blogger for a service sector brand. Explain how you could use Creative Commons licensing to ensure you are sharing content legally.
5 Social media can be a powerful communication channel. Discuss the opportunities and pitfalls of these platforms.
6 Devise a plan of action for an o nline business to ensure compliance with ethical and legal standards of their e-commerce site.
--~ Alalwan, A. A ., Ranan, N.P., Dwivedia, Y.K. and Algharabat {2017) Social media in marketing:
A review and analrsis of the existing literature, Telematics and Informatics, 34, 1,177- 90. Birch, D. {2018), Forger banks, in 2018 you'll pay through Amazon and Facebook, Wired, 2
February, http://www.wired.co.uklarticlelbanks-data-tech-giants {accessed May 2018). BBC Newsround {2018) KyLie Jenner 'sooo over' Snapchar - wiping £1 billion off irs value,
http://www.bbc.eo.uk/newsround/43167084; Kylie Jenner b:aby photo causes social media Srormi, http://www.bbc.eo.uk/newsround/42972664 {:accessed M:ay 2018).
C IA The World Facts Book (2018) World Populations, https://www.ciagov/library/publications/ resources/the-world-factbook/geos/xx.html (accessed May 2018) .
Cre:a tive Co mmo ns (2018) https://creativecommons.org/licenses/ (:accessed May 2018) . DCMS (2017) UK Digital Strategy, https://www.gov.uk/governmenVpublications/uk-digitaJ-
strategy (accessed M ay 2018) . Doherry, N .F., Ellis-C hadw ick, F. and H an , C. A. (2003) An ana l ysis of the factors affecting
the adoption of the Internet in rh e UK retail sector, journal of Business Research, 56{11), 887-97.
Eldridge, R . {2017) H ow social media i s shaping financial se rvices , https://www.huffington post.com/richard-eldridgelhow-social-media-is-shapi_b_9043918.html {accessed May 2018).
Felix, R., Rauschnabel, A . and H inch, C. (?016) Elemenrs of strategic social media market- ing: A holisric framework , Journal of business Research, 70, 118-26.
Flurry {2018) Flurr y state of mobile 2017: with captive mobile audiences, new app growth stagnates, Chris Klotzbach, 10 January, http://flurrymobile.tumblr.com/posV169545749110/ state-of-mobile-2017-mobile-stagnates {accessed May 2018).
Gajanan, M. {2017) Th e most valuable lessons we can all learn form the Kardashians , Fortune, 18 October, http:l/fortune.com/2017/1 0/ 18/kardashian-family-business-lessons- kim -kylie-kris/ {accessed May 2018).
132 Part 1 Digital marketing fundamentals
Gartner (201 1) H ype Cycle Special Report for 2011. Report published 2 August. General Data Protection Regulation (2018) Guide to the General Data Protection Regula -
tion, https://ico.org.uklfor-organisations/ guide-to-the-general-data-protection-regulation- gdpr/ (accessed May 2018) .
Global Web Jnd~x (?014) Almost half of online shoppers are deleting cookies, blog article posted by Jason Mander, 11 November 2014, http://blog.globalwebindex.net/online- shoppers-privacy-measures (accessed May 2018).
Goodley,$. (2017) 'Coogle tax' to crack down on avoidance by internet firms in UK, The Guardian, 23 November, https://www.theguardian.com/uk-news/2017 /nov/ 23/google-tax- crack-down-avoidance-intemet-finns-uk-amazon (accessed jan 2018).
Gorrell, C. (2014) Interview: Robert Sutton. The new excellence: spreading constructive beliefs and practices from the few to the many, Strategy & Leadership, 42(5).
Halzack, S. (7017) Grab your waller: The woman who began boycott of Trump products in US retai lers, Independent, 14 February, http://www.independent.eo.uk/news/worldl americas/grab-your-wallet-trump-boycott-products-us-retailers-shannon-coulter-nordstrom- donald-jr-ivanka-eric-a7579776.html (accessed May 2018).
l-IM Government (2017) industrial Strategy: Building a Brirain fir for rhe future; W hite Paper publi shed 27 November, https://www.gov.uk/govemmentlpublicationslindustrial -strategy- building -a-britain-fit-for-the-future (accessed May 2018).
ICO (2018) Principles of the GDPR, Information Commissioners Office, https://ico.org.ukl for-organisations/guide-to-the-general-data-protection-regulation-gdpr/principles/ (accessed Jan 2018).
jobber, D. and Ellis-Chadwick, F. (2016) Principles and Practice of Marketing, McGraw Hil l, Maidenhead.
Manjoo, F. (2017) Why Jnstagram is becoming Facebook's next Facebook, The New York Times, 26 Apri I, https://www.nytimes.com/2017 /04/26/technology/ why-instagram-is- becoming-facebooks-next-facebook.html (accessed May 2018).
Markham, T (2016) Social media, politics and protest, Media, Culture & Societ); 38(6), 946-57. Nielsen (2010) H omes add even more TV sets in 2010, blog post, 28 April: http://blog-nielsenl
nom/nielsenwire. Rogers, E. (1983) Diffusion of Innovations, 3rd edn. Free Press, New York. Rueda-Sabarer, E. and Derosby, D. (2011) The evolving Internet in 2025: four scenarios,
Strategy & Leadership, 39(1), 32-38. Smarr Insights (2011) New privacy law on cookies- do we need to rake action?, blog post
by Dave Chaffey, 1 March, http://www.smartinsights.com/marketplace-analysis/digital- marketing-laws/cookie-privacy-law (accessed May 2018}.
Weber, Y. and Tarba, S. Y. (2014) Stra tegic agility: a state of the art, Californian Management Review, 56(3), 5- 12.
Wired (2007) The Great Firewall: China's misguided- and futile - attempt to control what happens online, Wired 15.11, by Oliver August, 10.23.07.
\'<loltag, J.-C. (2012) (ed. R. Wolfrum) Internet, Max Planck EncyclofJedia of Public Inter- national Law, Oxford University Press.
Wray, R. (2008) Porn? Sex? Britons value cruises much more, Guardian, 6 February 2008. Young, D. (2016) Qihoo eyes 360 brand with record domain buy, Forbes, 6 Februa.ry, https://
www.forbes.com/sitesldougyoung/2015/02/06/qihoo-eyes-360-brand-with-record-domain-
buy/#669756544016 (accessed May 2018). W3C (2018} Roadmap of web applications on mobile, https://www.w3.org/2018/01/
web-roadmaps/mobile/ (accessed February 2018).
Chapter 3 The digital macro-environment 133
Weblinks ]
• Oxford Internet Survey (OxlS) (www.http://oxis.oii.ox.ac.ukl). Research and statistics from rhe Oxford !mernet lnstirute designed to offer derailed insights into the influence of r:he Internet on society in Britain, including ' Internet disengagement'.
• Pew Internet and American Life Project (www.pewintemet.org). Funds and publishes original, academic-quality research that explores the impact of the Internet on society. Also highlights adoption trends such as social networks, online video and char.
• Smarr In sights Digital M arketing Statistics so urces (www.smartinsights.com/ dig ital- marketing-statistics). A compilation of the Top 10 statistics sou rces and a custom search engine ro search r:hem.
Digital law, data protection and privacy links and resources
• Marketing and advertising: the law (https://www.gov.uk/marketing-advertising-law); UK Governm ent guide on advertising and direct selling regu lat io ns; United Kingdom Infor- mation Commiss ioner (https://ico.org.uk/).
• OUT-LAW (www.out-law.com). This site has 8,000 pages of free legal news a nd guida nce, mosrly on IT a nd e-commerce issues produced by UK law firm Pin senr Masons.
• Privacy International (www.privacyintemational.org). Group campaigning for privacy - contains in formation on legal developments in different countries.
• Wikipedia: Summary o f Privacy law (https://en.wikipediaorg/wiki/Privacy_law). • European Commission Data Protection and privacy legal resources (https:l/ec.europaeu/
info/law/law-topic/data-protection_en) . • European Commission Digital Economy and the law (http://eur-lex.europaeu/summary/
chapterlinformation_society.html?root_default=SUM_1_ CODED=31 ). • United States (CAN-SPAJ\11 Act) (www.ftc.gov/tips-advice/business-center/guidance/
can-spam-act-compliance-guide-business). • Summary of the spam laws in all countries (www.spamlaws.com).
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Digital marketing strategy development
In Part 2, we explore digital marketing strategy development by combining traditional approaches to strategic marketing planning with
deploying digital media, data and technology. Chapter 4 presents a framework for developing digital marketing strategies, Chapter 5 discusses the opportunities for varying the marketing mix online
and Chapter 6 reviews strategies for digital customer relationship management.
Digital marketing strategy
'
Chapter 4 Digital marketing strategy 13 7
Quest ions for marketers
Key questions for marketing managers related to this chapter are:
• What approaches can be used to create digital marketing strategies?
• How does digital marketing strategy relate to marketing strategy development?
• What are the key strategic options for digital marketing?
Links to other c hapters
• Builds on the evaluation of the Internet environment from Chapters 2 and 3
• Links to different elements of the marketing mix as part of digital marketing strategy, as discussed in Chapter 5
• Chapter 6 describes customer relationship management strategies and online segmentation, which are vital for strategy development
• Chapter 8 links to goal setting for digital campaigns and strategies for developing the right communications mix
• Options for segmenting site visitors through web analytics systems are covered in Chapter 10.
( Introduction ~ '-- -------~~
Thjs chapter begins by considering an appropriate process for developing a digital marketing strategy, and then looks at the followi ng aspects of strategy development:
1 situat ion rev iew (draw ing o n o ur coverage in Chapters 2 and 3); 2 goal a nd objective setting; 3 strategy fo rmula tio n.
Figure 4.1 provid es a n overview of digita l marketing strategy development. The internal influences incl ude to p-level business objectives, which inAucnce marketi ng strategy and ul ti- mately provide di rect ion fo r the digital marketing strateg)( Key external influences include the market st ructure a nd d emand, com peti tor strategies and opportunities a nd threats, in particular those enabled by new digital technologies (e.g. mobile marketing and social media, virtual reality, Anificiallnrelligence) and marketing tactics (e.g. use of search, adver- tising, personalisation and messaging) . Methods for monitoring the external environment to anticipate external opportunities and threats and competitors' actions have been intro- duced in Chapters 2 and 3.
138 Part 2 Digital marketing strategy development
Essential digital skills Digital strategy development
Digital marketing strategy Definition of the capabilities and strategic initiatives to support marketing and business objec tives an organisaton should deploy to harness digital media, data and marketing technology to increase multichannel engagement with their audiences using digital devices and platforms.
Of all the topics in this book, strategy is the most difficult to develop your skills without direct experience of different sectors. But, by considering examples of strategy develop- ment by pureplays and existing businesses of different sizes in different sectors, you will be able to generate ideas for digital disruption that other organisations have used that could apply in your sector. We recommend you develop these skills:
• understanding digital revenue and business models (which we first introduced in Chapter 2);
• understanding how to assess aud ience demand for services in a sector and the potential for a business to attract new customers at an acceptable cost per acquisition.
Practical ideas to boost employability by showcasing your interests and experience include:
• using the Business Model Canvas Framework, (businessmodelgeneration.com) to summarise business models for the examples in this chapter or companies you are familiar with from your work experience;
• using the tools for assessing consumer demand for digital services introduced in Table 2.1 -for example, using the Google Ads Keyword Planner to assess the cost and volume of attracting visits through paid search or Facebook IQ for increasing awareness using Facebook advertising;
• understanding the VQVC objectives explained in this chapter by accessing Google's Demo account for their retail store (you can find it via Google).
To audit your d igital marketing skills across the RACE planning framework, use the Smart Insights Skills Assessment tool available at: http://bitly/smartdigiskills.
Additio na lly, we exami ne t he range of o pti ons avai la ble for organisations t o d isrupt through digital media, data a nd techno logy and that digit al marketing strategy often requires a lon g-t erm roadmap. In m any larger organisations t his is developed as part of a digital transformat ion programme s ince it is not practical to implement the change required within annual planning cycles more typical of marketin g in smaller and mid -size organisat io ns.
F undamentall y, a digital marketing strategy sho uld provide co nsistent direct ion for an organisation's online marketi ng acti vi ties and channel integration . The aim is to integrate di git al with o ther market ing act ivities and ultim ately support its overal l bus iness objectives. D igital marketing strategy ai ms a re simi lar to the ai ms of trad it io nal marketing strategies to grow a bus iness t hrough customer acq u isi tion and retention or to achieve commun ica- tions goals of no r-fo r-profit organisat ions. O u.r defin ition o f digital strategy developm ent emphasises the need to deploy digital media, data and technology integra ted with tradi tional ch a nn els t o ach ieve a udie nce engagement goals to su p port ma rke ting o bjectives (see Cha pter 1 where we defi ne the '5Ds of digit al marketing') .
Understanding the impact of digital disrupters
Digital disruption Innovations in digital media, data and marketing technology that enable a change to a new basis for competition in a market or across markets.
Digital stra tegy is ultimately driven by innovation in digital media, d a ta man agement and techno logy. Th is digital disruption enables new entra nts to a market , such as those show n in Table 1.1, and agi le existing businesses to deploy new business models and revenue models based o n digital media, data and techno logy. T he best-known examp les of disrupters are
Chapter 4 Digital marketing strategy 139
Amazon (retail ), Airbnb (accommodation), TripAdvisor (travel), Uber and DeliverooTM (personal transportation and food delivery).
The raft of new digital technologies and consumer devices regularly launched at consumer trade shows such as CES (https-J/www.ces.tech/) and digital business events such as CeBIT (https://www.cebit.de/en/about-cebit/) show that digital disruption is here to stay. Innovation from the main digiral platforms rhar consun1ers use ro inreracr and selecr products, such as Apple, Amazon, Coogle, Facebook , !nstagram, Twirrcr and Pinreresr, also provide options for disruption. For example, Amazon (Machine Learning at Amazon Web Services) and Coogle (Coogle Cloud Machine Learning at Scale) have recently launched low-cost Artificial Intelligence solutions that can be deployed by businesses across sectors to achieve digital disruption.
@ gital marketing strategy as a channel marketing strategy _] Channel marketing strategy Defines how a company should set specifiC objectives lor digital channels and how they integrate with traditional channels, incudlng web, mobile and social media, and vary its proposition and communications lor this channel.
Customer touc hpoints Comrru1ications dlannels With which companies onteract cimclly With prospects and custornets. Tradtiooal touchpoints include lace to face (n-store or With sales representatives). phone and mail. Digital touchpoints include web services, ernaU and, potentially. mobile phones.
For existing businesses, digital marketing strategy is a c hannel marketi ng s trategy, which defines how a company should set channel-specific objectives and develop differentia{ advan- tage whil e at d1e same time considering how ch::mncls should inregrate. The key aim is to use digital channels ro enable companies and organisations to stand out from the competi - tion when com.mw1icating with relevant target audiences. Digital chan nel strategy has rwo components - many may see ir simply as a digital communications strategy (reviewed in Chapters 6 to 9), but it should also define changes to the proposition enabled by digital channels {reviewed in Chapter 5 on rhe marketing mix), including product, pricing, place, promotion and changes to customer service.
The strategy determines the strategic significance of digital channels relative to oilier communications chatmels used to communicate directly with customers at different c us t o mer tou c hpoi nts . See Figure 1.1 and Digital marketing insight 4.1 for further discussion of customer touchpoims.
Overall, the way people shop is changing as a result of the interventions of digital tech- nologies and social media. Consumer decision making has become more complex and as a result the shopper's path to purchase can mean that they not only encounter all of the tra- ditional (pre-Internet) purchasing cues bur this is also integrating with a range of new
Figure 4.1 Internal and external influences on digital marketing strategy
Market structure and
demand
• • • • • • • • • • • • • • • • • • • • • • • • • • • •
Business objectives and
strategy
Multichannel marketing strategy
Digital marketing strategy
Emerging opportunities and threats
Competitor strategies
Key
0 Internal influences 0 External influences
140 Part 2 Digijal marketing strategy development
Digital marketing insight 4 .1 Retail digital channels and touchpoints
Possibilities opened up by a-commerce sparked new thinking about how computer networks might facil itate and increase trade in consumer markets. Retailers have devised new operational strategies that incorporate their operations and d igital technol- ogy to develop different approaches and this has led to a prol iferation of touch points to engage consumer engagement online. For example:
• Bricks-and-clicks retailers (involves operating mainly from a physical store and developing an online e-commerce shop). The digital channel is integrated into their businesses either strategically or tactically as a marketing tool or a sales channel. In the UK, the majority of major high-street brands use this type of approach, including: Next.co.uk, Sainsburys.co.uk, topman.co.uk and specsavers.co.uk.
• Clicks-and-mortar retailers (involves online retailers developing a physical store). For example, Oakland Furniture™ started with an eBay shop, which was so successful the company started selling through physical stores. This strategy has enabled growth and the company has become one of the UK's leading retailers (Found, 2016). Some pureplay retailers are now venturing offline, with Amazon and Zalando™ opening high-street stores following the trend set by manufacturers such as Apple and SamsungTM.
• Pureplay retailers (involves 'click-only' and operating entirely online). While these retailers do not have fixed-location stores they will have physical operational support systems (e.g. distribution warehouses), as is the case with Zalando and ASOSTM (read more in the ASOS case study at the end of this chapter). As a result, retailers are becoming increasingly more creative with how they are using the Internet and associ- ated di gital technologies to serve the needs of their customers. A high proportion of customers now use multiple channels when making purchase decisions, combin ing online research with physical store visits (Hart eta/. , 2017).
Research (Hart eta/. , 2017; Stocchi eta/., 2016), found that on a typical visit to a town centre consumers refer to multiple digital touchpoints before and during their shopping journeys (see Figures 4.2 and 4.3). Digital marketers should be aware of how their target markets respond to digital to ensure they maximise opportunities to engage customers at every stage in their journeys.
digira ll y enhanced cues such as social media mentions and comparison sites (Fulgoni, 2014). Businesses can no lo nger igno re digi tal cha nn els a nd many retai lers are fi ndi ng ways to increase their reach and number of custo mer touch po in ts. For example, in November 2014, US depa rtment sto re retailer Macy's, wit h over 850 phys ica l sto res, introd uced a sma rtpho ne app t hat enabled shoppers to search ro fi nd out whether a particu lar item was in stock in a locaJ Macy's store. Macy's claims that every do ll ar it invests in search marketing drives $6 towards a store pu rchase (Rod riguez, 2014).
Ln order to make best use of digit al channels, according to Fulgoni (2014), d1ere are three priorities for retail busi nesses:
1 Eliminate silos and create seamless experiences for consumers all the way along the path- to-purchase. Look for ways ro bring together the on- and of8ine worlds and avoid iso- lated marketing campaigns, which do nor integrate. If there is any friction along the journey a shopper is likely ro defecr ro another supplier (e.g. if a retailer sells products at differem prices online ro in-srore).
2 Increase opportunities to digitally interact br undersranding more about their paths- to-purchase (e.g. provide incemives along the way rhrough digital advertising and mobile promotions) .
3 Analyse and measure consumer behaviour at all rouchpoinrs in order to develop deep and insightful undersranding of what is driving shoppers' choices and purchase decisions.
Chapter 4 Digital marketing strategy 141
Figure 4.2 Typical shopper behaviour before a town-centre shopping trip
Digital access BEFORE town-centre v isit
Checking TC w ebsite 1-----'1
Getting directions 1---------'1
Checking what's on ~---------'1
Finding a store 1--------- --'1
Click and collect 1-------------,1
Checking goods availability ~--------------'1
Price comparison 1---------------,1
Product preview 1----------------.JI
Product search I
0% 10% 20% 30% 40% 50% 60% 70% 80%
I checked out a few restaurants and an idea where we could walk in town
I went online to reserve an Item I wanted to get. I did this to make sure they had it in stock
I saw a deal on a billboard and looked into it when I got home .. . It's my local town centre and I visit often but made me realise I can find deals in shops and not just > the internet
%of CATI responses I used the internet to research gift ideas and availability
Sotxce: Hart et a/. (2017)
Figure 4.3 Digital access during town-centre visit
Digital use DURING town-centre j ourney
M obi.le use in TC shopping?
49'Hi 51 'Hi
To look on diScount voucher webs1tes and get voucher cod"" far discounts
'
To compa111 prices and as a barpaining IDol far discounts to show the prices
Price oornpenson to SCI8 ill can get il any t:htMf»r on/ole
Socrce: Hart et al. (2017)
Purpose
e Checking what's on J
~ Checking TC website p
~ Previewing products p
VouchetS/ofters ~=1-. Check opening times 1
Click and collect 1----,1
Finding a s tore ~==I~ Getting directions 1
The town centre map
Mainly bus tim"" and occasiooall)' for finding a store if I con 'I lind it
Only as a phone but not to access online
Checking availability
Searching for products ~~~~~~~~=-~ -~/:::::::::=~ Phone call!ext 1------1-/:...._ ___ -.JI
Facebool</email l-----+ - -----,1
tO'Hi 15'Hi 20% 25'Hi 30'Hi
1 4 2 Part 2 Digital marketing strategy development
Multichannel marketing strategy Defines how d~ferent marketing channels should integrate and support each other in terms of their proposition development and communications based on their relative merits for the customer and the company.
It is nor only retailers that make use of multiple channels to engage their customers - airlines (Bri tish Airways™), rail companies (Virgin Trains™), pubs and restaura nts GD Werher- spoonsTM) use virmal channels (apps, webs ires, email marketing) to integra te the physical cus- tomer experience with the digital to deliver services and communicate with customers.
So, the focus of digital marketing strategy is decision s about how to use digital chatmels to support ex:isr.i ng marker.ing strategies, how ro exploi t its strengths and manage irs weak- nesses, a nd to use it in con jw1ction wi th o ther channels as parr of a mult ichannel marketing strategy. T h is should define how traditional market ing channels integrate with digital and support each other to meet co rp orate and marker.ing visions and goals. Indeed, Keith Weed, head of commun ications at Unilever™, says 'we a re no longer doing digital marketing, but marketing in a digita l wo rld ' (Weed, 2017) .
The scope of digital marketing strategy
Although enhancing website experiences d1at are effective for mobile and desktop users will be a central part of the strategy, digi tal marketers should also examine broader issues of how to:
• use marketing automation tools for customer relat ionsh ip development (as d escribed in Ch apter 6); these may include email, mobile and web-based person alisarion based on CRM databases;
• develop the overall custo mer experience across multiple channels (as described in Chapter 7 in the section on cusromer experience m anagement (CXM), including using structured experiments such as AB testing using the range of martech (as expla ined in Chapter 10);
• maximise the results fro m partnering and advertis ing with o nl ine intermedi aries such as publishers, a.nd influencers such as bloggers (as described in Chapters 8 and 9);
• harness social media m arketing, both th rough use on its own site through u ser-genera ted content and th rough paid ads w ith in the mai n social n et works such as Facebook, Instagram , Linkedln and Twitter (as described in Chapter 9).
Strategy development may also involve redesigning business processes to integrate with partners , e.g., suppliers a nd distri butors.
As the Internet a nd digit ally enha nced t rading environments are mo re widely a dopted, the scope fo r redesigning business processes extends even further. Marketers not onl y need to look for op portunities to u se tedmology to enh ance their offer but must also ensure they protect thei r comper.itive positioning. See Digital marketing insight 4.2 a bo ut DHL and Sains bury's Argos support ing a mul t ichannel with a t wo -person approach .
Digital marketing insight 4.2 DHL and Sainsbury's Argos support multichannel
Selling bulk consumer goods online (e.g. furniture, k itchen appliances, washing machines, sporting treadmills) raises challenges. But Sainsbury's Argos™ in collabora- tion with DHL have turned this into an opportunity. In the past the problem was having only one person driving the delivery vehicles, so on arrival at the customer's home mov- ing the goods into place was often difficult, especially for properties that were not on the ground floor. The rise in online sales meant a solution was required; the answer: the two-man home delivery service, fully integrated across the supply chain. By having two people involved in the home delivery, DHL has seen an annual growth in demand of 6.5 per cent, which is above the retail sector average of 2 per cent for these types of goods (Harthorne, 2017). Additionally, this new approach has increased customer satisfaction and levels of service, and increased the speed so that next-day delivery can be offered to 95 per cent of the UK. The delivery services are supported by a mobile app and live chat via the Argos website.
Chapter 4 Digital marketing strategy 143
Figure P.l in the Preface suggests the range of digital marketing activities that must be managed as part of a digital marketing strategy, strucrured around the customer lifecycle defined as the four steps in RACE Planning (Smarr Insighrs, 2015). The figure shows that the operational activities that need robe implemented and managed as pan of strategy can be usefully divided imo those focusing on (1) customer acquisition, (2) customer conversion, proposition and experience development, and (3) customer retention and gcowth.lmproving the capability to execute many of these activities will be decided upon through the review process of creating a digital marketing strategy. An ourput from the digital strategy will be a series of strategic digital marketing initiatives in the areas of customer acquisition, conver- sion or retention, such as those shown in Table 4.1. These initiatives will typically be priori- tised and placed as parr of a long-term e-commerce 'roadmap' defining required developments over a longer period, say one to three years.
Table 4 .1 Summary of typical focus for main types of strategic digital marketing initiatives
Type of digital marketing strategy initiative
New customer proposition (product and pricing)
Customer acquisition
Customer conversion and customer experience initiatives
Customer development and growth strategic initiatives
Social media and, content marketing
Enhanced marketing capabilities through site infrastructure improvements
Resourcing and governance strategies
Commentary
Innovative website features digital communications related to new products or services that will generate revenue
Innovative marketing designed to enhance digital capability and aimed to attract new customers
Innovative features that add functionality and increase conversion rates and average order values. Strategic initiatives aimed at improving the customers' brand experience
Investments to improve the experience and delivery of offers to existing customers
Broader application of social media for acquisition, conversion and retention
These typically involve 'back-end or back-office features' that won't be evident to users of the site, but will help in the management or administration of the site
Changes needed to marketing management given the increased importance of digital media and technology
Examples
HSBC Bank PLC1 M introduced new financial calculators to drive sales of loans, credit cards and savings accounts
Content and inbound marketing deployed by HubSpotrM to achieve a successful stock-market flotation in the US including: search engine optimisation (SEO) pay-per-click (PPC)
Co-marketing and influencer marketing Affiliate marketing and aggregators more
relevant for transactional businesses
JD Wetherspoons Order & Pay app Customers can now find a table, order and
pay on their phone; food and drinks are delivered directly to the table. No queuing at the bar or waiting to pay. Reducing barriers drives sales
Volkswagen ™ is increasing sales and customer conversion through its digital ecosystems. MyVolkswagen app links customers to their car, providing servicing updates and delivery information; Car-Net connects smartphones and watches to navigation and in-car security; Volkswagen Connect gives driving Information, charging updates and car location capabilities
Alrbnb used lnstagram and celebrities such as Mariah Carey and Lady GaGa to act as influences for the acoommodation platform
CAM or personalisation Content management system Performance improvement - improve
management information, web analytics systems including systems for multivariate and AB testing
Improve customer feedback facilities
Process change Skills development Team structure
144 Part 2 Digital marketing strategy development
Importance of integrated digital marketing strategy and digital transformation
Digital transformation A staged proganvne of business ~ts to people, processes and tools used for ntegrated oJglal mar1<etJng to maxmise the potential contri:Jubon of digital technology and meda to business growth.
Digital marketing is becoming increasingly pervasive across every aspect of an organisation's activities, but there are many aspects of managing digital media and technology to consider when seeking to integrate digiral marketing across an organisation:
• gailrilrg buy-i11 and budget consistent with audience media consumption and value generated;
• conflicts of ow11ership and tensions between a digital ream and other teams such as traditional marketing, IT, finance and senior management;
• coordination with different channels in conjunction with reams managing marketing programmes elsewhere in the business;
• managing and integrating customer information about characteristics and behaviours coll ected online;
• achieving consistent reporting, review, analysis and follow-up actio ns of digital marker.ing results throughout the business;
• structuring the specialist digital team and integrating into the orga ni sati o n by changing responsibilities elsewhere in the organisation;
• 'time to market' for implemenr.ing new functionality on a sire; • insourcing vs outsourcingo11line marketing tactics, i.e. search, affiliate, emai l marketing,
PR; and staff recruitment requirements.
Given the scope and importance of digital marketing for many organisations, as we ex"Piained in Chapter 1, many large organisations are now implementing d ig ital transfo rma- tion programmes, which have these features:
• Gain agreement of long-term term digital marketing strategy and investment levels between relevant parts of an organisar.ion, i.e. senior management team, marketing, corporate communications/brand, e-commerceltrading, IT and data management.
• Broad scope covering resource investment for digital media, data management and marketing technology.
• Conside r changes to process, structure and skills (internal and resources) needed to implement change and agree integration of communications across traditional and digital channels.
• Review approach to insight, m easurement and improvement, e.g. agreei ng relevant KPis, dashboards to review them and use of structured experi me nts ro make tmprovcments.
• Define a road map and change programme for ituplement in g clutngcs.
Ultimately, the transformation plan should integrate all of their st rategic plans inro the o rganisation's overall long-term business plan. Figure 4.4 shows a planning hi erarchy for an organisation , from a corporate or business plan. The figure shows how the digital marketing plan supports other strategic and tactical initiatives. (Sec Chapter 8 for furrher discussion of these techniques.) We see a specific digital marketing plan as a temporary, imerim tool to support digital transformation by defining the major changes needed for processes, resourcing, strucmrc, media investment and proposition development. Once these issues have been addressed, then digital channel activities can and should be integrated within the broader marketing and communications plans. A digital marketing speci:tlist or consultant can create a digital marketing plan to help inform and influence not only senior managers or directors and other non-marketing functions, but also to achieve buy-in £rom fellow marketers. Failure to plan bow to manage digital channels can lead to the problems shown in Table -L 2, which can be reduced if a digital marketing strategy and transformation plan is in place to manage the problems. Activity 4.1 explores the benefits of a planned approach.
Chapter 4 Digital marketing strategy 145
Figure 4.4 Hierarchy of organisation plans including digital marketing plans
Step 1. Annual busines s plan
Step 2. Annual marketing plan
Step 3. Annual communications plan
Campaign 1 II Campaign 2 II Campaign 3 II Campaign 4 E-campaign E-campaign E-campaign E-campaign
component 1 .. n component 1 .. n component 1 .. n component 1 .. n
Always -on digital marketing activity - search, social and email marketing
Digital marketing plan
Table 4.2 Digital marketing planning failures and solutions
, Potential failure or problem
Underestimated customer demand for online services
Intense competition from existing and new market entrants who may spark digital disruption in sector through new business or revenue models
Duplication of resources
Insufficient resources and capabilities
Relevant customer data not collected or uitlised
Lack of control
Lack of senior management support
Potential solution
Research demand, set objectives, allocate sufficient resources
Analyse the market, especially the intensity of rivalry, anticipate competitive responses, plan a clear market entry strategy or potential changes to business and revenue models
Improve internal communications to avoid different parts of the marketing organisation purchasing different tools or different agencies for performing similar online marketing tasks
Ensure budget and specific specialist digital skills are available to support the strategic initiatives including 'always-on' activities to continuously engage audiences using search, social and email marketing
Research to ensure best possible knowledge of target customers; integrate customer data into existing systems
Measure and analyse regularly to take corrective action to ensure achievement of objectives
Ensure support for a long-term digital trans- formation plan as this will be needed to drive major strategic initiatives
146 Part 2 Digital marketing strategy development
Activity 4.1 Benefits of digital marketing planning
Business commentators suggest that to survive it is vital to have a 'strong digital footprint' (Forbes, 2014). Furthermore, without a d igital mar1<eting strategy, new business, brand exposure and revenues can all be significantly affected, particularly since new ent rants may encourage digital disruption within a sector.
Purpose
To consider the benefits and barriers to the adoption of d igital marketing plann ing.
Task
Imagine you are a marketing manager responsible for the development of your organisa- tion 's digital marketing strategy. Using an organisation you are familiar with , outline the barriers and potential benefits of digital marketing planning.
How to structure a digital marketing strategy
Strategy process model A framewor1< for approaching strategy development.
Marketing planning A logical sequenoe and a series of actMties leading to the setmg of mar1<eting objectMlS and the forrT1Uation of plans for actieWlg them.
M ichael Porter (2001) sugges ted the Internet has he ightened rhe importance of stra t egy, bur he encouraged business ro be cautious and suggested where businesses should focus when developing their strategy. H e suggested six principles rhat could help to sustain a distinctive strateg•c posmon:
1 Start with the right goal, which is grounded in real economic value. 2 Defi ne a value proposition, \vhich is unique bur, importantly, deliverable. 3 Do things differently; create a distinctive value chain. 4 Be prepared to make trade-offs, tailoring a fi r m's activities ro outperform rivals. 5 Create a fit between what tbe company does, where ir wanrs ro be and the resources available. 6 Establish continuity. Planning decisions follow the disrincth·e position set out by rbe
original goals.
T hese principles remain fundamental ro how ro define value rhrough a digital marketing strategy. More recently, he has recommended thar innovative technologies are forcing co m- panies increasi ng ly to ask rhe questio n 'what business am I in?' (Porter a nd H eppelmarm , 20 L4) as com peti tio n intensifies due to increased da ra processing power and a lmost u niversal con nectivity. The o ther aspen of a digital ma rketing strategy rhat Porter d idn 't consider since it is mo re tactica l, is how ro improve digir:-~1 ma rketing com muni catio ns capa bilities. T his requ ires prio ritisation of activities, s uch as th ose exp lored in P:~ rt 3, to improve reach , custo mer experience, conversio n and retention.
Ma rketi ng p lan ni ng a nd st rategy comprises a co mplex and resource-i ntensive sel of pro- cesses that can deliver great rewards if full y embraced Uobber :~nd Ellis-Chadwick, 2016) . A strategy process model provid es a f ra mework thar gives a logical sequence to fo llow to ensure inclusion of all key activi ties of strategy development and implementation. In a marketing context, t hese stra tegy development and implemcnt:ltion activities a re coord i- n:Jted through a marketing plan , and the process of creating this is know11 as marketing planning . McDonald (2003) defined marketing plann ing simply as:
the planned application of mar1<eting resources to achieve marketing objectives . .. Mar1<eting p lanning is s imply a logical sequence and a series of activities leading to the setting of mar1<eting objectives and the formulation of p lans for achieving them.
McDonald (2003) distinguished between strategic m:~rketing plans that cover a period beyond the next financial year (typically three to five years) and tactical marketing plans that cover detailed actions over a s horter time period of one year or less, and this is equally
Chapter 4 Digital marketing strategy 14 7
applicable to digital marketing planning. In a similar way, we sugges t rbat a strategic digital marketing plan, ofren known in large companies as a digital transformation plan, should place emphas is on four areas:
1 Identification of changes to competitive forces in the micro-environment and macro - environmenr that w ill influence customer demand for online experiences and products.
2 Developing val ue propositions for customers using onl ine services as parr of their buying process.
3 Definicion of th e tech nology infrastructure and information architecture to deliver these value propositions as a customer experience.
4 Changes to governa nce of marketi ng activities affecting the structure, skills and systems . . . or processes m an orgamsauon.
Having a long-term roadmap to guide digital transformation activities for 18 mo nths to three years may be needed given the scale of changes to structure, skills and techno logy suggested by Figure 4.1. Equally, it is important to cons ider that digital environments are hig hl y dynamic, an d opera ti o nal plans should aim ro promote st rategic agility, so shorter- term flexibility needs to be built into rl1e process. Outram (2015} argues for a 90-day plan- n ing approach where communicati ons strategy performance is reviewed.
Figure 4.5 shows an overall strategy process model for developing a digital marketing strat- egy recommen ded by Chaffey and Smith (2012). PR Smi th 's SOSTAC® Planning framework (explained ar www.prsmith.org) stands for Situation, Objectives and St rategy, Tactics, Action and Control. Cbaffey and Smith (2012) note d1at each st age is nor discrete; rather d1ere is some
Figure 4.5 The SOSTAC41> planning framework applied to d igital marketing strategy development
Where are w e now? • Goal performance (SSs) • Customer insight • E marketplace SWOT • Brand perception
How do we monitor performance? • Internal capabilities and resources • SSs + web analytics - KPis • Usability testing/mystery
shopper • Customer satisfaction surveys • Site visitor profiling • Frequency of reporting • Process of reporting and
actions
The details of tactics, who does what and when • Responsibilities and structures • Internal resources and skills • External agencies
Source: Chaffey and Smith (2012)
Situation
/ analysis '~
Control v ~ Objectives ,.----'--,
Actions ~ / Strategy
~ Tactics / How exactly do we get tl1ere? (the details of strategy) • E-marketing mix, including: the
communications mix, social networking, what happens when?
• Details of contact strategy • E-campaign initiative schedule
Where do we want to be? SSs objectives:
• Sell - customer acquisition and retention targets
• Serve - customer satisfaction targets
• Sizzle - site stickiness, visit duration
• Speak - triaJogue; number of engaged customers
• Save - quantified efficiency gains
How do we get there? • Segmentation, targeting and
positioning • OVP (online value proposition) • Sequence (credibility before
visibility) • Integration (consistent OVP)
and database • Tools (web functionality, e-mail,
IPTV etc.)
148 Part 2 Digital marketing strategy development
Prescriptive strategy The t1vee core areas of strategic analysis, strategic deYelopment and strategy implementation are linked together sequentialy.
Emergent strategy Strategic analysis, strategic development and strategy implementation are interrelated and are developed together in s more agile fashion.
overlap during each stage of planning- previous stages may be revisited and refined, as indi- cated by the reverse arrows in Figure 4.5. The elemems o f SOSTAC"' planning in rhe context of how they are described in this text with respect to digital marketing s trategy are:
1 Situation analysis means 'where are we now?'. Planning activ ities in\'olved at this stage include performing anlnterner-specific SWOT analysis, and reviewing the different aspects of the micro-environment (Chapter 2) including customers, competitors and intermediaries. Situation analysis also involves review of the macro-environment (Chapte r 3).
2 Objectives m eans 'where do we want to be?'. This can include a vision for digital chan- nels, and also specific numerical objecti\res for the digital channe ls such as projections of sales volumes and cost savings (see Chapter 9).
3 Strategy means 'how do we get there?'. Strategy summarises how to achieve the objectives for the different decision points explained in this chapter, including segmentation, target- ing, proposition development, including the elements of the marketing mix (described in more detail it1 Chapter 5) and CRM (described in C hapte r 6).
4 Tactics defines the usage of tactical digital communicatio ns tools. This includes specific detai ls of th e marketing m ix (Chap te r 5), CRM (Chapter 6), experience (Chapter 7) and d igital commun icatio ns (Ch apters 8 and 9) .
5 A ctions refers to action plans, change management and project management skills. We refer to some of the issues of modifications to organisationa l roles and structures later in this chapter.
6 Co1:trollook.s at the use of management information including we b analytics to assess whether strategic and tactical objectives are achieved and how improvements can be made to e nhance results further. This is closely related ro goal sening as described in this chapter (and in Chapter 8), and also the coverage of web analyrics and tracking (in Chapter 10).
\Y/e will now look at each of the steps involved in strategy development. Arguably, due to the speed of developmem of digital technologies, there is a need for a
more responsive, more agile approach to strategy planning (as discussed at the start of Chapter 3) . Rather rhan a top-down, prescriptive s trategy development approach, similar to Figur es 4.1 , 4.4 and 4.5, a more agile, emergent strategy app roach is required, where strategic analysis, strategic development and strategy implementation are interrelated. In reality, most organisational strategy developmem and planning processes ha\'e elements of prescriptive and emergent strategy reflecting diffe rent planning and stra tegic review rime- scales. The presc riptive elements are the structured annual o r six-monthly budgeting process o r a longer-term three-year rolling marketing planning process. But on a s horter timescale, organisations naturally also need a n emergem process to enable stra tegic agili ty and the ability to rapidly respond t o marketplace dynam ics.
( Situation analysis
Situation analysis Collection and review of information about an organisation's intemal processes and resouroes and external marketplaoe factors in order to inform strategy definition.
The situation analysis in classic marketing planning is an audit of current effectiveness of a firm's activities. \Y/e reviewed issues to consider in a digital marketing audit in C hapter 2. 1l1e analysis involves a review of internal and external factors (for example, the marketing e nvironment) rhar have implications for strategy development. More spcci ficall>~ situation analysis involves:
• Assessment of internal capabilities, resources and processes of rhe compa ny and a review of irs activity in the marketplace. Consideration of the immediate competitive eJl\rironment (micro -environmem) including customer de mand and behaviour, competitor activity, marketplace structure and relacionships with suppliers and partners. (Micro-e nvironment factors were reviewed in Chapter ? .)
• Investigation of tbe wider environment in which a co mpany operates, including economic development, government regulations, lega l issues and taxation, social and ethical issues, e.g. data protection and consumer privacy. (Macro-envi ronment factors were reviewed in C hapter 3.)
Chapter 4 Digital marketing strategy 149
Figure 4.6 A digital marketing capability model
FIVE. Optimized FOUR. Quantified
THREE. Defined
DlgjrM TWO. Managed
~~ ONE. Initial lkaNos-algi>Od Agilo -· Defined vision- -oactl Pt IOrilised madcebi 1Q -- 51111-oy end "**""" A. s•atogic Awoech Nostnllegy actMties 8.- VolumoMlasedt<Pis Ouality-based KPis v--KPis ~-t<Pis lmptovomont Not<Pis
No dashboards 'last dick' attnbudon Weighted an-
ConlnJous CRO """'- so ....... daslllloatds NJI>oc:CAO c.~
l.knilod Verbal SllppOrt. bot Sponsashlp and Acove chom.,.,..ng ond Integral part ol
Bvy-ln Inadequate reso.ndng Increased lnvestmenl -IOII'ialt lnv•lmont slralegy development
O. R~Ing Core sklls centralised or CentraltSed hub and £poke Dtctntralisation ond Balanced blond o4 and No spoclllc sldlls
agencies Oedtcat ed l'MOIXC8S reskMtong mari<etlng Sl<llls Strvcture
E. OaUl Limited I no Separate data tools Partially lntograted Integrated CRM l)'lloms Flo'"ble -roach to and
lnlr•Slructure cu~omer database and IT servloes syst&mS and data Ord 36Q• data IOIXOIS optimise resources
F. lntogmted Core push act:Nitl&S lnl&gmlod lnbOLild
Integra ted, personaUsocl. Me<Ja optimised IO< ROt Customer Not Integrated synchroolsod approach
Pald· Owlltd·Eomod and to ,.,.;mlze Ct. V
Communk:al~s 1114dl<l
G. lnlogratod Desktop a nd mobile
Partially personalised In tegrated. personalised. Full contexual personalised Customw Website not lntegmted desktop and mobiJa web. mob<lt . tmall ond experiences and
Expertence support. not ~allsed experience sociall114dla recommendations
'l.oggord' ' Oevoioping ·Competent average ·~or average 'Mar1<81 teacltng ~ ~tty· coptblllty' capability'
\.._
Source: Smart Insights (http://bit.ly/smartbenchmarking)
'
Activity 4.2
Dave Cha ffey, writ ing for Sma rr Insights, has developed a modern stage-tuodel framework fo r assessing internal digital marketing capabilities in larger organisa tions (Figure 4.6). This was inspired br the capability manuity models devised by the Carnegie Mellon Softwa re Engineering Instirute (www.sei.cmu.edu) ro help organisations improve thei r software devel- opment practices.
Now complete Activity 4.2 , wh ich illustrates t he type of analysis needed for a digi tal marketi ng sitllation analysis.
Situation analysis for an a-commerce operation
Purpose
To consider which elements of a situation analysis could help to avoid digital strategy failures (see Table 4.2).
Activity
1 Imagine you are a newly appointed digital marketing manager and you have been asked to present your views on how the company can improve its use of digital channels. Select an existing company to focus on and give context to this activity.
2 Map out how the company is currently using digital channels. 3 Make recommendations for how the company can increase and expand its use of
digital channels. 4 Review the potential failure points in Table 4.2 to ensure that your answer to 3 does
not expose the company to the risk of failure.
150 Part 2 Digital marketing strategy development
Resource analysis Review of the technological, financial and human resources of an organisation and how they are utilised in business processes.
Internal audit for digital marketing
An internal audit involves reviewing rhe cUirenr contribution of rhe cligital marketing activities within an the organisation. More specifically, this consists of assessing effectiveness, perfor- mance measUiemenr and reviewing web analytics. There are clifferent levels to consider:
• Business effectiveness. Financial or commercial contribution from digital channels, includ- ing online leads, sa.les and profit and offline-influenced leads and sales and how well it is supporting business objectives. The relative costs of developing and maintaining digital experiences and communications will also be reviewed as part of a cost-benefit analysis.
• Marketing effectiveness. Review leads (qualified enquiries); sales; customer retention, satisfac- tion and loyall:)~ including lifetime value; online marker (or audience share); brand enhance- menr; customer service. For large organisations, these measUies can be assessed for each of the cliHerent markers a compa11y operates in or for product lines produced on d1e website.
• Digital marketing effectiveness. Specific measures are cligiral meclia against the volume, quality, value and cost (VQVC is explained in more depth later in this chapter) of visits to the website, mobile and social plarforms covered. Evaluation also involves reviewing audience profile, experience and customer sarisfication.
According to Chaffey and Smith (2012), key performance indicators (KPis) for an online presence include:
• unique visitors: the number of separate, individual visitors ro cl1e sire; • total numbers: of sessions or visits to the website; • repeat visits: average number of visits per inclividual; • dUiation: average length of time visitors spend on the site; • conversion rates: the percentage of visitors converting to subscribers (or becoming
cus romers); • attrition rates: through the online buying process; • chUin rates: percentage of subscribers lapsing or unsubscribing.
Customer research
Research into customers should not be restricted to quanritative demand analysis. Varianini and Vaturi (2000) point out that qualitative researcl1 about existing customers provides insights that can be used to inform strateg)c Research suggests rhar using user profiling to capture rhe core characteristics of target customers involves more than using demographics. It also includes customer needs, attitudes experiences and abilit ies of using digital tedmologies and the Internet (Doherty and Ellis-Chadwick, 2010). A customer's profile can strongly influence where, when ru1d how they engage wiili cligital channels and also has important digital marketing implica- tions. See Digital marketing insight 4.3 about consumer profiles and digital targeting options.
Resource analysis
Resource analysi s involves assessing cl1e capabilities of rhe organisation to deliver its digital services. Resource analysis should include:
• Financial resources. The cost componenrs of running an online presence, including sire development, promotion and maintenance. Mismatch between current spend and required spend to achieve visibility within rhe online marketplace should be reviewed using tools such as Hitwise and Netratings, whim ca11 be used to assess online marker share.
• Technology infrastructure resoUices. Availability ru1d perfonnance (speed) of website and service-level agreements wid1 the ISP. The need for cliHerenr applications to enhance the cus- tomer experience or increase conversion rates can be assessed (e.g. on-site search, customer review or customisation facilities). The infrastructure to manage sires such as content man- agement, customer relationship management and web analytics should also be considered.
Chapter 4 Digital marketing strategy 151
Digital marketing insight 4.3 Consumer profiles
We can break consumers' profile data down into two distinct sub-categories: classifica- tion variables and character variables.
Classification variables are those personal attributes that tend to remain static throughout an individual's lifetime or evolve slowly over time. These variables are parti- cularly useful for marketers as they can help to identify particular consumers and target groups. According to Jobber and Ellis-Chadwick (2016), profile segmentation variables can be used to group consumers together in a meaningful way so they can be reached by suitable media communications. See Table 4.3 for a list of classification variables and possible implications for online target marketing.
Table 4.3 Consumer profile: classification variables
Profile variable
Age
Education and literacy
Employment status
Gender
Geography
Household size
Household type
Income
Mobility
Race and ethnicity
Online marketing impac t
Age can affect levels of access to technology, computer literacy and use of digital channels. Targeting by age is available in Facebook.
Influences how digital channels are used, e.g. university students find it is not only useful for shopping but indispensable to support their studies. Targeting also possible in Facebook.
Employment places time constraints on online shopping behaviour, i.e. when and where individuals can access online shopping channels.
Originally, male consumers made more purchases and bought higher ticket items online than females. Now there is a greater balance and higher penetration of use across populations.
Location is an important consideration: where people live can affect the potential size of the online mari<et. Populations in rural and remote locations are increasingly turning to online for their purchasing needs. Gao-targeting available in all social networks and ad-networks.
Household size has the potential to affect the number of people involved in purchasing decisions and the direction of influence. For example, research has shown that in Europe teenagers can have a strong influence on purchasing based on their levels of computing competency.
Household type has the potential to affect product and service requirements; major shifts towards single-person households have led to a shift in purchasing patterns and times of purchasing. Online, such households can create logistical difficulties when delivering bulky and perishable goods.
Income affects purchasing power and also influences whether individuals have access to the Internet. In the UK, AB, C1 and C2 socio-economic groups are significantly more likely to have access to the Internet and to subsequently shop online than groupings D and E. Income is positively related to a tendency to shop online.
Main retailers use value-based targeting based on past and Mure predictions of spend.
Mobility affects channel access; less mobile targets may be encouraged to shop online. This also applies to macro-populations, which are poorly served by public and private transport.
Race and ethnicity affects access to technology and economic circumstances. In the US, the number of African Americans with Internet access is increasing to over 50 per cent but this sector of the population still lags behind the Caucasians and Hispanics.
1 52 Part 2 Digital marketing strategy development
Figure 4.7 Character variables, beliefs, attitudes and shopping intentions
Form
Beliefs about the Internet
Attitudes towards perceived
outcomes of online shopping
Influence
0 0 c:::> Intentions shop online
Ch aracter Variables Innovative, computer-
literate individual !::!!:.2:- who is confident and
enjoys shopping online and offline
Feedback
Online shopping experience
Character variables are less straightforward to understand and identify for marketing purposes as they comprise any attributes of a consumer's perceptions, beliefs and attitudes, that might influence online behaviour, e.g. innovativeness, enjoyment, skills and experience and emotions. Character variables are also more likely to develop, change and be significantly modified over time by online shopping experiences than classification variables. For example, if a consumer has negative beliefs about, say, privacy and security of online transactions, which are due to lack of computer skills, these beliefs are likely to shape negative attitudes towards the Internet and reduce the
intention to shop online. Conversely, if a consumer believes the Internet is, say, easy to use, they are more likely to have a positive attitude towards the idea of online shopping and ultimately have an increased intention to shop online. Each stance may be continu- ally reinforced by positive or negative feedback from online shopping experiences. See Figure 4. 7 for a model of how character variables interact.
Digital channels also provide good insight on consumer behaviour, such as the con- tent they consume, which can be used to deliver personalised messages on a website and in emails.
• Data and insight resources. The qualiry of data and tools to analyse rhe performance of digital channels and consumer characteristics and behaviour including multichannel attribution to decide on the impact and effectiveness of different digital media channels and touch points.
• H uman resources. Availability for an e-retailer includes service and fulfilmenr resources for answering customer queries and dispatching goods. For all companies there is a chal- lenge of possibly recruiting new staff or re-skilling marketing staff ro manage online marketing activities such as merchandising, search engine marketing, affiliate marketing and email marketing. Structure - what are rhe responsibilities and control mechanisms used to coordinate Internet marketing across different departments and business units?
• Stre ngths and weaknesses. SWOT analysis is referred ro in rhe next section, where generic strengths and weaknesses are summarised in Figure 4.8. Companies will also assess their distinctive competencies.
Chapter 4 Digital marketing strategy 153
Competitor analysis ]
In Chapter 2 we showed that competitor analysis or the monitoring of competitor use of digital marketing and e-commerce ro acquire and retain custome rs is especially important in the dynamic online marketplace. This enables new services to be launched, media in\'est- ments changed and prices and promotions changed much more rapidly than through print communications. Benchmarking is intended ro:
1 review current approaches to digital marketing ro identify areas for improvement; 2 benchmark with competitors who are in rhe same market sector or industry and in
different sectors; 3 identify best practice from more advanced adopters; 4 set targets and develop strategies for improving capabilities.
Intermediary analysis
Situation analysis will also involve identifying relevant intermediaries for a particular mar- ketplace and looking at how the organisation and irs competitors an: using the intermediar- ies to build traffic and provide services. For examp le, an on line retailer s hould assess where its target customers migh t encounter their competitors, or know whether competitors have any special sponsorship arrangements or microsires created with intennediaries. Another aspect to consider is the way in which rhe marketplace is operating: ro what extent are com - petitors using disintermediation or reinrermediarion? How are existing channel arrange- ments being changed? There are now many freemium online services available to companies to understand their effectiveness in attracting and retaining new customers and competitors and intermediaries (see Chapter 2 for further discussion).
Assessing opportunities and threats
A SWOT analysis is a useful way ro summarise the external opportunities and threats and is a core activity for situation analysis. The results of a digital channel-specific SWOT analy- sis (internal Strengths and ·weaknesses and external Opportunities and Threats) should clearly highlight where actions should be taken (both short and longer term). A digital
Figure 4.8 A generic digital channel-specific SWOT analysis showing typical opportunities and threats presented by digital media
~
The organisation
Opportunities - 0 1. Cross-selling 2 . New markets 3. New services 4. Alliances/co-branding
Threats - T 1. Customer choice 2. New entrants 3. New competitive products 4. Channelconflicts
Stengths-S 1. Existing brand 2. Existing customer base 3. Existing distribution
SO strategies Leverage strengths to maximise opportunities = Attacking strategy
ST sbategies Leverage strengths to minimise threats = Defensive strategy
Weaknesses - W 1. Brand perception 2. Intermediary use 3. Technology/skllls 4. Cross-channel support
WO strategies Counter weaknesses through exploiting opportunities = Build strengths for attacking sbategy
WT sbategies Counter weaknesses and threats = Build strengths for defensive strategy
154 Part 2 Digijal marketing strategy development
Figure 4.9 An example of a digital channel-specific SWOT for an established multichannel brand showing how the elements of SWOT can be related to strategy formulation
The orgiM'Iisation
Opportunities - 0 1 Cross-selling 2 New markets 3 New services 4 Alliances/co-branding
Threats- T 1 Customer choice (price) 2 New entrants 3 New competitive
products 4 Channel conflicts 5 Social network
Sbengths-S 1 Existing brand 2 Existing customer base 3 Existing distribution
SO strategies Leverage strengths to maximise opportunities = attacking strategy Examples: 1 Migrate customers to web
strategy 2 Refine customer contact
strategy across customer lifecycle or commitment segmentation (email, web)
3 Partnership strategy (co-branding, linking)
4 Launch new web-based products or value-adding experiences, e.g. video streaming
ST strategies Leverage strengths to minimise threat = defensive strategy Examples: 1 Introduce new
Internet-only products 2 Add value to web services
- refineOVP
3 Partner with complementary brand
4 Create own social
Weaknesses- W 1 Brand perception 2 Intermediary use 3 Technology/skills (poor web
experience) 4 ~oss-channelsupport 5 Chum rate
WO strategies Counter weaknesses through exploiting opportunities = build strengths for attacking strategy Examples: 1 Countermediation strategy
(create or acquire) 2 Search marketing acquisition
strategy 3 Affiliate-based acquisition
strategy 4 Refine customer contact
strategy (email, web)
WT strategies Counter weaknesses and threats: = build strengths for defensive strategy Examples: 1 Differential online pricing
strategy 2 Acquire/create pureplay
company with lower costbase 3 Customer engagement strategy
to increase conversion, average order value and lifetime value
network/customer reviews 4 Online reputation management strategy/E-PA
strategy sh ould plan to coun t er the threa t s a nd rake advantage of the opportunities. Figure 4 .8 shows a generic app lication of SWOT. T he SWOT shou ld review the main areas of digital marketing activity: customer acquisition, conversion, retention and growth.
This 'TOWS' is a different formulation of presentation of the digital cha1mel -specific SWOT shown in Figure 4.8 and is a powerful technique since it not only indjcates the current SWOT, but can be used ro generate relevant future strategies. Often, the most rewarillng strate- gies combine Strengths a11d Opportunities or counter Threats through Strengths. Figure 4.9 gives an example of typical illgital SWOT an alytics for an established multichannel brand.
Setting goals and objectives for digital marketing
Any marketing strategy should be based on clearly defined corporate objectives, and digital marketing should be an integrated element not considered separately from other
Chapter 4 Digital marketing strategy 155
business and marketing objectives. Porter (2001) criticised the lack of goal setting when many organisations have developed Internet-related strategies. H e noted that many com - panies, responding to distorted marker signa.ls, have used 'ram pam experimentation' that is not economically sustainable. He suggests that economic value or sustained profitabil- ity for a company is the final arbiter of business success. We have found that goals and objec tives are often defined and used differently within differenr companies or parrs of a business and this can lead to confusion when creating processes to track and improve marketing performance. Typically, in businesses you sec rhat objectives are specific, they cover the SMART criteria that ensure specific targets for a time period and measure against these using sales or analyrics systems. Goals are broader aims that are informed by a vision.
When defining objectives and goals you should use clear definitions. For digital marketing you ca n define different types of performance targets and measmes, as shown in Figure 4.10:
1 Visio n . A high-level stat ement of how digita l m~ukering will contribute to the orgamsanon.
2 Goals. These are the are broad aims to show how the business can benefit from digital channels. They describe how your digita l marketin g wi ll contr ibute to the business in key areas of growing sales, communicating wirh your aud ience and saving money.
3 O bjectives. Specific SMART objectives to give clear direction and commercial targets. Objectives are the SMART targets for digital marketing, which can be used to track performance against target.
4 KPis. Key performance indicarors (KPis) are used ro check you are on track. KPls are specific merrics that are used ro track performance ro make sure you are on track ro meet specific objectives. They are sometimes known as performance drivers or critical success factors for this reason.
5 Metrics and measures. Other measures that may be referenced, but aren't typically used in high-level reporting.
As a starring point for setting specific objectives, it is useful to think through the benefits of using digital channels and how these can be converted inro specific objectives. Also iden- tifying both tangible benefits (e.g., monetary savings or revenues), which are fairly straight- forward to identify, and also intangible benefits {e.g. customer service quality), which can be difficult ro identify bur can be fundamental to the overall customer experience. Table 4.4 presents a summary of typical benefits of digital marketing.
Figure 4.10 The relat ionsh ip between vision, goals, objectives and KPis
Vision
I Goals \ L Objectives
I CSFs and KPis I Metrics and Measures \
156 Part 2 Digijal marketing strategy development
Table 4.4 Tangible and intangible benefits from Internet marketing
Tangible benefits Intangible benefits
Increased sales from new sales leads giving: Corporate image communication rise due to increased revenue from: • New customers, new markets • Enhanced brand • Existing customers (repeat-selling) • More rapid, more responsive marketing communications including PR • Existing customers (cross-selling) Cost reductions from:
• Improved customer service • Learning for the Mure
• Reduced time in customer service (customer self-service online)
• Meeting customer expectations to have a website • Identifying new partners, supporting existing partners better
• Online sales • Reduced printing and distribution costs of
marketing communications
• Better management of marketing information and customer information
• Feedback from customers on products
Online revenue contribution An assessment of the direct contribution of the Internet or other dig~al media to sales. usualy expressed as a percentage of overall sales revenue.
Allowable cost per acquisition A target maximum cost for genetating leads or new customers prof~ably.
Online promotion contribution This is an assessment of the proportion of customers (new or retained) who are influenced and reached by online communications.
The online revenue contribution
A key objective for digital marketing is the online reven ue contributio n since this gives a simple mea sure of d1e proportion of on line sales achieved in different product categories. This is a measure of the extent to which a company's on lin e presence directly in1pacts on the sa les revenue (or better profit) of the organisation. By understanding this contribution, business planners should be able to determine furure resource allocation to online channels. These objectives can be specified for different types of products, customer segments and geographic markers. For example, traditional high-street food and fashion retailer Marks and SpencerTM has over 8 million online ,risirors per week and reported online revenue &om generic search engines to be just under 30 per cent (M&S, 201 7). Bur online fashion retailer ASOS is eating into M&S's market share, so this brand should consider increasing its invest- ment in resources to boost its online revenue contribution (see Case srudy 4 for further discussion).
It is important that companies set sales and revenue goals for online channels for which costs are controlled through an allowable cost p er ac quisition . This rakes into account the cost of attracting visitors through techniques such as affiliate marketing, paid search adver- tising or display advertising, as explained in budget models presenred in Chapter 8.
For some companies (e.g. FMCG manufacturer of multiple brands Unilever), it is unre- alistic to expect a significanr direct online revenue coorribution. In this case, an indirect online contribution can be stated. This considers the Internet as parr of the promotional mix and irs role in reaching and i11fluencing a proportion of customers to purchase the product, generating trials or, in the case of a B?B company, le::tds. A compru1y could set an onli ne promotion contribution or indirect online revenue contribut ion of 5 per cent of its t::trger market visiting rl1e website or socia l media presence and interact ing with the brand (see Digital marketing insight 4.4 abom how Black Friday boosts sa les).
Setting SMART objectives
SMART is an easy -to-recall acronym that is used to assess rhe suitability of objectives. SMART stands for:
• Specific. Is the objective sufficiently detailed to measure real-world problems ru1d opportunities?
• Measurable. Can a quantitative or qualitadve attribute be applied to create a metric? • Actionable. Can the information be used to improve performance? If the objective doesn't
change behaviour in staff to help them improve perform::tnce, there is little point in it! • Relevant. Can the information be applied to the specific problem faced by the manager? • Time-related. Can the information be constrained through rime?
Chapter 4 Digital marketing strategy 157
Digital marketing insight 4.4 Black Friday, boost sales
The moniker 'Black Friday' is attributed to the Philadelphia Police Department in the 1950s, which gave this name to the day after Thanksgiving due to the mayhem that hap- pened as shoppers flocked to the high-street sales. Hearsay evidence suggests the name Black Friday was used as increased sales enabled retailers to go into the 'black' with their accounts for the first time in the year and to generate profits. It wasn't until 2010 that Amazon brought Black Friday to the attention of online shoppers in the UK. Since then this promotional discount day has gathered momentum and led to frenzied scenes in stores across the UK as shoppers fight one another to get at the best bargains. Aware- ness of this promotional event has been online but it has quickly spread to the physical
high street and this event was initially cited as affecting Christmas sales figures in a nega- tive way in the UK. The Office for National Statistics reported that events such as Black Friday promotions are bringing forward Christmas purchasing into November.
Soun:e: Based on Butler (2015); Rees (2018): ONS (2017)
With SMART objecti ves, everyone is clearer what the target is and progresses towards it and, if necessary, action can be t aken to put the company back on t arget. For SMART digital marketing objectives for an online presence such as a website or mobile app it is important to measure traffic, value and cost. Applying t he VQVC mnemonic is a technique used to rest whether businesses are using the right types of goals and measures. VQVC stands for:
1 Volume measures (of traffic)
Digi tal analyrics systems such as Google Analyt ics have specific measures for volume:
• Unique visits. T he number of individuals who visi t the site in t he specified period . • Visits. The total number of rimes the si re was accessed by different individuals. • Page views. T he total number of pages viewed by individuals.
T hese measures can be used wicl1 objectives and to monitor performance against planning models.
2 Quality measures
To understand cl1e effectiveness of the online experience, conversion measures assess the quality of the visitors and meir experiences . These measures give an indicat ion of how a visi tor has engaged wim a si te and include:
• Bounce rate. Percentage of visitors who leave immedia tely after viewing only one page. A high bounce rate is a sign of poor-quality traffic and/or experience.
• Duration. Dwell t ime, wh ich is measured as average time on page or t ime on site. • Pages per visit. Arguably more useful than dwell t ime since it shows how many pages a
visi tor views on average. Conversion rates to lead and sale are arguably cl1e most impor- tant quality measure since they show what proportion of visits convert to commercial outcomes.
3 Value measures
Value shows cl1e communications effectiveness and commercial contribution of digi tal mar-
keting to a business. Here we're looking for outcomes rhar show intent ro purchase or purchase irself. For an e-commerce site this is straight forward - we can look at measures sum as sales t ransactions and average order value. However, it's less obvious for t he many
158 Part 2 Digital marketing strategy development
non-transactional sites, like B2B sites. Here it's necessary to set up goals customised for the business in Coogle Analyrics for when user actions are completed for qualified leads. Goal value per visit. 1f you assign a value to a goal such as a download, you can then compare how different visitor sources comribure value to the site. For example, how does social media marketing compare to email, is Linkedln more or less valuable than Twiner- this is very powerful for checking your marketing investments.
• Revenue per visit. For sires with e-commerce tracking, Coogle will report revenue per visit, which enables similar analysis to that of goal value.
• Page value. If marketers review this measure for pages they can determine which pages arc prompting rhe creation of value, enabling you to improve customer journeys.
4 Cost measures
Cost includes the cost of content and experience creation and promotion- i.e. paid, owned and earned media costs. Cost per acquisition is typically used ro assess media effect iveness.
Exa mples of SMART objectives across VQVC, including those to support goal serring in customer acq uisition, conversion and retention ca tegories for digital marketing strategy, are:
• Digita l channel contribution objective. Achieve 10 per cent on line revenue (or profit) contribution within two years.
• Acquisition objective. Acquire 50,000 new online customers this financial year at an aver- age cost per acquisition (CPA) of £30 with an average profitability of £5.
• Acquisition or conversion objective. Migrate 40 per cent of existing customers to using online 'paperless' bill payment services within three years (e.g. for a bank o r urilities company).
• Acquisition objective. Increase by 20 per cent within one year rhe number of sales arising from a certain target marker, e.g. 18-25 year-olds.
• Conversion objective. Increa se the average order value of online sales ro £42 per customer.
• Conversion objective. Increase sire conversion rate to 3.2 per cent (would be based on model of new and existing customers in different categories).
• Conversio n objective. Increase percentage of online service enquiries fulfilled online by 'web self-service' from 85 to 90 per cent.
• Retention objective. Increase annual repeat new customer conversion rare by 20 per cent. • Retentio n object ive (existing customers). Increase percentage of active users of the service
(purch asi ng or usi ng of other electronic services) within a 180-day period from 20 to 25 per cent.
• Retention objective. Increase customer satisfaction rating for channel from 70 to 80 per cent.
• Growth objective. Increase new prospects recornmended by friends (vira l marketing or 'member get member') by 10,000 per annum.
• Cost objective. Achieve a cost reduction of 10 per cent in marketing communications within two years.
Frameworks for objective setting
A significant challenge of objecti,·e setting for digital marketing is that rhere will potentially be many different measures, such as those listed above, and these will have be to grouped to be meaningful and presemed on performance dashboards. In this chapter, we have al.ready seen two methods of categorising objectives. First, objectives can be set at the level of business effectiveness, marketing effectiveness and Internet marketing effectiveness, as explained in the section on imernal auditing as part of the situation analysis. Second, the 55 framework of Sell, Speak, Serve, Save and Sizzle provides a simple framework for objective setting.
Balanced scorecard A framework for setting and monttoring bUSiness perfoonance. Metrics are structured accotdng to customer issues. ontemal efficiency moosures, financial measures and ilnovation.
Efficiency Mmris.ng resources ()( time needed to complete a process. 'Doing the thng right.'
Effectiveness Meel:flg process objectives, delivering the required outputs and outcomes. 'Ool'lg the right thing.'
Performance metrics Measures that are used to evaluate and improve the efficiency and effectiveness of business processes.
Key performance in dicators (K Pi s) Metrics used to assess the perfoonance of a process and/()( whether set goals am acl'leved.
Leading perfonnance indicalO<' A measure that is suggestive of future performance and so can be used to take proactive action to shape future performance.
Chapter 4 Digital marketing strategy 159
Some larger companies will identify objectives for digiml marketing iniriarives rhar are consistent with existing business measurement frameworks, e.g. the balanced scorecard , but research has identified widespread variation in the use and level of uprake of perfor- m:mce measures (Gunawan eta/., 2008). Nevertheless, the balanced business scorecard is a well-known and widely used framework and it can be helpful as a guide. Thi s framework has been applied to IT (Der Zee and DeJong, 1999), e-commerce (H asan and Tibbits, 2000) and multichannel marketing (Bazett eta/., 2005).
Table 4.5 illustrates specific Internet marketing measures within the four main areas of organisational performance managed through the balanced scorecard . In our presentation we h ave placed objectives within rhe areas of efficie ncy ('doing rhe thing right') and effec - t iven ess ('doing the right thing') . For example, efficiency in volves increasing conversion rates and reducing costs of acquisition. Effectiveness involves suppo rting broader marketing objectives and often indicates the contribution of the online cha nnel.
Performance drivers
Specific performance metrics are used to evaluate and improve rhe efficiency a nd effective- nes s of a process. Key performan ce indicators (KPis ) are a spec ial rype of performance metri c t hat indica te the overall perfonnance of a process or irs sub-processes. An exa mple o f KPls for an online electrical goods retailer. Improving the res ults from thee-com merce sire involves using rhe techniq ues on the left of the diagram ro improve the performance drivers, and so rhe KPI. The KPI is the total online sales figure. For a traditional retailer, this could be compared as a percemage to other reta il channels such as mail order or retail sto res. It can be seen that this KPI is dependent on performance drivers such as number of sire visits or average order value, which combine to govern this KPI.
Leading and lagging performance indicators
When developing goals and measurement systems used ro review and improve performance of digital channels, iris also helpful to consider which are leading and lagging indicators of performance. Trends should be identified within these - e.g. are they increasing or decreas- ing yea r-on-yea r (often used as a good like-for-like compa ri son) - or compared to rhe previ - ous week, monrh or average for a recent period?
A leading perfo rmance indicator is a metric that is suggestive o f future performance - think of the amber preceding the green light on traffic lights on a shorr timescale. The benefit of leading indicators is that they enable managers ro be proactive in shaping future performance. There rend to be fewer leading performance indicato rs, but these can be applied toe-commerce:
Table 4.5 Examp le all ocation of Internet marketing objectives within the balanced scorecard framework for a transactional a-commerce site
Balanced scorecard sector
Financial results (business value)
Customer value
Operational processes
Efficiency
Channel costs, channel profitability
Online reach (unique visitors as% of potential visitors)
Cost of acquisition or cost per sale (CPA/CPS) Customer propensity
Conversion rates Average order value Ust size and quality Email active (%)
Effectiveness
Online contribution (direct) Online contribution Ondirect) Profit contributed
Sales and sales per customer New customers Online market share Customer satisfaction ratings Customer loyalty index
Fulfilment times Support response times
160 Part 2 Digital marketing strategy development
lagging performance indicator A measure that indicates past perfoonance. Corrective action can then be applied to improve performance.
• Repeat sales metrics. If repeat conversion rates are falling or the average time berween sales (sales latency) is falling, then these a re warning signs of furure declining sales volume for which proactive action can be taken, e.g. through a customer email marketing programme.
• Customer satisfaction or advocacy ratings such as the Net Promoter Score. If these are trending downwards or return rates are increasing, this may be a sign of a furu re decline in repeat sales since more customers are dissatisfied.
• Sales trends compared to market audience trends. If, for example, online sales are increas- ing at a lower rate than overall online audiences for a product category are indicated, e.g. through panel data, bitwise or searches in particular categories, then this is a warning sign that needs to be acted upon.
A lagging performance indicator is one where the measure indicates past performance. Lagging indicators enable corrective action to be taken. Some also identify a coincident performance indi cator, which is more suggestive of current performance. Lagging perfor- mance indicators for a transactional retail site include:
• Sa les volume, revenue and profitability. These are typically compa red against target or prev ious periods.
• Cost per acquisition (CPA). The cost of gaining each new customer wil l also be compared aga inst target. Variations in trends in CPA for different referrers (traffic sources) and between different product categories can potentially be used as leading indicators.
• Conversion efficiency metrics. For an e-commerce sire these include process efficiency merrics such as conversion rate, average order and landing page bounce rates.
These lagging indicators are used operationally on a daily or weekly basis so that perfor- mance can be diagnosed and reviewed.
Strategy formulation for digital marketing
Strategy fonnulation Genemtion, r'E!IIiew and selection of stmtegles to acneve strategiC objectilles.
Strate gy fo rmula tion involves the identification of alternative strategies, a review of the merirs of each of these options and then selecting the strategy that has the best fir with a company's trading emrironment, its internal resources and capabilities. Companies should be realistic about what their strategies can achieve and must base digital strategies on sound logic and thorough analysis.
Strategies are agreed to be most effective when they support specific business objecti ves (e.g. increasing the on line contribution to revenue, or increasing the number of online sales enquiries). A useful technique to help align strategies and objectives is to present them together in a table, along w ith the insight developed from situation ana lys is that may have informed the st rategy. Table 4.6 shows how objectives, strategies and performance indicators can be mapped to produce this logical a11d connected fl ow of activity.
Here different digit almarketi11g strategies are grouped according to whether they support . .
customer acqmsmon, conversion or retention. The key decisions for digital marketing are the same as strategic decisions for traditional
marketing. They involve selecting t arget customer groups and specifying how ro deliver value to these groups. Segmentation, targeting, differentiation and positioning are aU key ro effec- tive digital marketing.
The main thrust of digital marketing strategy development is taking the right decisions on the selec6ve targeting of customer groups a11d differem forms of value delivery for online channels. Digital marketing strategy is a channel marketing strategy and should:
• be based on objectives for online contribution of leads and sales for this channel; • be consistent with the types of customers that use and can be effectively reached through
the channel; • support the customer journey as they select and purchase products using this channel in
combination with other channels; • define a unique, differential proposition for the channel;
Chapter 4 Digital marketing strategy 161
Table 4.6 An example of the relationship between objectives, strategies and performance indicators
Objectives Substantiation (informed by Strategies to achieve goals Key performance indicators situation analysis or insight, (critical success factors) example)
1 Acquisition objective Based on growth forecast Start affiliate marketing Overall CPA for online sales Acquire 50,000 new online 40,000 sales per year, but programme and improve Incremental number and % (based on current sales) with incremental sales SEO. Existing media mix of sales from affiliate customers this financial year arising from new affiliate based on pay-per-click marketing programme at an average cost per programme and SEO and display advertising Number of strategic acquisition (CPA) of £30 with development supported by offline keywords ranked in top an average profitability of 5% media. Use social media positions in natural search
engagement to generate results page leads
2 Acquisition (or conversion) Extrapolation of current Direct marketing campaign Number and % of existing objective Migrate 40% of natural migration coupled using direct mail, phone customers registering to existing customers to using with increased adoption prompts and online use online service online 'paperless' bill payment from offline d irect persuasion to encourage Number and % of customers services and email marketing campaign adoption. Use of incentive actively using online communications within to encourage change services at different points three years after initially registering
3 Conversion objective Growth estimate based on Use of new merchandising % of site visitors responding Increase the average order current AOV of £35 plus system to show users to merchandising/cross- value of online sales to £42 model suggesting 20% related 'next best product' selling messages per customer increase in AOV for different product
categories
4 Conversion obj ective Model showing separate Combination of strategies: Variations in conversion Increase site conversion rate increase in conversion for lncentivised email follow-up rates for new and existing to3.2% new and existing on checkout abandon- customers in different
customers based on ments for new customers product categories strategies shown right Introduction of more
competitive pricing strategy on best-sellers
AB and multivariate messaging improvement of landing pages
Refinement to quality of traffic purchased through pay- per-click programme
5 Retention objective Business case based on Delivery of personalised Increased conversion rate of Increase annual repeat new limited personalisation of product offers by email retention email contact customer conversion rate by offers to encourage repeat 5% second p urchase programme 20% purchases via email discount voucher Conversion to sale for
second purchase discount campaigns
6 Growth objective Model based on Supported by direct Response rate to direct mail Increase new prospects encouraging 2% of mail and email campaign recommended by friends customers to recommend recommendation (viral marketing or 'member friends annually (based on programme get member') by 10,000 per trial scheme) annum
Online tactical marketing segmentation
• specify how this proposition is communicated to persuade customers to use online ser- vices in conjunction with other channels;
Tactical segnentation enables targeting based on rustomer joLmey behaviour such as sean:h behaviour. content accessed and contribution to social media.
• manage the online customer lifecycle through the stages of attracting visitors to the website, converting them ro customers and rerenrion and growth;
• be consistent with the types of customers thar usc and can be effectively reached through the digitaJ communications channels and targeted using online tac ti c al marketing segmentation.
1 6 2 Part 2 Digital marketing strategy development
Furrhermore, digital marketing strategy development involves reappraising a company's approach to strategy based on familiar elements of marketing stra tegy. We believe there are nine importa nt decisions to consider. The firs t four are concerned with fundamental ques - tions of bow a n organisation delivers value to cust omers onl ine and which products are offered to which m arkets onli ne. The next four are more concerned w ith the mix of market- ing commuillcations used to co nu1mn icate wi th customers across multiple channel s and the final decision refers to o rganisation and governance.
Decision 1: Market and product development strategies
Fundamentall y, the market and product development matrix (Figure 4.11) can help id entify strategies to increase sales vo lume through varyi ng what is sold (the product dimension o n the horizontal axis of Figure 4.11) and to whom it is sold (the market dimension on the verti-
cal axis) . Specific objectives need to be set for sales generated via these strategies, so this d ecision relates closely to that of objecti ve setti ng. Let us now review these strategies in more detail.
1 Market penetration
This strategy involves using digital channels to sell more existing products into existing markets. Digital cha m1els have great potential for achi eving sales growth o r maintaining sales by the market penetration strategy. As a starting point, many companies w ill use digital channels to help sell exist ing products into existing markets, altho ugh they may miss oppor- tunities indicated by the strategies in other parts of the matrix. Figure 4.11 .indicates some of the main m arket penetration techniques:
Figure 4 .11 Using digital channels to support different organisational growth strategies
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Market development strategies
Use the Internet for targeting:
• New geographic markets
• New customer segments
Market penetration strategies
Use the Internet for:
• Market share growth - compete more effectively online
• Customer loyalty improvement - migrate existing customers online and add value to existing products, services and brands
• Customer value improvement- increase customer profitability by decreasing cost to serve and increase purchase or usage frequency and quantity
Existing products
Diversification strategies
Using the Internet to support:
• Diversification into related businesses
• Diversification into unrelated businesses
• Upstream integration (with suppliers)
• Downstream integration (with inte1111ediaries)
Product development strategies
Use the Internet for:
• Adding value to existing products
• Developing digital products (new delivery/usage models)
• Changing payment models (subscription, per use, bundling)
• Increasing product range (especially a-retailers)
New products
Product growth
Chapter 4 Digital marketing strategy 163
• Market share growth. Companies can compete more effectively online if they have web- sires rhar are efficient at converting visitors to sale (as explained in Chaprer 7) and mas- rery of rhe 'always-on' online marketing communications techniques (reviewed in Chaprer 8), such as search engine marketing, affiliare marketing and online advertising.
• Cusromer loyalty improvement. Companies can increase their value to cusromers and so increase loyalty by migrating existing customers online b)' adding value to existing prod- ucrs, services and brands by developing their online value proposition (see Decision 4 and Chaprer 6).
• Cusromer value improvement. The value delivered by customers ro rhe company can be increased by inc reasing customer profitability through decreasing cost to serve {and so price ro customers) and at rhe same rime increasing purchase or usage frequency and quanrity, for example using the marketing auromation and personalisation techniques (described in Chapter 6). These combined effecrs should drive up sales. Many companies will offer competitive online prices or discoums to help increase rheir marker share. Approaches ro specifying online pricing a re covered in Chapter 5.
2 Market development
O nline channel s are u sed to sell into new markers, raking advanrage o f rhe low cost of adverti sing inrernarionally without the necessity for a supporting sales infrastructure in rhe cusromer's co untry. The lnterner has helped low-cost airlines such as easy Jet and Ryanair ro cost-effectively enrer new markers served by their routes. This is a relatively conservative use of the Internet bur is a great opportunity for SMEs to increase exports a r a low cost , though ir does require overcoming the barriers to expo rtin g. We saw in Chaprer 1 how a Germany-based fashion reraiJer has entered many European markets using techniques such as sea rch engine marketing, display advertising and social media marketing to create aware- ness and demand for services. New entrants that gain market share using new rechniques arc so merimes referred ro as 'digi ral disruptors ' .
Existing producrs can also be sold to new marker segmenrs or differem types of cusrom- ers. Virrual invenrory enables new offerings to be made available ro smaller segment sizes, an approad1 known as micro-targeting. Th is may happen simply as a by-product of having a webs ire- e.g. RS Components (www.rswww.com), a supplier of a range of MRO (main - renance, repair and operations) irems, found that 10 per cenr of th e web-based sales were to individual consu mers rather rhan traditional busi ness cusro me rs. lr also uses the website to offer additional facilities for cusro mers placing large o rders online. easy Jer also has a sectio n of irs website ro serve business customers. The Internet may offer further opporruni - tics for selling ro ma rket sub-segmems that have nor been prev iously targeted. For exa mple, a p roduct so ld ro large businesses may also appeal to Slv1Es that they have previously been un able ro serve because of the cost of sales via a s pec ia list sales force.
3 Product development
T he web can be used to add val ue to or extend existing products fo r m any companies. For example, a car ma nufacturer can potentially provide car performance and service informa- tion via a websire. Facilities can be provided to download tai lo red brochures, book a resr d rive or tailor features required from a car model. Bur truly new products or services thar can be delivered only by the lnterner are typically digital media or information products - e.g. Elepham Wifi found tbar irs town-wide Wi-Fi systems could be supporred by a new product called Ceo-Sense, whim opened up new revenue streams (sec http://www.elephant- wifi .eo.uk/geo-sense).
Similarly, music and book publishing companies have found new ways ro deliver products through a new developmem and usage model such as subsc riptio n and pay-per-use (as explained in Chaprer 5) in the section on the product elemenr of the markering mix} Rerail- ers can extend their product range and provide new bundling options online also.
164 Part 2 Digital marketing strategy development
B usiness model A summary of how a company wil generate revenue, idenmyw,g its pnxiJct offemg, value- added seMces. l'9llellU9 SOtn:eS and target rustomers.
Skunkworks A loosely structured group of people who research and develop innovative opportunities and business benefits.
Early{first)- mover advantage An early entmnt into the marl<etplace.
4 Diversification
In this sector, new products are developed that are sold into new markers. T he Internet alone cannot facilitate these high- risk business strategies, bur it can facilitate them at lower costs than have previously been possible. The opdons include:
• Diversifi cation into related businesses. A low-cost airline can use the website and cus· romer emails to promote travel-related services such as hotel booking, car rental or travel insurance at relatively low costs either through irs own brand or through partner com· panics- e.g. Ryanair offers irs customers discounts if they book car hire with HerrzTht car remals.
• D iversification into unrelated b usinesses . Again, the website can be used ro promote less- related products to customers, which is the approach used by rhe Virgin brand, which constantly diversifies in order to avoid obsolescence.
• Upstream integration wit b suppliers. This is achieved through data exchange between a manufacturer or retai ler and its suppliers to enable a company to take mo re contro l of the supply chai n (e.g. the ASO S marketplace (https://marketplace.asos.com) ena bles the retail er to offer prod ucts fro m independe nr retai l brands and boutiques) .
• Down stre am im egration with inter mediar ies . Aga in, thi s is ac hi eved th ro ugh da ta exchange w ith distributo rs such as o n line interm ediaries.
Decision 2: Business and revenue models strategies
Strategy formulation often requires companies to evaluate new models, since to survive in the digital age means companies need to constantly innovate in order to defend market share from competitors and new entrants. Companies at the leading edge of technology such as Face book and Google constantly innovate through acquiring other companies and internal research and development. Case study 4 on ASOS at the end of this chapter also highlights innovation in the ASOS business mo del facilitated through online channels.
This approach to supporting strategic agility through ongoing research and development is sometimes known as a Skunkworks , digital lab, or also digital innovation centre in larger businesses.
Surprisingly, the term is not new. It originated from a Second World War R&D project, known as the Lockheed Marrin Skunk Works, over 70 years ago. Since then, its Skunk works has helped enhance its global repuradon as a pioneer in creating breakthrough technologies and continually redefining flig ht.
Ideall y, a Skunk works has suffi cient auto nomy t hat it docs not get side tracked by cmrem business needs. So it can o perate as a n off-shoot of the ma in organisatio n, protected fro m cu ltu res a nd processes that inhibit p rogress, and has a remi t to create, develop a nd concept rest new opportunities, products a nd serv ices.
Another approach to developing new approaches is to encourage other com panies in your secto r; th is is the approach taken by Jo hn LewisTM with the Jbbs (https://jlab.co.ukl).
Mini case study 4.1 Innovation in the Dell business model
One example of how c ompanies can review and revise their business model is provided by Dell Computers. Dell gained ea rly-mover advantage in the mid-1990s when it became one of the fi rst companies to offer PCs for sale online d irectly from manufacturer to user. Its sales of PCs and peripherals rapidly grew from the mid- 1990s with online sales of $1 million per day to sales of $50 m illion per day in 2000. Based on this success it has looked at new b us iness models to use in combination with its powerful brand to provide new services to its existing custome r base and also to geoerate revenue through new customers. In 2000, Dell announced plans
Chapter 4 Digital marketing strategy 165
to become a supplier of IT consulting services through linking with enterprise resource planning specialists such as software suppliers, systems integrators and business consulting firms. In 2007 Dell. com became fourth-
largest a-commerce site, and by 2016 claimed to the largest for commercial technology products. In 2017, the company expanded its worldwide market share. Dell achieved this continued growth by focusing on using a-commerce and social media strategies to reach out and retain loyal customers. According to M ichael Dell, the company founder, the company maps its path by curiosity and looking at opportunities in new ways, con-
cluding that there is always an opportunity to make a difference. His leadership in the early days established a culture within the company of looking to innovation for Mure growth and development.
Dell launched Idea Storm TM (www.ideastonn.com, see Figure 4 .12) as a site encouraging user participation, where anyone can suggest new products and features, which can be voted on. Importantly, Dell 'closes the loop' through a separate Ideas in Action section, where it updates consumers on actions taken by the company. For example, as well as improvements to customer service, the company explains how it has introduced new systems such as a non-Windows Linux operating system in response to suggestions on ldeaStorm. It also explains ideas it hasn 't implemented, and why.
Figure 4 .12 DellldeaStorm (www.ideastonn.com)
Glomll•••311
Vote
- Soo --·--
I
...... * Ill .. ~--·•· On......., -- -·----~
-------
... ,."'
M SCP', J Ita~...., Cabin tw~~s;;,.,..~,.:---------- ....._ I• l.li\J!.IJVI, A-ot7. 20C7
Source: C 2012 Dell Inc. All Rights Reserved.
Revenue model Describes methods for genemling ~ tor an organJSation.
Finally, w hil e all digi tal strategies shoul d consider all of the avai l abl e options (including
w do nothing), we can note rhar companies can make l ess radical changes to their revenue models through the I nternet that are less fa r -reaching, but may nevertheless be worthwhile. For example:
• Transactional e-conm1erce sites (e.g. Tesco.com and Lastminute.com) can sell ad,·ertising space or run co-branded promotions on sire or through their email newsletters or lists ro sell access to their audience ro third parties.
• Retailers or media owners can sell-on white-labelled services through their online pres-
ence such as ISP, em ail services or photo-sha r ing services.
166 Part 2 Digijal marketing strategy development
Target marketing strategy Evaluation and selection of appropriate market segments and the development of appropriate offers.
Strategic market segmentation A grouping of customer types defined by their value to a business and common characteristics, needs ()( psychographic profiles.
• Companies can gain commission through sel ling products rhar are complementary (bur nor competitive ro their own); e.g. a publisher can sell irs books through an affiUate arrangement with an e-rerailer.
Decision 3: Target marketing strategy
Deciding on whkh markers ro target is a key strategic consideration when plmming a iligital marketing strategy. Target ma rket ing st rategy involves the four srages shown in Figure 4.13. The rwo key decisions for the marketing srraregisr are:
• Segmentation/targeting strategy. A company's on line cus£Omers wi ll ofren h ave different demographic characteristics, needs and behaviours from irs offline customers. It follows that different online a pproaches ro strateg ic ma rket segm entation may be an o pportu- nity, a nd specific segments may need to be selective ly rargered through o nline meilia cha nnels, the company website or email communications. As we will see, personal devel- op ment and lifecycle t argeting are comm o n approaches for on line targeting.
• Positio ning/ djfferenriation strategy. Competitors' product a nd service offerings will ofren differ in the on line environment. Developing an appropriate o nline value proposition is an important aspect of t his strategy.
T he first stage in Figure 4.13 is segm entatio n. Segmentat ion is a management technique that all ows businesses to focus their efforts o n the customers rhey can serve best. When creating digital marketing plans it is u seful to distinguish berween strategic market segmentation and on line tactical segmentation , which is used for online targeting.
Strategic market segmentation can be defined as (Jobber and Ellis-Chadwick , 2016):
the identification of individ uals or organisations with similar characteristics that have significant implications for determining marketing strategy.
Figure 4.13 Stages in target marketing strategy development
(
Informed by
Market research and analysis of customer data
Demand analysis
Competitor analysis Internal analysis
Evaluation of resources
Stage of target marketing
Segmentation Identify customer
needs and segment market
Target m arketing Evaluate and select
target segments
Positioning Id entify proposition for each segment
Planning Deploy resources to achieve plan
Info rms
• Market segment definition • Persona development • Customer experience requirements
• Select online targeting • Target segments • Online revenue contribution
for each segment • Customer lifecycle targeting
• Core brand proposition • Online value proposition • Online marketing mix • Ufecycle brand development
and proposition messaging
• Online marketing mix • Restructuring • Automated online customer
contact strategy
Chapter 4 Digital marketing strategy 167
Ln a digital marketing plarming context, marker segments should be reviewed to assess:
• the current marker size or value, furure projections of size; • the organisation's current and future marker share within the segment; • the cost-effectiveness and likelihood of a target segment engaging with the organisation's
offer across all aspects of r:he buying process - for example, whether it is cost-effective ro generate demand of leads and sales use organic media based on content marketing or paid media such as programmatic display, pay-per click advertising (Coogle Ads), paid social ads or affiliate marketing;
• needs of each segment, in particular unmer needs; • competitor market shares within the segment; • organisation and competiror offers and propositions; • usage of the site and conversion ro action through web analytics.
Options for segmenting online customers by activity levels, which is an online tactical marketing segmentation approach, are covered in more detail in C hapter 6 and segmenting site visitors tluough web analytics systems are covered in Chapter 10.
Stage 2 in Figure 4.13 is target marketing. Here we can select segments for targeting online that are most attractive in terms of growth and profitab il ity. These may be simi lar or differ- ent compared with groups targeted offline. Some examp les of customer segments that are targeted onljne include:
• The most profitable customers. Using the Tnrernet to provide tailored offers to the top 20 per cent of customers by profit may result in more repeat business and cross-sales.
• Larger comparues (B2B). An exrraner could be produced to service these customers and increase their loyalty.
• Smaller comparues (B2B). Large companies are traditionally serviced through sales rep- resentatives and account managers, bur smaller companies may not warrant rhe expense of account managers. However, the Internet can be used to reach smaller companies more cost-effectivelr The number of smaller companies that can be reached in this way may be significant, so alr:hough the individual revenue of each one is relatively small, the col- lective revenue acrueved through Internet servicing can be large.
• Particular members of r:he buying llllit (B2B). The site should provide detailed informa- tion for different interests that supports the buying decision, e.g. technical documentation for users of products, information on savings from c-procuremenr for IS or purchasing managers, and information to establish the credibility of the company for decision makers.
• Customers that are difficult to reach using other media. An insurance company looking to target younger drivers cou ld use the web as a vehicle for this.
• Customers that are brand-loyal. Services to appeal ro brand loya lists can be provided to support them in their role as advocates of a brand.
• Customers cl1at are not brand-loyal. Conversely, incentives, promotion and a good level of service qualiry could be provided by the website to try and retain such customers.
Some segments can be targeted online by using navigation options to different content groupings such rhar visirors self-identify. This is the approach used as the main basis for navigation on rhe Dell site (Figure 4.14) and has porcnrial for subsidiary navigation on other sites. Dell targets by geography and then tailors rhc rypes of consumers or businesses accord - ing to colllltry, the US Dell sire having rhe most options. Other alternatives are ro set up separate sites for different audiences - e.g. Dell Premier is rargeted at purchasing and IT staff in larger organisations. Once customers arc registered on a site, profiling information in a database can be used to send tailored email messages to different segments.
The number of options used, or segment layers, and so the sophistication of the approach, will depend on resources available, technological capabilities and opportunjties afforded by the following.
Chapter 4 Digital marketing strategy 167
Ln a digital rnaiketing planning contexr, marker segments should be reviewed to assess:
• the current market size or value, future projections of size; • the organisation's current and future marker share wirhin the segment; • the cost-effectiveness and likelihood of a rarger segment engaging with the organisation's
offer across all aspects of t:he buying process - for example, whether it is cost-effective to generate demand of leads and sales use organic media based on content marketing or paid media such as programmatic display, pay-per click advenising (Coogle Ads}, paid social ads or affiliate marketing;
• needs of each segment, in particular unmer needs; • competitor market shares within the segment; • organisation and competitor offers and propositions; • usage of the site and conversion to action through web anaJyrics.
Options for segmenting online customers by activity levels, which is an online tactical marketing segmentation approach, are covered in more detail in C hapter 6 and segmenting sire visitors tluough web analytics systems are covered in Chapter 10.
Stage 2 in Figure 4.13 is target marketing. Here we can select segments for targeting online that are most attractive in terms of growth and profitabi lity. These may be similar or differ- ent compared with groups targeted offline. Some examp les of customer segments that are targeted onljne include:
• The most profitable customers. Using the Tnrerner ro provide tailored offers to the top 20 per cent of customers by profit may result in more repeat business and cross-sales.
• Larger compailles (B2B). An exrraner could be produced to service these customers and increase their loyalty.
• Smaller compailles (B2B}. Large companies arc traditionally serviced through sales rep- resentatives and account managers, bur smaller companies may not warrant the expense of account managers. However, the Tnterner can be used to reach smaller companies more cost-effectivelr The number of smaller companies that can be reached in this way may be signilicanr, so alt:hough rhe individual revenue of each one is relatively small, the col- lective revenue acrueved through lnrerner servicing can be large.
• Particular members o f the buying unit (B2B). The sire should provide detailed informa- tion for different interests that supports the buying decision, e.g. technical documentation for users of products, information on savings from e-procurement for IS or purchasing managers, and information to establish the credibility of the company for decision makers.
• C usto mers that are difficult t o reach usi ng other media. An insurance company looking to target younger drivers could use the web as a vehicle for this.
• C ustomers that are b rand-loyal. Services to appeal ro brand loyalists can be provided to support them in their role as advocates of a brand.
• Cu sto mers cl1at are not brand-loyal. Conversely, incentives, promotion and a good level of service quality could be provided by the website to try and retain such customers.
Some segments can be targeted online by using navigation options to different content groupings such thar visitors self-identify. This is the approach used as the main basis for navigation on the Dell site (Figure 4.14} and has porenrial for subsidiary navigation on other sites. Dell targets by geography and then tailors the types of consumers or businesses accord - ing to country, the US Dell site having the most options. Other alternatives are ro set up separate sites for different auruences - e.g. Dell Premier is rargered at purchasing and IT sraff in larger organisations. Once customers are registered on a sire, profiling information in a database can be used to send tailored email messages ro different segments.
The number of options used, or segment layers, and so the sophistication of the approach, will depend on resources available, technological capabilities and opportunities afforded by the following.
168 Part 2 Digital marketing strategy development
Figure 4.14 Dell Singapore site segmentation
8 For .. I tom.
- ...... •
For 5,.11 tnd • Medlllm Bulolneu
Forurv• • EfttMPrin
Dol Dull
lit••• lett" I ·~ ~et£.W..~- a.
•Got••-*"""'-_,..,__
Source: www.ap.dell.com/contenUdefault.aspx?c:sg& 1 =en&s:gen. © 2012 Dell Inc. All Rights Reserved.
1 Identify customer profile-based demographic characteristics
This is a traditional segmentation based on the type of customer. For B2C companies this wiU include age, sex and geography. For B2B companies, it will include size of company and the industry sector or application they operate in .
2 Identify customer lifecycle groups
Figure 4.15 illustrates this approach. As vis itors use online services they can potentially pass through seven or more stages. Once companies have defined these groups and set up the cus- tomer relationship management infrasmJCrure t o categorise customers in this way, they can then deliver targeted messages, either by personalised on-site messaging or through emails that are triggered a momatically by different rules. First-time visitors can be identified by whether they have a cookie placed on their digital device or o ther 'digital fingerprints' related to mobile or social media use . Once visitors h ave registered, they can be tracked th rough the remaining stages. A particularly important group is those customers who have purchased one or more times. For many e.-retai lers, encouraging customers ro move from the first purchase to the second purchase and t hen on ro the thi rd purchase is a key challenge. Specific promotions can be used ro encourage furd1er purchases. Similarly, once cusromers become inactive (i .e. they have nor purchased for a defined period such as three mond1S} further follow-ups are required .
3 Identify behaviour in response and purchase value
As customers progress through the lifecyde shown in Figure 4 .15, database analysis can be used by the marketer to build up a detaiJed response and purchase history, which cons iders
Chapter 4 Digital marketing strategy 169
Figure 4.15 Customer lifecycle segmentation
I
0 I Purchased active: a-responsive I 0 I Purchased inactive I
0 I Purchased once or n times I 8 I Registered visitor J
0 I Newly registered visitor I 0 I Retum visitor I
8 I First-time visitor I
the details of recency, frequency, monetary value and category of products purchased. Grouping customers by their current and future value and techniques can be used ro develop strategies ro retain valuable customers and migrate lower-va lue customers to a higher value in future (see Chapter 6).
4 Identify multichannel behaviour (channel preference)
Regardless of the enthusiasm of the company for online channels, some customers will prefer using online channels and others will prefer traditional channels. Drawing a channel chain for different customers is useful to help understand this. It is also useful ro have a Bag within the database that indicates the customer's channel preference and, by implication, the best channel to target them through. Customers who prefer o nline channels can be targeted mainly by online communications such as email, while those who prefer tradirional channels can be targeted by traditional communications such as direct mail or phone.
5 Tone and style preference
In a similar manner to chaJmel preference, customers will respond differently ro different types of message. Some may Like a more rational appeal, in which case a detailed email explaining the benefits of rhe offer may work best. Others will prefer an emotion:JI appeal based on images and with warmer, less fo rmal copy. Testing is needed based on customers' profi le characteristics :~nd response behaviour and then develop different cre:Jtive treatments accordingly.
Decision 4: Positioning and differentiation strategy (including the marketing mix}
Stage 3 in Figure 4.13 is positioning. Ultimately, positioning defines how a company wants to compere and this is determined by the chosen marker segmentation, the actual target marker and the differential advantage offered by the product or service Uobber and Ellis- Chadwick, 2016). The key to this stage of decision-making is ro focus on the minds of customers in rhe chosen target markers (Reis, 2017). In their minds, most consumers either have a brand attached ro product category or they do nor; maybe because it is an underde- veloped category (e.g., the electric car) or they have yet ro exercise a preference. ln the case of the new caregor}~ there is opportunity for a brand ro rake first-mover advantage (Yang eta/. , 2017), as Tesla Thl has done in the electric car marker. Either way, ro make a connection with a prospect's mind, it is better to promote a small feature of a brand rhar is known to
17 0 Part 2 Digital marketing strategy development
Digital marketing insight 4.5 How did cardboard boxes singing 'give a little bit of my love' connect to the minds of millions of shoppers?
Differential advantage A desirable attribute ol a product offemg that is not CLITlll11ly matched by competitor offemgs.
Amazon's C hristmas 2017 advert showed boxes travelling fro m a warehouse, by lorry and p lane, to the hands of a young customer. And, o n the journey, the s miling boxes were animated to appear as if they were s ing ing 'Give a little b it of my love'. This was considered the most impactful according to research by Kantar Millward Brown (2017) . The reasons why is that consumers said the advert stood out from the noise; Amazon 's branding came through clearly, so it was easy to identify with , and the story in the advert was also found to be relevant and believable. In other words, it hit the spot in the minds of the target audience, by using strong positioning. How this works is that anyone who has shopped with Amazon is familiar with the cardboard boxes that arrive on their doorsteps, even if they are not aware of the journey the box takes to get there. So once the initial connection is made, the story can be told.
t he p rospect rathe r th a n a major fea ture th at is unknown (Reis, 2017). By taki ng this app roach, it becomes possible to connect with t he target prospect and es tablish the fo tm da- rions of a differential market positio ning and then build from this point.
Online the sa me principles a pply bur in a high ly comp lex ond dynamic marketplace. Key decisions are about how to e nter the minds of the prospective customer, which is the posi tion where the brand wishes to be (as shown in Figure 4.16).
See Digital marketing insight 4.5 to find our how singing boxes captured the minds of millions of online shoppers in the UK.
Differential advantage
The aim of positioning is to develop a d iffe rential advantage over competitors. Jobber and Ellis-Chadwick (2016) suggest that market segmentation is at the heart of developing a dif- ferential marketing strateg)' Marketing strategists usc clements from the marketing mi.x to establish the difference between their company and their riV::IIs. Many businesses have dif- ferentiated their own line offer by using pr ice, fo r example:
• Reta ile rs: offering lower prices online. Examples: Tesco.com (price promotions on selected products}, Comer™ (discounts relative to insrore pricing on some produc ts).
Figure 4 .16 Alte rnative positionings for online s e rvices
Relationship building or service quality
innovation 100 %
smile Dabs
Cisco
easy Jet RS Components 100% "--------------------" 100% Pricing Product innovation innovation
Online value proposition (OVP) A statement of the benefits of online services reinforces the core proposHlon and differentiates from an organisation's offline offering and those of competitors.
Chapter 4 Digital marketing strategy 1 71
• Airlines: offeri11g lower-cost flights for online bookings. Examples: easy Jet, Ryanair, BA. • Financial services companies: offering higher inrerest rates on savings products and lower
interest rates on credit products such as credit cards and loans. Examples: Natiomvide Building SocietyTM, Alliance & LeicesterTM.
• Mobile phone network providers or utiliti es: offering lower-cost tariffs or discounts for customer accounts that are managed online wirhour paper billing. Examples: 02n1, British Gas™.
It is importam to note that price is not rhe only way to stand out online; quality of brand experience and quality of service is equally important for creating differential advantage.
In a digital ma.rkering context, differemial advamage and positioning can be clarified and communicated by developing an on lin e value proposition (OVP) . Developing an OVP, involves:
• developing online content and service and explaining them through messages that: • reinforce core brand proposition and credibility; • commw1icate wha t a visitor can ger from an on lin e brand rhar they can't get from the
brand offline and they can't get from competitors o r intermediaries. • communicating these messages to all appropriate on lin e and offline customers wi th
touchpoints in different levels of derai l, from srraplines to more detailed coment on the website or in print.
Communicati11g the OVP on the site can help create a customer-centric website. Virgin WinesT111 used an OVP to commnnicate irs service promise as follows:
• And what if ... You are out during the day? We promise that ou r drivers will find a safe place to leave your wine; bur if it does get stolen, we just replace it.
• You find it cheaper elsewhere? We will refund the difference if you are lucky enough to find a wine cheaper elsewhere.
• You live somewhere obscure? We deliver anywhere in the UK, including Northern Ireland, the Highlands and Islands and the Scilly Isles for £5.99.
• You are in a hurry? We deliver within seven days, or your delivery is free.
Many strategic planning decisions are based around the OVP and the quality of online customer experience delivered by a company. Interactive features can be particularly irnpor- t:lnt for transactional sites in that they may enhance the user's experience and so encourage conversion and repeat sales. Examples of how companies have developed their OVP through interactive featmes include customer reviews and ratings, podcast product reviews, a blog wirh customer com ments ena bl ed, buyers' guide a nd video rev iews (see Activity 4.3 for examples}.
Having a clear online value proposition has severa l benefits:
• It helps disti11guish an e-commerce sire from irs comperirors (this should be a website design objective}.
• It helps provide a focus on markering efforts so rhat company staff are clear about the purpose of the site.
• If the proposition is clear, it can be used for PR, and word-of-mouth recommendations may be made about the company.
• It can be linked to the normal product propositions of a company or irs product.
\Yie look furrher into options for varying rhe proposition and marketing mix in Chapter 5.
17 2 Part 2 Digijal marketing strategy development
Act ivity 4.3
M ul tichannel prioritisation Assesses the strategic significance of lhe Internet relative to other communications channels and then deploys resooo::es to integrate wrth mar1<eting ch<nlels.
Customer communications channels The range of media used to communocate drectly with a customer.
Customer engagement strategy A strategy to encourage interaction and participation of consumers with a brand through developing content and experiences with the aim of meeting commercial objectives. It is closely related to the development of content marketing and social media strategy.
Socia! media strategy A definition of the rnarl<eting cornrnU1ications used to actieve ontemction With social network users to meet business goals. The scope of social media optimisation also inOOdes incorpotation ol social featt.reS such as status updates and sharing widgets into~ webs~ as.
Online value proposition
Purpose
To explore the concept of online value propositio n.
Ac tivity
Visit the fo llowing websites and summarise their online value proposition. You should also explain how they use the content of the website to ind icate the ir value proposition to c ustomers.
• Shopify (https://www.s hopify.co.uk} • Apple iPhone X (https://www.apple .com/ ukliphone-xl) • Netflix (https://www.netflix.com) • BBC (https://www.bbc.co.uk/) • Aldi (https://www.aldi.co.uk/)
Decisions 5 a nd 6 rel ate ro mult ic hannel prioritisation , which assesses the strategic significance of t he Internet relative to o t her communications channels. ln making this prioritisation it is helpful to distinguish berween c ust omer communications channels and distribution channels.
Decision 5: Customer engagement and social media strategy
Each day there are millions of social network status updates, new blog posts, videos and news articles published . As consumers spend more rime online reading and interacting with this content, the challenge of engaging them increases. Given this, we belie\·e that every company must develop a c ustomer engagement s trategy as a key parr of their digital mar- keting strategy. This customer engagement strategy reviews approaches to create compelling content and experiences that for m the online value proposition.
Increasingly, it's most straightforward to achieve online engagement not on a company website but through a social presence o n one of t he m::1in socia l networks such as Facebook, Coogle+, Li n ked ln , Tw itter o r o th er speci::~l ist netwo rks. G iven the popularity of these social netwo rk s, ma ny companies w ill seek to develop an overall socia l media strategy.
When developin g a n approach for usin g each socia l network to build engagement a nd co mmunity, there are some co m mo n d ecisions across the networks t hat foc us on the t ypes of co ntent a nd how it is published. T he answers for each social netwo rk w iiJ vary, but there are some co nun on themes that should be parr of an overall engagement ::1nd content market- ing strategy. H ere are some key qu estio ns to consider:
• Questi011 1. Who are our target audience? For a s ingle company, the typical audience of each social network will differ in terms of demog raphics. If you review a sample of pro- files for your own followers or competitors, you will get a feel for the typical audience and can develop typical customer personas you arc targeting.
• Question 2. What are the content preferences of our audiences? The type of content that audiences like ro see on each network is shown by the content they share or rate highly. For example, on Facebook it may be that videos work well, on Twitter infographics and on Linkedln posting a provocative statement.
• Question 3. Which content types should have priority? Based on your analrsis of customer needs and competitor benchmarking, you can set our the topics that will work best when covered in your content stream. For example, for the American ExpressTM Open Forum
Social media optimisation (SMO) A process to review and inprove the elfectMlneSS of social meda matl<e~ through rlMewing approaches to enhance content and communications quality to generate more business value.
Distribution c hannels The mechanism by which products are directed to customers, either through intermediaries or directly.
Click s and mortar A business combining an onlne and offli1e presence.
C6ck s·only (Internet pure play) An aganisatlon 'M1h pmapally M or01e presence. It does not operate a ma.l-otder operation or promote ilbound phone orders.
Chapter 4 Digital marketing strategy 173
(www.openforum.com, a community that is independent of social nen,vorks) their content focuses on innovation, marketing and finance, though it can cover health and Lifestyle too.
• Question .J. How do we differentiate the social channel (rom other communications channels? Each network will differ and have different preferences for types of content rhar fir the channel. If you can define a power ful offer for the social channel, it will encourage people to subscribe to that channel even if they are already using other chan- nels. For e.xample, retailer Asda TM (www.facebook.com/GeorgeatAsdaOfficial) offers 'Pre- views, competitions and exclusive offers' if someone 'Likes' irs page. Ir also has more ractica.l campaigns to encourage sign-up; this requires email addresses to be collected, which can be assigned to a Facebook user.
• Question 5. Should we consider content (reque11cy and an editorial calendar? To engage an audience requires regular content, bm what does regular mean? Wi ll there be several status updates a day or only several upda tes a week? How do these link to o ther content, such as that on a blog? There will be ma ny different types of content, some will be quick to crea te, others will rake much longer and need planning or rcsourcin g; this is where an cdirorial calendar is essential.
• Question 6. H ow do tue manage publication and interaction? Each social platform need s someo ne to update the conrem, but also to respo nd and inreracr o n other social nenvorks. A decision has to be taken as to whether thi s happens in-house or whether so me of it can be ou rsourced to a third party.
• Question 7. Should we use softtuare for managing the publishing process? Software can't create content for you , bur it can streamline the process. Tools such as H oorsui reTM or TweerburnerTh1 enable status updates to be shared across different networks. For example, status updates can be shared across Facebook, Li nked In or Twitter. However, a person- alised approach is recommended also.
• Question 8. Should we be tracking the business impact of socitll rzetwork activity? Tools are available from each of the platforms to help marketers review their effectiveness. For example, Facebook Insights is a service available to page owners on Facebook. There are also ana lyrics features within tools like H oorsuite showing which messages were popular
based on sharing and dick-through rate. • Questio11 9. How do we optimise the social presence? Tracking isn't wonhwhile unless
it is reviewed and acted upon. The insights available will enable you to rest, learn and refine marketing activities. This is known as s ocial media opt imisation (SMO) . We return to social media straregy at the start of Chapter 6.
Decision 6: Multichannel distribution strategy
Distribution channe ls refer to the flow of products from a ma nufacturer o r service provider to the end customer. At the centre of any distribution chan nel arc rhc movement of goods and the flow of information ben,veen different o rganisations involved in mov ing goods from the point of manufacture and the point of consumption. Depending on rhe players thar make up the supply chain, its structure can vary and this structure will determine whether goods get to the right p lace at the right rime. Players in a supply chain can include: retailers, suppli- ers, inrermediaries, third-parry logistic solution providers and transportation companies that provide relevant services (e.g., warehousing and distribution management for their clients). The general options for the mix of 'bricks and clicks' are shown in Figure 4.17. The online revenue conrriburion estimate is informed by the customer demand analysis of propensity ro pu rchase a particular type of product. If the objective is ro achieve a high online revenue contributio n of greater than 70 per cent then this will require fundamental change for the company ro transform to a clic ks and mortar or c lic ks-only (Internet pure play) company.
Kumar {1999) suggesred rhar a company should decide whether the Tnrerner will primarily complement the company's other channels or primarily replace other channels. Clearly, if it is believed rl1ar the Internet will primarily replace other channels, then it is imponanr to invest
17 4 Part 2 Digital marketing strategy development
Figure 4.17 Influences on customers of multichannel decision making
--~ "tl 8!. ,
Q) .... ·-::J a' Q) .... Q)
Cl c: IV ~ (,)
-IV c: 0 :;::1
:X ·- li 1 Cl ... ' Bricks and mortar' 0 Information only
aJ "" .§ -.J
Low
Source: adapted from Dholakia et al. (20 1 0)
3 ' M aj ority c licks'
All transactions and customer 5e!Vice online
2 'Bricks and clicks '
Mix of on- and offline transactions and customer service
Digital c hannels compleme ntary
Medium
% Online revenue contribution
Digital channels replace
High
in the promotion and infrastrucrure to achieve rhis. This is a key decision as the company is essentiallr deciding whether the Internet is 'just another communications and/or sales channel' or whether it will fundamentally change rhe way it communicates and selJs to its customers.
Kum a r (1999) suggests that replacement is most likely to happen when:
• customer access to the Internet is high; • the Internet can offer a better value proposition than other media; • the product can be delivered over the Internet (it can be argued that this condition is not
essential for replacement, so it is nor shown in the figure); • the product can be standardised (the user does nor us ually need to view to purchase).
On ly if all four conditions are mer will there primarily be a rep lacemem effect. The fewer conditions mer, the more likely it is t hat there will be a co mp lementary effect.
From an analysis such as tha t in Figure 4 .18, it s hould be poss ibl e to stare whether the company strategy should be directed as a complemcnrary o r as a re place mem scenario. As me ntioned in relat ion to the question of t he contribution of the Inte rn et to its busit1ess, t he company should repeat the a nalysis for differem product segments and different markets. It will then be possible to sta te the company's overall commirmenr to the lmernet. If the future strategic importance of the Internet is high, with rep lacement likely, the n a significam investment needs m be made in the Internet, and a company's miss ion needs to be directed towards replacement. If the future strategic impo rta nce of the Internet is low then this srilJ needs to be recognised and appropriate investmem made.
Technological integration
To achieve strategic digital marketing goals, organisations will have ro plan for integration with customers' and suppliers' systems. Chaffey (?014 ) describes how a supplier (in a B2B market) may have to support technical integration with a range of customer e-procurement needs, e.g.:
• Links with single c ustomers. Organisations will decide whether a single customer is large enough to enforce such Linkage (e.g., supermarkets often insist that their suppliers trade
Chapter 4 Digital marketing strategy 17 5
Figure 4.18 Matrix for evaluating digital marketing business investment alternatives
Internal people resource (cost/time) (Q-20) > -·- Agency resources (cost/time) (Q-20)
:0 ., >
Set-up costs and technical feasibility (Q-20) 0) c ·-(,) ....
Ongoing costs (Q-20) :::1 0 "'
Business & implementation risks (Q-20) CD a:
P3. Medium .c: priority: P1 . High priority: .!;!I
Implement J::
~ 0 ...,j
Reduce scope or defer
P2. Medium P4. Low priority:
priority: Don't implement
or defer Reduce scope
or defer
Low High
Organizational value and fit
Business value generated (0-50)
Customer value generated (Q-20)
Alignment with business strategy (Q-1 0)
Alignment with digital strategy (Q-1 0)
Alignment with brand values (D-1 0)
with them electronically). However, the suppl ier may be faced with the cost of sening up different rypes of links with differenr supermarket cusromers.
• Link s with intermediaries. Organisations have to assess which are the dominanr inrer- mediaries, such as B2B marketplaces or exchanges, and then evaluate whether the trade resulting from the intermediary is sufficient ro set up links with thi s inrermediary.
Decision 7: Multichannel communications strategy
Customer communications channels refer ro how an o rganisation influences irs customers
ro select products and suppliers through the diJferent stages of the buying process through inbound and outbou nd communicatio ns. As part of creating a digital marketing strategy, it is vira l ro define how the digital in tegrates with other inbound communications chan nels used ro process customer enquiries and orders and with outbound channels that use direct marketing ro encourage retention and growth or deliver customer serv ice messages. For a retailer, these channels include in-store, contact-centre, web and outbound direct messaging used to communicate with prospects and customers. Some of these channels may be broken down furrher inro differenr media (e.g. the contact-cenrre may involve inbound phone enquiries, email enquiries or real-time chat). Outbound direct messaging may involve direct mail, email media or web-based personalisation.
The multichannel communications strategy must review different types of customer con- racr with the company and then determine how online channels will best suppo rt these channels. The main types of customer contact and corresponding strategies will typically be:
• inbound sales-related enquiries (customer acquisition or conversion strategy); • inbound customer-support enquiries (customer service strategy); • outbound conracr strategy (customer retention md development strategy) .
17 6 Part 2 Digijal marketing strategy development
For each of these stra tegies, the most efficient mix and sequence of media to support the business objectives must be determined. Typically the short-term objective will be conver- sion to outcome such as sale or satisfactorily resolved service enquiry in the shortest possible time with the minimum cost. H owever, longer-term objectives of customer loyalty and growth also need to be considered. If the initial experience is efficient, but unsatisfactory to the customer, then they may not remain a customer!
The multichannel communicarions strategy musr assess rhe balance between:
• Custo mer channel preferences. Some customers will prefer online channels fo r product selection or making enquiries while orhers will prefer traditional channels.
• Organisa tio n channel preferences. Traditional channels tend to be more expensive to service than digital channels for the company; however, iris important to assess effective- ness and the ability of channels to convert the customer to sale (e.g. a customer who responds to a TV ad to buy car insurance may be more likely to purchase if they enquire by phone in comparison to web enq u iry) or in developing customer loyalty {the personal touch available th roug h face-to-face or phone contact may result in a better exp erience for some customers, which engenders loyalty).
Channels a nd media h ave become increasingly sop hist icated and diverse in recent years an d these developments have led to increasingly comp lex patterns of consumer behaviour. For an organisation to begin to und ers tand customer behaviour on line they need to identify target marker segments, develop customer profiles and select channels and media that might be suitable for communicating with the chosen segment. As 'consumer segmentation is a critical aspect of effective multichannel strategy design' {Neslin eta/., 2006), organisations are faced with making difficult and challenging decisions.
Figure 4.19 is based on the work of Dholakia eta/. {2010}, who suggest that there are eight dimensions to consider when making channel choice. This figure shows these dimensions and suggests the factors that affect constuner decision making. The channel dimensions ha,·e implications for planning and point to key decision areas for an organisation that is develop- ing its channel and communication strategies. For example, dimension 3- accessibility - is
Figure 4.19 Influences on customers of multichannel decision making
Channel dimensions affecting channel choice:
1) Purpose for using the channel: purchasing or information
2) Type of channel: physical, virtual, mobile 3) Degree of accessibility 4) Types of communications the channel
facilitates 5) Nature and flexibility of the interface 6) Level of convenience the channel offers
the customer 7) Switching costs, what is involved in
moving from one channel to another 8) Organisations' flexibility, product offer
Customer Influences on channel choice:
1) Knowledge 2) Experience 3) Preference 4) Actions
Marketing strategy considerations for channel selection:
• Marketing and communication goals • Level of control required • Access to segment
Source: adapted from Dholakia et a/. (201 0)
Chapter 4 Digital marketing strategy 177
Figure 4.20 Channel coverage map showing the company's preferred strategy for commu- nications with different customer segments with different value
CD .;;!
"' > ~ ., E .9 (/)
~ 0
Web
Sales force
Customer extranet
Contact -centre
Web-supported
Product sales complexity
becoming increasingly important with the widespread adoption of wireless technology and mobile phones; dimension 5- flexibility of the interface- some channels offer limited flexibil- ity whereas others can be instantaneously tailored (e.g. advertising, whkh through emotional recognition software can potentially provide a personal message as a cuswmer passes by an outdoor billboard). Customer influences affect their channel choice based on their personal characteristics, which affect how rhey interact with technology. Both the channel dimensions and customers will shape the strategy decisions a marketer makes but there are also marketing strategy considerations that will influence final channel selection, e.g. goals and objectives.
MuJrichannel communications strategy needs to specify the extent of communications choices made available to customers and the degree to whkh a company uses different ell an- nels to communicate with particular customer segments (Figure 4.20). Deciding on the best combination of channels is a complex challenge for organisations. Consider your mobile phone company- when purchasing you may make your decision about handset and network supplier in-store, on rhe web or through phoning the contact centre. Any of these contact points may either be direct with the network provider or through a retail intermediary. After purchase, if you have support questions about billing, handset upgrades or new tariffs you may again use any of these touchpoinrs to resolve your questions. Managing this multichan- nel challenge is viral for the phone company for two reasons, both concerned with customer retention. First, the experience delivered through these channels is viral to rhe customer's decision as to whether to remain with rhe network supplier when their contract expires- price is nor the only consideration. Second, ourbow1d commwucations delivered via website, email, direct mail and phone are critical to getting the customer to stay with t he company by recommending the most appropriate tariff and handset with appropriate promotions, bur which is the most appropriate mix of channels for the company (each channel has a different level of cost-effectiveness for customers that contributes different levels of value to the customer) and the customer (each customer will have a preference for the combinations of channels they will use for different decisions)?
We will return to key decisions about implementing customer conract strategies in Chapter 6.
Decision 8: Online communications mix and budget
The decision on the amount of spending on online communications and rhe mix between the different comnnmications techniques such as search engine marketing, affiliate market- ing, email marketing and online advertising closely relates ro Decision 6. In Chapter 2
17 8 Part 2 Digital marketing strategy development
Performance drivers Critical success factors that determine whether business and rnari<etilg objectives are met.
Campaign-based e -communications Digital communications that are executed to support a specific marl<eting campaign such as a pn:rlJCIIaunch, price promotion or a website launch.
we discussed the changes in Jevels of adoprion of different channels and media and these changes have a cascade effect in terms of implications for planning the communication mix.
Making these decisions requires digiraJ marketers to decide the focus of their communications and whether the primary purpose is customer acquisition, rerenrion or relationship building.
Ln the case of e-commerce operations, Agrawal eta/. (2001) suggest that success can be modelled and controlled based on the customer lifecycle of customer relationship m anage- ment. They suggest using a scorecard, which is based on performance drivers or criticaJ suc- cess factors, e.g. costs for acquisirion and retention, conversion rates of visitors to buyers to repeat buyers, together with churn rates. There are three main parts to their scorecard:
1 Attraction. Size of visitor base, visitor acquisition cost and visitor advertising revenue (e.g. media sites).
2 Co nversion. Customer base, customer acquisition costs, customer conversion rate, num - ber of transactio ns per customer, revenue per transaction, revenue per customer, cus-
. . . . romer gross mcome, custo mer mamtenan ce cost, customer operatmg mcome, customer churn rate, customer operating income before marketing spendin g.
3 Retention. This uses similar measures ro th ose for conversion custo mers.
We will return to this topic in Chap ter 8, where we will review the balance b etween camp aig n-based a -co mmunications, which are often tied into a particular event such as the launch or re-launch of a website or a product- e.g. an interactive (ban ner) advert cam- paign may last for a period of two months following a site re-launch, or for a five-monrh period around a new product launch.
Companies wishing to advertise using digital channels are also making changes; they are having to invest in new staff with the required skills to understand the new media and many established brand images need to be changed to succeed online.
Decision 9: Organisational capabilities (7S framework) and governance to support digital transformation
In addition to the eight decisions we have reviewed related to digital business and revenue models and use of digitaJ communications, there are also decisions related to how the organ- isation manages changes required by deployment of digital media. These are related to digi- tal transformation changes ouclined in Table 1.3, such as managing marketing technology, data and in sight and changes to structure and skills.
[ Strategy implementation
This forms the topic for subsequent chapters in this rexr as follows:
• Chapter 5 - options for varying the marketing mix in the digital environment. • Chapter 6 - implementing customer relationship management. • Chapter 7 - delivering online services and developing digital experiences via a website
and mobile apps. • Chapters 8 and 9 - interactive marketing communications. • Chapter 10 - monitoring and maintaining the online presence.
In each of these areas, such as CR1v[ or development of website functionaJiry, it is common that different initiatives wiiJ compere for budget. The next secrion reviews techniques for priorirising these projects and deciding on rhe best portfolio of e-commerce applications.
Chapter 4 Digital marketing strategy 179
~ssessing different digital projects including marketing technology =:J
Portfolio analysis Identification, IMIIuation and selection of desO'able markemg appications.
A further organisational capability issue is the decision about different systems for imple- menting marketing applications. Typically, there will be a range of alternatives competing for budgets. Limited resources will dictate thar only some applications are practical and a long-term roadmap may be needed to priori rise them.
Po rtfolio analysis can be used to select the most suitable projects. For example, Daniel et al. (2001) suggest rhar potential e-comm erce opportunities should be assessed for rhe value of the opportunity to the company against irs ability to deliver. T ypical opportuni- ties for digital marketing strategy for an organisation that has a brochureware site might be:
• content management systems or online catalogue facility; • CRM system -lead generation and inbound marketing system; • CRM system- customer service management; • CRM system- personalisarion of content and promotion recommendations for users; • partner relationship management ~xtranet for distributors or agents; • transactional e-commerce facility.
The full range of marketing technology options are covered in Chapter 10. Such alternatives can be evaluated in terms of their risk against reward.
For information systems investments, the model of McFarlan (1984) has been used exten - sively to assess the furure strategic importance applications in a portfolio. This model has been applied to thee-commerce applications by Daniel et nl. (2008) and Chaffey (2014) . Potential e-commerce applications can be assessed as:
• Key operational: essential to remain competitive. Example: parrner relationship manage- ment extra net for distributors or agents.
• Suppo rt: deliver improved performance, bur not crirical ro strategy. Example: e-CRM system - personalisarion of content for users.
• High-potential: may be important for achieving future success. Example: e-CRM system .
- customer servtce management. • Strategic: critical ro future business strategy. Example: e-CRM system - lead generation
system is vital to developing new business.
A further portfolio analysis suggested by McDonald and Wilson (2002) is a matrix of attrac- tiveness to customer against attractiveness ro company, which will give a si milar resuJt to the risk-reward matrix. Finally, Tjan (2001) has suggested a matrix approach of viability (return on investment) against fit (with rhe organisation's capabilities) for digital applica- tions that remains representative of the decision -making process many organisations follow. H e presents five metrics for assessing viability and fit. Viabi li ty is idea ll y based on a quan- titative business case assessment of the value of a new application that wiU be generated through increasing conversion and retention rates. Fit is a more subjective measure based on the ease of implementation given the fir of an application with an organisation's existing processes, capabilities and cuJmre. Additional criteria are developed for viability and fit. For 'viability', the criteria used to assess the potential value of an investment are rated between 100 (positive) and 0 (unfavourabl e) in each of these areas:
• market value potential; • time to positi\·e cash flow; • personnel requirement; • funding requirement.
180 Part 2 Digital marketing strategy development
For 'fir', th e cri teria are rated as low ro medium ro high ro assess the value of a potential . mvesrment:
• alignment with core capabilities; • alignment with other company initiatives; • fit with organisational structure; • fit with compan y's culture and value; • ease of technical implementation.
Our recommendation for a form of portfolio analysis is shown in Figure 4.18 as the basis for benchmarking current e-cornmerce capabiliries and identifying strategic priorities. The five criteria used for organisational value a nd fir (rogether with a score or raring for their relative effective ness) are:
• Busi ness value generated (0-50). These should be based on incremental financial benefits of the project. These can be based on conversion mode ls showing es timated changes in number of visitors attracted (new and repeat customers), co nversio n rates and results produced. Consideration of lifetime value s hou ld occur here.
• Customer value generated (0-20). This is a ' softer' meas ure that assesses the impact of the delivered project on customer sentiment, for exa mple wou ld they be more or less likel y to recommend a site, would it increase their likelihood to visit or buy again?
• Alignment with business strategy (0-10). Projects that directly suppo rt current business goals should be given additional weighting.
• Alignment with digital strategy (0-10). Likewise for digital st rategy. • Alignm ent with brand values (0-10). And for brand va lues.
The cost elements for potential e-business projects are based on requirements for internal people resource (cost/ri me), agency resource (costftime), ser-up costs and technical feasibi- lity, ongoing costs and business and implemenrarion risks.
The online lifecycle management grid
Earlier in the chapter, in the section on objective setting, we reviewed different frameworks for identifying objectives and metrics ro assess whether they are achieved. We consider the on line lifecyde management grid ar this point since Table 4.7 acts as a good summary tha t integrates objectives, strategies a nd tactics.
The columns isolate the key performance areas of sire visito r acquisitio n , conversion to opportunity, conversion to sale and retention. The rows isolate more detailed metrics such as the tracking metrics and performance drivers from hi ghe r-level merc ies such as the cus- tomer-centric key performance indicators (KPis) and business-value KPis. In the bottom two rows we have also added in typical stra tegies a nd racrics used to achieve objectives, which show the relationship between object ives and strategy. N ote, though, that this frame- work mainly creates a focus on efficiency of conversion, although there :~re so me effective- ness measures also.
These are so me of the generic digital marketing mai n stra tegies to achieve the objectives in the grid, which apply to a range of organisations:
• Online value proposition strategy. Thi s mea ns defining the va lue proposition for acquisi- tion and retention to engage with customers online . Includes informational and promo- tional incentives used to encourage trial. Also defines programme of value creation through time, e.g. business white papers published on partner sites.
• Online targeted reach strategy. The aim is ro communicate with relevant audiences online to achie\·e communications objectives. The communications commonly include campaign communications such as online adverrising, PR, email, viral campaigns and continuous communications such as search engine marketing or sponsorship o r partnership
Chapter 4 Digital marketing strategy 181
Table 4.7 Online performance management grid fo r an a-retailer
Metric and growth Reach Act Conversion to sale Customer engagement
Tracking metrics Unique visitors Opportunity volume Sales volume Email list quality New visitors Email response quality Conversation volume transactions
Performance drivers Bounce rate Macro-conversion Conversion rate to Active customers(%) (diagnostics) Conversion rate: new rate to lead or sale (site and email
visit to start quote opportunity and Email conversion rate active) Brand/direct visits micro-conversion Repeat conversion
efficiency rate for different purchases
Customer-c,entric Cost per click and Cost p er lead Cost per sale Lifetime value KPis per sale Customer Customer satisfaction Customer loyalty index
Brand awareness sat isfaction Average order value and advocacy Conversion polarity (AOV) Products per c ustomer
Business-value KPis Audience share Online product Online originated Retained sales growth Share of voice requests (n, £,% of sales (n, £,% of and v olume
total) total)
Strategy Online targeted reach Lead g eneration Online sales Retention and strategy st rategy generation customer growth
Offline targeted reach Offline sales impact strategy strategy strategy
Tactics 'Always-on' continuous Usability Usability Database/list quality communications mix Personalisation Personalisation Targeting
Campaign communica Inbound contact Inbound contact Outbound contact lions mix strategy (cus strategy (customer strategy (email)
Online value proposition tomer service) service) Personalisation Merchandising Triggered ernails
Source: Adapted from Neil Mason's Applied Insights acqJisition, COil'olerSion, retention approach to the Smart Insights Reach. Act, Convert, Engage framewotk introO.lced 11 Olapter 1.
arrangements. The strategy may involve ( 1) driving new, potential customers to the com- pany site, {2) migrating existing customers to online channels or (3) achieving reach to enhance brand awareness, favourab ili ry and purchase intent through ads and sponsor- ships on rhird -party sites. Buildi11g brand awareness, favourabi lity and purchase intent on third-pa rty sites may be a more effective st rategy for low- involvemen t FMCG bra nds where it wi ll be difficul t to encou rage visitors ro rhe site.
• Offline t argeted reach strategy. T he objective is to encourage potential cus tomers to use online channels, i.e. visit website and transact where relevant. The strategy is to co m- municate with selected customer segments offline through direct mail, rnedia buys, PR and sponsorship.
• O nlin e sales efficiency strategy. The objective is to convert site visitors to engage and become leads {e.g. through registering fo r an e-newslener or placing the first item in the shopping basket) to convert them to buy products and maximise the purchase transaction value.
• O ffline sales impact Strategy. The aim is to achieve sales offline from new or existing customers. Strategy defines how online communications through the website and email can influence sales offline, i.e. by phone, mail order or in-store.
The case study for this chapter e-xamines a rerail example of straregy development.
1 82 Part 2 Dig"al marketing strategy development
Case study 4 ASOS shifts the focus of high-street retailing
ASOS has pioneered online social shopping and is one of the most successful online fashion retailers in the UK ASOS offers tens of thousands of branded and own-label fashion items to millions of twenty-something men and women around the globe. This case study explores the growth and competitive strategy of this iconic online retail fashion brand.
Nick Robertson and Quinten Griffiths, founders of As Seen on Screen (ASOS), were inspired by watching American TV series Friends, and these friends set about building a website that could sell items that potential customers had seen on television. Initially, ASOS sold copies of clothing worn by celebrities, but soon the com- pany began developing its own brand. This focus ena- bled the company to start to build a reputation that was attractive to young fashion shoppers.
Despite industry commentators' doubts about selling clothing online, by 2004 ASOS had introduced its own- label women 's wear and since has achieved the follow- ing landmarks:
• 2006- became the first company in the UK to launch online catwalk shows
• 2007 - launched ASOS own-label for men • 201 0 - began expanding internationally into Europe,
Russia and USA and established sites to serve these markets and launched ASOS marketplace
• 2011 - app launch and Australian, Italian and Spanish sites established
• 2012- began to consolidate online expansion, open- ing international offices in Sydney and New York
• 2015- partnered with PayPal to connect directly with student markets
• 2016 - invested in Artificial Intelligence and voice recognition to improve social media applications
• 2017 - market valuations made ASOS more valuable than M&S, the UK's largest seller of clothing.
ASOS has grown into the UK's largest online fashion retailer by deploying a competitive strategy, which has established a unique market position: selling a specialist range of products that have 'the designer fashion look'. Nick Robertson, the company's founder, started selling branded clothing as seen in films and on television. Not only did this enable the company the opportunity to create a market, but it also benefited from celebrity endorse- ments in PR and promotional campaigns. ASOS now sells over 50,000 branded and own-label clothing products and offers a much wider product range than its high-street competitors. ASOS operates as a fast-fashion retailer, which has meant overcoming many challenges to get goods to the customers on time and at the same time manage the high rate of returns. ASOS has set up systems
that enable product lines to be replaced quickly. Operat- ing at this level creates many challenges for ASOS, so, in order to deliver the promise of fast designer-look fashion, and to constantly update product ranges, ASOS has established an ' in-house' design team in Europe, which creates catwalk lookalike items that are produced close to the customers, which aids delivery and helps the higher returns rate of operating online rather than in-store. ASOS continues to be 'third-most-visited fashion website on the planet', after HM.com and Zara.com.
Online value proposition Product choice is at the core of the ASOS proposition: tens of thousands of branded and own-label products available, with hundreds introduced each week. On pric- ing, ASOS is price competitive with its Price Promise (a price match offer): if you see a branded (non-ASOS) product cheaper on another website, the company will match that price. ASOS describes its website as 'evolv- ing constantly as we find better ways of presenting our products'. The essence of the brand communicated in its annual report is 'restless innovati on for our custom- ers'. The main elements that ASOS aspires to are: ' Inspire and power your fashion d iscovery'.
Other elements of the 'brand wheel' (see F~gure 4.21 ) are:
• External. The world 's best fashion, the best fashion experience, the service I want, inspire and engage me.
• Internal. Passionate about people, continuous improvement, fashion with integrity.
In 2010 ASOS.com launched its marketplace platform, enabling boutiques, vintage collectors, individuals and designers- established or unknown- to trade from their own virtual market stalls to customers across the world. It differs from other online marketplaces like eBay and Amazon in that each vendor can customise their shop front and, for £50 each month, wi ll have access to an account manager at ASOS and some premium promo- tional spots on Marketplace.
ASOS service For ASOS, speed and accuracy of deliveries to custom- ers is a critical success factor. By offering same-day deliveries the company has increased sales by 23 per cent in the UK and even more in the EU.
Underpinning these improvements in sales is an inno- vative ethos that is evident across the company. ASOS invested in a customer contact management system that enables staff to respond to customer care emails more quickly and efficiently. Working with Clipper Logistics, they have introduced an innovative reverse l ogistics
Chapter 4 Digital marketing strategy 183
Figure 4.21 ASOS brand wheel
\VINNING THE GLO BAL ONLINE FAS H ION RACE
TilE WOA.LO'S ~ST
R\SHIGrl
nlEOCST SHOPPL'IG
EXPBtJ:NCC:
\ Inspire &
Power your Fashion
Discove ry
iii[ SIJMC[ I
'MNT
system called Boomerang, which provides quick turna- round on inventory when products are returned. A pri- mary strategic objective is to continually innovate to 'add convenience and choice for ASOS shoppers'.
Partnerships ASOS focuses on its target market and looks for strate- gic opportunities and initiatives that can strengthen its positioning. Promotional tie-ups and associations are very important to ASOS. In June 2008 the company launched a limited 1 00-design collaboration with the London College of Fashion. A capsule collection of 1 00 one-off pieces each sold on the ASOS website. The pro- motion received media coverage, including two full-page
features in the national press. The collection sold out in minutes. The ASOS fashion discovery programme, launched in 2016, continues to create opportunities of young designers and students to work on their own labels, which are then stocked by ASOS for at least two seasons.
Marketing communications ASOS brand magazine has a circulation of nearly 500,000 and reportedly is the 'most widely read quarterly fashion magazine'. The magazine reaches more than 700,000 when including France, Germany and the US in the circu- lation figures and this communication vehicle is used to reach out to new markets by expanding the readership.
184 Part 2 Digital marketing strategy development
eWord of mouth is a powerful tool of this brand and able to leverage advantage through links to celebrities and fashion using the ASOS Insider Community, which is a marketing initiative that uses individuals and their fashions insights to build digital content. The 'authentic- Ity' of the content generated by the Insiders makes this a very powerful approach to digital communications and also links to their own social media accounts in order to extend the reach and impact of the communications net- work. These digital influencers not only share their fash- ion favourites but also have an 'Outfit of the Day', which helps drive sales of specific products.
ASOS Foundation is central to the ASOS corporate social responsibility strategy, which again contributes to the brand 's market positioning. The Foundation seeks to support disadvantaged young adults in the UK, India and parts of Africa. Projects involve finding ways to develop sustainable improvements in these areas: a social enter- prise in Kenya that works from an eco-factory producing African-inspired fashion designs; education in artisan skills in remote parts of Africa; and working with the Prince's Trust in the UK to help young people develop the skills they need to get jobs.
Search marketing The range of terms ASOS targets for search are evident from the <title> and description tags on the home page, which are also used to communicate key brand messages:
<title>ASOS I Shop women's fashion & men's clothing I Free DeHvery & Returns<ltitle>
<meta name = "Descriptionn content = "Discover the latest in women's fashion and men's clothing online. Shop from over 40,000 styles, including dresses, jeans, shoes and accessories from ASOS and over BOO brands. ASOS brings you the best fash- ion clothes online. vi>
Social media marketing The growth of the company in recent years has largely been driven by social media. ASOS has contributed a great deal to the digital high street. Apart from showing that it is possible to sell fashion online profitably, the company has also pioneered social shopping, where customers use online social network sites to share prod- uct ideas before they buy. ASOS has successfully used social media to build a community of fashionistas who are prepared to share their views and opinions on Face- book, Twitter and Google Plus and to share ideas of what to wear, giving its young shoppers fashion inspiration. With approaching 12 million followers on social media sites, the company has made a significant commitment to community on its own site through the ASOS blogs at https://marketplace.asos.com/community/ and the social network sites where it has over 1.3 million Ukes on
Facebook. It runs regular promotion events integrated
across the social networks but focuses on stories and its lnstagram strategy links directly to its influencers and in doing so widens the reach of the brand.
Basket analysis Basket analysis approaches were described in an inter- view with marketing and operations director Hash Ladha:
One of the most interesting things we found was that men tend to buy for their partners as well as them- selves. We previously thought this might work the other way around. Using this data, email content was generated by the company's in-house editorial team. Generic content included a round-up of current fash- ion trends and 'best buy' recommendations. The per- sonalised content took into account favourite brands and budget, recommending items below a certain price limit. Emails were sent twice a week. Other strat- egies, such as encouraging customers to refer a friend to the company, and sending viral campaigns, were also used at this time. Our best customers visit the site every day. Shopping habits do vary, but most custom- ers like to browse the site between spending. A twice- weekly email gives them a direct link straight to the site and keeps it fresh in customers' minds.
ASOS also wanted to lure lapsed customers back to its website. It targeted these individuals with tailored con- tent that aimed to remind them why they had previously shopped online for designer and high-street clothing.
Ultimately, ASOS has developed a large target audi- ence for its products through the use of digital media and it is able to communicate new product ideas very effectively to keep customers interested. ASOS's innova- tive use of social media has enabled it to influence the way young shoppers interact with online fashion retail- ers. Moreover, this is likely to be a massive growth area and social shopping is likely to continue to reshape the way we shop for the foreseeable future. Always keen to be ahead of the competition, the main thing for the ASOS team is being where their customers are and being able to engage in the dialogue.
Sources: ASOS (2011, 2013); B8C (2013); Kolewe, (2014); Wood, (2017); Armstrong, (2016); Logistics Manager (2018): Kakar (2018).
Questions 1 Apply the SOSTAC model to ASOS and highlight
why it has become such a successful online
fashion brand. 2 Describe how ASOS uses elements of the mar-
keting mix as part of its digital strategy. 3 Discuss how ASOS has used digital to develop
its differentiated market position.
Exerc ises
Chapter 4 Digital marketing strategy 185
1 The development of the online presence follows stage models from basic static 'brochure- ware' sites through simple interactive sires with query facilities ro dynamic sites offering personalisarion of services for cusromers.
2 The digital marketing strategy should follow a similar form ro a traditional strategic marketing planning process and should include: • goal setting;
. . . • s1tuanon reVIew; • strategy formulation; • resource aJJocarion and moniroring.
A feedback loop should be est ablished ro ensure the sire is monitored and modifications are fed back into the strat egy development.
3 Strategic goal setting sho uld invo lve: • setting busin ess o bjectives that the Intern et ca n help achieve; • assess in g a nd sta ring the contributio n rh ar d igital wi ll make ro th e business in rhe
future, bo th as a proportion of revenu e a nd in terms of whether d igital w ill comple- ment or rep lace o ther media;
• sta ring cl1e full range of busin ess benefits tha t arc sought, such as irnproved cor po rate image, cost reduction, more Jeads a nd sales, and improved customer service.
4 The situat ion review wi ll include assessing interna l resources and assets, including the services available through the ex.isring website.
5 Strategy formulation involves defining a company's commitment to digital, setting an appropriate value proposidon fo r cusromers and identifying rhe role of the digital chan - nels in exploiting new markers, marketplaces and distribution channels and in delivering new products and services. In summary: • D ecision 1: Market and product developmenr strategies. • Decision 2: Business and revenue models strategies. • Decision 3: Target market strategy. • Decision 4: Positioning and differenriation strategy (including the marketing mix). • Decision 5: Customer engagemenr and social media strategy. • Dec ision 6: ~'luJdcharmel distribution srraregy. • Decision 7: Multichannel communications strategy. • Decision 8: Online com mun ications mix and budget. • Decision 9: Orga.nisa rio nal capabilities (7S framework).
Self-assessment exercises
1 How does a digital market strategy integrate with corporate and marketing strategies?
2 What is the role of monitoring in the strategic plan ning process? 3 Summarise the main tangible and intangible business benefits of digital channels
to a company. 4 What is the purpose of a d igital marketing audit? What should it involve? 5 What does a company need in order to be able to state c learly in the mission state-
ment its strategic position relative to the Internet? 6 What are the market and product positioning opportunities offered by digital
channels?
186 Part 2 Digital marketing strategy development
Essay and discussion questions
1 Discuss the frequency with which a digital marketing strategy should be updated for a company to remain competit ive.
2 'Setting long-term strategic obj ectives for a website is unrealistic since the rate of change in the marketplace is so rapid.' Discuss.
3 Explain the essential elements of a digital marketing strategy. 4 Discuss the extent to which the nine key strategy decisions are important to a new
online retail business.
Examination questions
1 The digital environment is disruptive, volatile and highly susceptible to change. Strat- egy involves long-term planning and future resource allocation. Discuss the conflicts raised by these two statements for a firm planning its future digital strategy.
2 Discuss the extent to which Porter's five forces remains relevant in the digital era. 3 Briefly explain the purpose and activities involved in an external audit conducted
as part of the development of a digital marketing strategy. 4 Explain what is meant by the online value proposition and give two examples of the
value proposition for online businesses of your choice. 5 Imagine you are the marketing director for a high-street fashion retailer:
a suggest how you would evaluate the threats posed by online retailers; b outline and justify the objectives you would set for a digital strategy designed to
combat these threats. 6 For a company of your choice, devise a digital marketing strategy.
( References ~ '------ --------~
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Chapter 4 Digital marketing strategy 187
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188 Part 2 Digital marketing strategy development
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Digital media and the marketing mix
190 Part 2 Digital marketing strategy development
Questions for marketers
Key questions for marketing managers related to this chapter are:
• How are the elements of the marketing mix varied online?
• What are the implications of the Internet for brand development?
• Can the product component of the mix be varied online?
• How are companies developing online pricing strateg ies?
• Does ' place' have relevance online?
Links to other chapters
This chapter is related to other chapters as follows:
• Chapter 2 introduces the impact of the Internet on market structure and distribution channels.
• Chapter 4 describes how digital marketing strategies can be developed.
• Chapters 6 and 7 explain the service elements of the mix in more detail.
• Chapter 7 explains how site design can be used to support and enhance brand values.
• Chapters 8 and 9 explain the promotion elements of the mix in more detail.
(~l_n_tro __ d_u_c_ti_o_n __________________________________________________ ~~ Marketing mix The series of seven key variables- Product. Price, Plaoe, Promotion, People. Process and Physic!!~ evidence - that are varied by marketers as part of the customer offering.
Online branding How ontine channels are used to support brands that, in essence, are the sum of the characteristics of a product or seMCe as perceived by a user.
This chapter shows how the tradition al mar keting mix can be applied to infor m digi tal marketing a.nd builds o n key issues associated with digital marketing strategy (in more derail than was possi bl e in Chapter 4). As part of our discussion of product we review how digital media, data and techn ology can support how brands are developed. T he chapter is struc· tured by lookin g at each element of the ma rketing mix in rurn and reviewi ng th e implica - t ions of d igital techno logy. Online brand ing is covered under 'Product'.
What is the marketing mix?
Marketers will be familiar with the marketing mix, but this introduction is included for context fo r those digital marketers who are unfamil iar with it. The marketing mix - widely referred ro as the 4Ps of Product, Price, Place and Promotion -was originally proposed by Jerome McCarthy (1960) and is still used as a.n essential part of formulating and implement- ing marketing strategy by many practitioners. The popularity of rhe mix as a guide for the application of marketing techniques is driven by the apparent simplicity of the framework. However, in the 1980s the 4Ps was challenged for not referencing the importance of customer
Chapter 5 Digital media and the marketing mix 191
Figure 5.1 The seven elements of the marketing mix
I Product
• Oualoty • Image
• Brandong • Feat11es • Vanants • Mix • Support
• Customer service
• Use occasion
• Availability • Warranties
II
I Using the Internet to vary the rnarlteting mix Promotion Price Place People ProceliS Physic:al evidence
• Marl<ebng • PosrtJoning • Trade • Individuals • Costome.- • Sales/staff communiCa!Jons • List channels on matl<etlng locus contact
• Pen;onal • Discounts • Sales activities • Bus.ness-led expenence promotJoo • Credit support • Individuals • IT -supported of brand
• Sales • Payment • Channel on customer • Oesogn • Product promo boo methods number contact features packagong
• PA • Free or • Segmented • Recruitment • Research • Online • Branding value- channels • Culture/ and experience • Direct added image development
marketing elements • Training and skills
• Remuneration
service. The result was that rhe mix was extended to 7Ps, which includes three further ele- ments (the service mix) t hat berrer ref:lect service delivery: People, Process and Physical evidence (Booms and Bitner, 1981). Some writers argue that the service mLx should be sub- sumed withi11 the 4Ps. Figure 5.1 summarises the different sub-elements of the 7Ps. Since the 1990s there have been more changes in marketing thinking and research and the outcome has been a shift in emphasis in the application of the ma rketing mix towards the develop- ment of relationship building. Some writers even argue that this is a paradigm shift, altering the underlying marketing philosophy guiding the application of marketing tools and con- cepts (BerT}; 2008). Whereas others suggest rhe move ro more relationship-orientated mar- keting is in response ro growing customer demands and increasingly complex rechnologr-driven trading environments (Singh eta/., 2011 ).
Note that the marketing mix concept has been criticised for not being customer-centric. Lauren born (1990) suggested the 4Cs framework, which considers the 4Ps from a customer perspective. In brief, rhe 4Cs are:
• customer needs and wants (from rhe product); • cost to the customer (price); • convenience (relative ro place); • communication (promot ion) .
lr is not the a im of t his rexr ro d eba te cu rrent th inking on m:~rketing ph ilosophy, bur ir is important to ack nowledge t he rise in importance of relationship bui ldi ng as th is is key to the application of d igital ma rket ing st rategies and the application of the marketi ng mix shown in Activity 5 .1.
Digital media ru1d rechJJology provide many new opportunities for the marketer:
• ro vary the application of the marketing mix; • ro develop new routes ro delivering com peri rive advantage; • ro create new marker positions; • ro build and service relationships in increasingly innovative \vays; • to cur through the barriers of rime and space and offer contiJluous and instantaneous
access ro products and services.
Think about these opporrunities while tackling Activity 5.1.
1 9 2 Part 2 Digital marketing strategy development
Activity 5.1 How can digital media and technology be used to vary the marketing mix?
Purpose
To highlight the scope for applying digital technology as a strategic marketing tool.
Activity
Review Figure 5.1 and select two opportunities that give potential for varying the marketing mix. For each opportunity suggest how each of the elements of the mix {Figure 5.1 ):
• provide new opportunities for varying the mix; • give rise to possible negative implications (threats) for each opportunity; • create opportunities to use the mix to develop relationships.
Digital marketing affects aU aspects of the traditional a nd serv ice marketi ng mix, and in this chapter we explore:
• Product: looki ng at opportun ities fo r modifying the core or extended product for digital . enviro nments.
• Price: focusi ng o n the implications for settin g prices in digital markers; new pricing models and strategies.
• Place: considering the implications for distribution for digital ma rketing. • Promotion: exploring promotional reclmiques in advance of more detailed coverage of
new techniques in Chapters 8 and 9. • People, process and physical evidence: reviewing t he principal ideas in advance of more
detailed discuss io n in Chapters 6, 7 and 10, where th e foc us is o n how these elements of the mix relate to customer relationship management and managing an organisation's digital presence.
Essential digital skills Applying the marketing mix to digital marketing
The techniques that businesses apply to the marketing mix are sector dependent and are best learned through experience of working in these sectors. To build your knowl- edge, we recommend you consider different types of business that you interact with and think about how they apply marketing to vary their proposition and add value to their brands. Types of businesses to review where you may work in future, as explained in Chapte.r. 1, are:
• transactional e-commerce businesses (retail, travel, financial services); • relationship-building businesses that do not transact online, (such as 828 lead
generation) and high-value consumer products (such as laser eye treatment); • consumer brands, some of which may not transact online through their own
e-commerce site (e.g. food and drink), or those that may sell direct through an e-commerce site (e.g. clothing, hardware manufacturers) or online marketplace (e.g. Amazon or e8ay);
• publishers and social networks - companies that can offer digital products such as streaming and downloads have been transformed by digital channels.
Practical ideas to boost employability by showcasing your interests and experiences:
• include· benchmarks in your assignment where competitors are compared based on differences in their brand-value proposition and online marketing mix;
Product
Product variable The element of the marl<etlng mix that involves researching customers' needs, developing appropriate products and communicating their featu-es and benefits.
Core product The fundamental featoxes of the product that meet the user's needs.
Extended product Ad!itional featunas and benefits be)ood the COle product.
Chapter 5 Digital media and the marketing mix 193
• explore different frameworks to assess brand identity and digital brand experience (such as WebQUAL, which is covered in Chapter 7)
• develop copywriting skills that create compelling product descriptions and describe brands in the appropriate tone of voice - see the Mailch imp (https://styleguide. mailchimp.com/voice-and-tone/) and Macmillan brand guidelines (http://be.macmillan. org.uk/AboutOurBrand/Home.aspx) for examples.
To audit your digital marketing skills across the RACE planning framework, use the Smart Insights Skills Assessment tool available at http:/ lbit.ly/smartdigiskills.
T he p rod uc t va riable of the marketing mi x refers to characteristics o f a product , a nd has im pli ca ti on s for se rvice o r branding. Product d ecisio ns sho uld be informed by market resea rch where custo mers' needs are assessed and the feedbac k is used to modify existing prod ucts o r develop new products. There a re ma ny alternat ives fo r va rying the product in rh e o nline context when a compan y is developi ng irs digiral srraregy; p rod uct decisio ns can usefu ll y be divided into decisions affecting the core prod uct and the e xte nde d pro duct. The core product refers to the main produc t purchased by rhe consumer to fu lfi l their needs, while the extended or a ugmented product refers ro additional services and benefits tha t are
built around the core of the product. The main implications of digital technology for the product element of rhe mix are:
1 options for varying the core product; 2 options for offering digital products; 3 options for changing the e.'Ctended product; 4 conducting research online; 5 speed of new product development; 6 speed of new product diffusion.
1 Options for varying the core product
For some corn pan ies, there may be o ption s for new digita l products rh ar wi ll typically be info rm atio n products that can be d elivered over th e web. O riginall y, Ghosh (1998) talked about developing new products or adding 'digital va lue' to customers. T he questions he posed still prove useful today:
• CanT offer add itio nal inform ation or transaction services to my existing custo m er base ? For exa mple, a fashi o n reta iler can prov ide customer reviews, fas hio n previews and per- sonal d igit al shopping assist ants such as shoptagr (www.shoptagr.com). A t ravel compan y can provide video to urs of resorts a nd feedback reviews of the accommodarion a.nd its fac ilities.
• Can 1 address the needs of new customer segments by repackaging my current informa- tion assets or by creating new business propositions using the Internet? For examp le, man y products can have accompanying ebooks, videos and tutorials to inform custom- ers. Fashion brand Rebecca MinkoffTM offers 'Connected Bags', which gives each item a digital idenriry in the cloud that , when accessed, will unlock e.xclusive offers, e-commerce services, priva te sryling sessions with Rebecca, sryle recommendations, video conrenr, an invitation ro the following show and elite expe riences to enjoy with lifesryle parmers. It will also auromacically qualify the customer for a loyalry program me (Forbes, 2017) .
• Can I use my ability to attract customers to generate new sources of revenue such as adver- tising or sales of complementary products? Lastminute.com, Booking.oom and trivago.com
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Mass customisation Using economies of scale enabled by technology to offer tailored versions of products to individual customers or groups of customers.
Bundling Bundling combines several proWcl or service options into a package of services, typically at a discounted price.
arc all web companies that sell travel-related services, but also generate significant adver- nsmg revenue.
• Will my current business be significantly harmed by other companies providing some of the value 1 currently offer? Consider the consequences if competing companies digitally adapt their products in order ro develop a stronger marker offer. WarersronesTM, the UK's largest bookseller, has ro compere with Amazon, and even through it trades online its global reach and product catalogue is not as ex1:ensive as that provided by Amazon.
Some of rhe markers transformed most by the Internet are those where products can be transformed into digital services, such as music (downloading or screaming of digital tracks), books (ebooks), newspaper and magazine publishi11g (online access ro articles), software, videos and films (digital downloads and o nline subsc ription services - see Digital marketing insight 5.1) such as Amazon PrimeTM, Netflix'rM and SpotifyTM (See the case srudy at the end of the chapter for further discussion of subscription services.)
Digital technology also introduces options for mass customis ation of products, par- ticularly digital products or products rhar can be specified on line. The Internet has pro- vided a channel through which manufacturers can not on ly sell the personalised products bur also usc the Internet as a source of information for developing hi ghl y targeted products. For exa mpl e, ASOS has revolurionised the way {ashio11istas shop in the UK (and around the globe). ASOS introduced rhe 'catwalk view', where fashion-hungry online shoppers can watch products being walked down the runway before the)' buy. The brand also sells fashionable clothing from a range of designers and its own in-house ream. Irs business model relies on quick turnover of 'on trend' fashion items to the mid and lower ends of the clothing marker (see rhe case srudy at the end of Chapter 4 for further discussion of ASOS).
Mass customisation (Davis, 1997; Pine, 1993) has been heralded as a business strateg)~ which derives benefits from the personalisation of products in which a customer rakes a more active role in product design (Kamail and Loker, 2002).
Companies can also consider how the internet can be used to change the range or com- bination of products offered. Some companies, such as fashion retailers, may only offer a su bser of products online, whereas furniture retailers may use their website ro expand their ra ngcs and customer choice. Bundling is a further alternative, bringing together a range of products. Koukova et al. (2008) found that the Internet has encouraged the bundling of information-based products, such as newspapers, books and music videos, in physical and digital formats. Sky Cinema has used this approach and the Disney Corporation has pur- chased Fox's film and TV assets ro launch a new streaming service to rival Nedlix (Barnes, 2017), and may bundle together digital services. The benefits for the sellers are chat digital products provide opporrunities to leverage advantage as there arc marginal costs involved with supp lyi ng digital versions and considerable cost savings if custo mers swi tch ro the digita l offer. Therefore, the introduction of physical a nd digita l product bundles offers much scope for new approaches to product delivery and pricing strategies (Koukova et al., 2008).
Fina ll y, websires and mobile apps provide a platform for providing informacio n about the core features of the product. However, the availability of information can impact on price as the price has become more transparent. Comparison sites such as Comparethemarket. comTM enable online shoppers to assess the price of car insurance, for example, from many supp liers in one location.
2 Options for offering digital products
Publishers, TV companies, media owners and other companies that can offer digital pro- ducts such as published content, music or videos now have great flexibiliry to offer a range of product purchase options ar different price points, including:
• Subscription. This is a traditional publisher revenue model, bur subscriprion can poren- tially be offered for different periods (for example, three months, twelve months o r two years) and at different price points.
Chapter 5 Digital media and the marketing mix 195
• Pay-per-view. A fee for a single down load or viewing session at a higher relat ive price than the subscript ion service - for example, music products from iTunes. Customers can enjoy instant download in a similar way to a mobile company 'pay-as-you -go' model. Travel publisher Lonely Planet enables visi rors ro a desrinarion to downJoad an introduc- tion for a fraction of rhe price of a full primed guide.
• Bundling. Different channels or conrenr can be offered as individual products or grouped at a reduced price compared ro pay-per-view.
• Ad -supported content. There is no direct price set here. Instead, the publisher's main revenue sou rce is through adverts on rhe sire (CPM display advertising on -site using ban- ner ads and skyscrapers), a fixed sponsorship arrangement or C PC, which stands for 'cos t-per-dick' - more ty pical when using se~rch ad network publishing, such as Google Adsense, which m akes a significa nr conrriburion ro Coogle's revenue.
Other opt ions ind ude affiliate reve nue fro m sa les on th ird-party si res or offerin g access ro subscriber lists.
T he d igirisari o n o f products presenrs opportun ities ro some ind ustries and t hreat s to others. Newspapers are an example of an ind usrry whe re rhe Inte rnet has had a fa r-reaching impact. M ost popular quality newspa pers a re now successfull y using subsc ripti o n-based busi ness mo dels to ma intain their rea dershi p. Indeed, The Guardian, The Daily Telegraph and The Independent (po pula r UK newspapers) h ave a large r o nl ine read ersh ip than the equivalent pri nt versions (Reid, 2014). H owever, the increase in fake news a rtides has revived interest in traditional rnedia b rands, in part due to many of these media brands having longst anding herit age a nd being more t rusted than the newer digital brands (Moody, 2017) .
3 Options for changing the extended product
When a customer buys a new com puter or mobile phone it consists not only of the tangible product, and peripheral devices, bur also the information provided by the salesperson,
Digital marketing insight 5.1 Digital players enter Hollywood?
Digital media and technology has radically changed the way we watch movies. Until recently, the film industry has not been as significantly affected by the shift towards digit isation as the music and newspaper industries have, but that is all about to change. While the Internet has potentially all but eliminated the distribution costs for film-makers, the industry has otherwise been protected due to the high costs of film production (levine, 2014). However, at Amazon Studios, individuals are invited to submit a script, a video or an idea for a comedy series (Amazon Studios, 2015) and the successful ones are then produced, and you can also become a reviewer of existing productions. Ama- zon has aggressively expanded its offer in the world of film production but not to the same extent as its major competitor Netflix. Netflix is cited as 'the world's largest online TV network', spending billions of dollars not only producing movies (which are only shown online) but also on promotion of these blockbuster productions.
Traditionally, the movie industry had relatively high entry barriers, due to distribution and production costs, and other contractual barriers . Digital companies such as Amazon, and Netflix, and other relatively new entrants, have been seeking to change the rules and others are set to follow.
Netflix has become so successful that it is now able to attract, leading Hollywood writers, producers and actors and has begun winning industry awards. Over the next year this digital new entrant to the movie industry is planning to release over 80 films, and while many of these will be low-production-cost comedies and dramas, it also plans for its major movie releases to compete with the major studios (Shaw, 2017).
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the instruction manual, the packaging, the warranty and the follow-up technical service. These are elements of the extended product. Chaffey and Smith (2012) suggest examples of how the Internet can be used to vary the extended product:
• endorsemenrs; • awards;
. . • tesmuomes; • customer lists; • customer feedback; . • warrann es; • guarantees; • money-back offers; • customer service (see people, process and physical evidence); • incorporating tools to help users during their selection and use of the product.
Once customers are attracted to a site and have begun to learn about the brand then th e companies can offer freemium content (which, as the name suggests, is free) or sa mple content or trial products. Through providing freemium content, more customers will be encouraged 1t0 enter into a paid -for relationship with the organisation. In other cases, a premium may be charged for innovative new services- for example, at Amazon Web Services offers for new (qualifying) customers include unlimited capacity for support of software, data migration , st reaming and Cloud Computing services (https://aws.amazon.com).
4 Conducting research online
Digital channels provide many options for learning about product preferences and it can be used as a relatively low-cost method of collecting marketing research, particularly when trying to discover customer perceptions of products and services. Sawhney et al. (2005) have reviewed the options for using digital media for new product innovation where they contrast the traditional new product research process with a digitally augmented co-creation process. They suggest that online research tools should be evaluated according to how they can be used: ( 1) from-end developments of ideation and concept against back-end developments involving product design and testi ng, and (2) the nature of collaboration- broad/high reach agaimr deep/high richness.
Options for performing new product development research online include:
• Online focus group. A moderated focus group can be conducted to compare customers' experience of product use. Many companies now have permanenr customer panels they can use to ask about new ideas.
• Online questionnaire survey. These typically focus on tl1e site visi tors' experience, but can also include questions relat ing to products.
• Social media li stening. Comments mentioned in social media can be added a longside customer feedback and support forums.
• Customer feedback or support forwns. Comments posted to the site or independent sires such as social networks may give sugges tions about future product innovation. Fresh- worksTM freshchat messaging is a new product that helps companies to use live chat to
improve target marketing and lead conversion for businesses (freshworks.com). This plat- form enables a company ro communicate and collaborate inside and outside the company. The platform also has the capacity to integra te with CRM, e-conu11erce and analytics systems.
• Web analyrics. A wealth of marketing research information is also available from response data from email and search campaigns and the website itself, since every rime a user clicks on a link offerin g a particular product, this indicates a preference for products and related offers. Such information can be used indirectly to assess customers ' product preferences.
Tipping point Using the science of social epidemics explains principles that underpin the rapid SPf(lad of ideas, products and behalliours through a populatoon.
Chapter 5 Digital media and the marketing mix 197
5 Speed of new product development
Digital channels give instant access to target markers and provide platforms, which enable new products to be developed more rapidly as it is possible ro rest new ideas and concepts and explore different product options rhrough online marker research. Companies can use their own panels of consumers ro rest opinion more rapidly and often at lower cost s than for traditional market research. Another aspect of the \'elocity of new product development is that the network effect of the Internet enables companies ro form partnerships more read- ily in order to launch new products.
6 Speed of new product diffusion
In the early days of the Internet, Quelch and Klein (1996) noted that to remain competitive, organisations would have ro roll om new products more rapidly to international markets. Additional ly, Malcolm G ladwel l, in his book The Tipping Point (2000), emp hasised the importance of word-of-mouth com munication on the impact of the rate of adoption of new products, especi ally through the Internet. In C hapte r 9, we wil l see how marketers seek to influence this effect through what is known as 'v iral marketing'.
Marsden (2004) provides a good summary of rhe impli cations of the tipping point for marketers. He says that ' using the science of social epidemics, The Tipping Point explain s the three simple principles that underpin the rapid spread of ideas, products and bel1aviours through a population'. H e advises how marketers should help create a 'tipping point' for a new product or service - the moment when a domino effect is triggered and an epidemic of demand sweeps through a population like a highly contagious virus.
There are three main Jaws that are relevant £rom The Tipping Point:
1 The law of the few
This suggests that the spread of any new product or service is dependent on the initial adop- tion by 'connectors' who are socially connected and who encourage adoption through word of mouth and copycat behaviour. In an onl ine context, these connectors may use personal blogs, email newsletters and podcasrs to propagate their opinions.
2 The stickiness factor
Typically, this refers to how 'glued ' we are ro a medium such as a TV channel o r a website, but in this context ir refers to attachment to the characteristics and attributes of a product or a brand. G ladwell stresses the imporra nce of resti ng and marker research to make the product effective. Marsden suggests that th ere a rc certa in cross-category attributes that are key drivers for product success - for examp le:
• ExceUence: being perceived as best of breed; • Uniqueness: clear one-of-a -kind differentiation; • Engagement: fosters emotional involvement; • Cost: perceived value for mone)(
3 The power of context
Gladwell (2000) suggests that, like infectious diseases, products and behaviours spread far and wide only when they fi r the physical, social and mental context into which they are launched. He gives the example of a wave of cr ime in the New York subway that came to an abrupt halt by simply removing the graffiti from trains and clamping down on fare- dodging. It can be suggested that products should be devised and tested to fit their context, situation or occasion of use.
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long tail concept A frequency distribution sugges~ the rela!Ne variation in populanty of items selected by <XlflSlXll9<S.
The long tail concept
The long tai l concept is useful when considering products and marker opportu nities. The phenomenon, now referred to as the 'long rail', following an article by Anderson (2004), was arguably fi rst applied ro human behaviour by George Kingsley Zipf, professor of linguistics ar Harvard, who observed the phenomenon in wo rd usage. H e found rhar if rhe variarion in populariry of different words in a language is considered, there is a sysremaric pattern in rhe frequency of usage o r popularity. Z ipf's 'law' suggests rhar if a collection of irems is o rdered or ranked by populariry, the second item will have around half the populariry of the firsr one and rhe rh ird item will have about a third of rhe populariry of rhe first o ne and so on (Newirz, 2013). In general:
The krh irem is 1/k the populariry of the first. Look at Figure 5.2, which shows how the ' relative popu la rity' of items is predicted to
decline according ro Zipf's law from a maximum count of 1,000 for the m os t popular item ro 20 for the 50th item.
In a n online context, application of rl1is ' law' is now kn ow n as 'the long ta il ' thanks to And erson (2004) . It can be applied ro th e relative popularity of a gro up of websi tes or web pages or products on an individual site, since they tend to show a si mila r pattern of popular- ity. There are a small number of sites (or pages within sites) that a re very popular (known as 'the head', which may account for 80 per cent of the volume) and a much larger number of sites or pages that are less popular individually, but still collectively importa nt. Rerurning to the product conrexr, Anderson (2004) argued m at for a company such as Amazon, rhe long tai l (or Zipf's law) can be applied to describe the variation in preferences for selecti ng or purchasing from a choice of products as varied as books, COs, electronic ire ms, travel or financia l services. Thi s pattern has also been identified by Brynjolfsson eta/. (2003, 2010), who presenred a framework that quantifies the economic impact of increased product vari- ery made avai lable through electronic markets, and they suggest thar the long rail approach is also useful for approximating market - sales relati onships. They say:
One reason for increased product variety on the Internet is the ability of online retailers to catalogue, recommend, and provide a large number of products for sale. For example, the number of book titles available at Amazon.com and Amazon's Kindle store has over 90,000 titles available, which is many times larger than the number of books on the shelves of a typical Barnes & Noble superstore, and the number of books stocked in a typical large
independent bookstore.
Figure 5.2 Zipf's law, showing decrease in popularity of items within an ordered sequence
1000
800
~ ·c: oS 600 :J a. 8. G)
.~ 400 (ij G)
a: 200
0 ]JUJJlll[[[l010101]1]1]1l1I•I•IL•DD~IIII~CODD~~IL~DD:L 1 50
Position of item in sequence
Branding Branding Is the process by which oompanles distinguish their product offerings from the compet~ion by the sum of the characteristics of the product ()( service as perceived by the customer.
Brand equity The assets (or tiabilrt16S) inked to a btand's name and symbol that add to (()( subtract from) a service.
Chapter 5 Digital media and the marketing mix 199
Looking ar the issue from another perspective, rhcy esrimare rhar 4{) per cent of sales are from relatively obscure books with a sales rank of more than 100,000 (if you visit Amazon, you will see that every book has a sales rank from I for the most popular to over 1 million for the least popular). This indicates the importance of rhc long rail for online retailers such as Amazon, since 4{) per cent of sales are from these less popular books rhat cannot be stocked in a conventional bookstore (a large real-world book store would typically hold about 100,000 books). In a Pricing comex't, another benefit for online retailers is that less popular products cannot be readily obtained in the real world, so Amazon can justify higher prices for these books. Brynjolfsson eta/. (2003) estimated that average Amazon prices for an item in the top 100,000 is S29.26 and in less popular rirles $41.60.
Branding in a digital environment
Branding is important online and offline as it helps customers differentiate between products and services from different manufacturers and producers. Furthermore, branding is how companies set themselves apart from their competitors. Perhaps most importan tly, 'brandi ng affects perceptions since it is wel l-known that in blind product resting consumers fail ro distinguish between brands' Qobber and Ellis-Chadwick, 2016). Consequently, how a brand is developed and presenred online is particularly important because a website visitor has limited physical cues to help form an opinion about a company and irs services, such as talking to a sales representative or the ambiance of the physical store. Branding can add value across the supply chain, act as a barrier ro competition, increase consumer trust and generate high levels of profitability.
Before examining online brands, ler's consider the fundamenrals of branding. A brand is far more than the name or logo associated with a company or products. Traditionally, manufacturers and producers develop their products and services into brands in order ro create unique marker positions in the minds of their customers Uobber and Ellis-Chadwick, 2016). From a manufacturer's perspective, at a basic level, rhere are product categories such as washing power, soup, cars and computers. To idenrify a unique position - within such basic categories - a manufacturer builds a brand around rhe basic core product in order ro distinguish their offering from the competition. Unilever1M, global manufacturer of many well-known household brands, produces thePersil brand, while irs rival Procter & GarnbleThi produces the Ariel brand. Each brand can rhen be divided into variants, which extend cus- tomer choice within rhe brand. In addition ro manufacrurer brands, there are also own-label brands (e.g. Sainsbury's basics), which are brands developed by distributors (in this case UK supermarket Sainsbury's). Own-label brands often provide lower-cost alternatives to the customer rhan the category leader brands, which are often highly priced.
For physical products, brand producers rake rhc co re product, create a brand name and image and then augment the product through service, guarantees, design quality, packaging and delivery. The result is customers can then choose berween brands by selecting those rl1ar best suit their needs and wants. However, it is nor on ly manufacturers and products that shou ld be concerned with online branding. All businesses are perceived as brands and the online presence is increasingly important in governing brand perception. The company's website, mobile apps and social media presence all affect rhe perception of tl1e brand and are part of the e>..'Perience of a brand (sec Chapter 7). Social media provide a new platform £0 interact wid1 brands.
A key concept ar the heart of creating a brand is positioning and, according ro Jobber and Ellis-Chadwick (2016), 'creating a unique position in rhe marketplace involves a careful choice of target marker and establishing a clear differential in the minds of rhe people'. Brands Organisations are able ro ger inro the minds of rhe cuswmers, to position rheir b rands, using a range of brand elements conuiburing ro bra nd eq uity:
• brand domain - key target markers, where the brand comperes; • brand heritage- rhe background and culture of the brand;
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Brand experience The frequency and depth of interactions with a brand can be enhanced through the lntemet.
• brand val ues - the core characteristi cs, e.g., price, quality, pe rforma nce; • brand assets - distinctive names, sym bols, images; • brand personality - the character of the bra nd; • brand reflection - how rhe customer perceives themselves as a result of buyi ng t he brand.
These principles of branding apply on- and offli ne, bur on line brands increasingly need ro ensure integration between the percep tion of their offer in borh digital and p hysical environ- ments. For example, the supermarket brand Tesco TM has developed Tesco.com and has been able to leverage some advantage from its long-established offline brand to build credibility online. Since 1995, Tesco has grown its online offer into becoming one of the world's largest on line grocery retai lers and the UK leads the way in this secror onl ine (Du nning, 2017) . The Tesco b ra nd's success can be attributed m m aintain ing the quality of the service o n- a nd offline by using all the traditional elements o f b rand bui lding ro position Tesco.com. M igrat- ing a brand in the o ther direction from online t o offline is not as stra ightfo rwa rd . Now read Mini case study 5 .1 to find out more.
Fo r sta rtup and established o nline brands, rhe issue of b ra nd ing is more co mplex . The Internet a nd digital techno logies have changed the global b rand landsca pe. Since 1998, o nline br:111ds have ernerged and become househo ld names in less tha n 15 yea rs - e.g. Coogle, Ama- zo n, c:Bay and Facebook (Jnrerbrand, 2014). DigiraJ techno logy has also brought distinctive fea tures to the online brand experience (Mo rga n-Tho mas and Vclourso u, 2013) . An o nline bra nd is very simila r ro its o ffline counterpa rts inso fa r as it inco rporates a na me, set of sym- bo ls and product/service components. Bur, acco rdi ng to Mo rgan-Tho mas and Veloutso u (2013), the majo r difference is the co ntext in which the custome r e.xperiences the bra nd . Online context tends ro be:
• information rich; • dyna rt"lic; • characterised by excessive inform ation flows; • technologicallr innovati\·e.
These authors (Morgan-Thomas and Veloursou, 2013) expand furthe r on the implications for online bra nd experiences. O n the negative side, rhe virtual nature of the digital market- place means there is a lack of p hysical cues and heightened challenges due to t he
Mini case study 5.1 Expansion of an online brand offline
According to Bravo et al. (2011 ), 'in recent years the offline and online spheres of strategic brand management are becoming more and more interconnected'. Part of the reason for this is that when offline companies decide to sell their product online they also need to establish the logistical and technical networks to support the operation. However, as companies seek to commercialise their products by using digital channels, the crossover from offline to online can lead to the creation of new online products and extend a brand's reach to a wider target audience.
By operating offline, brands can build value in both environments, by extending their existing brand. For an offline brand a core reason for expanding online is accessing new markets, adding customer value and increasing flexibil- ity through the use of multichannels. According to Burt (201 0), established brands are 'getting more, rather than less important'. However, for a brand moving from online to offline, the focus and opportunities are slightly different.
Online brands can create awareness for their product and service offers and it may be possible to enhance con- sumer trust in the online brand (Delgado and Hernandez, 2008). But online brands must get it right if they are to enhance their brand positioning by going offline. Amazon have been experimenting with physical stores using an innovative format : completely automated stores called ArnazonGo. The first of these new concept stores is in
Seatle, and it has no cashiers or self-service scanners; instead there are hidden technology devices, which are able to record every item a shopper takes from the shelves and puts into their bags. These items are held in a virtual shopping basket until the shopper has finalised their purchases, then as they leave the store their Amazon account is automatically charged (Wingfield, 2018). Arguably, Amazon is seeking to bring the convenience of online, offline.
Brand advocate A customer who has favourable percepbons of a brand who wil talk f3\IOUI3bly about a brand to their acquaJntanees to help genemte awareness of the brand or inf\Jence purchase intent.
Chapter 5 Digital media and the marketing mix 201
intangibility of the environment and increased uncertainty of what engaging in an online experience will deliver. However, on the posirive side, digital environments create opportuni - ties for increased interactiviry and real-rime brand experiences, which can be empowering for the customer. Therefore, an online brand should seck to build links with customers by delivering positive online e.>..lJeriences, which then lead to satisfaction and positive intentions to interact with the brand in the future.
Consequently, positioning online brands requires marketers to think creatively abour the traditional elements of a brand and also consider new elements:
• Online brand domain. Where the brand comperes. Coogle has established and maintained irs marker-leading position in the search engine marketplace by foiJowing the company's mission ro 'organise the world's information and make it universally accessible'.
• O nline brand heritage. Cuinness is a brand with heritage going back over 200 years; use of the Internet has only been possible on a commercial sca le since 1989, so online brands must look for other ways ro develop their heritage. One way to do this is by offering genu- ine value. Online brands can get very close to their customers through use of digital technology and should seek to develop genuinely va luable relationships.
• On line brand values. The core characteristics that users of the brand value. For example, Alta Vista {launched 1995) was a.n early free sea rch engine, which originaJly provided a clean user interface similar to Coogle's. Bur AltaVista soon lost market share when irs search experience was rated lower than that of its new rival Coogle a11d it added other new services rather than focusing on the core deliverables the brand had to offer. It is important for online brands to emphasise the benefits of engaging with cl1e brand and also to develop a unique personality that is engaging and shareable {Brown, 2014).
• Online brand assets. Distinctive names, symbols, images. Twitter is an example of an online brand name that is distinctive, and with the bird symbol the brand assets help its users quickly assimilate \vith the brand. Tt is important to ensure that a company presents a standardised message at whatever touchpoinr they interact with the online brand {Brown, 2014).
• Online brand personality. The character of the brand, which irs customers use to deter- mine tbe added value offered by the brand and also to express their own individual per- sonalities through association wirh the brand {Valene-Fiorence eta/., 2011). Online brands need to understand their brands from the customer's perspecti\·e.
• O nline brand reflection . How the customer perceives themselves as a result of buying the brand. Being authenric and transparent about what the brand stands for is importam if an online brand is to create positive brand associations.
We return to the concept of brand promise at the start of Chapter 7, since this is closely related to delivering customer experience.
Success factors for brand sites
In Chap ter 1, we identified a 'brand website' as one of five classes of website or parts of sites that support differenr organisational goals. Although other types of sites were men - tioned, including transactional sires, relationship-building sires, portals and social networks, all seek to provide a favourable brand experience. In the case of manufacturer 'brand sires', the manager of the site needs to think carefully of the best way the brand can engage with consumers given the lack of conrem naturally associated with low-in\'oh-ement products.
For the site itself, iris nor the quantity of visirors that is important; rather it is abour the quality of ,·isirors, since brand sires are most likely to anract bra nd advocat es , who can be important in influencing others to make them aware of the brand or trial the brand. Ries and Ries (2000) suggested that it is in1porranr rhat brand sires provide a home for the brand loyalists and advocates. It foiJows that brand owners should determine the type of comenr on a brand site that wiiJ encourage brand loyalists (and also the brand-neutral consumer) to visit and then rerum ro the brand sire. Flores (2004) said that encouraging visitors to
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Brand identity The totality of brnnd assodalions. incWng name and symbols that must be COilYlUlicated.
return is key, and he suggests different aspects of a qualiry site experience to achieve this. Some of the methods he suggests ro encourage visitors to return include:
• Creating a compelling, interactive e:>.-perience including rich media that reflects the brand. The research by Flores (2004) showed that a sire rh:u delivers an unsatisfactory experience will negatively affect brand perception.
• Considering how the site will influence the sales cycle by encouraging trial. Trial will often be fulfilled offline, so approaches such as samples, coupons or prize draws can be used. These response activators should be integra red rhroughour the sire. For example, car brands will all have prominent options for raking a test drive, receiving a brochure o r the option to win a car or a visit ro a race circuit.
• Developing an exchange (permission marketing) programme 011 your website to begin a 'conversation' with the most valuable customer segments. Permission-based emai l or text messages can be used ro update consumers abou t new products or promotions.
Additiona ll y we wo uld stress the importance of achieving customer engagement with bra nd si res to encourage participation or co-creatio n of contenr. For example, brands ca n encour- age users to share and submit their comments, stories, photos or videos. Once engaged in this way, visitors arc more likely ro return ro a si re ro sec others' commen ts.
The success factors a brand uses should closely interlink wirh the brand's identity.
Brand identity
Aaker and Joachimsthaler (2000) also emphasise the importance of developing a plan ro communicate the key feanues of the brand identity and increase brand awareness. Brand identiry is again more than the name. These authors refer ro ir as a set of brand associations that imply a promise to customers from an o rganisarion.
Brand names for online brands
Ries and Ries (2000) suggest two ru les for naming online brands:
1 The Law of the Common Name. They say ' the kiss of dcarh for an Internet brand is a com mon name'. The idea is that common names such as Art .com or Advertising .com are poor si nce they are nor sufficiently distinctive.
2 TI1e Law of the Proper Name. They say 'you r name sta nd s alone on the Lnternet , so you'd better have a good o ne' . This suggests rhat proper names a re to be preferred to generic names, e.g. PinkMoods.com against Woman.com .
Research has fotmd that the characteris tics of the word chosen ro represent a brand can influence consumer behaviour (Vitevirch and Donoso, 2011) and be linked to the propensity with which a buyer will engage with a brand. This srudy suggests that in order to increase the likelihood that a consumer will engage with a new brand, it should be easy to pro- nounce, have interesting arrangements of syllables and consonanrs so as to make the name easy ro recall but should nor be roo similar ro other words (thereby causing confusion with other brand names).
In essence, good brand names (Activity 5.?) are those that are easy to remember and pronounce but also have potential ro carch the attention of customers (Brand a me Genera- tor, 2015).
Activity 5.2
( p · nee
Price variable The element of the marl<eti1g mix that involves clefi1ing ptOduct prices and pricing models.
Pricing models Describe the fOITll of payment, such as outright purchase, auction. rental. volume purchases and credit terms.
Chapter 5 Digital media and the marketing mix 203
How to develop a new brand name
Purpose
To illustrate how non-words (those not recognised in everyday language) can be used as brand names.
Activity
Visit the Brand Name Generator at http://business-name-generators.com/generator. php?gen=brand-name-generator. Generate new brand names that you feel have poten- tial as online brands. Evaluate your choice using the following criteria:
1 Easy to pronounce Y/N? 2 Easy to remember Y /N? 3 Intriguing word pattern (syllables and consonants) Y /N? 4 Has the potential to attract attention Y /N? 5 Not close to existing known word(s) Y/N? 6 Creates a feeling of trust Y/N? 7 Has an 'air' of professionalism Y/N?
Once you have a name that you feel has potential to be successful (more than five Ys), suggest some products that could fit with the name.
_ _ ) The p rice variable of the marketing mix refers ro an organisation's pr icing policies, which are used to define pricing mode ls and ro ser prices for products md services, which ulri- m::nely differentiate a brand. The Internet ha s implications for pricing in many sectors. Original research suggested rwo approaches commonly adopted for pricing online: 1) sranup companies have tended to use low prices to gain a customer base; and 2) existing companies just transferred their e-xisting prices to the web (Baker eta/. , 2000; )Gng eta/. , 2006) . H owever, as organ isatio ns a re increasingly developing multicha n nel strategies in order to give t heir custo mers more opportun ities to interact with brands, it becomes mo re difficult to justify o nHne and offline pricing po licies, especially in conSLLmer markets. D ixons Carpho ne Warehouse, for exa mple, no r o nl y offe rs un ifo rm pric ing ac ross its bra nds but also has a Com pare Prices App tha r allows irs users ro sea rch fo r p roducts by key word o r bar cod es and rhen get instant price compa risons with other retai lers sel li ng identica l p rod - ucts (PC Wo rld, 2015) . fu rlines use revenue management systems a nd dyna mk prici ng mod- els ro generate maximum revenue. See Digital m arketi ng ins ight 5.2 (Up up and away - fo r a price) . H owever, for companies sel ling goods and services, it is becom ing h arder to legiti - mise differential online pricing as this can reduce buyer confidence and trus t. Trivago is an online brand that h as crea ted business our of price variations in the travel industry, a nd it nor only shows consumers price comparisons for accommodation bur also provides insights on pricing for hoteliers (http:llhotelmanager-blog.trivago.cornlrate-insights!).
The Pricing element of the mix invariabl y rei ares ro the Product element (even when rhe offer is a service), since online pricing depends o n the range of products offered and rhe poi nt ar which a product is in its lifecycle. Extending rhe product range may allow these products to be discounted onJine. Some organisations have launched new p roducts
204 Part 2 Digital marketing strategy development
Digital marketing insight 5.2 Up up and away -for a price
Price transparency Customer knowledge about pricing Increases due to Increased availability of pricing Information.
Differential pricing Identical products are priiced differently for different types or customers, markets or buying situations.
Price elasticity of demand Measure of COflSIM1lel' behaviour that indicates the change il demand for a prodJct or seMCe in response to dlanges il price. Price elasticrty or demand is used to 8$S9SS the extent to which a change in price .,;1 influence demand for a product.
Grandos eta/. {2012) note that there is now far more information available to aid airline buying decisions, which leads to ' . . . an increase in the price elasticity of demand, or the per cent change in demand due to a per cent change in price, because consumers are better able to compare offerings from multiple suppliers'.
What this means is that there is more information to use for assessing availability, routes and prices, but this is not just for consumers. Airline companies and online travel agencies also have access to data, which helps them to pinpoint high and low points in demand and to closely align these patterns with specific customer types. Airlines know which are the high-value routes and which are the high-value customers, and digital technology is enabling better price matching through customer profiling. As a result, on a typical business route - let's say London to Frankfurt - the airline may start with low prices to fill a minimum of capacity, then raise prices steeply for business travelers who 'book at the last minute' (CNN Travel , 2017). So, while information has, to a certain extent, liberated the airline ticket market, making prices more elastic and transparent, there is also a certain level of opaqueness from the ticket sellers as to how they arrive at fare pricing (Grandos, eta/., 2012). Indeed, there are no longer just three fare bands (economy, business and first class) but dozens of different air fare classes, which are devised when airlines are able to bring together their different data sets of flight sales and availbility with passenger information.
online that have a lower Price element; for exam ple, banks have launched 'eSavings' prod- ucts where higher interest rares are offered to online customers in order to attract new customers. Alternatively, they may offer insurance products with a 10 per cent online discount in o rder to encourage customers to switch to the digital channel. Often these agreements a re dependent on the customer servicing their account online, which helps reduce the cost-base of the bank. This then relates to the service elements of the mix since service has to be delivered onli ne. See Digital marketing insight 5.3 about discounting options for online services.
The main implicat ions of the Internet for the price aspect of the mix, which we will review in this section, a re:
1 inc reased price tra nspa rency and irs impli catio ns on diffe rential prici ng; 2 dow nward pressure o n price (including comm odirisarion); 3 n..:w pricing approaches (including d yn amic p rici ng, price testing and a uctions); 4 alte rn a ti ve pricing structure or po licies.
1 Increased price transparency
Quelch and Klein (1996) descri bed rwo contradictory effects of the Internet o n price that are related to price transparency. First, a supplier can usc the technology for differential pricing - for example, for customers i11 different countries (or as discussed in Digit aJ mar- keting insight 5.3). H owever, if precautions are nor taken about price, the customers may be able to quickly find our about the price discrimination through price comparison and they will object to it.
Pricing online has ro take imo account the concept of price elasticity of demand. This is a measure of consumer behaviour based on economic theory that indicates the change in demand for a product or service in response to changes in price. Pr ice elasticity of demand is determined by the price of the product, availability of alternative goods from alternative suppliers (which tends to increase online) and consumer income. A product is said to be
Ch apt er 5 Digital media and the marketing mix 205
Digital marketing insight 5.3 Discounting options f or online services
Satisficing behaviour Consumers do not behave entirely rationally In product or supplier selection. They will compare alternatives. but then may make their choice given imperfect information.
Some service industry providers face a challenge with regard to p ricing due to the nature of their products: their inventory- e.g. theatre seats, hotel rooms and even a hair cut- cannot be stored for future use in the same way that products can. So the service provider faces the constant d ilemma of how much and when to d iscount prices to maximise the sales of perishable services. In the hotel industry, in the low season there are many unbooked rooms due to low demand, but these cannot be stored for the high season. However, the profit margins of hotel rooms are relatively high for each let room. So the challenge is how to increase use of the perishable rooms (Guo eta/., 2013). These authors suggest that profits in the hotel industry can be increased significantly 'with a proper pricing strategy provided by market segmentation '. The Internet and online reser- vation systems (ORS) have enabled this approach and are now widely used around the globe. ORS have become increasingly sophisticated and offer dynamic pricing based on target segments and lead times. This has enabled hoteliers to engage in sophisti- cated pricing strategies in an attempt to maximise sales. Some offer variable discounts for booking in advance (e.g. Marriott lnternational r"', Hilton r"') , while others offer fixed discounts. The pricing approaches can vary depending on the target segments, fre- quency of use, loyalty and many other related variables. Dynamic pricing strategies used in conjunction with ORS have benefited the hotel industry and, where applied effectively, have increased profitability. However, the 'book anytime, any place, anywhere' model , which underpins this new way of booking rooms, also has its limitations . The hotel industry has to deal with cancellations and no-shows, so sometimes hotels add into their ORS the capacity to overbook (Ung eta/. , 2014 , or adopt the more innovative approach of ' name your own price'.
'elastic' (or responsive ro price changes) if a small change in price increases or reduces the demand substantially. A product is 'inelastic' if a large change in price is accompanied by a small amount of change in demand .
Although, intuitively, we would rhj nk that price transparency enabled through the digi tal price comparison services such as Shopping.com (owned by eBay), which leads ro searching by product rather than by srore level, would lead ro common comparisons of price and the selection of the cheapest p roduct, the reality seems d ifferent. Pricing online is relatively inelas- tic. T here are two m ai n reaso ns for this: 1) prici ng is on ly one variable- consumers also decide on suppliers according ro other aspects abou t the brand, such as famil iari ty, t rust and pe r- ceived service levels; and 2) consumers o ften display satisficing behaviour. T he term 'satisfi ce' was coi ned by H erbert Simo n in 1957 when he said that peop le are on ly 'ra tional enough' an d that they suspend or relax their rati onality if th ey fee l it is no longer required . T hjs is called 'bounded rational ity' by cognitive psycho logists. In other words, although consumers may seek to mjnimise some variable (such as price) when making a product or suppJjer selection, most may not try too hard . Online, t his is supported by research Uohnson et al., 2004; Allan, 2012), which has shown that shoppers visit a number of web stores before making their pur- chase decisjons. In the early days of online shopping, choices were Jjmited and consumer confidence in the digital marketplace was rei a lively low. As choice and interest in buying online has grown, in line with the proliferation of online business, rhe number of sites consulted has grown significantly during the last decade. In the travel industry ir has been suggested that as many as 38 websites might be visited before choosing a horcl room. However, currently, con- sumers visit, on average, around four to five websites when making tra\·el choices bur they are also likely to consult social media and customer reviews before making their final purchase decision (DiMjao, 2017) . This reduction ca.n be explained by the growth in the number of intermediaries (e.g., booking.com, laterooms.com, trivago.com), which act as a portal for tens
206 Part 2 Digital marketing strategy development
Aggregators An alternative tenn to price comparison s~es or comparison seatdl engre; (CSE). Aggregators ir'KUle product, price and seMce infoonation ~ competitors wltt«< a sector such as financial services, retal or tr.111e1. Thew revenue models commonly include affill!lte revenues (CPAj, pay· per ·cick advertising (CPC) and display advertising (CPM).
Commoditisation The process whereby product selection becomes more dependent on price than on differentiating features, benefits and value-added services.
Pricing level The price set for a specific product or range of products.
of thousands of holiday accommodation providers and destinations. The number of sires and digital information sources can also vary depending on the product or service being sought.
Retailers or other transactional e-commerce companies operating in markers where their products are readily reviewed online need to review their strategy rowards the impact of aggregators, which facilitate price comparison. One strategy for companies in the face of increased price transparency is ro highlight the other fearures of the brand- such as the quality of the retail experience, fulfilment choice or customer service- to reduce the emphasis on cost as a differenriaror. Another strategy is to educate the marker about the limitations in aggrega- rors, such as incomplete coverage or Limited information about delivery or service levels.
Arguably, this conflict shows the importance of companies that are featu red within aggre- garors possessing a strong brand that can offer additional value in terms of customer service or trust. It also shows the conri1ming importance of offline advertising in shapi ng conswner perceptions of brands and driving visitors directly to a destination site.
For business commodities, auctions on business-to-business exchanges ca n also have a simi lar effect of driving down price. Purchase of some products that have nor traditionally been thought of as commodities may become more price sensitive. This process is known as c ommoditisat ion. Examples of goods that are becoming commod iti sed include electrical goods, ca rs and even cut flowers (Lu eta/., 2016).
2 Downward pressure on price
The competition caused by price transparency and increased number of compe titors is the main reason for downward pressure on price. Many aggregators or compar ison sires have benefited from r.his approach (e.g. mysupermarket.com). For example, Activity 5.3 and Figure 5.3 shows an example of this website, which compares four different super- markers showing the va riati on in prices between Tesco, ASDA, Sainsbury's and Ocado. However, you should be aware when looking at price comparisons that you are nor always seeing a like-for-like comparison; products can vary, especially when supermarket own - brands are in the shopping basket.
The Internet also rends to drive down prices, since lnrerner-only retailers that do not have a physical presence do nor have the overheads of operating stores and a retailer dis- tribution nenvork. This means that, in theory, online companies can operate ar lower pricing leve ls than offline rivals. This phenomenon is prevalent in the banking sector, where many banks have set up online companies or online-only accounts offering better rates of interest on savings products. Online purchase discounts are a com mon approach in many markers.
Price e last icity of demand (see Digital marketing insight 5.4) assesses the extent to which a change in price will influence rhe demand for a product. It is calcul::!ted as the change in quantity demanded (expressed as a percentage) divided by the chan ge in price as a percent- age. Different products will naturally have different coefficients of price elasticity of demand depending on where they lie on the continuum of consumer tastes, from relatively Lmdif- ferenriated commodities to luxury, highly differentiated products where the brand percep-
non IS Important. Discounting of rhe most popular products is another pricing approach used by both
online :md traditional retailers to acquire customers or drive sales. For example, online booksellers may decide ro offer a discount of 50 per cent on rhe rop 25 best-selli ng books in each category, fo r which no profit is made, but offer a smaller discount on less popular books to give a profit margin.
Baker eta/. (2000) suggested that companies should use the following three factors to assist 111 pncmg.
1 Precision. Each product has a price-indifference band , where varying price has little or
no impact on sales. The authors report that these bands can be as wide as 17 per cenr for branded consumer beauty products, 10 per cent for engineered industrial components,
Activity 5.3
Chapter 5 Digital media and the marketing mix 207
Assessing price ranges on the Internet
Purpose
To illustrate the concept of price transparency.
Activity
Visit a price comparison site, e.g. www.pri cerunner.com , www.confused.com, www. moneysupennarket.com; or www.gocompare.com , and then find the products below and examples of the best and worst offers:
• insurance; • a personal loan; • a savings product.
Figure 5.3 mySupenmarket aggregator (www.mysupermarket.co.uk)
- .. .... -.. -- W~w~to
sure rket
I ea...,_ •• w.-. oiiCJC* ll ._...
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.... -· - -- 011 • - - ... ....... - - ,
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but less d1an 10 per cenr for some fina ncial products. The authors suggest that while the cost of tm dertaking a survey to calcula te price indjfference js very expensive in the real world, it is more effective onli ne.
2 Adaptability. Tlll5 refers simply w the fact that it is possible to respond more quickly to the demands of the marketplace wi th online pricing. For many product areas, such as ticket- iJ1g, cars and fas!Uo n, it may be possible to dynanucally alt er prices ju line with demand. Tickets.com adjusts concer t t icker prices according to demand and has been able to aclueve 45 per cem more reven ue per event as a result.
3 Segm enta tio n. This refers to pricing d ifferently for differenr groups of customers. T hjs has not t rarutionaUy been pract ical for B2C markers since at the point of sale information is not known abom the customer, although it is widely practised for B2B markets. One example of pricing by segments would be for a car manufacrmer to vary promot ional
208 Part 2 Digijal marketing strategy development
pricing, so that rat her than offering every purchaser discount purchasing or cash-back, it is only offer ed to those for whom it is thought necessary to make the sale. A fur ther example is where a company can identify regular customers and 611 in customers who only buy from the supplier when their needs can't be mer elsewhere. l n the latter case, up to 20 per cent higher prices are levied.
Digital marketing insight 5.4 Price elasticity of demand
The formula for the price elasticity of demand is:
(% change in quantity demanded) Price elasticity of demand coefficient = (oL h . . )
70 c ange 1n pnce
Price elasticity for products is generally described as:
• Elastic (coefficient of price elasticity > 1). Here, the percentage change in quantity demanded is greater than the percentage change in price. In elastic demand, the demand curve is relatively shallow and a small percentage increase In price leads to a reduction in revenue. On balance overall, when the price is raised, the total revenue of producers or retailers falls since the rise in revenue does not compensate for the fall in demand; and when the price is decreased, total revenue rises because the income from additional customers compensates from the decrease in revenue from reduced prices. Figure 5.4 shows the demand curve for a relatively elastic product (price elasticity = 1.67).
• Inelastic demand (coefficient of price elasticity < 1). Here, the percentage change in quantity demanded is smaller than the percentage change in price. In inelasticde- mand, the demand curve is relatively steep and a small percentage increase in p rice causes a smal l decrease in demand. On balance, overall revenue increases as the price increases and falls as the price falls. Figure 5.5 shows the demand curve for a relatively inelastic product (price elasticity = 0.3125).
Figure 5.4 Price elasticity of demand for a relatively elastic product
600
550 Price reduced from £50 to £250 % change in price = 60%
500 % change in demand = 1 00% 450 Price elasticity = 1.67 a i.e. d emand is p rice elastic
... 400 0 A ~ 350 ;t:
§ 300 B ...
8. 250 B 200 ·;:: a.
150
100
50
0 1 2 3 4 5
Quantity demanded (OOOs)
Chapter 5 Digital media and the marketing mix 209
Figure 5 .5 Price elasticity of demand for a relatively inelastic product
600 r
550 ~
500 1-
a 450 ~ 400 0 ~
~ 350 !!::
~
§ 300 1- ~
8. 250 8 200 ~ ;:
Q.
150 ~
100 1-
50 ~
0 I
1 2
B
I
3
Price rises from £250 to £450 % change in price = 80% % change in demand = 25% Price elasticity= 0.3125 i.e. demand is price inelastic
A
4 5 Quantity demanded (OOOs)
I
When the price elasticity coefficient is close to 1 , this is described as unit elastic or unitary elastic. At the limits of elasticity, products will vary from:
• perfectly elastic (coefficient is not infinite), effectively shown as a horizontal line on demand curve graphs, such as Figure 5.4 where any increase in the price will cause demand (and revenue for the goods) to drop to zero.
• perfectly inelastic (coefficient of price elasticity is zero), effectively shown as a vertical line on demand curve graphs, such as Figure 5.5 where changes in the price do not affect the quantity demanded for the good.
When the price elasticity value is 1 of the demand for a good it is known as unit elastic (or unitary elastic).
What, then, are the options available to marketers given this downward pressure on pricing? We will start by looking at traditional methods for pricing and how they are affected by the Internet. Bickerton et a!. (2000) identified a range of optio ns that are available for settin g pncmg:
1 Cost-plus pricing. Tl1is involves adding on a profit margin based on production costs. As we have seen above, a reduction in this margin may be required in the Internet era.
2 Target-profit pricing. This is a more sophisticated pricing method that involves looking at the fixed and variable costs in relation to income for different sales vo lu mes and unit prices. Using this method, the breakeven amow1t for different combinations can be cal - culated. Fore-commerce sales the variable selling cost (i.e. the cost for each transaction) is smal l. This means that once breakeven is achieved each sale has a large margin. Wi th this model differential pr icing is often used in a B2B context according to the vo lume of goods sold. Care needs to be taken th at differential prices are not evident to different customers. One company, through an error on its webs ite, made prices for different customers available for all to see, with disastrous results.
3 Competition-based pricing. This approach is common online. T he advent of price com- parison engines such as Kelkoo (www.kelkoo.co.uk) for B2C consum ables has increased price competition a nd companies need to develop on line pricing strategies that are
21 0 Part 2 Digital marketing strategy development
Forward auctions Hem purchased by highest bid made in bidding period.
Reverse auctions Item purchased from lowest-bidding supplier in bidding period.
Offer A commitment by a trader to sell under certain conditions.
Bid A commitment by a trader to purchase under certain conditions.
Dynamic pricing Prices can be updated in real time according to the type of customer or current market conditions
flexi -ble enough to compete in the marketplace, bur are still sufficient to achieve profit- ability in the channel. This approach may be used for the most popular products and is available via cow1rry -specific sites such as kelkoo.nl, and kelkoo.de.
4 Market-orientated pricing. Here the response to price changes by customers m aking up the market are considered. Tlus is known as ' th e elasticity of demand'. There are two approaches. Premium pricing (or skimming the market) involves setting a higher price than the competition to reflect the positioning of the product as a high-quaJiry item . Penetration pricing is when a price is set below the competitors' prices to either stimulate demand or increase penetration. This approach was common ly used by dor.com com - panies to acquire customers. The difficulty with this approach is that if customers are price-sensitive then the low price has to be sustained- otherwise customers may change to a rival supplier. 1l1is has happened with online banks- some customers regularly move to reduce costs of overdrafts, for example. Alternatively, if a customer is concerned by other aspects such as service quality, it may be necessary to create a large price differential in order to encourage the customer to change supplier.
Whi le there is much research evidence that suggests the Internet has had a downwards impact on pricing, this may not be so prevalent in the future. As rl1e Internet has become a more mainstream shopping channel, consumers are tending to focus more on the quality of the services provided rather t han the price.
3" Innovative pricing approaches
The Internet has proved to have the teclmological capacity to create new pricing options. Figure 5.6 summarises different pricing mechanisms, wluch have been used effectively online. Wh ile many of rl1ese were available before the advent of the Internet and are nor [Jew, the Internet has made some models easier to apply. In particular, the volume of users makes traditional or f orwar d auctions (B2C) and rever se auct ions (B2B) more tenable- these have become more widely used than previously.
An offer is a commitment by a trader ro sell under certain conditions, such as a minimum price. A bid is made by a trader to buy under the conditions of the bid , such as a commit- ment to purchase at a particular price. In a sealed-bid arrangement, suppliers submit rl1eir bids in response to an RFP posted to a website at a set rime. In an open -bid arrangement, suppliers bid sequentially ilirough a series of product lots or subgroups and can vi.ew their competitors' bids and respond in real time. A moving end -time (a 'soft close') is used for each lot, which means that any bid within the last minute of the closing rin1e automatically ex'tends the end time for a few minutes to allow orl1er bidders to respond.
Price testing and dynamic pricing
The Internet introduces new opportunities for dy namic pricing - for example, new custom- ers could automatically be given discounted purchases for the first three items. Ca~re has to be taken with differential pricing since established customers will be w1happy if significant discounts are given to new customers. Amazon rrialed such a discounting scheme and it received negative press and had to be withdrawn when people fouud out that their friends or coUeagues had paid less. If the scheme had been a clear introductory promotion this problem may not have arisen .
Baye et a/. (2007) reported that European electronics on line retailer Pixmania™ (www.pixmania.com) used price experimentat ion to learn about its customers' price sensit ivity. They noted that for a PDA, Pixmania adjusted its product price 11 rimes in a 14-week period, from a low of £268 to a high of £183, as parr of a series of small experi- ments that enabled it to learn about the price sensitivities of its customers. But th.is strategy did nor prove to be sust ainable or profitable and the brand has all but disappeared following its sale to German Murares in 2013, who attempted to save ir.
Chapter 5 Digital media and the marketing mix 211
Figure 5.6 Alternative pricing mechanisms
Seller sets
I
Pricing option
I
Fixed Variable
I
Buyer sets Single
transaction
I
Multiple transactions
Retail sale Tendered
sale Buyer sets Seller sets
....
Shipping fees
Tendered sale
Reverse ,_ (Dutch) auction
t- Buyer sets
....
'- Both sets
Traditional auction
'- Negotiation
The settin g o f shipping fees can have a dramatic effect o n both convers io n rates and profit- ab ility accordi ng to research completed by Lewis ct a/. (2006). T hey note the popularity of free shippin g offers when the basket size is above a certain amount, but also no te rl1at it can pote nti ally cause profitability to faU if it is no t set at the right level. They also suggest that different shippi ng fees could potentially be offered to different segments. Shipping fees can also be varied according t o the rime it rakes for items to be delivered.
One further approach wirl1 inn ova tion in crearmenr of shipping fees is to offer a loyalty programme in return for free express shipping - the basis of the Amazon Prime programme.
4 Alternative pricing structure or policies
Different types of pricing may be possible on the Internet, particularly for digital, download- able products. Software and music ha\'e traditionally been sold for a continuous right to use. As explained in more detail in the section on Product, the Internet offers new options such
212 Part 2 Digital marketing strategy development
- Place
Place variable The element of the marketing mix that involves dlstnbuting products to customers in line with demand and minimising cost of inventory, transport and storage.
as payment per use, rental at a fixed cost per month, a lease arrangement and bundling with other products. The use of application service providers (ASPs) to deliver services s uch as website traffic monitoring also gives new methods of volume pricing.
Further pricing options rhar could be varied online include:
• basic price; • discounts; • add-ons and extra products and services; • guarantees and warranties; • refund policies; • order cancellation terms.
As a conclusion ro the sectio n o n pricing, we su mmarise the research by Baye eta/. (2007), which h as many interesting examples of in nova rive online pr icing approaches. They reco m- mend that o nline retailers should ask the following questions when reviewi ng pricing on line:
• H ow many competitors are there at a point in time? They suggest a product's markup sho u ld be increased when the number of rival s fall s and decreased when the number of rivals in creases. They also recommend that since !(he id entity of competitors online will differ from traditional offline rivals, ir is impo rtant to include key o nline competitors.
• Wh at is the position in the produ ct lifecycle? A product's markup should be decreased over its lifecycle, or when new versions a re introduced.
• Wh at is the price sensitivity o r elasticity of a prod uct? They suggest conti nuously experi- menting to learn from cha nges in the price sensitivity of a product.
• At what level is pricing set ? T he optimal markup factor should be applied at the product rather than category or firm level, based on price testing at the product level. They also note the variation of conversion rates and click-through fees from paid search engines and aggregators at the category or product level, which makes it importa nt to have micro- management of pricing.
• Are rivals monitoring my price? Be unpredictable if rivals are watching; exploit 'blind spots' if rivals are nor watching.
• Are we stuck in the middle? A middle pricing point is suboptimal, particularly if prices can be set to target the lowest point in the marker.
T he place variable of the marketing mix refers ro how rhc product is distributed to custom - ers. Typically, for offli11e cha nnels, the aim o f Pl ace is to maximi se the reach of distribution to achi eve widespread avai la bility of produ ct s whi le minimising the costs of invento ry, trans- port and storage. In a n online context, thanks to ease of navigating from o ne si te to a nother, the scope of Place is less dear since Place also rela tes to Promotion and Partnerships. Take the exa mple of a retailer of mobile phones: for this retailer ro reach irs potential audience to sell and distribute irs product, it has to think beyond irs own website to third-party web- sires where it can promote its services. Successful retailers are those that maximise their representation or visibility on third-party sires that a re used by their target audiences. These third-party sites wiJI include search engines, online portals reviewing mobile phones and product comparison sites. When thinking about represenrarion on third-party sires, it is useful to think of the long tail concept (Anderson, 2004) referenced in Figure 5.2. Across the Internet, there are a small number of sires, including porrals such as Coogle and Yahoo!, that are ver y popular (known as the head, which may theoretically account for 80 per cent of the volume of visitors) and a much larger number of sires that are less popular individu- ally, bur still collectively important. Similarly, within a category of sires, such as automotive,
Chapter 5 Digital media and the marketing mix 2 13
there will be a few very popular sires and then many niche sites, which are collectively important in volume and may be more effective at reaching a niche target audience (the tail}. When considering Place and Promotion, it is important to target both the head and the tail to maximise reach and to attract quality visitors to the destination sire.
The main implications of digital for the Place aspect of the mix reviewed in this section are:
1 place of purchase (see options shown in Table 5.1 ); 2 new channel strucnues; 3 channel conflicts; 4 virtual organisations.
1 Place of purchase
Suggesting the concept of place in relation to the Internet may seem peculiar, but as it is a global virtual environment that crosses geographical boundaries, the issues associated with distribution, logistics and the point at which sales and other transactions rake place are important for digital marketers. For example, when selling physical goods there are cost and time issues associated with fulfilment (local, regional and international) together wirh issues of trust, culture and local support networks. However, in the case of sellers of digital products rhere is no physical limitation on fulfilment. For exa mple, Apple iTunesTM has
proved successfu l in offering its service worldwide. Read Mini case study 5.2 (Winners and losers in online shopping) to find out more about the impact of digital on retailer trading in physical stores.
Evans and Wurster (1999) argue that there are three aspects of ' navigational advantage'
that are key to achieving competitive advantage online. These duee, wh ich all relare to the Place element of the mix, are:
• Reach . Evans and Wurster say: 'It [ reach ] means , simply, how many customers a busi- ness can connect with and how many products it can offer ro those customers' . Reach can be increased by moving from a single site to representation with a large number of
Table 5.1 Different places for virtual marketplace representation
Place of purchase
A Seller-controlled
B Seller-orientated
C Neutral
D Buyer-orientated
E Buyer-controlled
Examples of sites
• Vendor sites, i.e. home site of organisation selling products or services- e.g. www.dell.oom, www.uber.com
• Intermediaries controlled by third parties to the seller such as distribu- tors and agents- e.g. Opodo (www.opodo.com), which represents the main air carriers and Amazon marketplace, where third parties can sell products
• Intermediaries not controlled by buyer's industry • Comparison sites- e.g. uSwitch (www.uswitch.com) in the energy
industry
• mySupermarket (www.mysupermarket.com) • Intermediaries controlled by buyers - e.g. the remaining parts of the
Covisint network of motor manufacturers • Discount sites for consumers such as voucher code sites - e.g.
www.myvouchercodes.com, and cashback sites- e.g. Quidco (www. quidco.com)
• Website procurement posting or reverse auctions on company's own site, e.g. www.Maistro.com enables businesses to post tenders for projects in marketing and other sectors
I
214 Part 2 Digital marketing strategy development
Mini case study 5.2 Winners and losers in online shopping
Serious attempts to trade online started to emerge in the early 1990s when innovative, technically savvy com- panies responded to the opportunities and challenges posed by the Internet, to develop sophisticated web- sites to serve customers in their homes (Rayport and Sviokla, 1994). At this time, many academics were starting to question the likely impacts that this exciting, new technology would have on the shape and conduct of retailing in the years to come and questioned the extent to which the virtual world would change the principles of retailing, and asked whether it would ultimately displace existing retail formats or serve as a natural comple- ment to current mari<eting practices. Malone et al. (1987) raised questions about the possibility that manufac- turers could simply target their consumers directly and, in so doing, simply cut the retailer, as the 'middle man', out of the equation. Other commentators went beyond raising questions about the Internet's likely impact on retailing, to making fairly specific predictions. Indeed, most commentators were extremely optimistic about how quickly and enthusiastically the consumer would adopt this new channel, with the following two quotes being very indicative of the general mood: 'by the year 2005 it (the Internet) would capture between 8 and 30 per cent of the UK retail market' Pavitt (1997); and, over a similar time frame, 'high-street stores face an esti- mated loss of 20% of their business to electronic shopping ' (Angelides, 1997).
Fast forward by twenty years, to the mid 201 Os, and it is possible to answer some of the original questions and assess those early predictions. Although the rate of Internet adoption among retailers might not have been as rapid as originally envisaged, a key question for both marketing scholars and practitioners is no longer whether but when a store-based retailer should adopt an online channel.
The results of this study show how there has been a significant decline in the number of well-known retail brands on UK high streets during the last two decades and suggest that their demise can be attributed to their approach towards Internet adoption as a retail channel. At the start of the study nearly 70 per cent of businesses d id not have any form of web presence or a registered domain name. Figure 5. 7 shows the decline in the number of leading high-street retailers between 1997 and 2013. Examples of brand names that have disap- peared from the high street include Blockbusters (video rentals), Barratts (shoes), Comet (white goods, elec- tricals), MFI (low-cost furniture) and Woolworths (music, entertainment, confectionary).
However, the findings of this study show that by 2013 all remaining retailers either had some form of online presence or had a registered domain, and 62 per cent had live sites that were a-commerce enabled. Analysis also reveals how retailers that were early movers, and have been innovative with their approach towards Internet adoption since 1997, have been able to future proof their businesses, and many still remain operational at the time of writing.
This extract is dedicated to the memory of Professor Nei F. Doherty and part of the last article we were able to write together befO<e his untimely death in 2017. (Fiona 8ks·Chadwick)
different intermedia ries . Allen and Fjermesrad (2001) suggest that niche suppliers can readily reach a much wider marker due to sea rch-engine marketing (C hapter 8) . Evans and Wurster also suggest that reach refers to the range of products and services that can be offered, since this will increase the number of people the company can appeal to.
• Richness. This is the depth or derail of information that is both collected about the cus- tomer and provided to the customer. The latter is related ro the richness of product information and how well it can be personalised ro be relev:uu to individual needs.
• Affiliation. This refers to whose interest the selling organisation represents- consumers' or suppliers' - and stresses the importance of forming the right partnerships. This par- ticularly applies ro retailers. The aurhors suggest rhar successful online retailers will reward customers who provide them with the richest information on comparing competi- tive products. They suggest this tilts the balance in favour of the customer.
Syndication Content or product information is distributed to third parties. Online this is commonly achieved through standard XML formats suoh as RSS.
Chapter 5 Digital media and the marketing mix 2 15
Syndication
Tradjtionally, syndication referred to articles or extracts from books being included in other publications such as newspapers and magazines. In an on line context, this practice related to Place and Partnerships needs to be reviewed for online content owners, since there may be oppornmi ties to generate additional revenue by .re-publishjng content on third-party sites through feeds, widgets or data exchange, or it may be possible to increase exposure on partner sites and so generate awareness or visits to the company site. For example, through its Amazon Author Central service, Amazon.com enables authors to publish a blog on their site based on an RSS feed (see Chapter 1) from their mvn blog, thus increas ing awareness of the blog.
But syndication also has implications for other companies , and in particular retailers, since syndication of information from their product catalogues to third-parry aggregarors is important to extend their reach. Retailers need to consider participating in Coogle Shop- ping so that Product Listing Ads (PLAs, Figure 5.7) are displayed to increase awareness (see Chapter 9, the section on search marketi11g).
Since integrating product data with a range of aggregarors that will require formats can be time-constmung, some companies such as Channel Advisor (www.channeladvisor.com) now offer a service to upload data and track results across a range of aggregators.
Payment m echanisms - purc hase place
Traditionally, online purchase will occur at the retailer th rough a partnership wi th an online secure payment provider such as Worldpay™ (www.worldpay.com). Effectively, the purchase transaction occurs on a different domain, but it is important that customers are reassured that the payment process is secure and seamless. Retailers often offer payment mechanisms where the purchaser has already set up payment with another payment pro- vider, such as Pay Pal (www.paypal.com). l11is approach can assist wirl1 reassurance about privacy and security and increase purchase convenience and choice for the user, so these options also have to be reviewed. Now complete Activiry 5.4 to gain more insight into the influence of place of purchase.
Figure 5.7 Google Shopping™ (www.google.com/shopping)
Go gle Ads Shopping o.- ... _ -- -- -- - ~~
,.. n ,._.,, a,...., ~~..,. .......... 1 ··-· , ... ,... a mlf'l .. ~wca ·~-.,..,. ...... -,.,-. ........ .,.._. ..-o s .......... ,.., ............ ,.., • • __ .., ____ _
a .............. _......_~,_.,.,......,..,, ... .. ............ ,._ .... ,....,.., .... ..... -·' .. ,.. __
_ .................... 1 ... _.. ___ _
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:-:: ... ~~~-=•:.:•..-C.....•.,.-• ... • t _.._. J]'u I" ... .-D._..._._ • .....,_..,.~...,..,_,,,.._...._ • ..._ _____ _
216 Part 2 Digital marketing strategy development
Localisation Tailoring of website information for illlividual countries or regions. Localisation can include simple llanSiatoon. but also etAttxal adaptation.
localisation
Providing a local si te, wi th or wi t:ho ur a language-specific version and additional cul tu ral adaptations, is referred to as localisation. A site may need ro support customers fro m a range of countries with :
• diffe rem product needs; • language differences; • cultural adaptation.
See Digital marketing insight 5.5 (Digital Town: localised search and collaborative trading). Further approaches used for cu lruraJ adaptation and localisation are described i n
Chapter 7 in the section on localjsation.
Digital marketing insight 5.5 Digital Town: localised search and collaborative trading
Activity 5.4
Digital Town offers a new way of th inking about the web, shopping online and interacting with a local town by providing local search, which brings back links to businesses and service providers based in a single town or city. It is an innovative web-based platform, which is built on blockchain technology and enables citizens to shop using a digital wallet, with just one sign on point. The company has a network of 22,000 domains and is building a global platfonm that aims to enable cities across the globe to develop their own part of the web.
What makes Digital Town innovative is that it is developing digital real estate in col- laboration with a town-centre management team, chambers of commerce and local citizens who can buy a stake in their local town or city platfonm. The company aims to offer online shoppers a choice to move away from global digital platforms such as Amazon and booking.com. Digital Town is aiming to provide a direct connection between businesses and consumers and in doing so reduce the cost to businesses for getting their products and services to market.
Visit Nashville to experience the Digtal Town concept: https://nashville.city.
Source: Based on Wood (2017)
Place of purchase on the Internet
Purpose
To explore connections between physical and virtual locations.
Activity
Imagine you are going to purchase a second-hand car. Set out the stages in the process you might go through, from thinking about the car you might buy to finding a place to purchase your car and then identifying the final car you might buy.
While you are going through this process, try to identify when you will be using the Internet (virtual environment) and when you will be in the physical environment
~-visiting car_ d_eal_ e_rs_l·------------------------'
Chapter 5 Digital media and the marketing mix 217
2 New channel structures
New channel structures enabled by the Internet have been described in derai.l in Chapters 2 and 4. The main types of phenomena that companies need to develop strategies for are:
• D isinter mediation. Digital marketers should ask themselves the question: is there an option for selling direct? But mer should also remember that selling direct can lead ro channel conflicts (mentioned in rhe next section).
• Rein termediation. The new intermediaries created through reintermediation described by Sarkar et a/. (1996) should be evaluated for suitability for partnering in affiliate arrangements - e.g. Kelkoo, which receiYes a commission on each click or sale resulting from a referral from its sire.
• Countermediation. Countermediation refers ro the strategic options ro make better use of online intermediaries, such as through parrnering with independent intermediaries, purchasing or creating an independent intermediary. for examp le, a group of European a irlines have joined forces to form Opodo (www.opodo.com), which is intended ro cotmter independent co mpanies such as Lastm inute.com (www.lastminute.com) and eBookers (www.ebookers.com) in offering discou nt fares .
When considering channel suucn1 res it is important to remember that there may be implica- tions for the physical disuiburion channel- e.g. grocery retailers have had to idemify d1e best strategy for picking customers' goods prior ro home delivery. Oprions include in-srore picking (selection of items on customer orders) and regional picking centres. The former is proving more cost-effective.
3 Channel conflicts
A significant threat arising from the introduction of an Internet channel is that while disin- termediation gives a company the opportu11iry to sell direct and increase profitability on products, it can also threaten disuibution arrangements with e-xisting partners. Such channel conAicts are described by Frazier (1999), and need to be carefully managed. Frazier identifies some simations when the Internet should only be used as a communications channel. This is particularly the case where manufacturers offer an exclusive, or highly selective, distribu- tion approach. To rake an example, a company manufacturing expensive watches costing thousands of pounds will not in the past have sold direct, bur will have used a wholesaler to distribute watches via retai lers. If this wholesaler is a powerful p layer in the watch distri - bution supply chain, they will react against t he watch manufacturer selli ng directly ro the consumer. The wholesaler m ay even refuse ro act as distributor and may t hreaten ro d istrib- ute on ly a competi to r's watches, wh ich are nor ava ilable over the Internet . Furth ermo re, direct sa les may damage the product's brand or d1ange its price positioning.
Furr her channel conflicts i1wolve other st akeholders including sa les rep resenratives and customers. Sales representatives may see the Inrernet as a direct threat to their livelihood. In some cases, such as Avon CosmeticsTM and Encyclopaedia Britannica™, this has proved to be the case, with this sales model being partly or completely replaced by the Internet. Avon Cosmetics has built irs online presence ru1d has a new three-year strategy designed to rebuild the business online out of their new London headquarters (BBC, 2016). For many B2.B purchases, sales representatives remain an essenrial method of reaching the cusromer to support them in the purchase decision. Here, following training of sales staff, the lnrernet can be used as a sales support and cusromer education rool. Customers who do not use the online channels mar also respond negatively if lower prices are available to their online counterparts. This is less serious than other types of channel conflict.
21 8 Part 2 Digital marketing strategy development
To assess channel conflicts it is necessary to consider the different forms of channel the Internet can rake. These are:
• a communication channel only; • a distribution channel to intermediaries; • a direct sales channel to customers; • any combination of the above.
To avoid channel conflicts, the appropriate combination of channels must be arrived at . For example, Frazier (1999) noted that using the Internet as a direct sales channel may not be wise when a product's price varies considerably across g lobal markets. In the watch manufacturer example, it may be best to use the Internet as a communication channel only.
Digital channel strategy will, of course, depend on the existing arrangements for the mar- ket. If a geographical market is new and there are no existing agents or distributors, there is lmlikely to be channel couflict in that there is a choice of d istribution through the Internet only or appointments of new agents to support Internet sales, or a combination of the two. Often SMEs will attempt to use the Internet to sell products without appointing agents, but this strategy will only be possible for retail products that need limited pre-sales and after-sales support. For higher-value products sud1 as engineering equipment, which will require skilled sales staff to support the sale and after-sales servicing, agents will have to be appointed.
For existing geographical markets in which a company already has a mechanism for distribution in the form of agents and distributors, the situation is more complex and there is the threat of channel conflict. The strategic options available when an existing reseller arrangement is in place have been described by Kumar (1999):
• No Internet sales. Neither the company nor any of it s resellers makes sales over the Internet. This will be the option to follow when a company, or irs resellers, feel that the number of buyers has not reached the critical mass thought to warrant the investment in an online sales capability.
• Internet sales by reseller only. A reseller who is selling products from many companies may have sufficient aggregated demand (through selling products for other companies) to justify the expense of setting up online sales. The manufacturer may also not have the infrastructure to fu1fi1 orders direct to customers without further investment, whereas the reseller will be set up for this already. In this case it is unlikely that a manufacturer would want to block sales via t11e Internet channel.
• Internet sales by manufacturer only. It would be unusual if a manufacrurer chose this option if it already had existing resellers in place. Were the manufacturer to do so, it would probably lead to lost sales as t11e reseller would perhaps stop selling through tra- di t ional channels.
• Internet sales by all. This option is arguably the logical future for Internet sales. It is also likely to be the result if the manufacturer does nor take a proactive approach to control- ling Internet sales.
Strategy will need to be reviewed annually and t11e sales man nels manged as thought appro- priate. Given the fast rate of change of e-conm1erce, it will probably not be possible to create a five-year plan! Kumar (1999) notes that history suggests that most companies have a ten- dency to use existing distribution networks for too long. The reason for this is that resellers may be powerful wit hin a channel and the company does nor want to alienate them, for fear of losing sales.
4 Virtual organisations
Benjamin and Wigand (1995) stare that 'it is becoming increasingly difficult to delineate accurately cl1e borders of roday's organisations', and a further implication of the introduc- tion of electronic networks such as the Internet is that it becomes easier to outsource aspects
Virtual organisation A 111rtua1 organ;sation uses information and comt'IUlications technology to allow it to operate without dealty defined physacal boundaries between different functions. It provides custcmsed services by outsourcing production and other functions to third parties.
Virtualisation The process whereby a company develops more of the characteristics of a virtual organisation.
( l Promotion
Chapter 5 Digital media and the marketing mix 219
of the production and disuiburion of goods to third panics. This can lead to the boundaries within an organisation becoming blurred. Employees may work iJl any time zone, and cus- tomers are able ro purchase tailored products £rom any location. The absence of any rigid botmdary or hierarchy within rhe organisation should lead ro a company becoming more responsive aJld flexible, and having a greater market orientation.
Kraut et a/. (1998) suggested rhe following features of a virtual organisation , which remain relevant:
• Processes transcend the boundaries of a single form and are not controlled br a single organisational hierarchy.
• Production processes are flexible, with different parries involved at different rimes. • Parries involved in the production of a single product are often geographically
dispersed. • Given this dispersion, coordination is heavily dependent on telecommunications aJld data
networks.
All co mpanies tend ro h ave some elements of the virtu a l organ isation. The process whereby these characteristics increase is known as virtualisation . Malone eta/. (1987) argued that the presence of electronic networks tends to lead to vi rtualisation si nce they enable the governan ce and coordinat ion of business transactions ro be conducted effectivel y a t lower cost.
What are the implicat ions for a marketing str:negist of this trend towards virrualisation? initially it may appear that oursourcing does nor have direct relevance to marker orientation. However, an example shows the relevance. Michael Dell (in Magrena, 1998) said that Dell did not see outsourcing as getting rid of a process rhar does not add value; rather it sees it as a way of 'coordinating their activity to create rhe most value for customers'. Dell improved its custorner service by changing rhe way ir works with both irs suppliers and its distriburors to build a computer to the customer's specific order within just six days. This vertical inte- gration has been achieved by creating a conrracrual vertical marketing srstem in which members of a channel retain their independence, but work together by sharing conrracts.
So, one aspect of virrualisation is that companies should identify opportunities for pro- viding new services and products ro customers looking ro outsource their external processes . The corollary of this is that ir may offer companies opportunities ro oursource some market- ing acti,·ities that were previously conducted in-house. For example, marketing research ro assess the impact of a website can now be conducted in a virtual environment by an outside company rather than by having employees conduct a focus group.
Ar a more practical level, elecuonic partnerships can be used to deliver rhe entire market- ing mix referenced in this chapter t hrough standard ised data exchange interfaces, which include:
• advertising through Paid Search networks (e.g. Google Ads); • promottng services t hrough feeds on price comparison search engines (e.g. Kelkoo or
Google Shopping); • promoting services through affiliate networks (e.g. CJ Affiliate™) or advertising networks
(e.g. Google AdSense™ publishers programme); • procuring expertise for short-term digital marketing work through an online web skills
marketplace such as GuruTM (www.guru.com) and Upwork™ (www.upwork.com); • use of secure paymenr system services such as PayPal or Google PayTM; • aJ1alysis of web performance through online \veb analytics services (e.g. Google AnalyticsTM) .
The Promotion variable of the marketing mix refers to how marketing communications are used to inform customers and other stakeholders about an organisation and its products.
220 Part 2 Digijal marketing strategy development
Promotion variable The element of the matketing mix that involves communication YJith rustomers and other s1akeholders to inform them about the product and the organisation.
The Lmernet and digital marketing techniques are highly important and have significam implications for marketing communication planning and for this reason digital promotions are CO\'ered in depth in Chapters 8 and 9. In this chapter the aim is to briefly outline the core components of Promotions.
According to Jobber and Ellis-Chadwick (2016), 'Good communications are the lifeblood of successful marker-orientated compa.nies and their brands. Bur creating good communica- tions presents many challenges'. Digital technology is changing the way individuals and business communicate, the channels through which they communicate and the number of touchpoi nts encountered. Modern businesses are developing more integrated approaches towards the use of communications tools in o rder ro maximise the opportunities to deliver messages to their target audiences. The main elements of the promotional mix a business might use to communicate, and their online equivalems summarised by Chaffey and Smith (2012), are shown in Table 5.2.
Specification of the Promotion elemenr of the mix is usually part of a communications strategy. This will include selection of target markers, positioning and integration of differ- ent communications tools. The Internet offers a new, additionalma rketing communications channel to i11form customers of the benefits of a product and assist in the buying decision . H ere are some different approaches for looking at how the lnrernet can be used to vary the Promotion element of the mix:
1 reviewing new ways of applying each of the elements of the communications mix- such 35 advertising, sales promotions, PR and direct marketing;
2 assessing how the Internet can be used at different stages of d1e buying process; 3 using promotional rools ro assist in different stages of customer relationship manage-
ment, from customer acquisition ro retention. In a web context this includes gaining initial visitors to the site and gaining repeat visits using a number of communications techniques:
• reminders in traditional media campaigns of why 3 sire is worth visiting - such as online sen· ices and unique online offers and competitions;
• direct email reminders of sire proposition- new offers; • frequently updated content- including promotional offers or information that helps
your customer do their job or reminds rhem to visit.
Table 5.2 The main elements of the promotional mix
Communications tool
Advertising
Selling
Sales promotion
Public relations
Sponsorship
Direct mail
Exhibitions
Merchandising
Packaging
Word of mouth
Online implementation
Interactive display ads, pay-per-click search advertising, targeted ads in social networks
Virtual sales staff, site merchandising, assisted selling (including livechat) and affiliate marketing
Incentives such as coupons, rewards, online loyalty schemes
Online PR and influencer outreach, blogs, a-newsletters, newsletters, social networks, links and viral campaigns
Sponsoring an online event, site or service
Opt-in email using a-newsletters and focused 'solus' emails
Webinars, virtual exhibitions and white-paper distribution
Promotional ad-serving on retail sites, personalised recon1mendations and email alerts
Virtual tours, real packaging displayed online
Social, viral, affiliate marketing, email a friend, links
J
Chapter 5 Digital media and the marketing mix 221
The Promotion dement of a marketing plan also requires three important decisions about investment for the online promotion or the online communications mix:
• Investment in site promotion compared ro sire creation and maintenance. Since there is often a fixed budget for sire creation, maintenance :1nd promotion, the e-markering plan shouJd specify the budget for each ro ensure there is :1 sensible baJance and the promotion of the sire is nor underfunded.
• Investment in online promotion techniques in comparison ro offli ne promotion. A bal- ance must be struck between these techniques. Typic:~lly, of8ine promotion investment often exceeds that for online prommion investment. For existing companies, traditionaJ media such as print are used ro advertise the si res, while prim and TV will also be widely used by dor.com companies to drive traffic ro their sires.
• Investme nt in different o nJ ine p romotion techniques. For example, how much should be paid for banner advertising as against online PR about onl ine presence, and how much for search engine registration?
People, Process and Physical evidence
The People, Process and Physical evidence elements of the mix are closely related and often grouped as 'the service elements'. They arc signific:1nr since the level of perceived service wiJI impact on a customer's loyaJty and the probability of their recommending the service. Since this issue is closely related ro the on lin e customer experience, we aJso look at issues of website performance and response ro customer emails in Chapter 7, including review of frameworks such as WEBQUAL and E-SERVQUAL for assessing service effectiveness.
Some of the key issues in improving rhe delivery of service online have been summarised by Rayporr eta/. (2005) . They identify these questions rh:1t senior executives and managers should ask to assess the combination of technology and human assistance that is used to deliver service. We have added some typical examples of :1pplications for each type:
1 Substitution . Deploying technology instead of people (or the opposite situation), for example: • frequently asked questions section on a website; • in-site search engine; • avatar offering answers to questions, as in rhc !kea 'Ask Anna' feature; • automated email response or a series of 'Welcome' cmails ed ucating customers abour
how to use a service; • using video to demonstrate products on line.
2 Compl ementarity. Deploying reclmology in combination with people, f<>r example: • caJ I-back facility where the website is used to set up a subseq uent caJJ from a contact
centre; • online chat facility - rhe user chats through exchanging text messages on the website; • an employee using a WLFi-enabled hand -held device to facilitate easy rentaJ-car
returns. 3 Displacement. Outsourcing or 'off-shoring' technology or labour, for exam p le:
• a fast-food chain centralising drive-through order taking in a remote caJI centre; • the onJine char or call-back systems referred to above can be deployed at a lower cost
through outsourcing.
ore that this perspective doesn't stress another important aspect of the service elements of the online marketing mix, namely the participation b)' other customers in shaping a ser vice through their feedback and the collaboration that occurs as customers answer other customers' questions in a forum.
We will now review the different parts of the service elements of the mix in more detail.
222 Part 2 Digital marketing strategy development
People variable The element of the marketing mix that involves the delivery of service to customers during interactions with those customers.
People
The People varia b le of the marketing mix relates to how an organisation's staff interact with customers and other stakeholders during sales and pre- and post-sales communications with them.
Chaffey and Smith (20U) make a similar poim to Rayport et a.l. (2005) when they suggest that, online, the main consideration for the People element of the mix is the review of how staff involvement in the buying is changed, either through new roles such as replying to emails or online char enquiries, or through their being replaced rluough automated online . services.
While the options for this form of customer service outlined above are straightforward, what is challenging is to implement the applications effectively. For example, if an FAQ doesn't have sufficiem relevant answers or a call -back does not occur at the right time, then the result will be a dissatisfied customer who is unlikely to use a service again or will tell others about their experience either through ratings in shopping comparison engines.
To manage service and quality, organisat ions must devise plans to accommodate the five stages shown in Figure 5.8.
Stage 1: Customer defines support query
Companies should consider how easily the customer can find contact points and compose a support request on site. Best practice is clearly to find email support oprions. Often, finding contact and support informacion on a website is surprisingly difficult. Standardised terminol- ogy on site is 'Contact Us', 'Support' or 'Ask a Question'. Options should be available for the customer to specify the type of query on a web form, or provide alternative email addresses sud1 as [email protected] or [email protected] on site, or in offline comnnmica-
tions such as a catalogue. Providing FAQs or automated diagnostic tools should be considered at d1is stage to reduce d1e number of inbound enquiries. Epson™ (www.epson.co.uk) provides an online roo! to diagnose problems with printers and to suggest solutions.
Figure 5.8 Stages in managing inbound email
Customer defines support query
Receipt and acknowledgement
Routeing
Response
Follow-up
Avatar A term used in computer- mediated environments to mean a 'Wtual person'. Derived from the word's original meaning: ·n. the descendant of a Hllldu deity i1 a vistJie fonn; incarnation; supreme glorification of any pmciple'.
Autoresponder or •mailbots' Software tool or 'agent' n.nning on web seNers that automatically sends a standard reply to the sender of an email message.
Process variable The element of the marketing mix that invclves the methods and procedures companies use to achieve all marketing functions.
Chapter 5 Digital media and the marketing mix 223
Finally, the website should determine expectations about the level of service quality. For example, inform the customer that 'your enquiry will be responded to within 24 hours'.
Avatars are increasingly being used to reduce the need for enquiries, such as 'Ask Anna' on the lkea site. Research by Holzward1 eta/. (2006) found that use of an avatar-based sales agent can lead to more satisfaction with the retailer, a more positive attitude towards the product and a greater purchase intent. They investigated the usage of 'attractive' versus 'expert' advisers, dependent on the comple.xity of rhe purchase decision.
Stage 2: Receipt of email and acknowledgement
Best practice is that automatic message acknowledgement occurs. This is usually provided by autoresponder sofnvare. While many auroresponders on ly provide a simple acknowl- edgement, more sophistica ted responses can reassure rhe customer about when the response will occur and highlight other sources of information.
Stage 3: Routeing of email
Best practice involves automated roureing or workflow. Roureing the email to the right person is made easier if the type of query ha s been id entified through the techniques described for Stage 1. It is also possible to use parrern recognition to identify the type of enqwry.
Stage 4: Compose response
Best practice is to use a library of pre-prepared templates for different types of query. These can then be tailored and personalised by the contact centre employee as appropriate. The right type of template can again be selected auromatically using the software referred to in Stage 2.
Stage 5: Follow-up
Best practice is that if the employee does not successfully answer the first response, then the email should suggest callback from an employee or a live char. Indeed, to avoid the problem of 'email ping-pong' where several emails may be exchanged, the company may want to proactively ring the customer ro increase the speed of problem resolution, and so solve the problem. Finally, the email follow-u p may provide the opportunity for ourbow1d contact and marketing, perhaps advising about complementary products or offers.
Process
The Process variable of the marketing mix refers to the methods and procedures companies use to achieve all marketing functions- such as new product development, promotion, sales and custmner service (as described in rhe previous section). The restructuring of the organi - sation and channel strucrures to accommodate online marketing, which were described i11 the previous chapter, are part of Process.
Customer contact strategies are a compromise between delivering quality customer service with the emphasis on customer choice and minimising the cost of customer con - tacts. Typical operational objectives that should drive the strategies and measure effective- ness are:
• to minimise average response rime per email and the range of response rime from slowest to fastest- this should form the basis of an advertised service quality level;
224 Part 2 Digital marketing strategy development
• to minimise dear-up (resolution) ri me - for example, number of contacts and elapsed rime to resolution;
• to maximise customer satisfaction ratings wirh response; • to minimise average staff time and cost per email response.
Custome r contact strategies for integrating web and email support into existing contact centre operations usually incorpora te elements of the following options:
• C ustomer-preferred channel. H ere the company uses a customer-led approach where customers use their preferred channel for enqui r y, whether it be phone call -back, email or live char. There is li rrle an empt made to in fluence the customer as to which is tbe preferable channel. Note tha t whi le this approach may give good customer satisfaction ratings, it is no t usuall y the most cost-effective approach, s ince the cost of phone support wi ll be h igher tha n cu sto mer self-service on the web, or an emai l enq uiry.
• Company-preferred channel. H ere the com pa ny wi ll seek to in fl uence t he customer o n the medi um used for co ntact. Fo r exa mp le, easy j et encou rages customers to use o nline cha nnels rather than voice contact t o rhe call ce nrre fo r both o rde ring a nd custo mer se rvice. Custo me r choice is st ill avail able, but the compa ny uses th e website to influence the cho ice of cha nnel.
• Delivering cu stomer services and assisted sales through Livech at is increasingly popular. For exa mple, mo bil e pho ne com pa ny EE uses 'Liveperson' fo r custo mer service a nd assis ted sales, as explained in M ini case sru dy 5.3: Onl ine customer service a r EE.
Mini case study 5.3 Online customer service at EE™
Established as a joint venture, bringing together the UK businesses of Orange and T-Mobile, EE (formerly Everything Everywhere) is now the UK's largest mobile phone company.
EE employs more than 11 ,000 customer-facing employees, covering both service and sales, and all are experts in mobile devices and operating systems. In the course of a year, the company registers around 86 million customer conversations via online and offline channels.
EE wants to be considered best in service across all channels and saw LiveChat as an important new way to establish high levels of customer satisfaction in relation to transactional queries and general enquiries on the site.
Digital engagement solutions provided by UvePerson support the online sales operation and customer upgrades operations by enabling meaningful, real-time connections with website visitors. Using UveChat to engage directly with customers, EE is driving conversions, increasing incremental sales and improving the online experience. LivePerson also provides predictive modelling and analytlcs, enabling EE to identify custom- ers whose behaviours indicate they may require help with the purchase decision. This is achieved by tracking the activity of individuals as they move through the site. Behaviours such as lingering on a page for a longer than average time or the triggering of multiple error messages can be a strong indicator that assistance is needed. At these points, invitations to chat are served proactively. By offering help when it is most needed, EE has succeeded in raising sales, while also improving customer satisfaction rates and enhancing perception of the EE brand. Equally important, each engagement is unique to the individual, ensuring a personalised and therefore relevant experience.
In 2013, when the service was introduced, real-time engagement via chat resulted in 30,000 contract sales, running at a rate of 0.5 sales per agent per hour. This rate is roughly twice as productive as the average for telephone sales agents and ten times more effective than the rates achieved by agents in bricks-and-mortar stores. Customers who generally self-serve convert at around 1 per cent, whereas with real-time sales engage- ment the conversion rate is five times higher. The upgrade team consistently converts at over 40 per cent, with CSAT measured at above 80 per cent. The all-important customer satisfaction (CSAT) score for the chat channel currently stands at 83 per cent. At the same time, by deflecting direct contact from call centres onto an online
Chapter 5 Digital media and the marketing mix 225
channel with support from chat agents, EE is reinforcing its status as a service-focused digital brand. The suc- cess of real-time engagement in the sales channel has also prompted innovation. Customers searching for EE via Google now have the option of clicking through to a chat agent from the search engine itself, and similar direct links are to be established with selected affiliate and price comparison sites.
In 2018, UvePerson and IBM Watson joined forces to offer a bot powered by intelligent technology, which enables consumers to message leading brands and recieve Al-powered responses, which seamlessly integrate with human customer service representatives. The new system delivers benefits to callers by helping them to avoid multi-layered automated systems before speaking to a real call operator.
Source: UvePetson customer success story.
Physical evidence Physical evidence variable The element or the marketing mix that involves the tangible expression of a product and how it Is pu rcllased and used.
The Physi cal evidence variable of the marketing mi x refe rs to th e ta ngible expression of a product and how it is purchased and used. In an on lin e co ntext, 'physica l evidence' refers to the cu stomer's experience of the company throu gh the website . It includ es issues such as site case of use or navigation, availability and perfo rmance, whi ch are di sc ussed further in Cha pte r 7 .
Case study 5 Spotify streaming develops new revenue models
Spotify1 M is a streaming music service originally deve- loped in 2006 in Sweden and launched in 2008. Spotify Ltd now operates as the parent company in London, while Spotify AB manages research and development in Stockholm.
This case study about the online music subscription service illustrates how different elements of the mix can be varied online. It also highlights success factors for developing an online marketing strategy.
At the time of writing, Spotify was valued at more than $23 billion as it filed for stock market listing. It has over 159 million users and 71 million premium members who pay for services, which raised over $5 billion in revenue (Young, 2018).
Context Spotify was not the first online entrant to online music services, but it was an innovator in marketing approaches, technology and subscription options that have enabled it to become a market leader in music subscription. In 1999, Napster™ launched the first widely used service- 'free' peer-to-peer (P2P) music-sharing channel. This innovative ap proach to sharing music became subject to legal challenges from major record companies, and Nap- star lost revenues on music sales and was eventually
forced to close. This was not the end of sharing digital music for Napster as the brand was purchased and it has had several owners such as Roxio, Best Buy and then became part of the Rhapsody music services, in direct competition to Spotify in Europe as its US operation was shut down. The importance of Napster today is perhaps that it demonstrated to the world what was possible in terms of sharing digital music. Figure 5.9, shows the growth in revenue for streaming in the music industry. Spotify has grown into a significant global brand and is driving market growth by focusing on delivering more perso nalised music playlists, e.g. S potify.me and mytimecapsule (Guditch, 2017).
Revenue model and value proposition Spotify operates a freemium model, with the majority of its users streaming music to their mobiles or desktop via apps or web browsers. Free subscribers get ads between tracks, which are part of the Spotify revenue model. Users of the free service encounter audio ads every five or six songs, or approximately three minutes of advertis- ing for every hour of listening.
Spotify Premium users pay a fixed monthly fee to get additional features (Figure 5.9), including offline listening and no interruptions from ads.
226 Part 2 Dig"al marketing strategy development
Figure 5.9 Changes in retail revenue in the US music industry
r U.S . music industry retail revenue from 1999-2016
$228 ----------------------------------------------------------------------
$208 ...............
$188--~-~~------------------- $168 ----------~~~~~--------------------------------------
$148 --------"""____:::,"<;:~,---------------------- S128 --------------------------~~"'--------------------------------------
$108 -------------~"",----------------
~8 --------------------------------~-------------------------------
$68-------------~~~------------- ~ :Streaming
~8-------------------~~~~----------~
===============::~~~~===~;~~~==~==_/==:Digital $28 ~. downloads $08 Physical J 2000 2002 2004 2006 2008 2010 2012 2014 2016 --~
Source: https:/ /www.recode.neV2018/2128/17064460/spotify-ipo-charts-music-streaming-daniel-ek
The Wikipedia entry for Spotify has charted the growth of Spotify:
In November 2011 more than 2.5 million paying sub- scribers s igned up to its service. This followed 500,000 premium users signing up since its partner- ship with Facebook's 'Open Graph', which allows peo- ple to share the tracks they were listening to with friends. It also launched in the United States in 2011.
In August 2012 there were four million paying Spo- tify subscribers responsible for at least €20 million per month in revenue.
By March 2013, Spotify had grown to six million paying customers globally (a figure that remained in December 2013) and 24 million total active users.
By May 2014, Spotify had grown to ten million pay- ing customers and 30 million free users.
By January 2015, Spotify had grown to 15 million paying customers and 45 million free users.
By January 2018, Spotify had 30 million songs in its catalogue, 140 million active users each month and over 70 million premium customers (Wikipedia, 2018).
Through licensing the service to other businesses there are further opportunities for revenue. For example, in January 2015, PlayStati on• announced that Spotify would power its new music service called PlayStatione Music.
In 2017, Spotify introduced ' Secret Genius', which provided a way of highlighting songwriters and produc- ers and 'Show cred its', giving details of these individuals. This initiative provides opportunities to drive sales and
enable fans to build connections that could lead to future sales (Spotify, 2018).
The company pays roughly 70 per cent of its revenue for royalties to artists and companies that hold the rights to the music. Spotify pays artists and labels per streamed track. In the past. artists have questioned the value that Spotify returns, w ith some major global artists such as Taylor Swift and AC/ DC withdrawing some or all of their music from the platform. However, after a three-year boycott, Taylor Swift made her whole back catalogue available on Spotify (Sweney, 2017) and for many other less well-known artists it provides a way to reach new audiences through recommendations and playlists, and gain royalties from listeners they would previously not have received any revenue from. Spotify makes the case that it aims to regenerate lost value by converting music fans from these poorly monetised formats (e.g. illegal d ownload services) to the paid streaming format, which produces far more value per listener.
Value proposit ion In addition to the core music listening service, Spotify has developed other features to add to the value of the service, which have also given opportunities to spread awareness of the site through co-marketing.
Spotify claims that its users are highly engaged, with the average multiplatform user spending 146 minutes a day using the service. Between 2013 and 2014 the share of users listening on mobile tripled, although more than 50 per cent of sessions are still on desktop. In 2017, the introduction of the ' Rise' program, in conjunction with the
new awards ceremony, aims to encourage emerging art- ists and highlight excellent talent.
Advertising Spotify has developed a range of innovative advertising formats to build its revenue, mainly from its free sub- scribers. Spotify uses data-driven analytics to help deter- mine its ad spend and target markets; users' data insights identify behaviour, which then inform the ads, the content and the messages that promotional tools and media can use. For example, the '2018 Goals' campaign used Spotify users' habits to create humorous resolu- tions and personal aims and presented these using bill- boards. The campaign worked really well as it tapped into music lovers' psyche, and the music we listen to is part of who we are (Nudd, 2017).
Other examples include:
• Audio Ad. A cross-platform, unavoidable format comprised of an audio spot, cover art and clickable campaign name.
• Display. Leaderboard ads in the Spotify player are served when the user is interacting with Spotify.
• Homepage Takeover. Block out a full day for your brand on our Homepage.
• Branded Playlist Custom user-generated playlists with brand logo, custom text and optional link to your campaign.
• Sponsored Session. Users choose to watch a video to receive a 30-minute, ad-free session.
• Video Takeover. Sponsor the ad break exp erience with video and display.
• Advertiser Page. A microsite seamlessly integrated into the Spotify player. The Advertiser Page can con- tain practically any content you 'd find on a webpage, including videos, clickable images, blogs, news, links and comments.
A campaign run on Spotify was for the launch of the BMW 3201 for which an 'American Road Trip' campaign was developed. A branded app on Spotify enabled users to select from one of five iconic American road trips. Based on their selection, a custom playlist was gener- ated featuring songs and artists from regions along the selected route. A BMW video was served during playlist generation and the final playlist was sharable via social media. The campaign resulted in more than 14,000 play- lists being created.
Competition Spotify faces competition from existing online music services such as Apple Music ™, but given that this is an evolving marketplace, other major competitors can be expected. For example, Google launched Google Play
Chapter 5 Digital media and the marketing mix 227
Music™ subscription service via YouTube, and Apple purchased the Beats™ subscription service earlier i n the year. Amazon also now offers Prime MusicTM subscrip- tion to customers who are in its loyalty programme.
Marketing Unlike in the 'dot.com era' when startups with global aspi- rations launched using TV campaigns, Spotify's growth has taken a more modest approach, relying on word of mouth, PR and co-marketing rather than big ad budgets.
The launch of Spotify in the US used private 'Beta' invites to create a buzz, as those with access shared their use of it in social media (and through word of mouth).
The music streaming service went live in October 2008, and it kept its free service as invitation only - something that had been In place while it was in the final stages of development prior to public launch.
The invitation-only element was a vital part of the plat- form 's rise. Not only did It help manage the growth level of Spotify, but it also helped create a viral element to the service, with users each having five invites at first to share with thei r friends.
Spotify has used co-marketing and partnerships with publishers to increase its reach by embedding different formats of widgets on other sites. For example, Drowned In Sound has a monthly playlist that it embeds within its blog, which encourages its readers to engage with Spo- tify. Other partnership services enable festivals and char- ities to engage their audience through Spotify playlists.
To grow its audience beyond its traditional younger audience, Spotify today invests more in campaigns. In 2013 it launched a multiplatform campaign , with a 30-second ad spot during the season premiere of NBC's The Voice. Sixty-second versions of the commercial aired in The Tonight Show with Jay Leno and Late Night with Jimmy Fallon.
In 2014 Spotify launched a ' Music takes You Back' ad (www.youtube.com/watch?v=BaDe9Pgkpl4) in t he UK and US, which featured in cinema, digital signage and online. It centres around three videos that showcase three differen,t people's stories throug h the medium of Spotify, Facebook, text messages, Skype and lnstagram. Its aim is to show how Spotify can bring people together through its integration with social media. Spotify decided not to use TV, creating 75- to 90-second videos rather than the typical 30-second TV ad break slots.
Question 1 Assess how Spotify competes with traditional
and online music providers by reviewing the approaches it uses for different elements of the marketing mix.
228 Part 2 Digital marketing strategy development
• mmary
Exercises
1 Evaluating the opportunities provided by the Internet for varying the ma rketing mix is a useful framewo rk for assessing currem and future digital marketing strategy.
2 Pro duct. Oppormnities for varying the core product through new information-based services and also the extended product should be reviewed.
3 Branding. This is an imporra m concept in the digital markerplace bur, in addition, each of the established elements of a brand offline (e.g. domain, value, assets, heritage) need careful consideration as to how they relate to the online world. Additionally, the context in which we encounter online brands is an important consideration.
4 Pri ce. The lnrerner leads to price transparency and commoditisarion and hence lower prices. Dyna m ic prici ng gives the ability to rest prices or to offer differential prici ng fo r different segments or in response to variatio ns in demand . New pricing models such as auctions a re ava il able.
5 Place. T hi s refers to pl ace o f purch ase an d channel structure on t he In tern et . T h ere a re three main loca ti ons fore-commerce t ran sac tions: sdler sire, buyer site a nd im ermed ia ry. New channel structures a re availa ble th ro ugh di rect sales and linking to new im ermediar- ics. Steps must be taken to m inimi se cha nnel conflict.
6 Pro moti on. Th is aspect o f the mix is discussed in more derai l in Chapter 8. 7 People, Process a nd Physkal evidence . These aspects of the mix are discussed in more
derai l in Chap ters 6 and 7 in relation to customer relationship management and service delivery.
Self-assessment exercises
1 Select and explain the two important changes introduced by the Internet for each
of the 7Ps. 2 What types of product are most amenable to changes to the core and extended
product in digital environements? 3 Explain the implications of the Internet for Price . 4 What are the implications of the Internet for Place? 5 Explain how digital channels have altered how companies can differentiate their
brands using the mix .
Essay and discussion questions
1 'The marketing mix developed as part of annual planning is no longer a valid concept in t he Internet era.' Discuss.
2 Critically evaluate the impact of the digital on the marketing mix for an industry
sector of your choice. 3 Discuss the potential impact of the Internet on a firm 's pricing policies. 4 Discuss the opp ortunities offered by the Place element of the mix for a) physical
retailers and b) digital retailers.
Examination questions
1 Explain the opportunit ies provided by digital channels for leading brands when launching new products.
2 Explain two applications of dynamic pricing on the Internet. 3 How does t he Internet impact an organisation's options for core and extended
(augmented) product?
( References
Chapter 5 Digital media and the marketing mix 229
4 Briefly summarise the implications of the Internet on each of these elements of the marketing m ix: a Product b Price c Plaoe d Promotion.
5 Discuss the extent to which the Internet is affecting the physical high street. 6 How can an organisation vary its promotional mix using the Internet?
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Weblinks
Sarbr, M., Butler, B. and Sreinfield, C. (1996) Intermediaries and cybermediaries: a continu- ing role for mediating players in the electronic marketplace, journal of Computer Medi- ated Communication, 1 (3).
Sawhney, M., Verona, G. and Prandelli, E. (2005) Collaborating to create: the Internet as a platform for customer engagement in product innovation, journal of Interactive- Marketing, 19(4), 4-17.
Shaw, L. (2017) Nedlix goes after the mmrie business with a big-budget Will Smith film, Bloomberg Pursuits, 20 December.
Singh, A., Agrariya, K. and Deepali, I. (2011) What really defines relationship marketing? A review of definitions and general and sector-specific defining constructs, Journal of Relationship Marketing, 10(4), 203- 37.
S po ti fy (20 18) https://artists.spotity.com/blog/spotify- now-displays-songwriter-credits (accessed May 2018).
Sweney, M. (2017) Shaken it off! Taylor Swift ends Sporify spat, The Guardian, 9 June, https://www. theg uardi an .com/music/2017 /j u n/09/ shaken-it -off-taylor-s witt -ends-spot ity- spat (accessed May 2018) .
Valette-Fiorence, P. , Guiza na, H. and Merunka, D. (2011) The impact of brand personality and sales promotjons on brand equity, journal of Business Research, 64(1), 24-8.
Vitevitch , M. and Donoso, A. (2011) Phonoractic probability of brand names: I'd buy that! Psychological Research, 76 (1 November), 693- 8.
Wikipedja, (2018) Spotify, https://en.wikipedia.org/wiki/Spotify (accessed May 2018}. Wood,C. (2017) DigitalTown's 'operating system for cities' aims to prop up local economies,
11 October, https://statescoop.com//digitaltowns-operating-system-for-cities-a ims-to- props-up-local-economies (accessed May 2018).
Xing, X., Yang, S. and Tang, F. (2006) A comparison of rime-varying online price and price dispersion between multichannel and dor.com DVD retailers, journal of Interactive Marketing, 20(2), 3-20.
Young, A. (2018} Sporify officially files to go public, fP O values company at 523 billion, 28 February, https:/ I consequen ceofsound. neV2018/02/spotity-officially-files-to-go-pub lie/ (accessed May 2018}.
Wingfield, N. {2018) Inside Amazon Go, a store of the future, The New York Times, 21 January, https://www.nytimes.com/2018/01 /21 /technology/inside-amazon-go-a-store-of- the-future.html (accessed May 2018).
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• C hris Anderson has a blog site The Long Tail (www.t helongtail.com), to support his book on the topic published in 2006 by H yperion , New York.
• ClickZ (www.clickz.com}. An excellent co llection of articles on on line marketing com- munications, US-focused . Relevant section for this chapter: brand marketing.
• The Cultural ly C u stomized Website {www.theculturallycustomizedwebsite.com}. Resources supporting tbe authors' book of the sa me title.
• Gladwell.com (http://gladwell.typepad.com/}. Author's sire with extracts from The Tipping Point and other books.
• Paul Marsden's Viralculrure sire (www.viralculture.com}. Articles related to The Tipping Point and connected marketing.
Relationship marketing using digital platforms
234 Part 2 Digital marketing strategy development
Questions for marketers
Key questions for marketing managers related to this chapter are:
• How can we improve customer loyalty and service using marketing automation to increase the value and satisfaction of customers through the customer lifecyde?
• How do we improve audience engagement and loyalty using mobile, social and messaging applications and integrate these through marketing orchestration.
• How can I apply Artificial Intelligence and personalisation cost -effectively in my marketing?
Links to other chapters
This chapter is related to other chapters as follows:
• Chapter 4 introduces customer lifecycle-based segmentation models.
• Chapter 7 has guidelines on how to develop the right customer experience to assist in forming and maintaining relationships.
• Chapter 8 describes methods of acquiring customers for one-to-one marketing.
• Chapters 10 gives examples of relationship marketing in the business-to-consumer and business-to-business markets.
[~l_n_tr_o_d_u_c_t_io_n _______________________________________________________ ~ Churn rates The percentage of customers who end their relationship with a company, typically calculated as the number of customers who left a company during a period divided by total customers at the beginning of the period. It is straight- forward to calculate for subscription businesses, but requires a definition of •active customers' for other types of business. such as retailing.
Bu ild ing long-term relati onshi p s wit h custom ers is essential fo r an y s us ta inable busi - ness . T he adve nt of digital marketi ng means t hat compar ing and switch ing providers of differe nt services is easier than prev iously. Yet improved in sigh ts about o ur aULdiences and n ew personal ised messaging chan nels g ive n ew opporru nit ies to bu ild relati o nsh ips and encourage loyal ty a nd d ecrease churn rates . Failure t o bui ld relati onshi p s t o ga in repeat visitors and sales has ca u sed th e fail u re of man y online startups, which have forfei t ed large expend iture on custo mer acquis it io n. Research sum ma ri sed by Reich held and ScheErer (2000) showed t ha t acquiring o nl ine cu sto mers is so expe nsive (he su g- gested 20- 30 per cen t h ig her t ha n for tradi t ion al busi nesses) th a t st arrup co m pan ies m ay remain un profit a ble for at least rwo to three years . The research a lso sh ows t hat by retain ing just 5 per cent more cust o m ers, o nl ine co m pa n ies ca n boost their profit s by between 25 a nd 95 per cent .
Customer relationship management (CAM) A marl<eting·led approach to building and sustanng long-term busness With customers.
Marketing automation technology Enables businesses to automate tasks n the marl<eting and sales process to~ more relevant oornrrunicaloons. typically delivered as personaiJsed emails and webs~e messages.
Marketing orchestration Designing CUSIOO'Ie1' contact strategies to deliver the most relevant, most responsive messages integrated across different communications channels based on customer context. Communications strategies are managed by marketing automation systems using rules or Artificiallnteltogence based on 819 Data analysis rather than manualy created campaig\5.
Contextual marketing Relevant CCI1lll'Ulicati are delivered oonsistent with the context of the rec:i~t. wlich can deperd on their location, time or place.
Chapter 6 Relationship marketing using digital platforms 235
Over the last three decades or mo re, relationship marketing, direcr ma rketing and data base marketing have com bined ro enable customer relationship management (CRM) . More recencly, marketing automation technology has been widely used across businesses ro creare rules rhar schedule more relevant emails and personalised comm u nications on company websi res. Mar- keting automation is a potentially powerful digitally-enabled technique since ir can provide more relevant, more conr~'\.'tllal messaging to customers, which has an improved response and value ro customers because of irs relevance. Marketing auromarion can supporr differem touch- poinrs across the lifecycle s hown in Figure 1.1. For prospect and cusromer communications in larger enrerprises, rh e management of these Luessages is now often known as marketing orchestration - parr of rhe 'always-on' approach to communications used ro deliver relevam messages, as shown in D igital markecing insight 6.1 about rhe goals of markeci.ng orchestration. TI1e analogy of a conductor a nd their orchestra is appropriate si nce ir suggests rhe large num- ber of people who need to be aligned in their actions at the right rime.
Given the ch all enge o f churn a nd the difficul ty in ach ieving custo mer e ngageme nr with rhe inc rease in media fragme nratio n and the developmenr of h igh-a n e nri o n med ia such as social networks, rhe need for develo pin g a s tr uctured, a uto mated app roach to commw1icat- in g w ith c us to me rs across the lifecycle has become mo re urgent . Dave C ha ffey has empha- sised the impo rtance for compa nies o f building a nd refin ing a n integrated multi cha nnel touc h o r contact stra tegy rhar delivers c ustomi sed com m uni cations ro cons ume rs usin g differe nr medi a including dis play ad s, social media, emai l and web reco mme ndatio ns a nd promotio ns (see D igital ma rketi ng insight 6.1) .
Every custo mer inte ractio n o r respo nse to a communication should be fo llowed up by a series of releva nt communicarions delivered by the right combinat io ns of c han nel (web, email, phone, di rect mail) ro elicit a response o r further dialogue. This is contextual marketing , where the aim is ro deli\·er relevant messages that fir the cur rem context of what the customer is interested in according to the searches they have perfor med, the type of contenr they have viewed or rhe products they have recent!)• purchased.
A contact policy should be developed to manage and control commun ications so mat rhey are at an acceptable level. The contact strategy should indicate rhe following:
• Freque ncy - e.g. minimum once per quarter and maximum once per monrh. • In te rval - e .g. t here m us t be a gap of at least one week or one month between
. . commu mcanons .
• Content and offers - we may want to limit or achieve a certain number of prize draws or infor mation-led offers.
• Links - between o nline communicat ions a nd offline communications. • A control strategy- a mechanis m to make sure communicat io ns guidelines are a dhe red
to - for exa mpl e, e ns uring brand messages are checked, rested and optimised a nd c ustom- ers are contacted at a s uitable frequ ency in line w ith their pri vacy sta te ments.
Exa mp les o f co ntact strat egies fo r E u roffice™ a nd Tesco. com we re discussed in C hapte r 4. A simpler exa mple o f a contact strategy is s how n in Table 6.1.
Digital market ing insight 6.1 The goals of market ing orchestration
We have used this summary of how businesses need to manage customer communica- tions in previous editions under the moniker coined by Dave Chaffey of 'right touching ', but it is now updated to explain the aims of marketing communications orchestration using marketing automation. Initially, automation was achieved by rules-based tech-
niques, such as 'send a series of three welcome emails to new customers with different repeat purchase offers over a period of three weeks'. Today, Artificial Intelligence can be used to deliver the right message at the right time, not using rules but instead based on learning from historic response patterns.
236 Part 2 Digital marketing strategy development
One-to-one marketing A unique dialogue occurs between a company and individual customers (or groups of customers with similar needs) using automation and personalisation to increase relevance.
Electronic c ustomer relationship m anagement (E-CRM) Using digital communications technologies to maximise sales to existing customers and encourage continued usage of online services through techniques including database, personalised web messages, customer services. email and social media marketing. Today, CRM is synonymous with E-CRM.
The aim of marketing orchestration can be defined as the development of:
A multichannel communications strategy
Customised for individual prospects and customers forming segments
Across a defined customer lifecycle
Which .. .
Delivers the right message
Featuring the right value proposition (product, service or experience)
With the right tone
At the right time or context
With the right frequency and interval
Using the right media/communications channels
To achieve ...
Right balance of value between both parties
Market ing a utomation is the term currently used ro describe a closely related approach k nown as one-to-one marketing . H owever, owing to the costs of managing relationsh ips on an individual level, ma ny companies will apply marketing autom ation to tailor com mwl i- cations and offers to custo mer segmenrs or grou ps, rather cl1at1 individuals.
Structure of this chapter
We start the chapter by considering the power of social medi a to engage audiences across the c ustom er lifecycle. We review socialmeclia in this chapter since it's pa rticula rly effective in encouraging advocacy among exisring customers ro boost awareness and preference of brands a mo ng no n-customers.
We then review the challenges of customer engagement a nd in tro duce how CR M can be used to help encourage engagement. We give exa mples of how new tech niques such as Big Data, Artificia l I ntelligence and machi ne learni ng are used to increase engagement. We then explain in more detail how permissio n marketing a nd data analysis are used to create more relevant communications. In the final part of the ch apter, we show how advanced tech ni ques are used to assess and increase custo mer value, and how e lectronic c ustom er relationship management (E- CR M) involves crea ting strategies and plans for bow digital technology and digital data can support CRM.
The interactive nature of t he web com bi ned w ith email , mobi le and social med ia com m unicatio ns seems ro prov ide an ideal environ menr i n which to develop custo mer rela- tionsh ips, a nd databases provide a founda tion for storing information about the relationship a nd delivering personalised custo mer messages via web or emaiL When digital markering was in its infancy, t his o nli ne app roach to CRM was described separately as electronic cus- to mer relat ions hip managem ent (e-C R M), bur it 's n ow simply known as C R M si nce so many communicat ions are electronic.
Digi tal marketing act ivities that are withi n the scope of CR M tha t we w ill cover in th is d 1apter include:
• usi ng the website and social networks for customer development, from generati ng leads th rough to conversio n to an o nl ine or offl ine sale usi ng email and web-based co nten't to encou rage pu rch ase;
• managing customer profile information and email list quality (coverage of emajl addresses a nd iJltegration of customer profile inform at ion fro m o ther databases to enable targeting);
Chapter 6 Relationship marketing using digital platforms 23 7
Essential digital skills Relationship marketing
The digital marketing skills needed by employers are to evaluate engagement and develop creative ways to improve audience engagement and loyalty. Specific skills include:
• assessing multichannel audience engagement and value using techniques such as RFM;
• boosting subscribers and profiling them through landing pages; • planning a web, email and app-based contact strategy for improvement engagement; • understanding and testing personalisation using rules and Al-based approaches; • auditing CAM technology; • developing creative ways to engage audiences through social media.
Practical ideas to boost employability by showcasing your interests and experiences include:
• using a free email management tool such as Mailchimp to broadcast emails to a group;
• understanding how personalisation works by trialling the free personalisation within Google Optimize on a blog.
To audit your digital marketing skills across the RACE planning framework use the Smart Insights Skills Assessment tool available at http://bit.ly/smartdigiskills.
• managing cu sromer contact options th rough mobile, email and social networks ro support up -sell and cross-sell;
• data mining to improve targeting; • providing online personalisation or mass customisation facilities to automatically recom-
mend the 'next-best p roduct '; • providing online customer service facilities (such as frequently asked questions, call -back
and chat sup po rt); • managing online service quality to ensure t hat first-time buyers have a great cusro mer
experience that encourages them m bu y agai n ; • ma naging the nzultichannel custom er experience as custome rs use d iffe rent med ia as parr
of the buying process and cusmmer lifecycl e.
( Using social media to improve customer loyalty and advocacy --------------------~
Organic social media marketing Ws common practice to dstinguiSh between organoc and paid social meda mat1<emg activities i1 a simiar Wirf to organic and paid search rnarl<emg. Orgaric SOCial i1IIOives using social networl<s and customer commun~ies to develop relationships, share postive opinions througt social media amplffication and manage negative social media comments.
Social media m arketing has many ap plica tio ns th roughout the customer lifecyd e, but a rgu- ably, it is most effect ive when it is used to develop existi ng relationships and encourage advocacy to create brand awa reness and favou rabiliry. T h is advocacy is not li mited to cus- tomers, it can also involve infl uencers, pa r tners and employees.
This section covers srrategy and practice for organic social media marketing fo r cus- tomer loyalt)~ PR and advocacy; social media will be explored in Chapter 9, with the focus on paid social media commw1icarions. T his is the main section on social media in the text since often it is most effective for customer communications and admcacy.
Brian Solis (Solis, 2011), analyst at Alrimerer, capmrcd the potential o f social media fo r brands when he said:
Brands are either part of the conversation or they're not and, as a resu lt, they' re either part of the decision-making cycle, or they' re absent from the heart , mind, and actions of the connected customer.
238 Part 2 Digijal marketing strategy development
Social media amplification A method of increasing awareness of a brand through organic and pald sharing of social media updates via social networks as organic social posls and adverts are displayed in the stream of social network users.
Activity 6.1
Social CRM The prooess of managing customer-to-customer conversations to angage existing customers, prospects and other stakeholders with a brand and so enhance customer rela~ management.
Social selling A proactive approach to using social mecia to generate leads and sales, particUarty applied to B2B marketing in Linkedln, where ~·s possible to identify prospects and comect wrth them.
What is social media marketing and why is it important?
Most consu mers and busi nesses wiiJ u nderstand social media simply as the main social networks such as Facebook, Insragram, Lin kedln , Pinterest, Snapchat, Twitter and other social networks that have the most active users in each count!]( \'{fhile these are important, there are other aspects of harnessing and social media, including customer communities and encouraging user-generated content (UGC) such as company and prod uct reviews and
. ranngs.
Social media marketi ng is based on how we can use consumer-to-consumer (C2C) interactions to increase awareness of our brand through social med ia amp lification while minimising nega tive ment ions. To apply this effectively for communications, we have to recognise that social media involves pa rriciparion in discussions and sha ring of ideas a nd content, which is often facil itated by social networks bur can occur in oth er locations.
\Y./e think the CIPR Social Medi a Pa nel (CIPR, 2011) describes socia l media well :
Social media is the term commonly given to Internet and mobile- based channels and tools that allow users to interact wit h each other and share opinions and content. As the name implies, social media involves t he building of communities or networks and encouraging participation and engagement.
This defini tion shows tha t the most im portant fea tu re of these socia l media ch an nels is that t hey encourage prospect s and customers to interact and create UGC.
To simplify: social media a re digi tal media that encourage audience participation, inter- action and sharing. To review the power of social media, complete this activity, which con- siders the range of social media interactions.
Which social interactions occur outside the social network
Identify, through discussion with other students, which types of social interaction occur online beyond the main social networks. Consider different types of media sites, platforms such as desktop and mobile usage and different formats of discussion, commenting and rating. Also consider how these may be integrated with social sharing on the main social networks. For each type of social interaction, assess the extent to which companies need to and can control them.
What is social CRM?
G iven the potentia l o f social media for customer commu nica ti ons, it's na tural tha t a new ma rketing te rm , socia l CRM , d evelo ped to d escri be socia l med ia integratio n w ith CR M . T he scope of C RM and social CR M crosses ma ny bus in ess p rocesses, as suggested by Fig- ure 6.1. Alt hough social CRM is not a term often-used any longer in busi ness, this diagram from the advent of social CRM is stil l usefu l for showing different marketing applications of social media .
This framework shows the value of social media in collecting customer insights across different business function . The scope of ead1 area shown in Figure 6.1 is:
1 M arketing. Monitoring, analysis and response of customer conversations through social listening tools.
2 Sales . Understanding where prospects are discussing selection o f products and services offered by rou and competitors and deter mining the best way to get involved in the conversation to influence sales and generate leads. Within B2B, Linked In is an obvious location that should be monitored and used proactively to generate leads and sales, a technique known as social selling.
Chapter 6 Relationship marketing using digital platforms 239
Figure 6.1 Applications of social media across different business functions
1 Social customers' Insights: the 5Ms
I Marketing
II Sales
I Service and
Innovation Collaboration Customer
support experience
2 Social 6 Social
9 Social 12 14 17 Seamless marketing support Innovations Collaboration customer
sales insi9hts insights insights insights insights experience
3 Rapid social 7 Rapid 10 Rapid 13 15 Enterprise 18 VIP
marketing social sales social Crowdsourced collaboration experience
response response response R&D
4 Social 8 Proactive 11. Peer-to- 16 Extended
campaign social lead peer unpaid collaboration
tracking generation armies
5 Social event
management
Source: Altimeter (201 0)
3 Service and support. C usto mer self-help through forums prov ided by you and neutral Sites.
4 Innovation. Usi ng conversations to fos ter new product development or enhance online offeri ngs is o ne of the most exciting forms of social CRM.
5 Collaboration. T h is is e-business collaboration wi thin an o rga nisati o n th rou gh an imrru1et and other software too ls to encourage all forms of collaboration th at support business process.
6 C ustomer experi ence. This references the use of social CRM to enh ance the customer experience and add value to a brand , which is implied by many of the other aspects above. It gives the examp les of using VIP programmes offering collaboration between customers with shared characteristics to add val ue and crea te advocacy.
Note that the deep integration between social networks and CRM systems promised by social CRM when the soc ial networks were growing rapidly in popularity has not been delivered in practice due to a combination of privacy concerns and soc ial networks wanting to retain contro l, requiring advertising expenditure for marketers to communicate to thei r subscribers. As Inside CRM (2017) exp lain:
Dominant social platforms largely boxed out social CAM by changing APis and limiting access. Facebook shut its door and broke many CAM Integrations, and Linkedln got choosy. The promise of social CAM as a way to automatically collect contact data and communicate on social platforms from within the CAM died a quick death.
What are the main social media platforms?
In pract ice, social media sites are amon g the m ost popular si res on the Intern et, along with search engines. Sma.rt Insigh t s (2015} created a ' social media marketing radar' (see Figure 6.2) rhar su mm arises the options t o help you discuss w ith colleagues or agencies
240 Part 2 Digital marketing strategy development
Figure 6,2 The social media marketing radar
SOCIAL MEDIA """'RKETING
RADAR
Source: Smart Insights (2015)
Content Syndication
outwards from the centre
Importance To Company
cl:)ser to the centre
Chapt er 6 Relationship marketing using digital platforms 241
which sites warrant or deserve most attention in the different categories. A similar catego- risation of social media sites has been created by Weinberg (2010}. Sites or services that are agreed to be more important, which warrant more resource, should be positioned towards the centre.
These are the main rypes of social platforms available to you:
1 Social networks . In most countries , the core social platforms where people interact through social networks are Facebook, lnstagram and Snapchat for consumer audi- ences, Linkedln for business audiences and Twitter for both.
2 Social publishing and news. Nearly all newspapers and magazines, whether broad or niche, now have an onli11e presence with the option to participate through commenrs on articles, blogs or commtmities.
3 Social comm enting in blogs. A company blog can form the hub of your social media strategy and you can look at tapping imo others' blogs, whether company or personal or through blog ouueach.
4 Social ruche communities. These are communities and forums independent of t he main networks.
5 Social customer service. Services such as Get Satisfaction™ (www.getsatisfaction.com},
as well as comp<1nies' own customer-support forums, are increasingly important for responding to customer complaints, particularly in some sectors such as mobile phone and network providers.
6 Social knowledge. These are reference social networks such as Yal1oo! Answers, Quora ™ and Wikipedia. They show how any business can engage its audience by solving their problems and subtly showing how products have helped others.
7 Social bookmarking. Bookmarking sites such as Delicious™ (www.del.icio.us.com) are today relatively unimportant.
8 Social streaming. Rich and streaming media sites including photos (e.g. Piurerest), video and podcasting.
9 Social search. When Coogle+ was launched search engines incorporated more social features such as voting for sites via a Coogle+ 1. With the wane in popularity of Coogle+ in recent years, these features are seen less commonly today.
10 Social commerce. Mainly relevant for the retail and travel sectors, social commerce involves reviews and ratings on products and sharing of coupons on deals.
We haven' t identified mobile platforms or apps separately since all social networks are avail- able through smarrphone apps- indeed, social media statistics show that these apps account for the majority of consumer usage. Around 90 per cent of mobile media rime is spent in apps according to Smarr Insights (2017}.
Social media activities requiring management
A social media strategy will define how social media can support marketing goals. We reco- mmend these six activities are reviewed to define goals and strategies for how social media can support each:
1 Listen and manage reputation; 2 Transform rl1e brand through social media; 3 Acquire new customers; 4 Increase sales to existing customers; 5 Deliver customer service.
All activities should nm on a continuous and campaign basis. To support them , they require both a content and a communications su·ategy, which we cover in later sections of this chapter.
2 4 2 Part 2 Digital marketing strategy development
Activity 1. Define listening and reputation strategy
To develop a social media listening approach, you need to understand social media usage for each of:
• your audience: who they are, how they p<uticipate, what they're saying and sharing; • your activity: through official social media channels and interactions through your site,
bur also through employee mentions; • your competitors: for direct and indirect competitors, you need to review how their activi-
tles compare to yours; • online publishers and other key intermediaries: these are a form of indirect competitor
and are also important as influencers.
Social media services such as the marl<et leader Hootsuite.comTM can be set up ro monitor
sharing, brand mentions and competitor activity. But listening is just listening, so at the same rime you need to develop a social media
governance approach on how to follow up for posit ive or negative mentions.
Activity 2. Transform the brand through social media.
To fully exploit social media across the functions shown in Figure 6.2 will require companies to make large changes to their brand, company structure and how everyone in the company communicates.
Some key areas for delivering this transformation are:
• Set scope for social media activities. Understand the intersection of social media and your business activit ies . It's not just about your Facebook, Instagram, Twitter or Linkedln presence, it cuts across al l customer marketing activities.
• Review social media capabilities and priorities. Social media marketing isn' t new for most companies, they will already be using social media . But they won't be using it to che max. Benchmarking where you are now against where you want to be in the future is the key to future success.
• Governance: define who is responsible for social media. We've seen that exploiting social media requires the involvement of many people in larger companies. So you need ro decide who does what and how different groups work together.
• Reviewing the personality of your brand and setting a vision. Social media and content marketing give many opportunit ies to make your brand more engaging, which have to be thought through. The whole personality of your brand may have to be revisited too.
Activity 3. Acquire new customers using social media
For most marketers, the ultimate appeal of social media marketing is to use it to increase sales through reaching new prospects and converting them to customers. In reality, for most businesses, social media marketing may be most important in serving existing cust omers or providi.ng service, but you will set priorities according to what you think ts tmportant.
Activity 4. Increase sales to existing customers
Applying social media to increase sales to existing customers focuses on developing your customer communications strategy to encourage more social interactions on your site, leading to more social shares ro gain the amplification effect.
Activity 5. Enhance customer service through social media marketing
Improving customer service or 'social customer care' through social media is not a major
focus of this chapter since we focus on communications that directly increase sales through reaching or converting more of au audience.
Chapter 6 Relationship marketing using digital platforms 243
However, to find our more about how cusromer service can be delivered through social media, we recommend reading the advice of consul tant Guy Stephens of Foviance (Smart Insights, 2010). H e talks about how specific customer-service activities should be managed, including:
• social listening to identify customers requiring service; • outreach to answer customer questions or resolve problems; • using service to improve product and service offerings; • management of a compa ny's own service forums o r o ther se rvice platforms such as
Get Satisfaction.
Guy has a visjon for 'anytime, anywhere' customer service in the context of customer need, as shown by this quote by John Bernier of Best Buy about their 'Twelpforce' Twitter service Uohn Bernier, cited in Smarr Insights, 2010):
For us to enable customers to answer questions that come from anywhere so that the customer doesn't have to find us, we find them. We don't want someone to have to leave Facebook to ask a question, we want them to ask it there.
( The challenge of customer engagement
Customer engagement Repeated interactions through the customer lifecycle prompted by online and offlile 001l'V1'Ulications amed at strengtheni1g the long- lerm emotional, psychological CW1d physical investment a customer has wilh a btmd.
Media fragmentation Describes a trend towards i'lcreasing choice and constmption of a range of media in tenns of different chamels such as web and rnobie and also within channels - for example,more TV channels, radio slations, magazines, more websites. Media fragmentation implies increased difflcuHy In reaching target audiences.
As we explained towards the end of C hapter I , Forrester (2007) heralded customer engagement as ' ma rketing's new key metric', given the rapidly increasing online media fragmentation a nd the challenges of keeping customers engaged with brands given the proliferation of choice. Customer engagement is sometim es used ro refer to engaging cus- tomers in the short term, on a single touchpoinr, such as whether someone dwells o n the site for a signjficant rime or whether they interact with an email. Instead, customer engage- ment really refers to rhe long-term abiliry of a brand ro gain a customer's attention o n an ongoi ng basis.
The commercial aim of engagement is ro maximise customer value through using cus- romer interactions ro lead ro more profitable relationships.
An example of the challenge and the need for reminder messages fo r consumers to engage is provided by mobile messaging service Urban AirshipTM (2017), wruch researched the impact of push notifications on new mobile app users. They found that within 90 days of first opening the app, 95 per cent of opt-in users in rhe study who didn't receive any push notifications ch urned- that is, they deleted or sropped using the app. ln contrast, app users who received push notifications in the 90 days after their first opening of the app had nearly three times (190 per cent} higher retentio n rates th an those who did not.
Figure 6.3 s hows the wide range of options to interact with customers today via different messaging platforms using marketing automation. The innermost circle show s interactions possible through mobile messaging platform Urban Airship, the outer circle interactions on ocher platform s. Orchestration of many of these engagemenr co mmunications requires planning to exploit them. Simply having techno logy is in sufficient, engagement messages need to be designed, created and optimised.
Forrester (2007) develo ped a framework to measure on line engagement through the cus- tomer lifecycle and also away from a brand 's own site, such a s o n publisher sites or social networks.
Accordjng to Forrester, engagement has four parts, which can be measured both online and offline:
• Involvement. Forrester says that online thi s includes website visits, time spent, pages viewed.
• Interaction. Trus is contributed commenrs to blogs, quanricy/frequency of w ritten reviews and onljne comments as well as comments expressed in custome r service. (We could add the recency, frequency and category of product purchases, and also ongoing engagement in emaiJ marketing programmes, as discussed later in this chapter; all are important here. )
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Figure 6.3 Different consumer messaging options (Urban Airship, 2017)
VA Headsets
• Native Urban Airship Messaging Channels • Partner and Platform Integrations
Chatbots
... ln-app / ~ Notifications
)
1
Message Mobile Centre Wallet
-- --l I Web • Push
Notifications Notifications I
I (( a= )) I
•
Smart Home Device
Android Auto Apple News
Apple Car
• Intimacy. Tlus is sentiment t racking on t hird-party sires including blogs and reviews, as weiJ as opinions expressed in customer service caiJs.
• Influence. This is advocacy indicated by measures such as likelihood to recommend, brand affinity and content forwa rded ro friends.
Benefits of using CRM to support customer engagement
Using digital platforms for relationship marketing involves integrating rhe customer data- base with websires and messaging to make rhe relationship targeted and personalised. Through doing this, marketing can be improved by:
• Targeting more cost-effectively. Traditional targeting, for direct mail for instance, is often based on mailing lists compiled according to criteria rha r mean t hat not everyone con- tacted is in the target marker. For example, a company wishing to acquire new affluent consumers may use postcodes to target areas with appropriate demographics, bur within the postal district the population may be heterogeneous. The result of poor targeting will be low response rates, perhaps less than 1 per cent.
Inbound marketing The custcmer is proactive in actively seekilg out a solution and interactions with brands are alttacled ltvough oontent. seateh and social meda marl<eli1g.
Sense-and-respond communications Deli-ing timely. relevant communications to customers as part of a oontact strategy based on assessment of their position in the customer lif~e and monitonng specifk: interactJOnS wrth a company's website. emais and staff.
Gam ification The process of applying game thinking and mechanics to engage an audience by rewarding them for achievements and sharing.
Chapter 6 Relationship marketing using digital platforms 2 45
• Permission marketing. Also known as inbound market ing , this has the benefit that the list of contacts is self-selecting or pre-qualified. A company will only aim to build rela - tionships with those who have visited a website and expressed an interest in its products by registering their name and address.
• Mass customisation of the marketing messages (and possibly the product). This tailoring process is described in a subsequem section. Technolog)' makes it possible ro send rai- lored emails at much lower cost than is possible with direct mail and also to provide tailored web pages ro smaller groups of customers (microsegments).
• Increased depth and breadth of information (and improved nantre of relationship). Digi- tal media enables more information to be supplied to customers as required through content marketing. For example, special pages such as Dell's Premier can be set up to provide customer groups with specific information. The nature of the relationship can be changed, in that contact with a customer can be made more frequently. The frequency of contact with the customer can be determined by the customers - whenever they have th e need to visit their personalised] pages - or they ca n be conractcd by email by the company.
• Deeper customer understanding and more relevant commu nicatiotlS can be delivered through a sense-and-respond approach. Examples of sense-and -res pond c ommunications include: tools that summarise products purchased on-site and the searching behaviour that occurred before these products were bought; online feedback forms about the sire or prod- ucts, completed when a customer requests free information; questions asked through forms or emails to the online customer service facilities; online questionnaires asking about product category interests and opinions on competitors; new product development evaluation - commenting on prototypes of new products.
• Lower cost. Contacting customers by email or through their viewing web pages costs less thru1 using physical mail, bur, perhaps more importantly, information needs to be sent only to those customers who have expressed a preference for it, resulting in fewer mail - outs. Once personalisation technology has been purchased, much of the targeting and communications can be implemented auromaticall)t
• Delivering loyalty programmes. Loyalty schemes are often used to encourage customer extension and retention. You will be familiar with schemes run by retailers such as the Tesco Clubcard or Nectar schemes, or those of airlines and hotel chains. Such schemes are often used for e-CRM purposes, as follows: 1 initial bonus points for sign-up to on line serv ices or initial registration; 2 points for customer development or extension - more points awarded to encourage
second or third online purchase; 3 additional points to encourage reactivation of online services. Popular products are offered fo r a relatively low number of points to encourage repeat
purchases. • Opportunities for gamification. Gam ification involves applying game-based thinking ro
a brand, business or organisation to engage and develop loya lry. Research shows that game play itself stimulates the human brain (releasing dopamine) and the now-proven mechan- ics from gaming can be brought into marketing, and especially mobile markcri11g. Some key features of gamification applied to digital marketing arc: . • creative concept to engage; • game mcchru1ics to encourage play (badges, points, leader boards levels, interactions); • game dynamics can be altered to reward and even penalise; • game currencies to provide the motivation - this can be financial, status, need for
doing good, pleasure and influence.
Mini case studr 6.1 shows how one brand is using gamificarion to reach and engage smartphone users.
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Mini case study 6.1 Nestle uses gamification to engage smartphone users
Brands such as Nestle™ have, for many years, successfully used lV and traditional media. But with consumer behaviour changing, reaching people who don't watch linear lV poses a challenge.
This example shown in the video (Figure 6.4, https:l/www.youtube.com/watch?v=IDdfs8NC3yc) explains how gamification can be used as a new technique by brand advertisers looking to engage users on their smartphones when commuting or relaxing. Steve Pollack, Head of Media Communications, Nestle UK explains the benefits that a brand advertiser sees from its new platform:
The great beauty of running an ad in a video in a game is that we can offer something to the gamer and they hopefully will then view the ad. We give them a good value exchange: they see our ad, we give them a power up or an extra life.
In this gamification campaign, Nestle worked with King Games who have a network of over 200 games- related sites, plus Google's Doubleclick ad network.
All advertising that runs on King Games is user-initiated. This means that the p layer gets to choose and engage in advertising for a value exchang e, such as a reward - an extra life, currency or booster, for instance.
Figure 6.4 King Games - Nestle example
Dou bleCiick Customer Stories: King
2,1 42 views
So<lce: Dot.bleclick (2017)
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Chapter 6 Relationship marketing using digital platforms 24 7
King Games believe that giving the user the choice of whether to engage with an ad or not and when to do so creates a more positive experience overall and improves results for advertisers. 'We' re find ing that the players that actually consume advertising in that form are playing the games longer and having more fun', says Ben Fox, VP of Business Development of King Advertising.
For this Nestle campaign, the results from advertising in King Games have included a 3 per cent click- through rate on Android and 99.5 per cent view-through rate (meaning that a very high proportion who partici- j pate eventually visit the Nestle site). .
Web self-service Customers perlorm information requests and transactions through a web interface rather than by contact with customer support staff.
Marketing applications of CRM
C RM systems support the fo llowing marketi ng applications:
1 Sales force auto m ation (SFA). Sales representatives are supported in their account ma n- agement th rough tools to a rrange and reco rd custo me r visits.
2 C ustomer service management. Representa tives in conract centres respond to customer req uests for info rmat ion by usin g a n intranet to access databases contai ning info rm atio n on the custom er, product s a nd previous queries . It is more efficient and may increase custome r convenience jf cust omers are given th e option of web self-service, i.e. access- ing support data through a web interface.
3 Managing the sales process. This ca n be achieved through e-commerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA).
4 C ustom er communica tions managem ent. Managing communications integrated across different channels including direct mail, email, mobile messaging, personalised web messages and social networks.
5 Anal ysis. T hrough technologies such as data warehouses and approaches such as data mining, which are explained further later in the chapter, customers' characteristics, their purchase beha\·iour and campaigns can be analysed in order to optimise the marketing mix.
CRM technologies and data management
Database technology is at the hearr of delivering these CRM applications. Often the database is accessible through an in u anet website by employees or an extra net by customers or partners, providing an interface onto the entire customer relationship management system. Email is used to manage many of the inbound, outbound and interna l commu nications managed by the CRM syste m. A workflow system is often used fo r automating CRM processes. For exa m- ple, a wo rkfl ow system ca n re mind sales represenrarives about cusromer co ntact s or can be used to manage service del.ivery, such as rh e many stages of ar ranging a mo rtgage. The three mai n types of customer d ata h eld as tables in cusromcr databases for CRM are typically:
1 Person al and profile data . These incl ude contact derails and characteristics fo r profi ling customers, such as age and gender (B2C), a nd business size, industry sector and the individual's role in the bu ying decision (B2B).
2 Tran sactio n data. A record of each purchase transaction including specific p roduct pur- chased, quantities, category, location, dare and time and channel where purchased .
3 Communi cations interactio ns d at a. A record of which customers ha,·e been targeted by campaigns and their response ro them (outbound communications). Also includes a record of inbound visits ro a website, customer service and support enquiries and sales
. . . tepresentao\·e mteracoons.
The behavioural data a\·ailable through 2 and 3 are very important for targeting custom- ers to more closely meet their needs. Initially, simple auromation approaches to send a series of customer-nurturing emails, for example, were used. Today, analysis of complex data sets and applying Artificial Intelligence enables us to deliver far more relevant one-ro -o ne
. . commumcatJons.
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'Big Data' for marketing 'Big Data' refers to applications to gain value from the increasing Volume, Velocity and Variety of data integrated from different sources. These enhance insight to deliver more relevant communications through techniques such as marketing automation and social CRM.
Using 'Big Data' and Artificial Intelligence to support data-driven marketing
'B ig Data' is a bjgh-level term used to describe anaJys is techniques and systems that explo it
the large volumes of data that are now captured by businesses. Marketing applications of Big Data exploit the different types of data n ow co llected when businesses interact with their audiences. The two mai n benefits of Big Data for marketing are:
• identifying insights such as trends and patterns th rough analysis of large, complex interrelated data sets, which can inform future strategies and t actics;
• identifying success factors to make commun ica ti ons more relevant by improving messaging- for example, by selecting rhe best rimi ng, copy or offers.
A n example of the insights that are avai lable from Big Data that can be applied is pro- vided by rhe US retailer TargetTM . Usi ng dat a about women's shopping b abjts, Target was able to identify rhat a woman buying large quantities of ru1scented Ionon, cotton baJis, supplements and washcloths might mean that she's anywhere from a few weeks pregnant, to very close to her d ue date. Of course, such approaches have d1eir risks. In one case, a teenager received di rect mail from Target promoting 'cribs and bibs' - before she had even rold her father a bout the pregnancy.
The opportw1ity and chaJlenge of Big Data for marketing is often described fro m a tech- nicaJ point-of-view using the three dimensions, or vectors, shown in Figure 6.5:
• Data Volum e refers to the increase in data that is now available for online inreractio ns with websites and sociaJ media .
• Data Veloci ty shows how marketers n ow have access to real-time dat a, such as real- rime anaJytics of interactions on web and mobile sites and a lso social media interact.ions.
Figure 6 .5 A summary of the t hree main dimensions of Big Data
Source: Soubra (2012)
Artificia l Intelligence Software and servces that perfoon tasks previously requiring hu-nan analysis and interaction. Marketing applications of AI typically aim to improve business· to-customer communi- cations including targeting media. personalised messaging and customer service interactions.
M achine learning Creating and applying predictive models and algorithms with the abiity lo learn without bang explicitly programmed. The computer models then make predictions of success based on patterns extracted from historical data. These are used to define lUes. which are implemented to automate tasks such as targeting media ~ emails to the most vallable segments with the most relevant creative offer and timing.
Chapter 6 Relationship marketing using digital platforms 249
• Data Variety shows how new types of unstructured data, including, again, social media interactions, offer potential mo. This also suggests the potential of integrating different sources of data to gain more customer insighr.
The key question for marketers given access ro the potential new types of data is: how do we harness it? lhrough in regrating new types of data from different systems and sources there is clearly the option ro mine new clara abour how businesses interact with customers to encour- age purchase. Ultimately, the main application of Big Data in marketing is used to increase the relevance of communications using the marketing automation techniques discussed earlier in the chapter. Techniques such as predictive modelling are used to send more relevant, con- textual emails or web personalised banners ro customers in order ro generate response.
Some have argued that 'Big Data' is a classic example of 'The Emperor's New Clothes' fable - i.e. it is a. rerrn created by systems vendors and consu lrnnrs to generate demand for services that have been previously available under another label. Others note rhar many marketers are not exploiting the 'Small Dara ' avai lable through campaign reponing and digital analytics, discussed in Chapters 8 and 10. Since initial launch of the Big Data concept , new Artifi c ia l Intellige nce and machine le a rning technol ogies have developed to help mar- keters analyse a nd app ly the insights.
Artificial Intelligence for marketing
The visual in Figure 6.6 defines rhe many opportunities of applying Artificial Intelligence in marketi11g, strucrured around the Smarr Insights RACE customer lifecycle we introduced in Chapter 1.
1 Al-generated content
For some types of content, AI content Narural Language Generating (NLG)', writing programs are able to pick elements from a daraser and structure a 'human sounding' article. An AI writing program called 'WordSmith' from Auromared Insights has been applied in several sectors:
• Associated Press produces nearly 4,000 company earnings articles quarterly- a 12-fold increase over irs manual efforts.
Figure 6 .6 Marketing applications of Artificial Intelligence through the customer lifecycle
REACH ACT
Propensity Modeling via Machine Learning
Applied Propensity Model
• AI Application
-- •
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• Processor vendor NVIDlA uses NLG and Tableau's visual analytics to optimise inrernal reporting.
• Vivint Smart Home generates thousands of localised webpages, boosting SEO efforts and generating a 5X increase in sales.
• GreatCall delivers over 50,000 personalised narratives a week using natural language .
generanon. • Bodybuilding.com generates over 100,000 workout recaps every week to help users reach
their fitness goals.
Another marketing-based A1 application that can be used by email marketers is Phrasee. This uses A1 technology to generate and optimise effective subject lines for emails. By using vast amounts of data on the effectiveness of email subject lines, it is able to get better resul ts in terms of opens and clicks than human copywriters.
2 Smart content curation
AI-powered content curation allows you to better engage visitors on your site by showing them conrem relevant to them. This technique is most commonly found in the 'customers who bought X also bought Y' section on many sites, bur can also be applied to blog content and personalisingsite messaging and services more widely. Think of Netflix's recommenda- tion system being able to consistently recommend you shows you'd be interested in.
3 Voice search and conversational user interfaces
Voice search appliances or personal assisrants have been developed by major online plat- forms such as Facebook, Google, Amazon and Apple after the initial launch by Amazon of its Alexa home appliance. The implication for marketers is that as search queries become more conversational, they need to ensure they are answering the questions posed by searches in natural language.
4 Programmatic media bidding
Programmatic media buying can use propensiry models generated by machine learning algo- rithms to more effectively target ads at the most relevant customers.
5 Propensity modeling
Propensity modeling is the goal of a machine learning project. The machine learning a.lgo- rithm is supplied wid1 large amounts of historical data, and it uses this data to create a propensity model which (in tl1eory) is able to make accurate predictions about the real world. An example is shown in Mini case study 6.2: Taking the guesswork out of CRM.
6 Predictive analytics
Propensity modeling can be applied to a munber of different areas, such as predicting the likelihood of a given customer to convert, predicting what price a customer is likely ro con- vert at, or which customers are most likely to make repeat purchases. This application is called predictive analytics because it uses analytics data ro make predictions about how customers behave. The key thing to remember is that a propensity model is only as good as the data provided to create it, so if there are errors in the data or a high level of randomness, it will be unable to make accurate predictions.
7 Lead scoring
Propensity models generated by machine learning can be trained to score leads based on certain criteria so that your sales team can establish how 'hot' a given lead is, and if ir is worth devoting time to. This can be particularly important in B2B businesses wiili consulta- tive sales processes, where each sale rakes a considerable amowlt of time on the parr of the
Chapter 6 Relationship marketing using digital platforms 25 1
sales ream. By contacting the most relevant leads, the sales ream can save rime and concen- trate their energy where it is most effective. The insights into lead's propensity to buy can also be used ro target sales and discounts where they arc most effective.
8 Ad targeting
Machine learning algorithms can run through vast amounts of historical data ro establish which ads perform best on which people and at what stage in the buying process. Using rhis data companies can serve them with the most effective content at rhe r ight rime. By using machine learning ro constantly optimise thousands of variables you can achieve more effec- tive ad placement and content than by using traditional methods.
9 Dynamic pricing
All marketers know that sales are effective at shifting more product. Discounts are extremely powerful, bur they can also hmt yom bottom line. If you make twice as many sales with a two-thirds smaller margin, you've made less profit than you would have if you didn't have a sa le.
10 Web and app personalisation
Using a propensity model to predict a customer's stage in the buyer's journey can let you serve that customer, either on an app or on a web page, with the most relevant content. If someone is still new to a site, content that informs them and keeps rhem interested will be most effective, while if they have visited many times and are clearly interested in the product then more in-depth content abour a product's benefits will perform better. We explore this further in Chapter 7 .
11 Chatbots
Chatbors mimic human intelligence by being able to interpret consumer's queries and com - plete orders for them. You might think chatbots are extremely difficult ro develop and only huge brands with massive budgets will be able to develop them. Bur actually, using open char bot developmem platforms, it's relatively easy to create your own chatbor withour a big team of developers.
Facebook is facilitating the development of chatbots for brands via its Messenger application, which is another form of conversational UI. For example, Pizza ExpressTM h as lau nched a new chatbot on Facebook Messenger rh::H a ll ows users to book in the ir rcst<~manrs.
12 Re-targeting
Much as with ad targeting, machine learning can be used ro establish what content is most likely ro bring customers back to d1c site based on historical data. By building an accurate prediction model of what content works best to win back different types of cnsromers, machine learning can be used to optimise yom re-targeting ads to make them as effecrive as possible.
13 Predictive customer service
Inbound enquiries of all types can be routed to the relevant support article or customer support person via a series of questions. This rules-based customer service has been used for voice calls. AI enables more narmallanguage questions to be asked, which again helps ro route ro rhe most relevant article or person. Bentoweb, Nanorep and Liveworld are examples of services for this application.
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Predictive analytics Using data mining and statistical modelling to predict Mum outcomes. for example by soomg rustomer propensity to respond to a specific offer.
Predic ti ve analytics can be used ro work our which cusromers are most likely to unsub- scribe from a service, by assessing what features are most common in customers who do unsubscribe. It's then possible ro reach our to these customers with offers, prompts or assistance to prevent them from churning.
14 Marketing automation and 151 -1 dynamic content emails
Marketing automation techniques generally involve a series of rules, which trigger imeractions with the customer via messaging on email, smarrphone notifications or web personalisation. Marketing automation adoption has been limited by the time needed to set up and optimise these rules. Machine learning can analyse customer imeraction data and establish when are the most effective dmes ro make contact, what words in subject Lines are most effective a nd much more.
Mini case study 6.2 Taking the guesswork out of CAM - how Guess™ uses predictive analytics
In an interview with Guess Director of Marketing- CAM, Victoria Graham (Custora, 2014) describes different opportunities for the brand in the way the company uses predictive an alytics. The first opportunity is combin- ing multiple customer and transaction data sources. Graham explains:
All of our analysis was based on past purchases behaviour. We' re not data scientists, we don't have PhOs in our office, so any predictive analysis - like who might buy in the future, and what a customer might buy in the future - was not something that we were able to capture.
Guess applied predictive analytics by first identifying and understanding its customers across two dimen- sions: purchase-based customer personas, and high-value customers. These insights were then applied to predict future p urchase response to acq uisition and retention campaigns. This has prompted a change in the Guess email strategy. Three years ago they were emailing customers three, possi bly four times a week. Gra- ham says:
We were very m uch 'batch and b last', and our email calendar was driven by our merchant team: if there's a product launch, or a big promotion, like 40% off all sweaters, that was driving the email calendar. We' re now in the process of changing that.
We've been cognisant of the fact that it is quite likely that we were irritating our customers with constantly talking to them. We had two options when we talked about getting personalised with our emails: one option was to cut back on emalls. If today's email is about denim, and you like accessories, you just don't get today's email. But the thought of cutting down the number of emails we send out was scary. The other option was, if we're going to email everyone every day, let's talk to them in a way that's meaningful and relevant to them.
In a test , they Isolated the accessories persona and the non-accessories persona. They compared t he accessories customers who received the accessories-focused email (group A) to accessories customers who received the regular email (group B). The CTR and conversion rate of group A far exceeded those of group B.
Another analytical approach was identifying high-value customers to optimise acquisition. This dispelled a lot of assumptions according to Graham, such as assuming that top customers were metropolitan customers, who liked core products like denim, but also loved accessories. This wasn't necessarily the case, as Graham explains:
When we looked at where our customers realty over-index and differentiate themselves from the rest of our customer database, they found that they were more likely to live in suburban areas. Arizona popped as a big state for high lifetime-value customers. Their first purchase tended to be a knit or a sweater or denim .
Note that techniques do not necessarily require an expensive recommendations engine, except for very large sites.
Chapter 6 Relationship marketing using digital platforms 253
~ Customer lifecycle management strategy ~
Customer lifecycle The stages each customer will pass ttvough in a long-tenn relationship thtough acquisition, retention and extension.
Customer selection Identifying key customer segments and targeting them for relationship building.
Customer acquisition Strategies and techniques used to gain new customers.
Activation A prospect or customer takes the first step in actively usilg an ooine ser.1ce after initial registration ()( purchase.
Customer retention Techriques to maintain relationships with e>cisting customers.
Customer extension Techniques to encourage customers to Increase their involvement with an organisation.
In this section we will review classic methods of orchestrating communications based on the position of customers in the lifecycle and the use of 'sense and respond' communications to build customer loyalry at each stage of the customer lifecycle . These can be used by businesses of any size, whereas some of the more ad\·anced Big Data and Artificial Intelli- gence approaches rend to be used by larger businesses currently.
To plan these communications requires consideration of the business goals of engage- ment using a high-level view of the classic customer lifccycle of selecr, acquire, retain, ex-rend as shown in Figure 6.7.
1 Customer selection means defining the rypes of customers that a company will market to. lt means identifying different groups of customers for which to develop offerings and to target during acquisition, retention and extension. Different ways of segmenting cus- tomers by value and by their derailed lifecycle with the company are reviewed.
2 Customer acquisition refers to marketing activities to form relationships with new cus- tomers willie minim ising acquisition costs and targeting high-value customers. Service qualiry and selecting the right channels for different customers are important at this stage and throughout the lifecycle. For an onl ine business, acquisition may involve a single-step conversion- for example, if a new visitor arrives on a site and purchases on the first visit. Typically, a longer, multi-step process is needed for conversion to sale where a visitor returns to the site. To facili t ate conversion, customer lifecycle marketing should seek to form aJl i11itial relationship through asking for contact derails for comrnunication, such as email address, mobile number or a social media contact. This is the permission mar- keting approach, which we explain in rhe next section . For online SaaS startups, there is an additional step of activation , which means that a person registered with an online brand takes further action{s), such as trying rhc service.
3 Customer retention refers to the marketing activities taken by an organisation to keep its existing customers, i.e. to encourage them to buy again o r continue a contract that renews for a service. Identifying relevant offerings based on their individual needs and detailed position in the customer lifecycle (e.g. number and value of purchases) is key.
4 Customer extension refers to increasing the depth or range of products that a customer purchases from a company. This is often referred to as 'customer development'.
There is a range of customer extension techniques that are particularly important to online retailers:
• Re-sell. Selling similar products to ~xisring customers - particularly important in some B2B contexts as rebuys or modified rebuys.
Figure 6. 7 The four classic marketing activities of customer relationship management
,-
Customer retention • Understand individual needs • Relevant offers for continued
usage of online services • Maximise service quality • Use the right channels
Customer selection ~ • Who do we target? ~ \--- • What is their value?
" \ • What is their lifecycle? • Where do we reach them?
Customers }v ;:.- Customer acquisition • Target the right segments • Minimise acquisition cost • Optimise service quality • Use the right channels
254 Part 2 Digijal marketing strategy development
Pennission marketing Customers agree (opt-in) to be involved in an organisation's marketing activities, usually as a result of an Incentive.
Interruption marketing Marketing communications that disr\.f)t CUSiome<'S' activities.
• Cross-sell. Selling additional products thar may be closely related to the original pur- chase, bur nor necessarily so.
• Up-sell . A subset of cross-selling, bur in this case selling more expensi,·e products. • Reactivation. Customers who have nor purchased for some rime, or have lapsed, can
be encouraged ro purchase again. • Referrals. Generating sales from recommendations from existing customers - for
example, member-get-member deals.
You can see that this framework distinguishes between customer retention and customer extension. Retention involves keeping rhe most valuable customers by selecting relevant customers for retention, underst anding their loyalty factors rhar keep them buying and then developing strategies that encourage loyalty and cemenr the relationship. Customer exten- sion is about developing customers to try a broader range of products to convert the most growable customers into the most valuable customers.
Peppers and Rogers (1997) recommended rhe fo ll owing stages to achieve these goals, which they popularised as rhe 5Is:
• Identifi cation . Learn rhe characteristi cs of customers in os much detail as possible to be able to conduct the dialogue.
• Individu a]jsation. Individualising is using mass custom isation and personalisation to define the company's approach to each customer, offering a benefit to the customer based on the identification of customer needs. The effort expended on each customer should be consistent with the value of that customer to the organisation.
• interaction. Continued dialogue to understand both the customer's needs a.nd the cus - tomer's strategic value.
• Integration. lnregrarion of the relationship and knowledge of rhe customer must extend throughout all parts of rhe company, harnessing data integrated from different systems.
• Integr ity. Since all relationships are builr on rrusr, iris essential not to lose the crust of the customer. Efforts to learn from the customer should nor be seen as intrusive, and privacy should be maintained. (See Chapter 3 for coverage of privacy issues related to e-CRM.)
Permission marketing
Perm ission marketing is a significant concept rhat sti ll underpins online C RM in manage- ment of the customer lifecycle. 'Permission marketing' is a term coined by Seth Godin (1999). It is best characterised with just three (or four) words:
Permission marketing is ... anticipated, relevant and personal [and timely).
Godjn (1999) noted that while research used to show we were bombarded by 500 marketing messages a day, with the advent of the web and digita l TV this has now increased ro over 3,000 a day! From the marketing organisation's viewpoint, this leads to a dilution in the effectiveness of the messages- how can the communications of any one company stand our? Godin refers ro the uaditional approach as interruption marketing . Permission marketing is about seekj11g the customer's permission before engaging d1em in a relationship and providing something in exchange. The classic exchange is based on information or enrenainment - a 828 site can offer a free report in exchange for a prospect sharing tl1eir email address, whkh will be used to majntain a dialogue through messaging. You will see permission marketing in action on many retailer sires where they seek ro capture email addresses of first-time visitors in return for a discount code ro be used for first purchase sent via email or SMS.
From a practical e-commerce perspecti\'e, we can think of ::1 customer agreeing to engage in a rebrionship when they check a box on a web form to indicate that they agree to receive further communications from a company, w hich as we saw from the discussion of
Opt -in A customer proacbvely agees to receive further informa!Jon.
Opt-out A customer declines the oiler to receive further informa!Jon.
Chapter 6 Relationship marketing using digital platforms 255
communications law in Chapter 3 is now a legal requirement in most countries. This approach is widely known as opt-in . This is preferable to opt-o ut, rhe situation where a customer has to consciously request nor to receive further information.
The importance of incemivisation in permission marketing has also been emphasised by Seth Godin, who likens the process of acquisition and retentio n ro daring someone. Likening customer relationship building to social behaviour is nor new, as O'Malley and Tynan (2001) note; the analogy of marriage has been used since the 1980s at least. They also report on consumer research thar indicates that while marriage may be analogous to business relation- ships, it is less appropriate for B2C relationships.
Godin (1999) suggests that 'daring' the customer involves:
1 offering rhe prospect an incentive to volunteer; 2 using rhe attention offered by the prospect, offering a curricu lum over time and reaching
the consu mer about your product or service; 3 reinforcing the incentive to guarantee that the prospect maintains the permission; 4 offering additional incentives to get even more permission from the consumer; 5 over time, using the permission to change consumer behaviour towards profits.
In practice, new forms of ' interruption' are required. To attract prospects ro a website or social media presence, the inbow1d marketing techniques described in Chapter 9, sud1 as search marketing, social media and remarketing using display ads, arc sti ll needed to gain attention.
Figure 6.8 gives a summary of a common, effective process for permission-based online relationship building to support engagement through the different stages of the customer
lifecycle.
Figure 6.8 A summary of an effective process of permission-based online relationship building
I
1 Drive traffic
4 Speak again
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256 Part 2 Digital marketing strategy development
Lead generation o ffer Offered in relt..m for rustomers providing their contact details and characteristics. Convnonty used in 828 marketing where free information such as a report or a seminar wil be offered.
Sales generation offer Encourages product trial. A coupon redeemed against a purchase is a classic example.
The stages are:
• St age 1. Attract new and existing customers to on line pre ence. Digital inbound com- munications and offline communications channels described in Chapter 9, such as search, social media marketing and direcr mail, are used to drive visitors to a website, Facebook or other form of presence such as an app that enables opt-in.
• Stage 2a. Prompt and incentivise visitors to action. Two key types of incenti,·es ro con- sider are: lead generation offers and sales genera tion offers.
Types of offers marketers can devise include information value, entertainment ,-alue, mon- etary value and privileged access to information (such as rhar only available on an extraner). The beauty of digital marketing is rhar different offers can be rested for different audiences using AB or mttltivariare resting (Chapter 10) and rhe offers refined ro increase response.
To get visitors to take notice, prominenr calls-to-action or pop-ups can boost conversion rates. For example, the pop-up shown in Figure 6.9, which was resisted by Dave Chaffey for several years, increased lead conversion by 40 per cent when deployed on Smart In sights. Many web users will be annoyed by pop-ups, yet for sire owne rs they do increase the number of leads, so the number of pop-ups is now increas in g and is likely to do so further.
• Stage 2b : Capture customer information to maintain rel ati o nship. Capturi ng profile information is commonly achieved through a n on line form such as that shown in Figure 6.9, which the customer must complete ro receive the offer. It is important to design these forms to maximise their completion. Factors that are important are: • branding to reassure the customer; • key profile fields to capture rhe most important information ro segment the customer
for future communications - for example, posrcode, airport and preferred activities (nor too many questions should be asked);
• mandatory fields - mark fields that must be completed or, as in this case, only include mandatory figures;
• privacy- 'we will nor share' is the magic phrase ro counter the customer's main fear of their details being passed on; a full privacy staremenr should be available for those who need it;
• KISS- 'Keep it simple, stupid' is a well-known American phrase;
Figure 6.9 Example of a pop-up on Smartlnsights.com
Yoofl be .,.G 1M 10000 llirTw\ INq'tl ,..,_ ""'10 -'•*--oo.r - •l'llr1.14 .... - ClpclrioH,.. ........
.... _
Customer profiling Using the website to lind out a customer's speofic interests and chatacteristics.
Single customer view Customer profile information is kept consistent across systems to maintain customer data quality.
Chapter 6 Relationship marketing using digital platforms 25 7
• WIFM - 'What' s in ir for me?' Explain why the customer's data is bei ng caprured; what benefits it will give rhem?
• validatio11- of email, posrcode ere., checking data as far as possible to make it accurate.
As well as online data caprure, ir is important ro use all customer touchpoints ro caprure information and keep it up ro dare, since this affects the abi li ty to target custo mers accu- rately. Figure 6.10 provides a good way for a comp any to review all the possible methods of capturing email add resses and other profile information.
Apart from the contact information, the other important information to collect is a method of c us tomer profiling so that relevant content and offers can be delivered to them. For example, B2B company RS Components asks for:
• industry sector; • purchasing influence; • specific areas of product interest; • how many people you manage; • total number of employees in company.
O nce data has bee n irlitial ly coiJected, ir s hou ld be added to gain a better understanding of custo mer needs a11d behaviours. The risk here is tha t if data is entered into different systems, data quality issues may arise with inaccurate dara . Managemenr me:1sures s hou ld be pur in place to create an accurate single c usto me r view. T hi s is a significant risk with CRM systems since data can be collected offline and in different o nlin e systems such as on the websi te, tran sactional e-commerce or wirhin social med ia and a sepa rate email system.
• Stage 3 : Main tain dialogue u sing o nl ine co mmunication. To build the relarionsbip between company and customer there a re m a ny digital methods of communication, shown in Figure 6.10.
Figure 6.10 Matrix of customer touchpoints tor collecting and updating customer email contact and other profile information
"' -c:: ·o a. -= (J 5 -Q) c:: '2 0
r-------------------------.-------------------------, • Online incentive such as prize draw
(B2C) or white paper download (828)
• Viral marketing
• E-newsletter opt-in on site
• Registration to view content or submit content to a community forum
• Renting list, co·branded email or advertising in third-party a-newsletter to encourage opt-in
• Co-registration with third-party sites
• Capture email when customer first registers or purchases online
• E-newsletter and other methods given on left
r-------------------------r-----------------------~ • Direct mail offer perhaps driving visitors
to web
• Trade shows or conference
• Paper response to traditional direct mail communication
• Phone response to direct mail or ad
New cust omers
• Paper order form, customer registration/product warranty form
• Sales reps - face to face
• Contact centre - by phone
• Point of sale for retailers
Existing customers
'
258 Part 2 Digital marketing strategy development
• Stage 4. Maintain dialogue using offline communication. Direct mail or phone conracr may still be cost-effective forms of communication since these can also be tailored and may have more 'cur-through' compared to an email. With direct mail campaigns The aim may be to drive rra.ffic to the website iu a web response campaign using techniques such as: • online competition; • online web seminar (webinar); • sales promotion.
A further objective in stage 3 ru1d stage 4 is to improve customer information quality. In particular, emails may bounce - in which case offli11e touchpoinrs, as indicated in Figure 6.10, need ro be planned to determine the latest addresses.
With rhe advent of social media marketing, the permission marketing concept has been applied to social networks where opt-in involves 'liking' a brand o n Facebook or following a company on Twitter, Linked!J1 or lnsragram. Within Facebook, 'liking' or an exchange of emai l address can be encouraged by a company. Of course, em:1il offers a key benefit over social media channels since it can be tailored to the individu:~l.
Writing for What's New in Marketing, Chaffey (2004) extended Godin's princip les to CRM with his 'e-permission marketing principles', which remain relevant for reviewing use of emai l marketing and other messaging types:
• Principle 1. Consider selective opt-in to communications. In orher words, offer choice in communications preferences to the customer to ensure more relevant com munications. Some customers may not want a weekly e-newsletter; rather, they may o nly wanr ro hear abom new product releases. Remember opt-in is a legal requirement in many countries. Four key communications preferences options, selected by tick box, are: • content - news, products, offers, e,·ents; • frequency - weekJy, monrhl}; quarterly, or alerts; • channel - email, social network, direct mail, phone o r SMS.
• Principle 2. Create a 'common customer profile'. A st ru ctured approach to customer data capture is needed , otherwise some data will be missed- as is the case with the utility company that collected 80,000 email addresses, but forgot ro ask for rhe posrcode for geo-rargeting! This can be achieved through a common customer profile - a definition of all rhe database fields rhat are relevant to rhe marketer in order to understand and target rhe customer wi th a relevant offering. The customer profile can have different levels to set targets for data quality (Levell is contact derails and key profile fields only, Level 2 includes preferences and Level 3 includes full purchase and response behaviour).
• Prin cipl e 3. Offer a range of opt-in incentives. Many websites now have 'free- win-save' incentives to encourage opt-in , but often it is one incenrive firs all visitors. A bundle of incentives or different incentives for different audiences wi ll generate a higher volume of permission, particularly for business-to -busi11ess websites.
• Princ iple 4. Don't make opt-out too easy. Often marketers make it roo easy ro unsu b- scribe. Although offering some form of opt-out is now a lega l requiremenr in many countries due to privacy laws and can help deljverability rates for emai l, a single click ro unsubscribe is making it roo easy. Instead , wise permission marketers such as Amazon usc rhe concept of 'My Profile' or a 'selective opt-out'. Instead of unsubscribe, they offer a link ro a 'communications preferences' or 'customer centre' web form ro update a pro- file that includes the option to reduce communications, which may be the option raken rather than unsubscribing completely.
• Prin ciple 5. Watch, don't ask (or 'Sense and Respond'). The need ro ask interruptive questions can be reduced through the use of monitoring clicks to better understand cus- tomer needs and to trigger follow-up communications. Some examples include: • monitoring dick-through to different types of content or offer; • monitoring rhe engagement of indi,ridual customers with email communications; • follow-up reminders to those who don't open the email first time.
Contact (touch) strategy Definition of the sequence and type of OIJibo\.nd c::omrruliCations reqlired at different points Ill the customer fifecyde.
Chapter 6 Relationship marketing using digital platforms 259
• Principle 6. Create an outbound contact strategy. Online permission marketers need a plan for the nwnber, frequency and type of online and offline com mw1ications and offers. This is a contact or touch strategy, which is particularly important for large organisa - tions with several marketers responsible for email communications. \Ve describe contact strategies in more depth in the next section.
Sar and Southwell (2006) give an e_xample of a permission-based campaign to promote a new interactive banking seiTice. The campaign objectives and results {in brackets) were to:
• capture 5,000 mobile phone numbers from cuswmers (200 per cent of plan); • acquire 3,000 email addresses (176 per cent of p lan); • raise awareness about rhe new service {3 1,000 customers view demonstration); • create 1,000 new registrations (576 per cent of plan).
Developing contact strategies that defi ne the trigger, aims, messagi ng, offer and time interval for co mmunications is a viral skill to develop the most from customer com munications. Figu re 6.11 shows recommendation s of different contact s trategies from Kath Pay, an email marketing automation consu ltant who created thi s visual to s how the oppo rtunity for retail- ers to communicate with their audiences via email.
Let's now look in more derail at e_xa mples of contact str:J.tegies at different po i11ts in th e customer Lifecycle. The acquisition activ iti es for a retailer invo lve overlays {pop -up) or other prompts to capture emails, with follow-up welcome emails to encourage subscription. An exa mple of a welcome contact strategy is shown in Table 6.1.
Figure 6.11 Options for lifecycle email marketing messages for a retailer
c: .2 -u e ~
. .;.. . Retenbon >' w'ul-Baek '
Source: Kath Pay. HoliStic Email Marketing (2016) What is lfecycle marketing?, https:/lwww.hoisticemaimarl<eting.com/bloglwhat·is·ifecycle-marketingl (accessed 30 July 2018).
260 Part 2 Digital marketing strategy development
Table 6.1 Example of welcome contact strategy
Message type Interval/trigger Outcomes required Medium for message/ condition sequence
1 Welcome Guest site membership Encourage trial of site services Email, post-transaction message sign-up immediate Increase awareness of range of page
commercial and informational offerings
2 Engagement 1 month inactive (i.e. 63 Encourage use of forum (good enabler of Email, home page, side message visits) membership) panels deep in site
Highlight top content
3 Initial cross-sell 1 month active Encourage membership Email message Ask for feedback
4 Conversion 2 days after browsing Use for range of services for guest mem- Phone or email content bers or full members
Dynamic content email Copy. creative and offer in an ema~ is customised based on rules or real- time content to iflC(ease its relevance and response.
Note that additional cusromisati on through a dynamic content e ma il is possible based on knowledge of the subscriber. Dynamic conrenr can also be added ro panels of an enews- lerrer to increase engagement. This can also include real-time information- for example, a retai ler could include weather information or srock levels.
Mini-case study 6.3 gives another example of a conract stra tegy, w hen a retailer can gain sales by fo ll ow in g- up with an email (or push notification) after a ' basket abandon', i.e. a shopper has browsed products , added one to their s hopping cart or basket, bur nor purchased. The case shows how these types of communications need ro be planned or t ested .
Anod1er situation where automated conununicati ons need ro be put in place is for the ' emotionally' unsubscribed who are inactive members of a n emai l subscriber list. They represent a significant issue in the management of customer email marketing programmes. The orange curve in Figure 6.11 shows how engagement can fall from the level shown.
Mini case study 6.3 WHSmith uses behavioural email to encourage engagement
Behavioural email marketing or remarketing is a classic 'sense and respond ' e-CRM approach. In th is case, a classic abandoned shopping cart follow-up email, but with three alternative communications that were tested, with these results:
1 Generic branded follow-up email: + 1 0 per cent conversion rate. 2 Personalised remarketing email with a promotional code for a 5 per cent discount time-limited to 72 hours:
+ 100 per cent conversion rate. 3 Personalised remarketing email with a promotional code for a 5 per cent discount time-limited to 48 hours:
+ 200 per cent conversion rate.
A survey was conducted (VE interactive) of those customers who had clicked through from the remarketing emails and had made a purchase, but who hadn't actually used the promotional codes! Interestingly, it was found:
• these customers had still reacted to the remarketing email as a prompt to return to the WHSmith website; • it was the expiry date of the call to action that had prompted them to return , even though they then did not
take advantage of the 5 per cent discount promo code.
Source: VE Interactive Case Study published on Smartlnsights: www.smartinsights.com/email-marketing-ecrm-alerts/email-remarketing-an- example-of-how-to-test/ (accessed January 2015).
Customer preferences c:entre Profile page(s) that enables c:ustomers to tailor the type and frequency of communications they receive.
Personalisation Web-based pefsonalisation involves delivering customised content for the Individual, through web pages, email or mobile push notifications.
Mass customisation The creation of tailored marketing messages or products for individual customers or groups of customers typic:ally using technology to retan the economies of scale and the capacity of mass ~or productiOI'l.
CoDaborative filtering Recommenc:led c:ontent or promotions are automaticaly created based on reviewing simiarities in how customers behave.
Chapte r 6 Relationship marketing using digital platforms 261
Although unsubscribe rates are usually low (for example, less than 0.1 per cem per email sent) there can be upwards of 50 per cent of a list who are 'emotionally unsubscribed'- i.e. they are not actually unsubscribed, but rarely open or click, suggesting that email is not an
effective communications channeL To avoid th.is and to maintain engagement, it is important to ensure that the contact
strategy has been planned and implemented to deliver relevant messages. The lapsed and
'win-back' contact strategies in F igure 6.11 show how these can be addressed. Some other
steps that can be taken to manage this issue include:
• Measure the level of activity in email response at a more granular level, e.g. review open, click, purchase rates or other actions at different points in rime compared to when the subscribers first signed up. Response rates from different segment rypes who have taken
different actions can also be reviewed to see how engaging they find the e-newslerrer. • Test differenr frequencies. It may be appropriate to reduce frequency if customers become
'emotionally unsubscribed ' and then emails rece ived will have a large impact. List mem - bers can also be surveyed for their preferen ces, possibly as part of a reactivation
. ca mpatgn.
• Develop automated customer lifecycle emails as parr of the co ntact strategy, which are releva nt and tailored according to the interests of the s ubscribe r. Lifecycle e ma ils will include welcome email contact strategies, reactivation emai l strategies and other service
messages such as customer feedback surveys. • Ensure the fields tha t are used to customise messages are those that are most Likely to be
relevam. Often these won't be the obvious fields s uch as gender, but contextual informa- tion related to content or products that have been recently consumed.
• Use offline communications such as direct mail and phone where list members express a
preference for these.
Personalisation and mass customisation
Increasingly, companies gather much personal data through the application of digital tech- nology and then use ir to develop personalised communication messages, with the aim of making the content appear more aligned to an individual's interests. The different targeting variables shown in Figure 6.12 can be used ro deliver more relevant, contexrual personalised
ema il or web messages. However, not all individuals respond favourably; indeed some react negatively towards brands that adopt rlus approach due ro fears over securiry of personal data a nd rh e feeling they are being manipulated (Tucker, 2014). T his leaves online marketers with a dilemma: should they strengthen privacy contro ls but in doing so reduce the oppor-
tunity ro personalise the ir advertising messages and thereby reduce the potency of person -
a lised communications? Tucker (2014) investigates the question o f ' How strengthening privacy co ntrols affects advertising performance' using Facebook advertising campaigns. Tucker (2014) found rhar when individuals were given more cont rol over privacy settings
they were more likely ro respond positively to personalised commun ications. So, to derive maximum benefits from the use of personal information, advertisers s hou ld consider giving individuals more control over how their information is used- for example, through tailoring content they receive via emaiJ through a customer preferences centre.
Recommendations based on profile information, behaviour o r predictive analyrics are usually known as personalisation or sometimes mass customisation. A well-known e."<am - ple of personalisation is when Amazon recommends similar products according to what others in a segn1ent have offered, or if ir sent a similar email to customers who had an inter-
est in a particular topic. Collaborative filtering is a method of implementing personalisarion where site visitors
are recommended content or offers by comparing them with customers in irs database. The more information a database contains about an individual customer, the more useful irs
recommendarions can be. The best-known example of this technology in action can be
2 6 2 Part 2 Digital marketing strategy development
Customer identity and access management (ClAM) A category of application for managing user access and consent to online information and services typically known as social log-in or sign-on.
Customer loyalty The desire on the part of the customer to continue to do business with a given suppfier over time.
Figure 6.12 The extent to which d ifferent types of segmentation variables tend to be pre- dictve of response
(ii CD 0 (/) E c CD 8_ ~ ~ .i:: - «S 0 > CD Ol> c"" ~ .~ Ol"O ~ CD
~a.
Behaviou/\
I Attitude and\ 1 preferences \
I Ufestyle and \ psychographies / Demographic profile data \
/ Unknown \
found on the Amazon website (www.amazon.com), where the database reveals that custom- ers who bought book X also bought books Y and Z. This is a more sophisticated machine learning or AI-dciven technique, compared to simple rules-based personalisation where visi- tors in categories are given fixed personalised recommendations.
Customer identity management
Permission-based marketing and the automation of marketing information can create issues in respect of consumer privacy law (as discussed in Chapter 3 Careful management is required to ensure protection of customer data and tl:tis should lead to better quality targeting. The concept of c ustome r ide nt ity and access mana ge me nt (ClAM) is one ele- ment of this requirement. Forrester (2017) explains these benefits of ClAM services, which are available from CRM-independent ClAM providers, such as Janrain™, GigyaTM, Login- Radius™, AurhOTM, and CRM™ providers such as Salesforce and Microsoft.
• Streamline new customer acquisition and registration processes through social log-in. Allowing customers to use bring-your-own-identity (BYOI) from a recognised social iden- tity provider such as Facebook, Coogle, Linkedln or Pay Pal, and preregister on a site is a large component of many ClAM implementations.
• Man age user consent to meet compliance with global privacy requirements. Multina- tional bra.nds with millions of customers must address demands g lo bally where different regions and countries have different privacy requirements.
• Provide user-centric capabilities for preference management. Updating commllllicarions preferences or opting-om in a preference centre.
• Integrate with od1er systems and report on performance. ClAMs can integrate with CRM systems, bur do not replace their messaging ftmctionality.
Using digital media to increase customer loyalty and value
The ultimate commercial aim of relationship marketing approaches such as CRM is ro increase engagement with customers, leading to increased c us t omer loyalt y and so direct- ing sales from these customers and indirect sales through advocacy. Undersranding rhe different levers that contribu te to increased engagement and loyalry among different cus- tomer groups should be the starring point in developing a customer retention and growth strategy.
Emotional loyalty Loyalty to a brand is demonstrated by favourable perceptions, opinions and recommendations.
Behavioural loyal ty Loyalty to a brand is demonstrated by repeat sales and response to marketing campaigns.
Customer satisfacti on The extent to which a customer's expectations of product quality, service quality and price are met.
Chapter 6 Relationship marketing using digital platforms 263
In Chapter 2 we introduced the 'LoyaJty Loop' described by Court eta/. (2009) in the classic McKinsey Quarterly white paper 'The consumer decision journey' . The paper dis- cusses 'Loyalty Loop', which shows oppormnities for brands to reinforce the loyalty of d1eir own customers or encourage switching after purchase during what it calls the 'Enjoy, Advo- cate, Bond' stage. They found that more than 60 per cent of consumers of faciaJ skin care products conduct online research about the products after purchase- a touchpoint not normally considered in the classic marketing funnel.
When consumers are pleased with a purchase, they'll advocate it by word of mouth including social media, but if a consumer is disappointed by the brand, they may criticise it through social media . Part of sociaJ CRM activities is to encourage online advocacy and limit negative word of moucl1. Presi eta/. (2014} explored how customers who share their negative service experience by creating UGC in social media can be segmented according to their motivation. They found that altn1istic, vengeance and economic motivations are strong drivers for user-generated content (UGC) creation after a negative service
. expenence.
Determining what customers value
Consider the different forms of online i.nteraction a consumer can have with a brand that can determine cl1eir perceptions of satisfaction and influence loyalty. Figure 6.13 shows how, when using digital media for online retention marketing, our ultimate goal on the right of the diagram is customer loyalty. The factors on the left help to deliver two main drivers of loyalty. First, emotiona l loyalty, where loyalty to a brand is demonstrated by favourable perceptions, opinions and recommendations, including sociaJ sharing. The suc- cess factors at the top of t he diagram are all related to the customer experience of online services (as we will explore further at the start of Chapter 7). These tend to influence emotional loyalty the most, and these are important in determining customer satisfaction.
The second type of loyalty is behavioural loyalty, where loyalty relates to repeat sales, repeated site visits, social interactions and response to marketing campaigns. To achieve these repeat sales, companies work hard to deliver relevant marketing communications, either through email and social media communications, web-based personalisation or through traditional media.
Figure 6.13 shows typical loyalty drivers to review, but customer research is essential to understand how specific factors affect loyalty and how satisfaction influences loyalty.
The relationship between satisfaction and loyalty
Although the terms ' satisfaction' and 'loyalty' are sometimes used intermangeably, we have seen that they do not necessarily correspond. Customer satisfaction refers ro how happy a customer is about the quality of products and services. As a customer's satisfaction with products and/or services increases, so should their behavioural and emotional loyalty, together with advocacy (see Table 6.2 and Mini case study 6.4: How car manufacturers use loyalty-based segmentation).
As we have seen, however, there may be customers with a high degree of satisfaction who don't exhibit behavioural loyalty and, conversely, customers who are loyaJ according to their behaviour cl1at may be at risk of defection since they are not satisfied. The implica- tions are that it is important nor only to measure satisfactio11 wi t h online services, bur loyalty also. In this way, we are able to identify customers at risk of defection who are likely to moose an alternative and those in the zone of iudilierence. Tlus is an important cate- gory of customer who, alcl10ugh they may have a high degree of satisfaction, is not neces- sarily loyal.
264 Part 2 Digital marketing strategy development
Figure 6.13 Factors affecting customer satisfaction and loyalty
r Satisfaction drivers
• Value proposition Rational
evaluation • Ease of use • Perfonnance
• Branding • Visual design • Reassurance • Community
Emotional connection
Multichannel customer
experience
Metrics? • Product and offer
Promised experience
Loyalty drivers • lnteractivity • Support and service
• Segmentation • Ust quality
Satisfaction gap
Loyalty gap
• Campaign and service
E-communications targeting Metrics?
• Response measurement
• Personalisation Web
targeting and e-CRM technology
~======~
Multichannel customer relevance
• Frequency • Offer value • Multichannel
integration
Online voice of customer (VoC) Qualitative assessments of the effectiveness of digital presence based on direct customer feedback. They answer 'who and why' questions about how customers in1eract with brands online.
Net Pro m oter Score (NPS) A measure of the number of adiiOC8tes a company (Of' website) has who would recommend it oompared to the runber ol detractors.
Touch strategy
Relevance drivers
Metrics?
Measuring the voice of the customer in digital media
Online voice of c ustomer (VoC) mea sures are useful for reviewing cust omer senti ment online. The satisfaction ratings we have reviewed arc o ne e:~Cample of VoC measures. A nother approach, which we wilJ explore in Chapters 7 and 10, is intent-satisfactio n surveys where the reasons for wby a customer is visiting a s ire are co mpared aga inst their s uccess in com - pleting tasks and their satisfaction raci ngs. This is a key technique for improving online cusro mer Journeys .
Net Promoter Score (NPS) is a key VoC measure of advocacy original ly popularised by Reichheld (2006} in his book; the 'U ltimate Ques ti o n' is essentia ll y 'would yo u recom1uend us?'. The ai m is to work out techniques ro maximise this NPS. Reich held explains the main process for NPS as follows:
1 Systematically categorise customers into promoters, passives or detractors. If you prefer, you can cal l them loyal advocates, fair-wearher friends and adversaries.
2 Create closed-loop processes so that the right employees will direcdy investigate the root causes rl1at drive customers into these categories.
3 Make the creation of more promoters and fewe r detractors a top priority so employees up and down the organisarion take actions based on their findings from these root-cause . . . mvesnganons.
In practice, consumers are asked '\VouJd you recommend [brand/company X) to a friend or colleague?', answered on a scale between 0 (nor ar all likely} and 10 (extremely likely).
Chapter 6 Relationship marketing using digital platforms 265
Mini case study 6.4 How car manufacturers use loyalty-based segmentation
An approach to reconciling customer satisfaction, loyalty, value and potential is to use a value-based segmentation. This modelling approach is often used by car manufacturers and other companies that are assessing strategies to enhance the Mure value of their customer segments. This approach involves creating a segmentation model combining real data for each customer about their current value and satisfaction, and modelled values for future loyalty and value. Each customer is scored according to these four variables:
• current satisfaction; • repurchase loyalty; • current value; • future potential.
Table 6.2 Loyalty-based segmentation for car manufacturer
SLVP sco re Nature of customer Segment strategy
Moderate satisfaction and loyalty. Moderate current and Mure potential value
An owner of average loyalty who replaces their c ar every three to four years and has a tendency to repurchase from brand
Not a key segment to influence. But should encourage to subscribe to a-newsletter club and deliver targeted messages around time of renewal
High satisfaction, moderate loyalty. Low future and poten- tial value
Low satisfaction and loyalty. High current and future poten- tial value
A satisfied owner but tends to buy second-hand and keeps cars until they have a high mileage
A d issatisfied owner of luxury cars who is at risk of switching
Engage in d ialogue via email newsletter and use this to encourage advocacy and make aware of benefrts of buying new
A key target segment who needs to be con- tacted to understand issues and reassure about q uality and performance
The actual score is calculated by subtracting the percentage of detracrors (those givi ng 0-6 answers) from promoters (9-lOs) . The middle section, between 7 and 8, are the so-called 'passives'.
So, the idea is that after surveying as many cusro mers as possible (ro make it representa- tive) :md show you are listening, you then work backwards to determine which aspects of the experience of interact ing w ith a brand creates ' promoters' o r 'detracto rs'.
Differentiating customers by value and engagement
A co re approach to relationship marketing is to focus our limited resources and marketing activities o n the most valuable customers. Within the o nline customer base of an organisa- tion, there will be customers who have different levels of activity or engagement with online services and purchasing. A good example is a bank - some customers may use the online account once a week, others far less frequently and some not at al l. Figure 6.14 illustrates the different levels of activiry in this case.
A key parr of C RM strategy is ro define measures that indicate activity levels and then develop racrics ro increase activity levels through more frequent use. An online magazine could segment it s customers in this way, also based on returning visitors. Even for companies without transactional service, a similar concept can apply if they use email marketing- some customers will regularly read and interact with the email and others will not.
266 Part 2 Digital marketing strategy development
Figure 6.14 Activity segmentation of a site requiring registration
(a)
(b)
(c)
L (d)
Ul 3-
~ c 2-0 0 --
·"' l:l 1 -> Gl Ul
0
6- 0 § 4--·-
New user (registered within last 60 days)
I I Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Active user (has used within last 60 days)
:iii l:l 2 - > ~
0 I I I I
3 - 0 § 2 - ~ ·u;
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Donnant user (has not used within last 60 days)
~ ~ 1 - "' 0 I I
Ul 1 - ~ c: 0 0 -:; ·o; 0.5 - > 3l
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Inactive user (registered but not used)
Ul 0~------------------------------------------ Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Objectives and corresponding tactics can be set for:
• Increasing the number of new users per month and annually (separate objectives will be set for exist ing bank customers and new bank customers) through promoting o nline services to drive visitors ro the website.
• Increasing the percenrage of active users (an appropriate threshold can be used- for dif- ferent o rganisations it could be set at 7, 30 or 90 days}. Using direct communications, such as email, personalised website messages, direct mail and phone communications, to new, dormant and inactive users increases the percentage of active users.
• Decreasing the percentage of dormant users (once new or active- cou ld be sub-categories) who have not used rhe service or responded to communications within a defined time period, such as three momhs.
• Decreasing the percentage of inactive users (or non-activated) users. These are those who signed up for a service sucb as online banking and had a username issued, bur have nor used the service.
You can see that corresponding strategies can be developed for each of these objectives. Another key metric, in fact the key retention metric fore-commerce sites, refers ro repeat
business. The importance of retention rate metrics was highlighted by Agrawal eta/. (2001). The main retenrion metrics they mention rbat influence profitability are:
• Rep eat-customer base: the proportion of the customer base that has made repeat purchases.
Ufetime value {LTV) Ufetrne vakJe is the total net benefit !hal a customer or group of customers will provide a company \Ner their total relationship with that company.
Chapter 6 Relationship marketing using digital platforms 26 7
• N umber o f transactions per re peat customer: this indica res the stage of development of the customer in the relationship (another similar measure is number of product categories purchased).
• Reve nue per transaction of re peat customer: this is a proxy for lifetime value since ir gives
average order value.
Lifetime value modelling
An appreciation of lifetime value (LTV) is key to the theory and practice of customer rela - tionship management.
Digital technology has enabled marketers to become more sophisticated in how they can identify and t arget valuable customers. Kumar et al. (2007) explain ir this way:
B y applying statistical models , they can predict not only when each customer is likely to
make a future purchase but also what he or she will b uy and through whic h c hannel. Man- agers can use these data t o estimate a potential lifetime value for every customer and to determine whether, when and how to contact each one to m ax im ise the chances of realis-
ing (and even increasing) his or her value.
However, wh ile rhe term is often used, calculation of LTV is not straightforward, so ma ny organisations do not calc ulate it. You are referred to Kumar eta f. (2007) for an explanat ion of LTV calculations. Lifetime val ue is defined as the total net benefit rhat a customer, or group of customers, will provide a company over their total relationship with the company. Modelling is based on estimating the income and costs associated with each customer over a period of rime, and then calculating the net present value in current monetary terms using
a discount rare value applied over the period. There are different degrees of sophistication in calculating LTv. These are indicated in
Figure 6.15. Option l is a practical way or approximate proxy for future LTv, bur the true LTV is the future value of the customer at an individual level.
Lifetime value modelling at segment level (4) is viral within marketing since it answers rhe question:
How much can I afford t o invest in acq uiring a new customer?
If online marketers rry ro answer this from a short-term perspective, as is often the case - i.e. by judging it based on the profit &om a single sale on an e-commerce sire - there are rwo problems:
• They beco me very focused on short-term return on investment (ROI) and so may not invest sufficiently to grow t he business.
Figure 6 .15 Different representations of lifetim e value calculation (LTV)
,..
0 ·;:
~ ·-l: 1
3
Individual
2
4
Segment }
268 Part 2 Digital marketing strategy development
• They assume th at each new customer is worth precisely the same and ignore differentials in loyalty and profitability between differing types of customer.
Lifetime value analysis enables marketers ro:
• plan and measm·e investment in customer acquis ition programmes; • identify and compare cri t ical target segments; • measure the effectiveness of al rernar.ive customer retention strategies; • establ ish the true value of a company's customer base; • make decisions about products and offers; • make decisions about th e value of introducing new e-CRM technologies .
Figure 6 .16 g ives an exa mpl e of how LTV can be u sed to develop a CRM strategy for different custo m er groups . Four main types of customers are ind icated by rh eir current and future va lue as bronze, silver, gold and platinum. Distinct cust o m er group - ings (circles) are identified accordi n g to their current va lu e (as indicated by current value) and fu ture va lu e (as indicated by lifetim e va.lue calculati ons). Each of these groups wi ll have a cust omer profile s ignature based on their demographics , so th is can be used for c ust omer select ion. Different stra teg ies are developed for different cus- tomer groups wi rhiJ1 the four main va lue groupi ngs . Some bronze customers, such as groups A and B, realis ti cal ly do not have development potentia l and are typically unprofit able, so the aim is to reduce cost s in co mmunications and if they do no r remai n as customers this is accep t able . Some bronze customers , such as group C, may have potential for grow th so for these the strategy is to extend their purchases. Si lver cus- tomers are t arge ted wi th cust omer extension offers and go ld customers are ex tended where possible, a lth ough they h ave relatively little growth potential. Platinum cust o m- ers are the best cust omers, so it is important to understand th e communi cat io n prefer- ences of th ese cust o m ers and not to over-communi cate unless there is evidence that they may defect.
To illustrat e anotl1er applicat ion of LTV and how it is calculated, take a look at the example in Activi ty 6.2.
Figure 6 .16 An example of an LTV-based segmentation plan
Gold Platinum High
0 0 0 G H
Retain F I I and extend !O Retain
Q) :I xO v
/ -as > ~ .. c: elf .c/ e 0 ... :I (.) 1
0 Reduce I Extend I costs
A 0 O e 3
Low Bronze Silver
Low High Future potential value
Activity 6.2
Chapter 6 Relationship marketing using digital platforms 269
Charity uses lifetime value modelling to assess returns from new CRM system
A charity is considering implementing a new email marketing system to increase donations from its donors. The charity's main role is as a relief agency that aims to reduce poverty through providing aid, particularly to the regions that need it most. Currently, its only email activity is a monthly e-newsletter received by its 200,000 subscribers, which features its current campaigns and appeals. It hopes to increase donations by using a more targeted approach based on previous customer behav- iour. The email system will integrate with the donor database, which contains infor- mation on customer profiles and previous donations. The company is considering three solutions that will cost between £50 ,000 and
£100,000 in the first year. In the charity, all such investments are assessed using life- time value modelling.
Table 6.3 is a lifetime value model showing customer value derived from using the current system and marketing activities.
A Donors - this is the number of initial donors. It declines each year dependent on the retention rate (row B).
B Retention rate- in lifetime value modelling this is usually found to increase year-on- year, since customers who stay loyal are more likely to remain loyal.
C Donations per annum - likewise, the charity finds that the average contributions per year increase through time within this group of customers.
Table 6.3 Ufetime value model for customer base for current system
A
B
c
D
E
F
G
H
Measure
Donors
Retention
Donations per annum
Total donations
Net profit (at 20% margin)
Discount rate
NPV contribution
Cumulative NPV cont ribution
Lifetime value at net present value
Year1
100,000
50%
£100
£ 10 ,000,000
£2,000,000
1
£2,000,000.0
£2,000,000.0
£20.0
Year2 Year3 Year4
50,000 27,500 16 ,500
55% 60% 65%
£120 £140 £160
£6,000,000 £3,850,000 £2,640,000
£ 1,200,000 £770,000 £528,000
0.86 0 .7396 0 .636
£1,032,000.0 £569,492.0 £335,808.0
£3,032 ,000.0 £3,601,492.0 £3,937,300.0
£30.3 £36.0 £39.4
D Total donations - calculated through multiplying rows A and C.
YearS
10,725
70%
£180
£ 1,930,500
£386,1 00
0.547
£21 1,196.7
£4,1 48,496.7
£41.5
E Net profit (at 20 per cent margin)- LTV modelling is based on profit contributed by this group of customers; row D is multiplied by 0.2.
270 Part 2 Digijal marketing strategy development
Rece ncy-frequency- m onetary v alue (RFM) analysis RFM is sometimes known as FRAC. which stands for: frequency. recency. amount (obviously equivalent to monetary value). category (types of proQJcl pudlased - not incVded within RFM).
F Discount rate - since the value of money held at a point in time will decrease due to inflation, a discount rate factor is applied to calculate the value of future returns in terms of current-day value.
G NPV contribution - this is the profitability after taking the discount factor into account to give the net present value in Mure years. This is calculated by multiplying row E by row F.
H Cumulative NPV conbibution - this adds the previous year's NPV for each year. I Lifetime value at net present value - this is a value per customer calculated by
dividing row H by the initial number of donors in Year 1.
Based on preliminary tests with improved targeting , it is estimated that with the new system, retention rates will increase from 50 to 51 per cent in the first year, increasing by 5 per cent per year as current ly. It is estimated that in year 1 donations per annum will increase from £100 per annum to £120 per annum, increasing by £20 per year as currently.
Question
Using the example of the lifetime value for the current donor base with the current system, calculate the LTV with the new system.
Kumar eta/. (2007) no te tha t the capability of a customer to generate value is divided into lifetime value of purchases (CLV) and what they term CRV, customer refer ral value. This concept is closely related to that of the 'net promoter score' identified earlier in the chapter. These authors suess that there is nor a clear correlation between C LV and CRV. For example, in their srudy they found rhat customers with rhe highest CLV did not have the highest CRV. So they suggest that customers should be segmented according to both arrribures and then tactics developed. For one company rhey studied, they identified four groupings of customers presented in a customer value matrix, plotting a\·erage CRV at one year on the x -axis and average C LV after one year on the y-axis to give these segments:
• Champions (top-right) - 21% of cusromers, CLV = $370, CRV = $590 • Misers (bo rrom -lefr) - 21% of customers, CLV = $130, CRV = $64 • Affluents (top-left) - 29% of custo mers, CLV = $1,219, CRV = $49 • Advocates (bottom-right) - 29% of custo mers, CLV = $ L80, CRV = $670. You can see that it wouJd be wo rth while usin g diffe rent tact ics for each segment to enco urage recomm endatio n o r purd1ase - for exa mp le, to migrate misers to affluents o r advoca tes, a nd advocates a nd affluents ro cha mpio ns.
In-depth ana lys is o f cu sto mer d a ta has rrad it ion::dl y been comp le ted by ca ta logue retai lers such as Argos, Littl ewoods Index™ or reta il ers such as Boo rs usi n g techn iq ues like customer order ga p a n alysis or recen c y- fre que n c y- mon e tary value (RFM) ana lys is .
Customer order purchase gap analysis is aimed ar increasing purchases by customers. According to Euroffice (2017), it involves identifying purchasing parrerns and comparing category mix, multi -buys, revenue and average order-size parrerns across customer data- bases and segments of customers, aU with the aim of identifying new opportunities. Using order gap analysis, retailers can build contact and merchandising strategies, pin- pointing the right time to communicate with their customers- delivering relevant mes- sages, offers, prices and promises at rhe opportune rime. Gap analysis can also be used to deter mine when a customer is at risk of lapsing - for example, if a customer is poten- tially shopping with mul t iple retailers or if a cusromer is changing his/her buying behaviour.
Latency The average length of time that different customer types take between different activities, e.g. log-ins, paying bils, first and second purchases.
Chapter 6 Relationship marketing using digital platforms 271
RFM analysis is a technique that rends to be little known outside retail circles, bur CRM gives great potential to apply ir in a range of techniques si nce we ca n use it not only to ana- lyse purchase history and targeting outbound communications, bur also visit or log-in fre- quency ro a si re or online service and respon se rates to email comm unications.
We will now give an overview of how RFM approaches can be applied, with special refer- ence ro online marketing. We will also look at the related concepts of latency and hurdle rates.
Recency
This is the recency of customer action, e.g. purchase, site visit, account access, email response. Novo (2003) stresses the importance of recency when he says:
Recency, or the number of days that have gone by since a customer completed an action (purchase, log-in , download, etc.), is the most powerful predictor of the customer repeating an action ... Recency is why you receive another catalogue from the company shortly after
you make your first purchase from them.
On line app lications of analysis of recency include monito rin g through time to identify vu lnerable cusromers, and scoring customers to preferentially target more responsive cus- to mers for cost savings.
Frequency
Frequency is the munber of rimes an action is completed in a period o f a cusromer action - e.g. purchase, visit, email response (for example, five purchases per year, five visits per month, five log-ins per week, five email opens per month, five emai l clicks per yea r). Online applications of this analysis include combining with recency for 'RF targeting'.
Monetary value
The mo netary value of purchase(s) can be measured in different ways- for example, average order value of £50, total annual purchase value of £5,CXXJ. Generall )•, cusromers with higher monetary values rend to have a higher loyalty and potential furu re value si nce they have pur- chased mo re items historically. One example application is to exclude these customers from special promotions if their RF scores suggested they were actively purchasing. Frequency is often a proxy for monetary value per year si nce the more products purchased, the higher the overall monetary value. Ultima tel y it is possible to si mplify ana lysis by just using recency and frequency. Monetary value can also skew the analysis with hi gh-value initial purchases.
Mini case study 6.5 explains how pet charity PDSA is applying RFM analysis to better understand donation patterns.
Latency
l at e ncy is a powerful concept, closely related to frequency - it is the average time between cu stomer events in the customer lifecycle. Examples include the average time between website visirs, second and third purchases and email click-throughs. On line applications of latency include purring in place triggers that alert companies to customer behaviour outside the norm, such as increased interest or disinterest, a nd then to ma nage this behaviour using e-communications or traditional communications. For example, if a B2B o r B2C o rganisation with a lo ng interval between purchases found that latency decreased for a particular customer, then they may be investigating an additional purchase via email or website {their recency and frequency would probably increase also). £mails, phone calls or direct mail could then be used ro target this person with relevant offers according to what they were searching for.
In this research, to mea su re customer engagement, Monerare (2017) reviewed their retailer customer data in the UK and US to a ssess how frequently customers began a new session within a set rime period - specificaUy the number of sessions and the number of days it rook fo r a customer to complete a purchase. Fo r first-rime customers, the baseline
272 Part 2 Digijal marketing strategy development
latency from first visit to purchase is an average of 25 days and 3.5 sessions to complete a purchase. For returning customers who make t heir second purchase, 32 days are needed, on average, to convert - an additional week compa red to the average first-time purchases. Cus- tomers returning to make their third purchase need, on average, 27 days to complete their transaction. Practical implications of reviewing latency in retail and other sectors is that businesses can compare latency to length of rime ro when cmails are automatically triggered to encourage a follow-up action such as purchase. You can potentially change the number of emails and freq uency by asking how many emails arc appropriate in the period, or ro nudge? Ther can also change on-si te personalisation rimcframes for recommending next- best product' or 'next-best content' ro encou rage repeat purchase.
Mini case study 6.5 Charity PDSA refines its understanding of its members using RFM analysis
The context for this case is provided by Robin Prouse, who is the training manager of Apteco Ltd (www.apteco. com), a company that specialises in analytical marketing software. He is in a unique position to understand the difficulties and challenges facing many organisations in making sense of their customer data and has worked with PDSA.
PDSA (www. pdsa.org.uk) is the UK's leading veterinary charity, providing free veterinary care for the sick and injured pets of those unable to afford veterinary fees. The charity, which is entirely funded by public sup- port, operates a UK-wide network of 47 PetAid hospitals and branches and also works through some 348 contracted private veterinary practices. PDSA also operates 180 charity shops UK-wide, but its main income is derived from direct marketing and relationship-building programmes that result in gifts in wills, voluntary donations and trad ing activities.
The charity uses DiscovererTM for detailed marketing analytics, supporter profi ling, database segmentation and predictive modelling. The direct marketing and legacy teams also make extensive use of Discoverer's Cascade module for campaign planning and management.
PDSA holds a huge database of past transactional and promotional histories on nearly 6 million supporters. This dataset is used to report lifetime value, patterns and trends in support, and for the identification of cross- sell and up-sell opportunities. In conjunction with third-party gao-demographic data, Discoverer has been used to build sophisticated legacy propensity models, donor profiles and channel attrition analysis.
As PDSA improves its online presence via its website (www.pdsa.org.uk) and dedicated email marketing campaigns, Discoverer has increasingly been used to monitor and classify donor email addresses. This allows marketers to combine online knowledge with that contained in transactional and operational systems- linking offline lifetime value , demographics and product propensity models with online marketing permissions and click-through analysis.
Hurdle rate The proportion of customers that fal within a particular level of activity. For example. the percentage of membets of an email ist that dick on the emai wiltin a 9Q.day period, or the number ot customers that have made a second purchase.
Hurdle rate
According to Novo (2003), h urdle rate refers ro the percentage of cusromers in a group (such as in a segment or on a list) who have completed an action. It is a useful concept since it can be used to compare the engagement of different groups or to set targets to increase engage- ment with online channels, as the examples below show:
• 20 pe r cent of customers ha\'e visited in rhe past six months; • 5 per cent of customers have made three or more purchases rhis year; • 60 per cent of registrants ha,·e logged onto sysrem this year; • 30 per cent have clicked through on email this ye-ar.
Chapter 6 Relationship marketing using digital platforms 273
Grouping customers into different RFM categories
In the examples above, each division for recency, frequency and monetary value is placed in :m arbitrary position to place a roughly equal number of customers in each g.roup. This approach is also useful since the marketer can set thresholds of value relevant to their under- standing of their customers.
RFM analysis involves two techniques for grouping customers:
1 Statist ical RFM analysis This involves placing an equal number of custOmers in each RFM category using quimiles of 20 per cent (10 deciles can also be used for larger databases}, as shown in Figure 6.17. The figure also shows one appLication of RFM with a view to using communications chan - nels more effectively. Lower-cost digital communications can be used to correspond with customers who use online services more frequently since they prefer these channels, while more expensive offline communicat ions can be used for customers who seem to prefer tra- ditional channels.
2 Arbitrary divisions of customer database This approach is also useful since the marketer can set thresholds of va lue relevant tO their understa11ding of their customers.
For example, RFM analysis can be applied for targeting using email according to how a customer interac ts with an e-commerce site. Values cou ld be assigned to each customer as follows:
Recency: 1 - Over 11 months 2 - Within last 12 months 3 - Within last 6 months 4 - Within last 3 months 5 - Within last 1 month
Freque11cy:
1 -More than once every 6 months 2 - Every 6 months 3 - Every 3 rnonths 4- Every 2 months 5 - Monthly
Figure 6.17 RFM analysis
Each R quintile contains 20% of all customers
R = 5, F = 5 contains 1 0% of customers
Recency
5
4
3
2
1
Highest
Frequency M onetary
E-maiVweb 5 5
only 4 4
Direct mail 3 3
2 2 Phone
1 1
Lowest
Note here: boundaries are arbitrary in order to place an equal number in each group
2 7 4 Part 2 Digital marketing strategy development
Propensity modelling The approach of evaluating customer characteristics and behaviour and then making recommendations for future products.
Monetary value: 1 -Less d1an £10 2 - £10-£50 3 - £50-£100 4- £100-£200 5 - More chan £200
Si m pl ified versions of this analys is can be created ro make it m ore man ageable - for example, a theatre group uses t hese nine categories for its direct market ing:
Oncers (attended theatre once): • attended 6-12 monrhs • attended > 12 but < 36 months • Very rusty o ncer - attended in 36+ months
Twicers: • attended 6-12 months • attended > 12 but < 36 months • Very rusty rwicer - attended in 36+ months
2+ subscribers: • Current subscribers - booked 2+ events in current season • booked 2+ last season • booked 2+ more than a season ago
Plotting cus to mer mm1bers against recency and frequency in this way for an online company gives a great visual indication of t he health of d1e busi ness a11d groups that ca11 be targeted ro encourage more repeat purchases.
Product recommendations and propensity modelling
Propensity m ode lling is one name given to d1e approach of evalu ating customer character- istics and behaviour, in particular previous products or services purchased, and then making recommendations for ilie n~xt sui table product. However, it is best known as recommending th.e 'next-best product' ro existing customers. It is now more common to use machine learn - ing or ArrificiallnreUigence to assess propensity t han to use the more rigid assignments of RFM. However, we retain the RFM concept and examples since it is a useful technique for assessin g customer beh aviour and value.
A related acquisition approach is to target potentia l customers with similar characteris- tics through renting direct mail or email lists or advertising onLine in simila r locations.
The following recommendations are based o n those in van Duyne eta/ . (2003):
1 Create automatic product relationships (i.e. next-best product). A low-tech approach to this is, for each product, to g roup roged1er products previously purchased together. Then for each product, rank p roduct by number of rimes purchased toged1er to find relationships.
2 Cordon off and minimi se ilie 'real estate' devoted to related products. An area of sc reen should be reserved for ' next-best product prompts' for up-selling and cross-selling. How-
ever, if these can be made parr of rhe current product they may be more effective. 3 Use familiar 'trigger words' . That is, familiar fro m using other sites such as Amazon .
Such phrases include: ' Related products', 'Your recommendations' , 'Similar', 'Customers
who bought ... ', 'Top 3 related products'. 4 Editorialise about related products. That is, within copy about a product. 5 Allow q u.ick purcl1ase of related products. 6 Sell related products during checkout. And also on post-transaction pages, i.e. after o ne
item has been added to the basket or purchased.
Chapter 6 Relationship marketing using d1gital platforms 27 5
Case study 6 Dell gets closer to its customers through its social media strat egy
Dell is well known as a technology company, offering a broad range of product categories including desktop computer systems, storage, servers and networking products, mobility products, software and peripherals, and services to manage IT infrastructure for large organisations.
Dell business strategy Dell 's vision is to 'strive to provide the best possible cus- tomer experience by offering: superior value; high-quality, relevant technology; customised systems; superior ser- vice and support; and differentiated products and ser- vices that are easy to buy and use'.
The core elements of the strategy that are evident in Dell 's marketing communications are:
• We simplify information technology for customers. Making quality personal computers, servers, storage and services affordable is Dell's legacy. We are focused on making information technology affordable for millions of customers around the world. As a result of our direct relationships with customers , or 'cus- tomer intimacy', we are best-positioned to simplify how customers implement and maintain information technology and deliver hardware, services and soft- ware solutions tailored for their businesses and homes.
• We offer customers choice. Customers can purchase systems and services from Dell via telephone, kiosks and our website, www.dell.com , where they may review, configure and price systems within our entire product line, order systems online and track orders from manufacturing through shipping. We have recently launched a retail initiative and plan to expand that initiative by adding new distribution channels to reach additional consumers and small businesses through retail partners and value-added resellers globally.
• Customers can purchase custom-built products and custom-tailored services. Historically, our flexible, build-to-order manufacturing process enabled us to turn over inventory every five days on average, thereby reducing inventory levels and rapidly bringing the latest technology to our customers. The market and our competition has evolved and we are now exploring the utilisation of original design manufactur- ers and new distribution strategies to better meet cus- tomer needs and reduce product cycle times. Our goal is to introduce the latest relevant technology more quickly and to rapidly pass on component cost
savings to a broader set of our customers worldwide.
• We are committed to being environmentally responsi- ble in all areas of our business. We have built environ- mental consideration into every stage of the Dell product lifecycle - from developing and designing energy-efficient products, to reducing the footprint of our manufacturing and operations, to customer use and product recovery.
Dell's sales and marketing Dell sells products and services directly to customers through dedicated sales representatives , telephone- based sales and online at www.dell.com. Customer seg- ments include large corporate, government, healthcare and education accounts, as well as small-to-medium businesses and individual consumers.
Dell stresses the importance of its d irect business model in providing direct and continuous feedback from customers, thereby allowing products and marketing programmes to be developed and refined for specific customer groups.
In its SEC filing, Dell emphasises how it listens to customers to develop relevant innovative technology and services they trust and value. Evidence for using the participative nature of Web 2.0 is that customers can offer suggestions for current and future Dell products, services and operations on an interactive portion of the Dell website called Dell ldeaStorm. It says: 'This con- stant flow of communication, which is unique to our direct business model, also allows us to rapidly gauge customer satisfaction and target new or existing products.'
For large business and institutional customers, Dell maintains a field sales force throughout the world. Dedi- cated account teams, which include field-based system engineers and consultants, form long-term relationships to provide our largest customers with a single source of assistance and develop specific tailored solutions for these customers. Dell also maintains specific sales and marketing programmes targeted at federal, state and local governmental agencies as well as specific health- care and educational markets.
Dell Premier For its large organisational customers, Dell offers Premier (www.dell.com/learn/us/en/04/premier), which is a secure, customisable procurement and support site or extranet designed to save organisations time and money
2 7 6 Part 2 DigijaJ mar1<eting strategy development
through all phases of IT product ownership. The main benefits of Dell Premier are described as:
• Easy ordering: a custom online store ensures access to your products at your price.
• Easy tracking: view real-time order status, onlin e invoices and purchase history details.
• Easy control: custom access groups define what users can see and do within Premier.
Marketing communications Dell markets its products and services to small-to- medium businesses and consumers primarily by adver- tising on television and the Internet, advertising in a variety of print media and by mailing a broad range of direct marketing publications, such as promotional pieces, catalogues and customer newsletters. In certain locations Dell also operates stores or kiosks, typically located within shopping centres, that allow customers to view its products in person and purchase online with the assistance of a Dell expert.
Dell online communications The management of the consumer site was presented to Econsultancy (2008). Dell has a three-stage order funnel:
• marketing communications execution measured by site visits;
• site merchandising measured by consideration % (site visits to e-store visits);
• store merchandising measured by conversion % (e-store visits to e-receipts).
The presenter explained how Dell aims to understand and act on customer behaviour based on identification of a series of consideration drivers: the quality of online advertising; path quality through site; merchandising/ offers - and conversion drivers: configurator 'ease of use'; accessibility of decision support tools; and consist- ency of message through the entire path.
Dell will invest in strategic improvements to the site to improve these levers - examples mentioned included new merchandising approaches such as customer rat- ings and reviews, videos and major 'path' or customer journey changes created through decision support tools to 'Help me choose'. There are also more tactical initia- tives to help deliver the right message to each customer including customisation/personalisation, real estate opti- misation and message balancing.
More tactical persuasion of site visitors is based on price moves/optimised price position to market and the mix of product features. A wide range of different offers
need to be managed. Tactical promotions, which are driven by promotional 'end dates' that are weekly or bi-weekly, include varying:
• free shipping; • money-off discounts; • free upgrades (e.g. additional memory); • free accessories; • finance offers; • service upgrades.
The presenter also noted how, across Europe, the pro- motional mix has to vary to reflect the differences in buy- ing psychology. He summarised the main differences between customers as follows:
• UK - all about price; • CH- add value over price; • DE - all about high-end products in mix; • IT - design is important(!); • DK - cheap is good; • NO- added value is key; • FR - tailored for France.
Dell's use of digital media channels The main digital media channels used by Dell.com in Europe are:
• Paid search through programmes such as Google Ads, which are used to promote value through time- limited offers related to the phrase searched upon. For example, a Google search for 'cheapest Dell' dis- plays an ad: 'Discount Dell Laptops www.dell.co.uk/ laptop - Save up to £300 on selected Dell Laptops from £329. Buy online now!'
• Display advertising - for example, advertising on technology websites- is particularly important for the corporate market.
• Affiliate marketing - used to protect the Dell brand by enabling affiliates to bid on terms such as 'Dell lap- tops' and to target niche audiences such as owners of gaming machines.
• Email marketing - an a-newsletter is used to keep in touch with existing customers and deliver targeted offers when their hardware may be renewed.
How Dell use social media marketing Cory Edwards, director of social media and reputation team (SMARl) at Dell, has explained Dell's approach to social media marketing. He stresses the importance of commitment from senior managers, which is exempli- fied for Dell by CEO Michael Dell, who frequently emphasises the importance of social media marketing
to Dell. Edwards (2011) contains this quote from Michael Dell:
Engaging in honest, direct conversations with custom- ers and stakeholders is a part of who we are, who we've always been. The social web amplifies our opportunity to listen and learn and invest ourselves in a two-way dialogue, enabling us to become a better company with more to offer the people who depend on us.
Edwards simply says, ' If content is king, then listening is queen'.
As an indication of the importance of social media lis- tening to Dell, Dell has created a Social Media Ustening Command Centre, which has six wall monitors tracking what Dell 's most influential customers are saying, trend- ing topics relating to Dell, market performance including share of voice and ratings of sentiment expressed about Dell. Around 25,000 posts in 11 languages are monitored daily by Dell's 'Ground Control Team'.
Dell has a social media governance workflow that reviews the potential importance of these customer com- ments and identifies those it is worth following up. The Ground Control Team is tightly integrated with the @Dell- Cares Twitter team who engage around 1,000 customers per week. Their role is to reach out to people complaining about Dell on Twitter. Edwards notes that the team has a 30 per cent rate of converting ranters to ravers.
As well as responding to negative mentions as part of customer service, Dell has created an Online Influencer Relations Program. This is managed by identifying influ- encers across business unit, region or topic area. Key influencers are identified using a conversation tracker, which is part of Dell's social media listening tool Radian 6. lnfluencers are provided with content and products that they may review or share. Dell has gone beyond virtual relationships, introducing Dell Customer Advisory Panel (CAP), which Edwards describes as 'a ranters and ravers event'. Invitees are prioritised based on size of social media reach and their affinity with Dell.
Relationship owners are designated and involved with ongoing efforts to build advocates. Within CAP days, Dell not only listens, but gives feedback on how prob- lems are addressed. For example, Dell heard that there were too many dropped calls and unnecessary transfers, so it explained how ePhone CRM software is being launched across sites, which will improve reporting capability to track telecom issues and queue mergers to eliminate certain types of transfer.
The reputation management we have described is only part of the social media marketing activities. If we review these acti vities according to the RACE framework (Chapter 1), we can see that Dell is involved in social media marketing activities across the customer lifecycle:
• Reach: Research, network and advertise to reach and interact with customers and prospects on the social
Chapter 6 Relationship marl<eting using dig~al platforms 277
outposts, communities and blogs relevant to your audience.
• (Inter) Act This involves determining your goals and then working out the engagement tools that will encourage your customers to interact and will inspire them. Dell has clear goals around a number of finan- cial and non-financial measures. They look at meas- ures including operational savings through paid search and support savings and boosting customer loyalty measured through the Net Promoter Score.
When customers interact with Dell, their experiences are shared via their social graph of followers or fans, so there is this viral effect that helps customer acquisition.
• Convert: Here Dell is trying to leverage initial interac- tion to go through into real value of leads or sales. At a practical level, Dell has a clearance channel, Dell Outlet, that it uses to sell through Twitter. It may also offer promotional coupons through social media such as Groupon or deals sites to encourage sales.
• Engage: This is the big challenge with social media: how to keep customers engaged. For Dell, engage- ment occurs on several platforms, but in particular within commun ity forums, which are user-to-user support postings where topics range from support to pre-purchase or enthusiast d iscussions. There are millions of members with tens of thousands of discus- sions and accepted solutions each week. The Direct- 2Dell Network is also used for 828 customers, with separate blogs for Enterprise IT, Small Business, Edu- cation, Investors, etc. They encourage guest influenc- ers to join the discussion. Finally, another big part of engagement for Dell is ldeaStorm - one of the best examples of crowdsourcing through social media, which encourages ideas, feedback, innovation and dialogue. Over tens of thousands of ideas have been generated, with around 100,000 comments added, and a viral effect occurring through a Facebook app. Only several hundred ideas have been implemented, but the secret is that Dell closes the loop by feeding back to customers what has worked and what hasn't.
Sow:e: 2011 SEC Aing Econsultancy (2008); Dell case study; Online Mar· keting Masterclass, J)(esented at the Royal Institute of British Architects, NoiiBmber 2008. Edwards (2011 ); Tackling corporate reputation with social media, J)(esentation by OJry Edwards, director of social media and reputa- tion team (SMART) FebruatY 2011 , avalable to view online at www.slide share.net!KenyatDeiVdell-social-media-oma-event..Joodon-v2-feb-2011 : See also: www.slideshare.neVKenyatDeiVdells-social·medi a-journey- econsultancy-masterctasses-novembef·2009; http://cootent.dell.cxxn/ uslen/corploor-story-oompany-tlrneline.aspx
Question Describe approaches used by Dell within its site design and promotion to deliver relevant offers for different types of online customers.
278 Part 2 Digital marketing strategy development
Exercises
1 C R M enables 'sense and respond' com munications, where personalised emails or web- based messages can be delivered based on disclosed o r inferred customers' preferences stored as customer profiles.
2 CRJVI. also im·olves managemenr of online services to deliver customer service that is aimed at improving brand loyalry.
3 The classic model for permission marketing to support e-CRJVI. is: • Step 1 - attract customers ro website, par m er microsite or social presence such as
Facebook. • Step 2a - incenrivise in order ro gain contact and profi le information . • Step 2b - capture customer in for matio n to maintain the re lationsh ip and profile the
customer. • Step 3 -mainta in d ialogue th rough using o nline communications ro achieve repeat
. S l tC V IS itS .
• Step 4- maima in dialogue consistent w ith customer's p rofi le using email , social media messaging or, where cost-effecti ve, d irect m ail or outbou nd p ho ne contact.
4 Personalisation technologies enable custom ised e mai ls (or di rect mai ls) to be sent to each individual (or related groups) and custom ised web content to be disp layed or distributed using push technology. [ncreasingly, rn achine learning Artificial Intell igence is used to deliver more relevant messages compared ro rules-based approaches.
5 C R M also involves review of customer advocacy through techniques such as Net Pro- moter Score (NPS) and developmem of programmes ro encourage customer advocacy.
6 The developmem of online communities through social networks, particularly Facebook company pages and Linkedln groups or independent communities linked to the company site, is a key part of social CRM.
7 Development of an independent customer community may give additional benefits since the community will be more aligned with company goals and customer brand experience.
8 Management of customer value rhrough customer lifetime value and recency- frequency- monetary (RFM value analysis) is a core technique for targeting marketing programmes at customers who will generate the most future value for an organisation.
Self-assessment exercises
1 Why are digital platforms so suitable for relationship marketing? 2 Explain ' personalisation' in a digital marketing context. 3 What is meant by 'customer profiling' ?
4 What are the options for using Artificial Intelligence to improve marketing communications?
5 How can customer concerns about privacy be responded to when conducting one- to-one marketing using digital communications?
6 Choose an e-commerce sector, e.g. retail, travel or financial services, to explain why different types of automated contact strategies are important.
7 Explain the concept and appli cations of RFM analysis to different types of web presence.
8 Explain the concept and applications of lifetime analysis.
Essay and discussion questions
1 Explain the factors that influence the development of multichannel customer con- tact strategies.
( References \._
Chapter 6 Relationship marketing using digital platforms 279
2 Explain how customer lifetime value analysis can be applied to improve all aspects of the customer lifecycle.
3 Explore the options, success factors and barriers to delivering Artificial Intelligence and Big Data applications for marketing.
4 Explore the legal and ethical constraints on implementing relationship marketing using digital media.
Examination questions
1 Define and explain the scope and applications of CAM. 2 Explain and evaluate the relevance of six applications of Artificial Intelligence for sup-
porting communications in different parts of t he customer lifecycle. 3 Suggest how an organisation could review its CAM capabilities. 4 Explain the benefits to businesses of creating virtual communities and how such
communities can be used as part of relationship marketing. 5 Suggest three measures a company can take to ensure that a customer's privacy is
not infringed wh en conducting one-to-one marketing. 6 Explain how digital media can support customer advocacy. Suggest how advocacy
can be proactively managed. 7 What is a digital contact strategy? Which success factors will make the contact strate-
gies more effective? 8 Explore opportunities and methods for personalising the interactive web session and
adding value for that individual customer.
Agrawal, V., Arjona, V. and Lemmens, R. (2001) E.-performance: the path to rational exuber- ance, McKinsey Quarterly, 1, 31-43.
Altimeter (2010) Social CRM : the new ru les of relationship managemem, White paper published Apri l 2010, edito r Cha rlene Li.
Chaffey, D. (2004) E.-permission marketing, Cha rtered lnsriwte of Marketi ng, What's New in Marketing, e-newslerrer, Issue25, www.w ncim.co m .
CIPR (2011) Soc ial media ma rketing best practi ce gu ide, May 2011 edi tio n, created by the C IPR Soci a l M edia Panel. Ava il ab le fr o m : Imp s:/ /www.cipr.eo. uk/con t ent/ policy-resources/ poli cy/ social-medi a (accessed May 2018) .
Court , D. , Elz inga , D. , Mulde r, S. and Vetvik , O.J. (2009) T he co nsumer decision journey, Mc Kinsey Q uarterly Uune) .
Custora (2014) Taking t he guesswo rk o ut of marketing - how Guess uses pred ict ive a nalyr- ics, blog post by Netta Kivil is on the Custora b log, lO December.
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Econsu ltancy (2008) Managing digital channels: integrating digital marketing into your organisation (190-page report), Dave Chaffey.
Edwards, C. (2011) Tackling corporate reputation with social media, presentation by Cory Edwards, director of social media and reputation team (SMA RT) February 2011, www.sl ideshare.net/KerryatDelll delJ-sociaJ-media-nma -even t-lon don-v2 -feb-201 1. See also: www.slideshare.net/KerryatDell/ d ells-social-media- journey-econsult ancy- masterclasses-november-2009; h t tp:/ I content.dell.co m/ u s/ en/ corp/ our -story-com- pany-timeline.aspx (accessed May 2018).
280 Part 2 Digital marketing strategy development
Euroffice {2017) Dealer support feature: gap analysis, 12 J anua r y, h ttp:/ / eo-gro up.co.uk/ news-medial press-releases/ dealer-suppo rr-fearure-gap-a nalysis/ {accessed May 2018) .
Forrester {2007) M:u:kering's new key metric: engagement, ma rketers must measure involve- ment, interaction, intimacy, and in1luence, Forrester Analyst Report, Brian H aven, 8 August.
Forrester {2017) The Forrester WaveTll1: customer identi ty and access management, Q2 2017, 15 June, by Merritt Maxim wir:h Stephanie Balaouras, Andras Cser, Sah-arore Schiano, Peggy Dostie, hrrps:/ I re prints .forrester.co m/\# / assets/2/776/RES136462/ repo rts {accessed May 2018).
Godin, S. {1999) Permission Marketing, Simon and Schuster, New Yo rk. Lnside CRM {2017) Four ways social CR.J\11 is evolving, Peter Kowalke, 1 November, http:/ I
it.toolbox.com/blogs/insidecrm/four-ways-social-c rm-is-evolving-78879 {accessed May 2018).
Kumar, V., Petersen, J. and Leone, R. {2007) How valuabl e is word of mouth?, Harvard Business Review, 85{10), 139-46.
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N egro ponre, N . {1995) Being Digital, H odder and Stoughton, London. Novo , ]. (2003) Dri ll ing dow n: t urn ing customer data into profits wit h a spreadsheet ,
w wW.Jlmnovo .com. O'Malley, L. and Tynan, C. (2001) Reframi ng relationship ma rketing for consumer markets,
Interactive Marketing, 2{3), 24Q-46. Peppers, D. and Rogers, M . {1997) Enterprise One-to-One: Tools for BHilding Unbreakable
C u stom er R elationships in the llzteractive Age, Piatku s, London . Presi, C., Saridakis, C. and Hartmans , S. {2014) User-generated conrem behaviour of the
dissatisfied service customer, European joHrnal of Marketing, 48{9-10). Rcichheld , F. {2006) The Ultimate Question: Driving Good Profits and True Growth,
H arva rd Business School Publishing, Boston. Rcichheld, F. and Schefrer, P. {2000) E-loyalry, }'Our secret weapon, Harvard Business Review
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driving sales through mobile marketing, journal of Direct, Data and Digital Marketing Practice, 7{3), 262- 5.
Smarr lmights (2010) Using social media and online channels to delive r customer service, interview with Guy Stephens, 5 October a r: www.sma rtinsights.com/customer-relatio n- ship-mana gement/ customer-service-and -s uppo rt/ online-custo mer-service/ {accessed May 2018).
Smarr Insights (2015) T h e social med ia m arketing radar, blog article by Dan Bosom worrh , 9 Janua ry, hnps:/ I www.smarrinsights.com/ social-medi a-m arketing/ social-media-strat- egy/ social -medi a-marketing-radar/ (accessed May 2018).
Smart Insights {2017) Mobile marketing st atistics, blog post by Dave Chaffey, 1 March , b ttps:/ I www.s m arrinsigbts.com/ m o bil e- m a rke ting/ m o bi le- m a rketing-analytics/ mobile-marketing-sta tistics/ (accessed May 2018).
Solis, B. {2011) End of Business as Usual: Rewire the Way You Work to Succeed in the Consumer R evolution, Wtley, New York .
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Tucker, C. {2014) Social networks, personalised advertising and privacy controls, Journal of Marketing Research, 51{5), 546-62.
Urban Airship {2017) How push notification s impact mobile app retention rates, research report, hnps:/ / www. urbanairship.com/ lp/how- push-n otifi catio ns-i rnpact-mobile-app- retentio n-rates {accessed May 201 8).
r Weblinks \..
Chapter 6 Relationship marketing using digital platforms 281
Van Duyne, D., Landay, J. and Hong, J. (2003) The Design of Sites: Patterns, Principles, and Processes for Crafting a Customer-Centred Web Experience, Addison-Wesley, Reading, MA.
Weinberg, T. (2010) The New Community Rules: Marketing on the Social Web, Wiley, Hoboken, NJ.
• ClickZ (www.clickz.com). An excellent collection of articles on online marketing com - munications, US-focused. Relevant section for this chapter: CRM strategies.
• CRM Today (www.crm2day.com). A portal with articles about the practical aspects of deploying CRM technology.
• Database Marketing Institute (www.dbmarketing.com ). Usefu l collection of articles on best practice.
• Dataversity (www.dataversity.n et). An aggregator sire.: for articles discussing Big Data. • lnfowo rld (www.infoworld.com/category/big-datal). Resources on the la test develop-
menrs i.n Big Dara. • Jim Novo (www.jimnovo.com). A sire by a US consultant that has a lor of derail on
techniques ro profile and target customers online. • MyCustomer (www. mycustomer.com). Articles about rhe principles and technology of
customer relationship management. • Net Promoter Score blog (http:/ /netpromoter.typepad.com/fred_reichheld). Multi-
author blog and forum discussing the practicalities of implememing NPS. • Peppe rs and Rogers One-to-One Marketing Website (www.ltol.com). A site containing
a lot of information on the techniques and tools of relationship marketing.
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Digital marketing: implementation and practice
In Part 3, practical success factors for implementing and managing digital marketing strategy are described, including website
and app development to ensure a quality customer experience (Chapter 7), marketing communications to promote a site
(Chapters 8 and 9) and the evaluation of company digital presences (Chapter 1 0).
Delivering the digital customer experience
( Introduction
Digital customer experience A brand's Ictal digital experience includes a brand's presence on differenl platforms ind uding desktop webslle, mobile sile and apps, ads on gaming platforms and digital in-store. The quality of digital experience is based on the combination of rational and emotional factors of usi1g a company's 0111ine services that infkJences customers' perceptions of a brand onh!.
Chapter 7 Delivering the digital customer experience 285
Questions for marketers
Key questions for marketing managers related to this chapter are:
• Which activities are involved in creating or redeveloping effective mobile and desktop experiences?
• What are the key factors of online service quality, site and app design that will help our goals of customer acquisition and retent ion?
• Which techniques can I use to determine visitors' requ irements and whether they are met?
• How should I integrate the different forms of online presence?
Links to other chapters
This chapter is related to other chapters as follows:
• Chapter 2 explains the technique of persona development, which is used to inform
the creation of a digital experience.
• Chapters 4 and 5 describe the development of the strategy and t actics that inform online experiences.
• Chapters 8 and 9 describe approaches to promoting websites.
• Chapter 10 describes the analysis of d igital customer experience and its maintenance.
M anaging rhe di gital c ust omer experience for a br and u sed ro be relatively stra i ghtforward: busi nesses simpl y had a w ebsite and an em ail newsletter :~ longside ofA ine channels ro sale. Today, t he pi cture is far mor e co mplex, w ith rhe combination of d igital ro uchpo inrs w her e marketers seek ro influence consum ers st retch ing across paid, ea rned and owned medi a o n different devices. Consider rhe custo mer- facin g rouchpoints of a brand's d igital e"-perience. T hese can include a desktop or mobile-optimised sire, mobile apps, company pages o n social media, emails, connected devices and the I nternet of Thin gs (loT ), w hich we explore towards the end of rhis ch apter. Fo r m ul t ichannel ret ailers, the digital experience also includes prov iding digital devices in-store, including augmented rea lity.
Company pages on social media today have a stro ng visual, interactive emphasis, such as Faceb ook or Twitter {text updates, video and im age posts plu s lead gener ation car ds),
286 Part 3 Digital marketing: implementation and practice
I
linkcdln (company pages and groups), You Tube (branded video channels) and l nstagram and Pi merest (image emphasis). Most companies seek to maintain a presence across all seven of these networks, although L inkedln may be limited to careers. Even within offline chan- nels, digital devices are being used to supplemenr the digital experience, as shown in Mini case study 7.1 on NFC in -store integration. For example, Debenhams, a leading UK retail
Mini Case Study 7.1 CloudTags integrates in-store digital experiences with the Internet of Things
CloudTags (www.connectedstore.com) worked with a number of retailers to create an innovative, omni-channel experience using mobile devices and NFC technology. The retailers, among them Harvey Nichols and MADE (an online furniture retailer), have been putting tablet computers in stores for consumers to pick up and use. The customer simply enters their email address, which creates a customer profile, and by interacting with physical products via tapping on NFC icons in store they get rich , in-depth product content such as images, videos and recommendations . There is also a separate tool that allows users to send details of the products to the in box.
If assisted by staff, the store is able to track and attribute activity online (should the user go home and purchase) so the original salesperson is included in the credit for the sale.
Results Harvey Nichols found that 90 per cent of shoppers engaged in-store were not previously known to them; 16 per cent of all shoppers engaged with the experience and 18 per cent took further action after receiving an email.
MADE also used the technology at its Notting Hill showroom (Figure 7.1): 21 per cent of consumers opted to have their in-store collections sent to their inbox; 41 per cent went on to browse products online; and over the course of the trial the average order value increased 15 per cent.
This example shows how, today, consumers are happy to interact with a company using technology. Ease
of purchase, good customer experience and strong engagement are moving beyond attractive extras and are becoming standard expectations.
Figure 7.1 CloudTags tablets used to assist the in-store digital experience
r
Conversion rate optimisation (CRO) Improving the commercial returns from a transactional site through increasing conversion to key goals such as sales, quotes, bookings or leads. CRO combines customer and competitor research with evaluation of customer behaviour using web analytics and AB and multivariate testing (see Chapter 1 0 for details).
Chapter 7 Delivering the digital customer experience 287
adopter of mobile, shared d1is retrospective of their mobile development over the last two years or so. Speaking at a Mobile Marketing conference, Debenham s' mobile marketing manager, Sarah Bailie, explained:
Integrating online in store should be top priority for all multichannel retailers looking to create an experiential and destination shopping experience. Debenhams' most valuable customers engage with the brand via multiple channels.
Creating effective digital experiences
Given the popularity of digital devices for finding out about brands and services, improving the capability to create and maintain these effective on line brru1d presences is a key part of digit al marketing. In the introduction we have described the range of different types of digi- tal dev ices that offer digital interactions between a brand and its audience. For most busi- nesses, the majority of interactions still occur on desktop and mobile-optimised websi tes and mobile apps, so this is where we focus in this chapter.
'Effective' means that the presence must deliver relevru1ce and a satisfactory digital cus- tomer experience for its audience. At the end of the chapter we wiU consider frameworks such as WEBQUAL and E-SERVQUAL for assessing different elements of service quality that can be applied to digital communications.
'Effective' also means d1e presence must support and add value to the brand to deliver results for the company. Conversion rate opti misation (C RO) is increasingly being used by companies to improve the commercial contribution of online presence to a bus iness, as the Min i case study 7.4 on Jack Wills later in this chapter shows.
In this chapter, we will explore different success factors and practical actions that com - panies can take to create and maintain satisfactory online experiences, both for the customer and business. An indication of the need to produce a customer-centric online presence is given by Alison Lancaster, at the t im e the head of marketing and catalogues at John Lewis Direct ru1d then marketing director at Charles Tyrwhitt™ (www.ctshirts.co.uk), who said:
A good site should always begin with the user. Understand who the customer is, how they use the channel to shop, and understand how the marketplace works in that category. This includes understanding who your competitors are and how they operate online. You need continuous research, feedback and usability testing to continue to monitor and evolve the customer experience online. Customers want convenience and ease of ordering. They want a site that is quick to download, well-structured and easy to navigate.
You can see that creat i11g effective online experiences is a challenge since there are many practical issues to consider, which we present in Figure 7 .2. This is based on a diagram by de Chernatony (2001), who suggested that delivering the on line experience promised by a brand requ ires deli vering rat ional values, emotional values and promised experience (based on rational and emotional values). The factors that influence the online customer experience can be presented in a p yramid form of success factors, as is shov.rn in Figure 7 .2 (th e different success factors reflect current best practice and differ from those of de Chernatony) . The diagram also highlights the importance of delivering service-quality online, which we explore more at the end of this chapter. More recently, Christodoulides et al. (2006) have tested the importance of a range of indicators of online brand equity for online retail and service com- panies. This analysis was performed across five dimensions of brand equity, assessed by ask- ing the questions below - they provide an excellent framework that can be applied to assess and benchmark the quality of brru1d experience for different types of website:
1 Emotional connection Ql: I feel related to the type of people who are [X]'s customers. Q2: I fee l as though [X] actually cares about me. Q3: I fee l as though [X] really underst ands me.
288 Part 3 Digital marketing: Implementation and practice
Figure 7.2 The online customer experience pyramid- success factors
The Offer The Experience Customer service
Value: Cost & Offers
Variety
Look and Feel
Visuals
Fit of Style & Tone
Customer fit
Ease of use
The User experience
Emotional needs
Rational needs
Fulfilment
Support
Confidence
Trustworthy
Credible
Simple to use Customer ftt Platform performance
Usable
Accessible &clear
2 Online experience
Content and search Speed
Availability
Q4: [X]'s website provides easy-to-follow search paths. QS: I never feel lost when navigating through [X]'s website. Q6: l was able to obtain the information I wanted wirhour any delay.
3 Responsive service narure Q7: [X] is wi llin g and ready to respond to customer needs. Q8: [X]'s website gives visirors the opportunity to 'talk back' to [X].
4 Trust Q9: 1 trust [X] to keep my personal information safe. Q10: I feel safe in my transactions with [X].
5 Fulfilm ent Qll: 1 got what I ordered from [X]'s website. Q12: The product was delivered in the rime promised by [X].
WEBQUAL is a similar framework fore-commerce sites covering 14 dimensions across four broad areas of ease of use, ease of information gathering, ease of transactions a nd emer- rainment value (Loiacono eta/., 2000, 2007}. We detail rhese and eire alternative frameworks such as SITE QUAL at the end of the chapter.
Consider how these elements of effective online brand experience might differ today. Differences could include support for interactions with other customers, including raring
Customer elCperience management (CX.M) A holistic approach to managing customer expenence and customer engagement across cigital and non-cigital touchpoints rduding web, mobie and social cigital platfonns, in stOte and by can centres.
Web merchandising The aim of web merchandising is to maximise the sales potential of an onine store for each visitor. This means connecting the right products with the right offer to the right visitor, and remembering that the online store Is part of a broader experience including online and offline advertising, in-store visits, customer service and delivery.
Customer journey A desaiption of modem mtJtlchannel blryet behaviour as consumers use different media to select suppiers. make purchases and gain customer~.
Chapter 7 Delivering the digital customer experience 289
of conten t or prod uct s, suppo rt for different digiral devices and integration with other online and offline channels. M o re recent research into assessing company digital capabiljries in the context of customer experience management (CXM) is limited. Klaus (2014) notes that 'there remains a need fo r bot h t heoretical and conceprual development, and empirical research to determine which cligital ex strategies and pracrices have the most positive influ- ence on organisational performance'. H e identifies three levels of company approach to eXNl : Preservers, Transformers and Vanguards. He categorises Vanguards as having a 'dear strategic model of ex management impacting all areas of the o rganisation, and developing commensurate business processes and practices ro ensure irs effecrive implementation. While Transformers merely ac knowledge rhe broad-based challenges of ex managemem, Vanguards integrate functions a.nd customer rouchpoints ro ensure consistency of the dcsi red cus tomer experiences across their own business'.
Figure 7.2 inco rpo ra tes ma ny of rhe facto rs rha r arc relevant for a t ra nsactional e-retail sire, such as pr ice and promo tions, which roge r her fo rm web merchandising (see the end of the ch apter), bur you can see rh ar ma ny of rhe rational and emotional values a re importa nt to a ny we bs ite. Yo u may not be famili ar w ith some of rhc te rms, such as ' usa biJjry' and 'access ibility' (which a re delivered through an effecti ve website des ign), but these will ail be expl ained la ter in this chapter.
In Figu re 7.2 these factors are a ll associated wit h us ing the websi te, but the o nl ine cus- tomer exp erience extends beyond th is, so effective designs a re based o n integrating wi rh th e entire customer journey for different aud iences and different scena rios to ad1ieve the best resu lt. So design of online presence also needs ro loo k at the bigger pic ture:
• ease of locarjng the site duough search engines {Chapter 8); • services provided by parmers online on other websires; • quality of outbound commun ications such as e-newslerrcrs; • quwry of processing inbound email communications from customers; • integration with offline communications and rouchpoinrs such as store and phone as parr
of multichannel marketing.
Essential digital skills Digital experiences and websites
While many people use social media accounts, not all will take the additional time to set up a blog. By creating a blog and updating it occasionally you can learn a lot about the challenges of managing digital experiences.
We recommend you develop these skills:
• how to explain the purpose and proposition of a website; • how to encourage different forms of audience interaction with a website, e.g. recom-
mended content, social sharing or data capture, e.g. through a contact form; • use analytics tools to understand the path and interactions of visitors to a website.
Practical ideas to boost employability by showcasing your interests and experiences include:
• Create a b log using a low-cost platform such as Wordpress.com or Tumblr.com and write about an area of marketing or a hobby that interests you.
• Apply different themes to the blog to see how cascad ing style sheets work. • Set up analytics on the blog , e.g. Google Analyt:ics, so you can understand audience
interactions with the site.
To a ud it your d igital marketing skills across the RACE p lanning framework, use the Smart Insights Skills Assessment tool available at http://bit.ly/smartdigiskills.
290 Part 3 Digital marketing: implementation and practice
Structure of this chapter
We start the chapter by considering the requirements for a presence that delivers appropriate rational and emotional values. We then look ar the processes and srages im·olved in manag- ing a project to improve the customer experience. Our coverage on website design is integrated with considerarion of researching online buyer behaviour, since an appropriate experience can only be delivered if ir is consistent with customer behaviour, needs and wants. We then go on to review delivery of service quality online. This includes aspects such as speed and availability of the sire itself, which support the rarional values, and also fulfilment and support, which are a core part of the promised experience.
Planning websit_e_, a_P_P_ d_e_s_ig_n_a_n_d_ re_d_e_s_ig_n_ p_ro_j_e_c_ts ___________ ~] Despite the growth in social media, the company website, which today must be effective for users accessing via desktop, smartphone and tablet devices, is still at th e heart of on lin e communications. For the experience to be effective, a sound process is needed to design, bui ld and refresh the online experience. In the past, it has been a com mon mistake among those creating a new website for the first time ro 'dive in ' and stnrt crentive design and con- rent crenrion without sufficient fonvard p lanning. This is sti ll a risk today, but new website design and build projects for existing businesses are less common, a lthough still needed for new startups, new brands or new campaigns. Instead, what hns become more common are website redesigns and relaunches and the continuous approach of conversion rate optimisa- tion. This change in emphasis is illustrated by many larger businesses in the retail sector, which now have teams to conrinuously boost conversion rates. For example, speaking at Ecommerce Expo in 2014, Gareth Jones, deputy CEO of Shop DirecrTh1, explained how, as part of a programme of digital transformation, they had increased the number of e..xperi- ments to test improvements to conversion to over 50 per month, with the aspiration to more than double them. He says:
In two years' time, we'll have more challengers live in a visit than competitors launch in a year.
He also reported that you need to invest in a range of tests since naturally not all will be successful, with around one-third giving a significant improvement in revenue, one-third failing and one-third neutral.
Regardless of timescale, the design and optimisation process (see Figure 7.2) involves ana lysing the needs of owners and users of a site and then deciding on the best way to bui ld the site to fu lfil these needs. Without a strucrured plan and c:Hefu l design, costly reworking is inevitable, as the firs t version of a site will not achieve the needs of the end users or the business. Follow Activity 7.1 to think through dle problems you have experienced when using a site that does no t meet your needs.
The process of website development summarised in Figure 7.3 is idealised because, for efficiency, many of these acrivities have to occur in parallel. Figure 7.4 gives an indication of the relationship between these tasks, and how long they may take, for a typical website project. We will explain some of the specialist design terminology and the differences berween website and app development later in this chapter.
The main development tasks that need to be scheduled as parr of the planning process for any digital experience are as follows:
1 Pre-development tasks. For a new site or app, these include domain name registration and deciding on the company to host the website. They also include preparing a brief that sets out the aims and objectives of the site, and then- if ir is intended to outsource the site - presenting the brief to rival agencies to bid for and pitch their offering.
Chapter 7 Delivering the digital customer experience 291
Figure 7.3 Summary of the process of website development
Soft launch A trial version o f a site, launched with limited publicity.
Main site d evelopment activities
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Marketing objectives
t Prepare
brief
t Select agency
• Market
research
t Prototype
design
t Develop content
t Test and
revise
t Launch
site
t Ongoing
development
Key support activities
Register domain
Select hosting provider
Communications plan
t Start
promotion
Main promotion
Conversion rate optimisation
(CRO)
2 Discovery, analysis and design. This is a research phase involving detailed analysis and design of the sire, and includes clarification of business objectives, market researcl1 to identify the audience and typical customer personas and user journeys and their needs, defining the information architecture of differem content types and prorotyping different functional and visual designs to support the brand.
3 Content creation, coding or development and t esting. Developing the sire to create pro- totypes including integration of content management systems, database integration, usability and performance testing.
4 Publ:ishing or launching the site or improvement. This is a relatively short stage, involving releases of different vers ions of an application or website update, shown as labelled in Digital marketing insight 7 .2. Often a soft la unch is used, where the site is updated but rhe version is nor widely communicated until the owners are sure rhe sire is stable. Some sire owners such as Google rest features with a limited number of users to assess their impact before the features are rolled out more widely.
5 Pre-launch promotion or communications. Searcl1 engine registration and oprimisarion is most important for new sites. Although search engines can readily index a new sire, they don't give the same level of visibi lity to new sites (sometimes known as 'the Google sandbox effect'), where rhe site is effectively on rrialunril it is established with links from other sires indicating its credibility. Briefmg rhe PR company to publicise the launch is another example of pre-law1ch promotion.
292 Part 3 Digijal marketing: Implementation and practice
Figure 7.4 Iterative approach to improving site effectiveness
Prototype #1 I )Ito I Usability test #1 I )Ito ... l __ w_ a_sh_ up _ __, )Ito Prototype #2
Instrumentation ~ I Testing , ,.. I Final build , ,.. I Usability test #2 1
Start 90/10% Monitor Move to 50/50 when happy
Clicktale monitoring
Contact channel 1 ....,.H
analysis Leak model
analysis Contact centre
Web analytlcs
L __ w_a_s_hu_p_-...~H~._ ___ Fi_x_es __ _JI )Ito l __ R_in_s_e_a_nd----" _ _ repeat!
Sotrce: Sullivan (2011)
Act ivity 7.1 What can go wrong without a planned approach t o website or app design?
Purpose
To indicate potential problems to customers, partners and staff if the design of an online presence is not carefully planned.
Activity
Make a list of the potential problems related to a poorly planned design that may be faced by customers of an online retailer. Base your answer on problems you have expe- rienced on a website that can be related to planning and implementation of site design.
The answers you identify all define the requirements for a new website design, includ- ing relevant content, acceptable performance, renders correctly in browser, findable within search engines (search engine optimisation, or SEQ).
6 Ongoing promotion. T he schedule should also a ll ow for promotion after sire launch . This might involve struct ured discount promotions on the sire, or competitions cl1at are planned iJJ advance. Many now consider sear ch engine optimisation, content marketing and pay-per-click marketing (Chapter 9) as a continuous, 'always-on' process, and will often ernploy a third parry to help achieve rhis.
7 Ongoing development. Ir used to be common place for rhere ro be a rime gap of several rears between major website redesigns involving new layout and typography. Although content relating to products, services and promotions would be updated, the layout of page templates remained static. Increased adoption of C RO, which we described at the starr of the chapter, means rha r the process of 1 to 5 is repeated between major updates using an agile development process, as e..xplored further in the next section.
Chapter 7 Delivering the digital customer experience 293
It's important to realise that Figure 7 .3 is a simplificat ion of real -world optimisation approaches. In reality, iteration of designs using agi le development or prototyping is required . Then, once a working version is finalised, it should be rested through user testing and rhen live testing using CRO including the AB/multivariate testing approaches described in Chapter 10.
Who should be involved in a digital experience project?
The success of a website is dependem on the range of people involved in its developmem, and how we ll they work as a team. Typical profi les of team members follow:
• Site sponsors. These will be senior managers who will effectively be paying for the system from d1eir budgets. They will understand the strategic benefits of the system and will be keen that the site is implemented successfully to achieve the business objectives they have set.
• Site owner. 'Ownership' will typically be the responsibility of a marketing manager or e-comrnerce manager (see Digital marketing insight7.1), who may be devoted full-time to overseeing the si re in a large company or it may be part of a marketing manager's remit in a smaller company. In larger com panies- for example, UK retail appli ances brand AO. com™ -there is a separate ream for desktop, mobile and tablet platform s with separate team members covering all these skills.
• Project manager. This person is responsible for the p lanning and coordination of the website projecr. They will aim to ensure that the sire is developed w ithin the budget and time constraints rhat have been agreed a t the sta rt of rhe project, and that the sire delivers the plan ned -for benefits for the company and irs customers.
• Site designer. The site designer will define the ' look a11d feel' of rhe si re, including irs styling through cascading style sheets (CSS), layout and how com pany brand values are t ransferred to the web.
• Content developer. The content developer will write the copy for the website a.nd convert it to a form suit able for the site. In medium or large companies this role m ay be split between marketing staff or staff from elsewhere in the organisation who write the copy, and a recl111ical member of staff who converts it to the graph ics a nd HTML docume nts forming t he web page and does the programming for interactive content.
• Web master. This is a redmical role. The web master is responsible for ensuring the quality of the site. This means achievu1g suitable availability, speed, worki ng lu1ks between pages and connections to company databases. In small companies t he web master may also rake on grap hic design and co ntent developer roles.
• Digital experience analyst or CRO expert. Familiar with how t o analyse digi tal analyrics to identify sire effectiveness and how to run conversion rare optimisat ion experiments (as explained ftuther in Chapter 10) .
• Stakeh olders. The impac t of the website on other members of the organ isation should nor be w1derestimared. Internal staff m ay need to refer to some of the information on the website or use its services .
Digital marketing insight 7.1 Improving site effectiveness
Figure 7.4 defines an iterative approach to improving site effectiveness recommended by Sullivan (2011). At that point Craig Sullivan was e-business manager at Belron, an international windscreen repair service with local country brands such as Autoglass™. He is now an independent consultant. You can hear him explain the increasing impor- tance of user experience and the challenges marketers face when trying to optimise customer experiences, both on- and offline.
Hear Craig speak at: https://www.youtube.com/watch?v=N1VJVz2JBXY
294 Part 3 Digijal marketing: Implementation and practice
Activity 7.2
While the site sponsor and sire own er wi ll work wirhin the company, many organisations outsource the other resources since full -time staff cannot be justified in these roles. There are a range of different choices for outsourcing, which are summarised in Activity 7.2.
We are seeing a gradual blurring between these different types of supplier as they recruit expertise so as to deliver a 'one-stop shop' o r ·full-service agency', but they still tend to be strongest in particular areas. Companies need ro decide whether ro partner with tbe 'best of breed' in each, or to perhaps compromise and choose rhe one-stop shop that gives the best balance and is most likely to achieve integration across different marketing activities - this would arguably be the new media agency, or perhaps a traditional marketing agency that has an established new media division. Which approach do you think is best?
Observation of the practice of outsourcing suggests that two conflicting patterns are evident:
• Outside-in . A co mpa ny o ften sra rrs usi ng new digital marketing tech nologies by out- sourcing some activities where rhere is insufficient in-house expertise. T he compa ny then bui lds u p skills inrernaJly to m anage th ese areas as digita l ma rketing becomes an impor- ranr co ntri buto r to the business. An o urside-i n appro:-ech will prob:-e bl y be d ri ven by the need ro reduce the cost s o f o utsourc in g, p oor delivery of serv ices by t he suppli er o r sim ply a need to concentrate resources for a strategic co re competence in -ho use.
• In side-out. A co mpru1y sta rts ro im plement digital m arketing using existing resources within the IT department and marketing department in conjunction with recruiunent of digital media specialists. T hey m ay then find thar there are problems in developing a site that meets customers' needs or i11 building traffic to rhe site. At this point they may turn to outsourcing to solve the problems.
These approaches are not mutually exclusive and an outside-in approach may be used for some activities, such as S£0 or content development, while an inside-out approach is used for other fm1ctions such as site promotion.
Options for outsourcing different digital marketing activities
Purpose
To highlight the outsourcing available for digital marketing and to gain an appreciation of how to choose suppliers.
Activity
A B2C company is trying to decide which of its e-business activities it should outsource. Select a single supplier that you think can best deliver each of these services indicated in Table 7 .1. Justify your decision.
Table 7.1 Options for outsourcing different digital marketing activities
Digital marketing function
1 Strategy
2 Design
3 Content and ser- vice development
4 Online promotion
5 Offline promotion
6 Infrastructure
Traditional marketing agency
Digital marketing agency
Traditional IT supplier
Management consultants
Prototype A pn!(lllllflal)' ver'Slon of part, or a ~of all. of a website, which can be reviewed by its target atrlence or the marketJng team. Prototyping is an iterative process n which website users suggest modifiCations before further proto!}peS and the final version of the site are developed.
Wireframe A simplified outline of a single-page template used to define new layout or functionality for part of a website for discussion, iteration and then a brief for implementation.
Agile software development An iterative approach to developi1g software and website fu'lctionaity with the~ on face-to- face oommunications to eicit, define and test reqLimments. Each iteration is effectively a mi1i-software project including stages of planning, requirements analysis. design, coding, testing and documentation.
Serum Scrum is a methodology that supports agUe software development based on 15-30-day sprints to implement features from a product backlog. 'Serum' refers to a daily project status meeting during the sprint.
Chapter 7 Delivering the digital customer experience 295
Prototyping
Prototypes are trial Yersions of an entire website or a part of the sire being refined that are gradually refined through an iterative process to become closer to rhe final \'ersion.lnirial pro- totypes or 'mockups' may simply be paper prororypes or storyboards, perhaps of a 'wireframe' or screen layout. These may then be extended to include visuals of key static pages. Finally, working prototypes wiU be produced as HTML code is developed. The idea is that the design agency or development ream and the marketing staff who commissioned the work can review and comment on prototypes, and changes can rhen be made ro the sire to incorporate these comments. Protoryping should result in a more effective final sire rhar can be developed more rapidly than a more traditional approach with a long period of requirements determination.
Each iteration of the prototype typically passes through the stages shown in Figure 7 .5, which are:
1 Discovery o r an alys is. Understanding the requiremenrs of rhe audience of the site and the requirements of the business, defined by business and marketing strategy (and com- ments input from previous prototypes).
2 Design . Specifying differenr fea tures of the site that wi ll fu lfi l the requirements of the users and the business as identified during analysis.
3 Develop. The creation of the web pages and the dynamic contem of the website. 4 Test and review. Structured checks conducted ro ensure that different aspects of the sire
meet rhe original requirements and work correctly.
Agile software development
Today, rhe concept of protoryping has been extended across the whole lifecycle for develop- ing website functionality or software applications, where it is known as agile software development. The goal of agile development is ro be able to c reate stable releases more frequently than traditional development methodologies, i.e. new functionality wiU be intro- duced through several releases each month rather than a more significant release e\·ery few weeks, months or even years. The approach is sometimes known as 'permanent beta'. Another difference with agile development is the emphasis on face-to-face communication to define requirements rather than detailed requirements specifications.
Serum is a methodology that supports agile software development. Serum involves stake- holders including the serum master, who is effectively a project manager, the product owner, who represents the stakeholders such as the business owners and customers, and the serum team, which includes the developers.
Serum is based on focused sprints of a 15-30-day period where the ream creates an incre- menr of potentially releasable software. Potential functionality for each sprint is agreed at a sprint planning meeting from the product backlog, a prioritised set of high-level require- ments. The sprint planning meeting is itself iterative, with the product owner staring their requirements from the product backlog and tl1e technica l team then derermini11g how much of this they can commit to complete during the forthcoming sprint. The term 'scrwn' refers to a daily project status meeting during rhe sprint. (See http://en.softhouse.se/ vara-erbjudand en/verksamhetsutveckling for an overview of the process.)
The principles of agile development are encapsulated in the 'Agi le Manifesto' (http:// agilemanifesto.org/), which was agreed in 2001 by proponents of previous rapid developmenr methodologies including the Dynamic Systems Development Methodology and Extreme Programming. The Agile Manifesto is useful in illustrating the principles of agile program- ming rhar contrast with traditional approaches. The tex't of the manifesto is:
We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:
• individuals and interactions over processes and tools; • working software over comprehensive documentation; • customer collaboration over contract negotiation; • responding to change over following a plan.
296 Part 3 Digital marketing: Implementation and practice
Figure 7.5 Example of a website 'Design and Build' project timeline
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OevOps An approach to development of systems that i:liiOives a more collaborative and closer rela~ between development and operations teams with the aim of reducing deployment times and frequency ot system updates and improvilg their stabiity.
Close ly related to rhe agile approach is restructurin g using the DevOps approach. \XIikipedia {2015) explains the reasons behind this:
The specific goals of a DevOps approach span the entire delivery pipeline, they include improved deployment frequency, which can lead to faster time to market, lower failure rate of new releases, shortened lead time between fixes, and faster mean time to recovery in the event of a new release crashing or otherwise disabling the current system. Simple processes become increasingly programmable and dynamic using a DevOps approach, which aims to maximise the predictability, efficiency, security and maintainability of operational processes.
Chapter 7 Delivering the digital customer experience 297
Digital marketing insight 7.2 Success f actors for delivery
Growth hacking A mindset which focuses marketing activities on increasing the scale and profitabaity of a business through testing and improving techniques for improving the value of audience touch points across the customer lifecycle of Reach, Interactions, Conversion and Engagement.
The Government 'Service Manual' (www.gov.uk/service-manual) describes the process for developing online services using an agile approach covering Discovery, Beta, Alpha and Uve stages. The UK Government Digital Service takes each new service it wants to bring online or relaunch through four main phases and a retirement phase. These mirror those phases used in commercial projects, which use similar terminology in agile. These are:
• Discovery (4-8 weeks) . The discovery phase gives a hi gh-level understanding of user needs, defines KPis and scopes initial prototypes that may be needed.
• Alpha (6-8 weeks). The alpha phase involves exploring solutions for user challenges. More developers and designers will be brought into the team, and will help you to build and test prototypes and possible solutions for your users' needs.
• Beta. The objective of the beta phase is to build a fully working prototype, which is tested with users and may involve private and public betas.
• Live. The Government Service Manual explains: 'The work doesn't stop once your service is live. You 'll be iteratively improving your service, reacting to new needs and demands, and meeting targets set during its development.'
In an article (O 'Neill, 2014), one of the project managers explains ihe success factors for delivery and picks out the 18 criteria (www.gov.uk/service-manual/digital-by-default) for an effective project, the majority of which also apply to commercial projects.
Growth hacking
Recently, the concept of growth hacking has developed as a way o f supporri ng the profitable growth of businesses through using an agile approach. And rew C hen (2012), an entrepre- neur w ho i s an advisor and inves to r to many startups, describes a growth hacker as follows i n his post Is the Growth Hacker the New VP Marketing?
Growth hackers are a hybrid of marketer and coder, one who looks at the traditional ques- t ion of ' How do I get customers for my product? ' and answers with NB tests, landing pages, viral factor, email deliverability, and Open Graph. On top of this , they layer the discipline of d irect marketing, with its emphasis on quantitative measurement, scenario modelling via spreadsheets, and a lot of database queries.
T his quot e shows t hat man y of rhe fea tu res such as a focus on resti ng and learning t hrough conver sion rare optimisation (CRO) are no t new, indeed rhey have been featured in t his book fo r several editions; i t shows a change in mindset in how business t ransform atio n can be achi eved. An o ther key feat ure of growth h acking i s appl ying tecluu q ues for how to ach ieve vi ral growth throug h encouraging user s to share their exp erience. T h e growth of H ouuai l from 0 to 12 m illio n user s before it was bought by M icrosoft i s a favourite anecdote of g rowth hackers. For H ormail tl1e sharing was rap id due to rhe emai l si gnan ue: 'PSI love you. Get your f ree em ail at H ot mai l. Sign ature.' To day encouraging sharing th rough social sign-on an d social sharing is mo re an approach sought by grow th hack ers. These techniques have helped compatues like L i ttkedin grow from 13 million to 175 nul lion users accordin g to Schranz (2012), who exp lai ned th at Facebook's growth team started by estab lishing a si mple fra mework of th ings ro measure and i mprove to make it easier for everyone to under- stand w har to focus o n and why i t matters:
• A cquisition: get people in from of your pro duct. • Activation: p rovid e a great initial experience. • Engagement: keep people engaged , deli ver value. • Virality: get peop le ro recommend your product.
298 Part 3 Digital marketing: implementation and practice
Some of the principles of growth hacking are being adopted by exist ing busi nesses, looking to enhance rhe sales from d1eir digiral cha nnels. For example, The Guardian is advertising for a ' Head of Growd1 Hacking', describing rhe growth in the role as:
The Guardian is committed to a 'digital-first' strategy and in order to support this, we are seek- ing a Head of Growth Hacking to manage a virtual, cross functional team focussed on GNM 's
growth hacking plan. This role is responsible for finding innovative ways to accelerate adop- tion, use, and retention to drive up audiences to the Guardian 's digital product portfolio.
Initiation of a digital experience project
Initiation of the website project This phase of the project should involve a structured review of the costs and benefits of developing a website (or making a major revision to an existing website). A successful outcome to initiation will be a decision to proceed with the s~e development phase, with an agreed budget and target completion date.
Domain name registrat ion The process of reserving a unique web address that can be used to refer to the company website, in the form of www.<companyname> .com or www.<companyname> .co.uk.
Before rhe ana lysis, design and creation of the website, aU major projects wiU have an init ial phase in which rhe aims and objectives of rh e website are reviewed, to assess whether ir is worthwhile inves ting in the website a11d ro decide on the amount to invest. The initiation of t he website project provides a framework for the project rhar ensures:
• there is management and st aff commitment to rhe project; • objectives are clearly defined; • the costs and benefit s are reviewed in order rhar t he appropriate amount of investment
in rhe sire occurs; • the project wi ll follow a structured path, with clearly identified responsibilities for dif-
ferent aspects such as project management, analysis, promot ion and maintenance; • the implementation phase will ensure th at important aspects of the project , such as rest-
ing and promotion, are not skimped.
Domain name selection and registration
If a project or campaign involves a new site rather rhan simply an upgrade, it will be neces- sary to register a new domain name , more usually referred to as a 'web address' or 'uniform (or universal) resource locator' (URL) .
Choosing a domai n name is a relatively simple decision, since t here is so me basic termi- nology rhat marketers need to be aware of. Companies typically have many digi tal services located on different address domains, particularly for compan ies wirh different domains for different countries. The domain name refers to the address of rhe web server and is usually selected to be rhe same as the name of th e company, and rhe extension w ill indicate irs type.
The extens ion is commonly known as the generic top-level domain (gTLD). Common gTLDs are:
i .com represents an international or American company, such as www.travelocity.com. ii .org are not-for-profit organisa tions (e.g. www.greenpeace.org).
iii .net is a network provider sucll as www.demon.net.
There are also specific country-code top-level domains (ccTLDs):
iv .co.uk represents a company based in rh e UK, such as www.thomascook.co.uk. v .au, .ca, .de, .es, .fi , .fr, .it, .ul, etc. represent other countr ies (rhe co.uk syntax is an
anomaly!} . vi .ac.uk is aUK-based tmiversiry or other higher education institution (e.g. www.cranfield.
ac.uk).
vii .org.uk is for an organisation focusing on a single cow1rry (e.g. www.mencap.org.uk}.
The 'filename.hrml' part of the web address refers to an individua l web page- for example 'producrs.hrml' for a web page summarising a company's products.
Unifonn (or universal) resource locator (URL) A web address used to locate a web page on a webserwr.
URL strategy A defined approach to forming URLs including the use of capitalosation. hyphenation and subdomains for different brands and dlfferent locations. This has implications for promoting a website offline through promotional or vanity URLs. search engine optimisation and findabifity.
A clean URL that fits many of these aims would be www.domain.com/ folder-name/document- name. Care must be taken with capot.alisa!Jon, since Urux servers parse capitals differently from lower-case letters.
Chapter 7 Delivering the digital customer experience 299
It is imporram rhar companies define a URL strategy that will help custo mers or parmers find relevant parts of the site containing references to specific products o r campaigns when
primed in o ffline communications such as adverts o r brochures.
Uniform resource locators (URLs)
The technical name for a web address is uniform (or universal} resource locator (U RL) . URLs ca n be tho ught of as a standard method of addressing, simi lar to posrcodes, that make it straightforward ro find the name of a domain or a document on the domain.
In la rger businesses, particularly rhose with many sires, it's imporranr ro develop a URL strat egy so that there is a consistem way of labelling o nlin e services and resources.
Domain names are registered usu1g a hosting company o r domain broker using a domain name service, such as:
• T nrcrNTC'"' (www.intemic.net). Registration for the .com, .org and .net domains. • Nominct™ (www.nominet.org.uk). Registration for the .co.uk domai n . All country· spe·
cific domains, sud1 as .fr (France) or .de (Germany}, have their own domain registrarion authority.
The following guidelines should be borne in mind wh en registering do main names:
1 Campaign microsites may hinder findability and give maintenan ce problems. 1f a new sire is created specifically for a campaign this can cause problems since although Coogle' s robots will crawl it rapidly, it will probably not rank highl y without back links from other sires, so it wiU have poor visibility (as described in Chapter 9 in the section on SEQ). For this reason it is often better to redirect visiro rs typing in the domain na me to a campaign
subfolder o n an ~xisting site. 2 Organisations should register multiple ccTLDs to protect their reputation. As described
in Chapter 3, 'domaineers' may seek to purchase domain extensions o r ccTLDs which would rightl y belong ro the brand s u ch a s .org.uk or their equivalents in other
countn es. 3 New startup companies should consider whether the company and domain name can
assist in SEQ. While existing brands will use their main comp any or brand name for a sire, new companies may benefit if the doma iu nan1c contains a key phrase that searchers will seek. As we saw in Chapter 3 about the legal constraints o n domain purchase, com - panies may pay a lor to register a domain such as cruises.com for this reason.
Managers or agencies responsible for websites need to check that domain names are auto· marically renewed by the hosting company (as most arc today) . For exa mpl e, the .co.uk domain must be renewed ever y two years. Companies that don ' t manage thi s process paten· tial ly risk losi ng their domain name since another company cou ld potentially register it if th e domain name lapsed.
Selecting a hosting provider
Selec ting the right parmer ro host a website is a n important decision since the quality of se rvice provided will directly impact ou the quality of service delivered ro a company's customers. The partner that hosts the content will usually be a speciali st hosti ng provider, such as RackspaceTM (www.rackspace.com), for the majority of small , medium and large companies. Today, it's rare for larger companies to locate the web server ro host the content inside the company and for it robe managed by the comp any's IT department.
The quality o f service of hosted content is essentially dependent on two factors: the performance of the website and its availabilit)~
300 Part 3 Digital marketing: implementation and practice
Bandwidth Indicates the speed at which data are transferred using a particular network medium. It is measured in bits per second (bps).
Website performance optimisation
It's imporranr fo r sire, owners ro recognise that page download perfor mance is essential ro the success of a sire, even when many users have broadband con nections and sires are hosted with high b andwidth connections ro rhe lnrerner.
Site performan ce has becom e more imporranr wit h the increased adoption of smarr- pho nes, wh ich ty pi call y h ave lower bandwidth connection s t han desk tops . Research by Coogle (2017b) has shown that th e recom mended average user perception of acceptable down loa d time is two seconds, while for t he average European website it is around eight seconds.
It's word1 noting that in novation in rhe protocols used for transmitti ng data can help site performa nce too. HTTP/2 is a major revision of the HTTP network protocol used by rhe World Wide Web for data transfer between web browsers and servers, which is porenriall y faster and is being rolled our ar the rime of writ ing. The majority of sites are now using secure 'HTTPS' protocol (denoted by rhe padlock symbol in the browser bar) . Coogle is encouragi ng sites to use htrps since it is more secure and it favours secure ' hrrps:/1' sites when ra11k ing sites.
This example in Mini case study 7.2 of Metro Bank™ shows ro ar redesigning sires to improve performance and usability can have significant benefits in customer sat isfact ion . Pages now load for 90 per cent of users in u nder two seconds.
Mini case study 7.2 Metro Bank transforms digital customer experience with a revamped, responsive website
Metro Bank first opened its doors in the summer of 2010, the first high-street bank to open in the UK in over 100 years. As the UK''s leading challenger bank, Metro Bank prides itself on offering the very best in service and convenience for its customers nationwide.
Figure 7.6 Metrobank desktop and mobile experiences
• - • • -- • - -- -• -- • • •
As a result, Metro Bank wished to transform its public-facing website, metrobankonline.co.uk, so that it accurately reflected the award-winn ing bank's service offering, brand identity and vision. It also wanted to
Chapter 7 Delivering the digital customer experience 301
ensure the site was fully responsive on all devices and also easy to update and manage for all content editors. The revamped website also had to be delivered to a tight five-month timescale.
Metro Bank's established technology partner, Netcel™ worked collaboratively with Deloitte DigitaiTM, who
provided additional art direction and template designs, together with a number of third-party specialists. Netcel built the revamped website on the latest version of Episerver, using its recognised Episerver expertise at deliv- ering complex integrated websites. It created all the front-end page templates, including headers, footers and navigation. The new user interface was tested rigorously.
Thanks to its collaborative, agile process, Netcel was able to deliver this highly complex large-scale and muJti-faceted project in just five months, with the project culminating in an out-of-hours launch.
Since relaunch, Netcel has been working on subsequent releases incorporating new requirements and optimisation of existing features such as a mortgage calculator tool.
And according to Metro Bank, public reaction to the new website has been 'overwhelmingly positive', and Metro Bank's score has already risen from 4.5 to 7 .5, in independent 'Digital Confidence' tests.
Content distribution (or delivery) networks (CONs) A system o f servers distributed globally with copies of data stored locally to enable more rapid download of content. Their use has increased with increased use o f streaming video and more complex web applications.
Research by Trilibis (2014) of over 150 prominent mobile responsive sites showed that only 21 per cent of these modern websites were loading in less than four seconds on a sma rt- phone, and that 32 per cent of the sites required between 8 and 48 seconds to load.
Trilibis investigated the reason for th is sluggish page-load time of responsive sites and found that image size was the primary cause. By analysing page compos ition, it determined that the mean home page weight of the sites in the samp le was 1.7MB, with a median weight of 1.2MB.
Another tactic th at can help is applying content distribution networks (CON s) such as Akamai and Cloudflare, indicating underlying technical issues in delivering contem fro m the server.
Google clearly t akes th is area of website management serious ly; it wants users to access relevant content quickly as part of the service and has stated that if a site is particularly slow its ranking will be affected . To help si te owners, Google has made available tools such as the one illustrated in Figure 7.7 to show the relevant performance, so m arketers should ask their agency to assess their performance.
The len gth of time is dependent on a n umber of factors, some of which cannot be controlled, but primari ly depends on the bandwidth of the hos ting company ' s connection to t he internet and the perform ance of the web sen•er hardware and content management platform. It also depends on t he 'page weight' of the si te's pages measured in kilobytes (which is dependent on the number and complexi ty of images and animat ions) .
Another factor for a company to consider when choosing a hosting provider is whether the server is dedicated to one company or whether co ntent from several companies is located on the same server. A dedicated server is best, but it will attract a premium price .
The availability of the website
The availability of a webs ite is an indication of how easy it is for a user to connect to it. In theory, this figure should be 100 per cent, but sometimes, for technical reasons such as failures in the server hardware or upgrades to software, the figure can drop substantially below this.
Sites also need to be configu.red to be able to deal with increased loads at certain times, e.g . during sales periods. SciVisum (2005) recommends that companies do the following:
• Define the peak vis itor throughput requirements for each customer journey on the site. For example , the site should be able ro support at the same time: approximately ten checkout journeys per second, 30 add -to -basket journeys per second, five registration journeys per second, two check -my-order-status journeys per second.
302 Part 3 Digital marketing: implementation and practice
Figure 7.7 Web Page performance test service results (www.webpagetest.org)
22 • -Web Page Pefformaooe Test for A A A B B J
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r-ee; .. ;,;,;,~c;,;,;.~--~.~~~,;;, ;, --l - ...... ,....,.. aa.. a._ •• .. ••• .. , .,. ,.,, • •:.• ---+- --+
-- · - ~.... ·- .. t Hio .. ... ·- • 010<1 .... --
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• Service-b-el agreement - more derailed technical requirements need robe agreed for each of the transaction stages. H ome-page delivery rime and server uptime are insufficiently derailed.
• Set up a monitoring programme rhar measures and reporrs on the agreed journeys 24!7.
Sires also need to be responsive in terms of speed to render pages to users, since visitors are less likely to remain on site and convert ro lead or sale if a page rakes a long rime ro load. So, it's useful ro assess download speed and to optimize rhc design of rhe page so thar ir doesn't take too long to render. Services like th e ·web Page performa nee test shown in Figure 7.7 can be used to review how long different stages of the page serving process take and how to improve rhem.
[~o __ ef_in_i_n_g_s_i_te __ o_r_a_p_p_re __ q_u_i~_e_m_e_n_t_s ____________________________________ ~~ Discovery or analysis phase The identification of the requirements of an online service. Techniques to achieve this may include quantitative analysis o f digital analytic:s data and quaitative analysis involvi1g focus goups. questiomawes sent to existing customers or interviews with key account s.
The discovery or analysis phase involves using different marketing research techniques to find our the needs of the business and audience, whether it's a website, mobile site, app or company social page. TI1ese needs can then be used ro drive rhe design and conrenr of the website.
Analysis is nor a 'one-off' exercise, bur is likely to be repeated for each iteration of the prototype. Although analysis and design are separate activities, there tends to be considerable overlap between the two phases. In analysis we are seeking ro answer the following types of 'who, what, why, how, when, where' questions, each of which has an associated analysis technique:
• Who are the key audiences for rhe si re or app (see personas explanation in Chapter 2)? • Why should they use the sire or app (whar will appea l ro them)?
User -centred design A design approach that is based on research of user characteristics and needs.
Marketing-led site design Site design elements are developed to achieve customer acquiSitJOn. retention and communication of markeli1Q messages.
Persuasion marketing Using design elements such as layout. orJP1 and typogaphy together' With promotional messages to encouage site users to folow particUar paths and specific actions rather than giving them <XlOlllete choice in their navigatJOn.
Chapter 7 Delivering the digital customer experience 303
• What should the comem of site or app be? Which services will be provided (value proposition)?
• H ow will the content be suucrured (information architecrure)? • H ow will nav;garion occur (fu1dability)? • \'<lhat are the main marketing outcomes we wanr the experience to deliver, such as regis-
tration, leads and sales, and how will we increase them (persuasion and CRO)? • \Xfh ich contex:r, i.e. when, where and on which devices, is the experience accessed: a t
home, at work or while mobile?
To help answer these questions, web designers commonly use a research-based approach known as u ser-centred design , which uses a range of techniques to ensure the sire meets user needs. This o ften involves eth nographic research used to build the website design or custo mer personas (as described in C hapter 2, where there are more derails on creating personas that summarise differenr cusromer journeys).
A structured approach to user-centred des ign is defined in the standard ISO 9241-210 'Ergonomics of huma n-system interactio n: human-centred design for interactive systems'. It describes human-cenrred design as:
an approach to systems design and development that aims to make interactive systems more usable by focusing on the use of the system and applying human factors/ergonomics and usability knowledge and techniques.
We will now explore the key requirernenrs for an on line presence: business req uirements and user requi rements, which comprise usability, accessibility and information n eeds.
Business requirements
\V!th a focus on user-centred design, there is a risk that business requiremenrs to achieve marketing o utco mes may be marginalised. A market ing-led site des ig n is informed by marketing objectives and tactics. A com mon approach is to base the design on achieving the performance drivers of successful digital marketing (referred to in Chapter 4) and the loya lty drivers referred to ar the sta rt of this chapter. Design will be led by these perfor- mance drivers as follows:
• Customer acquisition. The online value proposition must be clear. Appropriate incentives for customer acquisition and permissio n marketi ng such as those described in Chapter 6 must be devised.
• Customer conversion. The sire must engage first-ri me visitors. Call to action for customer acquisition and retention offers must be promin ent, with benefits clea rly explained. The fulfi lm ent of rhe offer or purchase must be as simp le as possible to avoid a ttrition during thi s process.
• Customer retention. Appropriate incentives , content and customer se rvice information to enco urage repeat visits and busi11ess mu st be ava il able (see C hapter 6).
• Service quality. This has been covered in rhis chap te r. Se rvice quality is affected by site navigation, performance, ava ilability and responsiveness ro enquiries.
• Branding. The brand offer must be clearly explained and interaction with the brand must be possible.
Marketing-led site design is also known as pe rsuas io n marketing . Consu ltant Bryan Eisen- berg (www.bryaneisenberg.com) was an early advocate of persuasion marketing alongside other design principles such as usability and accessibility. H e says this type of focus on marketing outcome is required:
During the wireframe and storyboard phase we ask three critical questions of every page a visitor will see:
1 What action needs to be taken?
304 Part 3 Digijal marketing: implementation and practice
Usability An approach to website design intended to enable the completion of user tasks.
Expert review An analysis of an existing site or prototype by an experienced usabiity expert who wil identify defidencies and improvements to a site based on their knowledge of web design principles and best practice.
Usability/ user testing Representative users are observed performing representative tasks using a system.
2 Who needs to take that action?
3 How do we persuade that person to take the action we desire?
Fogg (2009) has developed a model ro inform persuasive design. The Fogg Behaviour Model (www.behaviormodel.org) asserts thar for a person ro perform a target beha,riour, they must (1) be sufficiently morivared, (2) have rhe abi.lity ro perform the behaviour and (3) be triggered to perform the behaviour. These rhree factors musr occur ar the same m oment, otherwise the behaviour will not happen.
Before we review user-centred design processes, consider Mini case study 7.3, which shows how one company has developed a sire thar blends marketing-led and user-centric design.
Usability requirements
Usability is a concept that can be applied ro rhe ana l ys is and design of a range of products that defines how easy they are ro use. The Briti sh Standard (BS l )/I SO Standard (1999) ' Human-centred design processes for interactive systems' defines usabi lity as:
the extent to which a product can be used by specified users to achieve specified goals with effectiveness, efficiency and satisfaction in a specified context of use.
You can see how the concept can be readi ly applied to website d esign- web visito rs often have defined goals, such as finding particular information or co mpleting an ac ti on such as booking a flight or viewing an account ba.lance.
In Jakob Nielsen's classic book Designing Web Usability (2000), he describes usability as follows:
An engineering approach to website design to ensure the user interface of the site is learn- able, memorable, error free, efficient and gives user satisfaction. It incorporates testing and evaluation to ensure the best use of navigation and links to access information in the short- est possib le time. A companion process to information architecture.
In p r actice, usability involves rwo ke y project activities. Expert reviews ar e often performed at the beginning of a redesign project as a way of id entifying problems with a previous design. Usability testing involves:
1 identifying representative users of rhe sire (see, for exa mple, Table 7.2) and identifying rypica.l tasks;
2 asking them to perform specific rasks such as finding a prod uct or compl etin g an order; 3 observ ing what they do and how they succeed.
Mini case study 7.3 Optimax
Optimax is one of the UK's largest laser eye treatment companies. The first Ultralase clinic was opened in 1991 and there are now 22 locations in the UK. Its growth has been supported through its website and digital media since the content available online is a key part of the consumer decision-making process and for the company lead generation.
Figure 7.8 shows how Optimax combines persuasion, usability and accessibility within its home page to help meet business needs.
These are some of the design elements used by Optimax to help it achieve its goals:
1 Carousel area (centre top of page). Use to deliver key brand messages and position the brand through imagery to appeal to different age groups.
Figure 7.8 Optimax website (www.optimax.com)
4 0ptimax - &Y& .... IIn•.-t • I
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Treatment Costs ~~~ .... ...a lUJ NJ~ ........ ~
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Clii'IIIC louttons Qnia: '* I 0t ..... '\l'tC • -----""'"' ~ Cilflc.
Chapter 7 Delivering the digital customer experience 305
e,~:uc:.e.o;
.............. tk--~ ..., .......... +lil'l(l ~ ......... -. - -.
Are You Su•table? Surgery Explained c-,..,_, __ _ ......... .,........., -- t ... ""' ..... -.~lllcM.,., IWII'Jet I & !!L ..,~..., ·~fA(JI. 2 Customer journey highlighted (buttons below carousel). The 'call-to-action' buttons for 'treatment costs',
'clinic locations' and 'are you suitable? ' help highlight common customer concerns based on research, which will help visitors easily find answers to their questions on the 'path to purchase'.
3 lncentivised response-fonn (right top). This 'lead generation form' uses multiple incentives and has a prominent position so the company can use email and phone communications to nurture interest in the product.
4 lntro text {below the screen capture). This helps show relevance for users, communicates key brand messages and is used for search engine optimisation to target the key phrases 'laser eye surgery' and 'laser vision correction treatment'.
5 Clear calls-to-action for key business outcomes. Again, prominent at the top of t he screen, these are likely to be set up as conversion goals in Google Analytics. Containers blend image and text to avoid banner blindness. These containers all highlight the site's online value proposition.
6 Common questions answered (centre panel). These 'points of resolution' are often hidden in a FAQ, but it is interesting that Optimax highlights them on the home page. Key concerns are also highlighted in the main navigation.
7 Prominent phone response (top right). Vital for high-value, complex products since conversion tends to be higher via the phone channeL A unique web number can be used for tracking online influence.
8 Social proof and testimonials. Trustpilot is used to display testimonials from existing customers.
For a site to be successful, the user tasks or actions need ro be completed:
• Effectively. ISO 9241-210 d efines effectiveness as 'accuracy and completeness wit/; wbicb users achieve specified goals'. Digital e..xperience usability special ists measure task com- pletion; fo r example, only three our of ten vis itors to a website may be able to find a telephone number or other piece of infor mation.
306 Part 3 Digital marketing: implementation and practice
Web accessibility An approach to site design intended to accommodate site usage using different browsers and settings - particularly required by the visually impaired and visitors with other disabilities including motor control, learning difficulties and deaf users. Users whose first language is not English can also be assisted.
Accessibility legislation legislation intended to protect users of websites with disabifities, including visual disability.
• Efficiently. ISO 9241-210 defines efficiency as 'resources expended in relation to the accu- racy and completeness with which users achieve goals'. Digital experience usabil ity spe- cialists also measme how long it takes to complete a task on-site, or the nwn ber of clicks it takes.
Jakob Nielsen expla ined the imperative for usabili ty well in his 'Usability 101' (www.useit .com/alertbox/20030825.html). He said:
On the web , usability is a necessary condition for survival. If a website is difficult to use, people leave. If the homepage fails to clearly state what a company offers and what users can do on the site, people leave. If users get lost on a website, t hey leave. If a website's information is hard to read or doesn't answer users' key questions, they leave. Note a pattern here?
For these reasons, Nielsen suggested tha t around 10 per cent of a design project budget shou ld be spent on usability, but often actual spend is signi ficantly less.
Some would also extend usability to including test ing of the visua l or brand des ign of a site in focus groups, to assess how well consumers perceive it reflects the brand . Oft en, alternat ive visual designs are developed ro ident ify those that are most appropria te.
Additional website design research activities include the use of personas and sce nario - based design (as introduced in Chapter 2) .
Web accessibility requirements
Web accessibility is another core requirement for webs ires. It is about allowing al l users of a website to interact with it regardless of disabi lities they may h ave, or th.e web browser or platform they are using to access the site. The visually impaired are the main audience that designing a.n accessi ble webs ite can help. H owever, increased usage of mobile devices also makes consideration of accessibility importa nt.
The following quote shows the importance of accessibi lity to a visually impaired user who uses a screen-reader th at reads ollt th e navigation options and content on a website:
For me being online is everything. It's my hi-fi, it's my source of income, it 's my supermar- ket, it's my telephone. It's my way in. (Lynn Holdsworth , screen-reader user, web developer and programmer) Source: RNIB
Remember, as we explaiJ1ed in Chap ter 3, rhat many countries now have specific accessib ilit y legislatio n to which websi t e owners are subject. This is often comaiJ1ed wi th in disability and discrim in ation act s. In the UK, the relevant act is the Disability and Discrimination Act (DDA) 1995. Recent amendments to the DDA m ake it unlawful to discriminate aga in st di sabled people in the way in wh ich a company recrui t s a nd emp loys peop le, provides serv ices or provides education. Provid in g se r vices is the parr of the law th a t applies to website design . Providing accessible websi tes is a requirement of Part II of the Disability and Discrimination Act published in 1999 and required by law from 2002.
Gui delines for creating accessi bl e webs ites are produced by the governments of different countries and non-government organisations such as charities. Internet standards organisa- tions, such as the World Wide Web Consortium, have been act ive in promot ing guidelines for web accessibili ty through th e Website Accessib ility Initiative (www.w3.org/WAI). This describes common accessibility problems such as :
images without alternative text; lack of alternative text for imagemap hot-:spots; misleading use of structural elements on pages; uncaptioned audio or undescribed video; lack of
Chapter 7 Delivering the digital customer experience 307
Mini case study 7.4 Thomas Cook Netherlands uses 40 to review and improve its customers' experience
To find out the customer satisfaction ratings for visitors to its site compared to their intent, Thomas Cook Netherlands used Voice of Customer Tool 4Q from survey provider !Perceptions.
A sample of visitors were asked four questions after they had used the site to determine the gap between what they were looking for and whether they were successful. The four questions, which can be applied in a customer intent-satisfaction survey to review customer journey effectiveness, are:
1 What is the purpose of your visit to our website today? 2 Were you able to complete your task today? 3 If you were, how would you rate your satisfaction? 4 If not satisfied, why not?
Thomas Cook noticed that website visitors were not able to find certain seasonal travel content such as des- tinations and specific accommodations from the homepage. Visitors also validated other research into web performance by suggesting that page load times could be improved. Using not only their own research , but also the voice of their customers, they were able to build a much stronger case to focus optimisation improve- ments in these areas.
'Because our work is very seasonal, we are constantly monitoring feedback in order to meet our visitors' content expectations', said Matthew Niederberger, conversion specialist at Thomas Cook Netherlands. 'Thanks to our visitors' insights, we have been able to improve much of the content on the homepage to better meet their needs. We have also increased priority to several web performance improvement projects as we could clearly see that this was a major concern among our visitor base.'
Soun:e: Matl<et Wred (2011)
Personalisation Dig~al experience personalisatlon Is the dynamic serving of customised content, product or promotional offer recommendations to webs~e visitors or app users based on thai' characteristics and ontent behaviour to support oonverslon and long· term engagement goals.
alternative information for users who cannot access frames or scripts; tables that are difficult to decypher when linearised; or sites with poor colour contrast.
A fuller checklist for accessibility compliance for website design and coding using HTML is available from the World Wide Web Consortium (http://www.w3.org/WAJI}.
Personalisation requirements
As prospects and customers use business websites and apps, we can use technology to learn a lor about their behavioms, preferences and characteristics. T his includes both implicit data based on behaviour and explicit data collected through p rofi ling forms, surveys and quizzes either by the business or through linking to third-parry data sources. Personalisation aims to deliver more relevant experiences through customised recommendations th at improve conversion to lead or sale or improve engagement wirh a brand.
Although many of us wiU have experienced personal isation through retaiJ product recom- mendations like those from Amazon, the definition shows the relevance of personalisation to all types of businesses. For example, B2B companies that don't sell on line can use per- sonalisation to recommend relevant conrem to sustain prospects' interest in a business and so nurture them towards sale.
Digital personalisarion provider Monetatc (2017) recommends that opportunities for personali.sarion for a transacrionaJ e-commerce business are based on three main rypes of implicit data that can be capmred in analyrics:
• Context. For example, first-rime or rerum visits, type of device, location, rime of day and refer ral source.
• Beh aviours. For exampJe, content viewed, particularly viewed products and categories and items in abandoned baskets.
308 Part 3 Digital marketing: implementation and practice
Mini case study 7.5 How a retail brand ran a personalisation programme to improve engagement
Figur e 7.9 Jack Wills website (www.jackwills.com)
• • JACK W ILL $ C\ -
•
0
Jack Wills, a retail fashion company, used personalisation to boost conversion rates among new and returning customers. Mark Wright, Managing Director Digital at Jack Wills, explains the importance of personalisation to Jack Wills:
As a leading British clothing brand, it's really important for us to provide customers with what they want, when they want it, and our online channels provide us with more opportunities to deliver personalised experi- ences to users.
When Wright joined the business, the fashion retailer was treating every customer the same way, with no real distinction between customer groups other than gender.
'We knew nothing about their shopping mission or how we could help them through the website shopping experience', he explains. ' Or how we could link that to show them a better suggestion of our product range.' Wright had a vision of making the websfte experience quicker and easier for those returning customers who shopped for their familiar core staples, such as a Jack Wills hooded jumper. ' I wanted to drive a proper test and learn mentality, how we can push the boundaries and understand customer behaviour. That's what personalisation is really all about, how we can inspire the customer.'
The results Jack Wills have seen since running their personalisation programme are:
• 12 per cent increase in conversion rates; • 8 per cent increase in add-to-basket; • reduced basket abandonment.
Using Monetate, personalisation software for consumer-facing brands, not only has Jack Wills increased fts conversion rates, it has also reduced its basket abandonment. Monetate is used for personalisation on all of its websites in the UK, Europe, US and Hong Kong.
Through using personalisation, new customers to the online store are shown product category pages with 'bestseller' products, while returning customers are shown 'new arrivals' on the same pages. This is because extensive testing proved that existing customers are more interested in discovering new products.
Chapter 7 Delivering the digital customer experience 309
To achieve this, Jack Wills now places a cookie on the website for a new customer, and a returning shopper is defined as being male or female and given a specific gendered landing page. Every couple of months this is refreshed to ensure the retailer isn't making too many assumptions and this strategy is dropped altogether at Christmas when many customers are visiting the website to buy gifts.
By providing a personalised experience to segmented customer groups, new customer conversions increased by 12 per cent and there was also an 8-per-cent increase in add-to-basket. Another enhancement to help user experience was sticky left-hand navigation filters that were added to remain visible while the user kept scrolling down the site page. This encourages users to engage and interact with searches and different products until they find the right item of clothing they like, without abandoning the page altogether. This increased conversions, with a 10-per-cent uplift and decreased basket abandonment.
Jack Wills' next step in delivering personalisation will focus on search filters that increase engagement on
mobile - a device that is becoming increasingly popular when searching the web. It is reported t hat users typically spend 12 per cent more on mobile than desktop.
Sources: Monetate {2016) and Essential Retail (2017)
• History. Pas t p urchases, involvement in loyalry programme and past emai l interact ions (also behaviours) .
\Yle recommend adding a fo urth, alt hough not all personalisation systems enable integra- tion with ot her data sources such as profi le information:
• Profile characteristics. These are explicitly disclosed data captured about details such as gender, age or company da ta o r profile information inferred from third-party data from similar audiences related to where they li,·e.
As we explained in Chapter 4, it's now a legal requirement in most countries ro disclose how they wiJI use personal dara for personalisarion according ro data protection and pr ivacy law. Monetate {2017) has distinguished between three different le,·els of personalisation in their 'pyrami d of personalisarion' {Figure 7.10), which arc useful for businesses to review their capabilities (figure 7.10). These are:
1 Optimisation using AB testing. This technique is used as parr of conversion-rate optimi- sation to identify which page elements and varaanons are important to increasing
Figure 7.10 Personalisation pyramid website
Machine-driven
Rules-based
AB testing
Source: Monetate. W1th penrission.
3 1 0 Part 3 Digital marketing: implementation and practice
Localisation Tailomg of website info<mation for indMdual <XX.ntries.
conversion. It isn't typically persouali sarion based on data co llected, bur invo lves serving different content to some groups of users compared to a control.
2 Segmentation u sing rules-based target ing. H ere mles are set up in a personalisa tion sysrem ro serve different coment to different audience groups based on the four types of data above. For e..xample, first-rime visirors can be served a different message to repeat visitors or a 'ne..xr-best product' can be recommended to a previous purchaser.
3 1:1 Personalisation. This approach goes beyond pre-defined rules to usc machine learning or predictive analyrics ro serve the most relevant messages to an individual based on all the known profile information and how others similar in their characteri stics have responded in the past.
Localisation and cultural customisation
One in three, one in five, one in seven? Do you know what proportion of our globa l popu- la ti o n speaks English as t heir primary language? In fact, it's o ne in seven , meaning that this leaves six bi llio n people worldwide who don't. This simple f:~ ct alone shows the poten- tial of translation, bot h in serving new international audiences and reaching non-Englis h speakers in majority English -speaking markets (nearly 20 per cent o f the US popularion a re Hi spa nic and Latino). At the same time, man y bu sin esses th:Jt o ri gin a ted in a non- Eng li sh speaking counrry have rhe opportunity to reach English spe:~kers in other counr n es.
A further aspect of cusromer-centricity for website design is the decision whether ro include spec ific content for particular countries. This is referred ro as localisation.
A sire may need ro support customers from a range of countries with:
• different product needs; • bnguage differences; • culru ral differences- this approach is also referred m :JS 'culrural adaptation' .
Localisation will add ress all these issues. It may be that products will be si milar in different countries :~nd localisarion will simply involve converting the website to suit another coumry. H owever, in order to be effective this often needs more than rmnslarion, since different promotion concepts may be needed for different countries. Note rh:1r e:~ch company priori- rises different countries according ro the size of the marker, and this priority then governs the a mou nt of work ir puts into localisation.
Singh and Perei ra (2005) provide an evaluation framework for rhe level of localisation:
• Standa rdi sed websites (not localised). A single site serves all custom er segments (domestic and internat ional).
• Se mi-locali sed web sites. A single site serves all customers; howeve r, co ntact information about foreign subsidiaries is available for internationa l customers. Many sires fal l into this catego ry.
• Loca lised websites. Country-specific websites with language translation for international custome rs, wherever relevanr. 3M (www.3m.com) has adapted the websires for man y countries to local-language versions. It initially focused on the major websires.
• Highly locali sed websires. Country-specific websites with language translation; they also include other localisation efforts in terms of time, date, postcode, currency formats, etc. Dell (www.dell.com) provides highly localised websites.
• Culru ra lly cu stomised '' 'ebsites. Websites reflecting complete 'immersion' in the culrure of target custo mer segments; as such, targeting a particular country mar mean providing multiple websires for that country depending o n the dominant culrures present. Durex (www.durex.com) is a good example of a cu lturall y customised website.
Chapter 7 Delivering the digital customer experience 31 1
The imperative for improving translation is clear from the demand of non-English speakers around the world. At rhe same rime, roday's businesses arc continuously creat- ing more content, in more systems, in more languages, and with more rapid development cycles.
Achieving scalable translation efforts that impact revenue growth is comple..x, with many factors that need ro be considered. It's also potentially costly ro scale with more systems, more languages and shorter nunaround rimes and smaller budgets. So, being clear on the drivers and challenges from the outset is important to building a realistic business case and ROT model.
Deciding on the degree of localisation is a difficult challenge for managers since while it has been established that local preferences are significant, it is often difficult ro balance localisation costs against the likely increase or conversion rare through localisation.
Different internat ional markets will vary in scale and product revenue, so a 'one size firs all ' model of translation will nor be cost effective for most businesses. Instead, a localisation st rategy is abour prioririsi ng what types of conrent ro translate and which translations method to use ro get rhe bus iness outcomes needed most cost-effect ively.
These are five core translation techniques businesses have to prioririse for different contcnr types. They are listed in order of decreasing cost:
1 Transcrearion. This is one-parr creative copywriting and one-pa rr traditional t ranslation. Practitioners still transfer a message from one language ro another, bur they have more freedom to modify the details along the way. As a result, the final product usually looks more like a creative interpretation than an exact replication of irs source conrent.
2 Profession al translation. This is the model most people picture when rhey first con- sider translating a business website. Customers send their source contenr to transla- tion agencies or freelance professionals, and expert linguists produce the most accurate adaptation possible. In many cases, businesses will also elect to have an editor and proofreader review rhe translator's work. This quality-conscious workflow is commonly known as TIP (Translate-Edit-Proofread), and it has become the default strategy for customers who prioririse precise communication over affordability or speed .
3 M achine translation. Computers will never fuiJy replicate the endless subtleties of htmlan communication, bur they're certainly making progress. Srarisrical models, rule-based systems a nd neural networks are generating vast reserves of Artificial Intelligence that customers can leverage ro produce credible linguistic translations wirhour any hwnan inrervenrion. No other tra.nslation type can rival the speed of this automated approach. And machine translation (MT) engines offer dramatic cost savi ngs over human profes- s ionals . Bur, computers are not known for their creativity. And despite rhe promise of future improvements, MT ca nn ot consistently march the qua li ty of human professionals.
4 Machine translation post-editing. If machin e translation is the automa ted counterpart ro si ngle-pass professional translation, then machine transl:.uion post-editing is the com- puter-aided cousin of professional TIP. An MT engine takes the place of a human t rans- lator, bur human reviewers are still there to elevate irs output ro a more accept able standard of qualit}~
5 Adap tive machine translation. What would happen if humans and machi.nes acted less like rivals and more like complementary partners? Well, adaptive MT is one of several innovative ideas currently pushing the translation industry in rhar direction. Adaptive MT engines study the linguistic decisions of human translators and posr-edirors, con- tinuous!>' learning correct terminology that can be used in their next MT ourpur. As a resulr, each new translation request assigned to the MT engine is completed with a progressively higher standard of proficiency.
312 Part 3 DigijaJ marketing: implementation and practice
Figure 7 .11 The continuum of translation types
<:----------------------------------Coo~~too~t~w~l~~~~~~~l
High Originality High Quality High Cost Low Speed
Source: Chaffey (20 17)
T ranscreation Professional
(TEP)
'
Professional (Single- Pass)
Table 7 .2 Scalable translation drivers and challenges
Opportunity: scalable translation drivers
Reduced time to market enabling more selling time for new markets and new products
Higher conversion rates via more persuasive and compelling localised messaging
Demand generation through organic search and content marketing
Increased smartphone adoption worldwide
Automated workflows reduce time spent on managing localisation
MT Post-Edit
' '
Adaptive MT Standard
MT
Challenges of scalable translation
Low Originality Low Quality Low Cost High Speed
Prioritising translation for greatest impact
Achieving cost and efficiency savings
Maintaining precision and minimising copy-and-paste mistakes
Measuring and reporting translation effectiveness
Updating content sufficiently and quickly
figure 7.11 and Table 7.2 summarise how rhesc different trans lation optio ns form a con- tinuum based on resource constraints.
In a su rvey published in Multilingual (2008), loca lisation was see n as important with 88 per cent of managers at multinational companies sta ring that loca li sa tion is a key issue and 76 per cent of them sayi11g that it is important specifica lly for international customer saris- fact ion. Yet over half of these respondents also admitted that they allocate only between 1 pe r cent and 5 per cent of their overall budget fo r locali sation.
An indication of the importance of localisation in different cu ltures has been com- pleted by Nitish eta/. (2006) for the German , Indian and Chinese cultures, assessing loca li sed websites in terms not o nly of content, bur cu ltural values such as collectivism, individualism, uncertainty avoidance and masculinity. The survey suggests that without cu ltural adaptation, confidence or flow decreased - rhus resulting in lower purchase . mtent.
A further aspect of localisation to be considered is search engi ne optimisation (see C hapter 9), since sites that have local-language versions will be listed more prominently
Chapter 7 Delivering the digital customer experience 3 13
within the search engine results pages for local versions of the search engines. Many special- ist companies have been created to help manage these content localisation issues for com- panies - for example, agency WebCertainTM maintains a forum advising on localisation (www.multilingual-seo.com).
Reviewing competitors' websites
Benchmarking of competitors' websires is vital in positioning a website to compere effec- tively with competitors that already have websires. Given the importance of this activity, criteria for performing benchmarking have been described in Chapters 2 and 4.
Benchmarking should not only be based on the obvious tangible features of a website such as irs ease of use and the impact of irs design. Benchmarking criteria should include those rhar define rhe companies' marketing performance in the industry and those that are
spec ific to web marketing, as follows:
• Financial performance (available from About Us, investor relations and electronic copies o f company reports) . This information is also available from intermediary sires such as finance information or share dealing sites such as Bloomberg (www.bloomberg.com) for major quoted companies.
• Conversion efficiency. Sites can be compared ro published results of average conversion rates (see, for example, Smartlnsights.com).
• Marketplace performance. Market share and sales trends and, significantly, the propor- tion of sales achieved through the Internet. This may nor be available direcdy on rhe website, bur may need the use of other online sources. For example, new entrant ro European aviation easy Jer (www.easyjetcom) achieved over rwo-rhirds of irs sales via the website and competitors needed to respond ro this.
• Business and revenue models (see C h apter 5). Do these differ from other marketplace players?
• Marketplace positioning. The elements of the marketing mix covered in Chapter 5, including Product, Pricing and Place.
• Marketing com munications techniques. Is the customer value proposition of cl1e site clear? Does the sire supporr all stages of the buying decision from customers who are unfamiliar with the compa11y through to existing customers? Are special promotions used on a monthly or periodic basis? Beyond the competitor's sire, how do they promote their sire? How do they make thorough use of intermediary sires ro promote and deliver their serv ices?
• Services offered. What is offered beyond brochureware? Is on line purchase possible? \'V'hat is the level of online customer support and how much technical information is avai lable?
• Implem entati on of services . These are the practical features of sire design thar a re described in rhis chapter, such as aesthetics, ease of usc, pcrsonalisarion, navigation, availabi lity and speed .
A review of corporare websites suggests that, for most companies, rhe type of information that can be included on a website will be fairly similar. Many commentators make rhe point that some sires miss our rhe basic information that someone who is unfamiliar with a com-
pany may want to know, such as:
• Who are you? 'About Us' is now a standard menu option. • What do you do? Whar products or services are available? • Where do you do it? Are the products and services available internationally? • What makes you different? Why should I use your sire/services compared to your
comperitors'? This includes communicating the online value proposirion (OVP) (see
Chapter 4).
3 14 Part 3 Digital marketing: implementation and practice
Information architecture The combnabon of organisation, labeling <Wld navigation schemes constitumg an 111foonaoon system.
Site map A graphical or text depiction of the relationshp between different gr<Jt4)S of content on a website.
Find ability Supporting users to locate the content or offE!IS they are looking for through search engines or when brows~ng or SOOiding on a site.
Designing the information architecture
Rosenfeld and Morville (2002) emphasised the importance of infor mat ion a rchitecture ro an effective website design. They said:
It is important to recognise that every information system, be it a book or an intranet, has an information architecture. 'Well developed' is the key here, as most sites don't have a planned information architecture at all. They are analogous to buildings that weren 't architected in advance. Design decisions reflect the personal biases of designers, the space doesn't scale over time , technologies drive the design and not the other way around.
In their book, which is still the basis for good practice in web design, Rosenfeld and Morville (2002) give these alternative definitions of information architecture:
1 the combination of organisation, labelling and navi gation schemes within an informa- tion system;
2 the stru ctu ral design of an information space to facilitate task completion and intuitive access ro content;
3 the art and science of structuring and classifying websites and intranets to help people find and manage information;
4 an emergi ng discipline and community of practice focused on bringing principles of design and architecture ro the digital landscape.
In practice, information architecture involves creating a plan to group information logically -it involves creating a site structure that is often represented as a sit e map. A well-developed information architecture is very important to usability since it determines navigadon opdons and fi ndability (Morville, 2005). Mini case study 7.5 about travel company Thomson shows how research ro improve findability, and in particular through optimising on-sire search engines, can yield major benefits to sire owners.
A planned information architecture is essential to large-scale websires such as transac- tional e-commerce sires, media owner sites and relationship-building sires that include a large volume of product or support documentation. Information a rchitectures are less important ro small-scale websites and brand sires, but even here the principles can be readily applied and can help make the site more visible to search engines and more usable. lr is also important for search engine optimisation (Chapter 8), since it determines how different types of content that users may search for are labelled and grouped.
The benefits of creating an information architecture include:
• A defined structure and categorisation of information will support user and organisation
goa ls, i.e. it is a viral aspect of usability. • It helps increase 'flow' on the sire- a user's mentalrnodel of where to find contenr should
mirror that of rhe conrent on rhe website. • Search engine optimisation- a higher listing in th e sea rch rankings can often be used
through organising and labelling u1formation in a structured way. • Applicable for inregrating offline communications- offline communications such as ads
or direct mail can link to a product or campaign landing page to help achieve direct response, sometimes known as 'web response'. A sound URL strategy (as explained in
Chapter 8) can help this. • Related contem can be grouped ro measure the effectiveness of a website as parr of design
for analysis, which is also explained below.
Card sorting
Card sorting is a way in which users can become actively im·olved in rhe development process of information architecture.
Chapter 7 Delivering the digital customer experience 3 15
Mini case study 7.6 Travel company Thomson improves findability through analytics and user feedback
This case study of lUI travel company Thomson highlights the importance of site search. It is based on a presentation by Sandra Leonhard, head of e-commerce.
When Thomson calculates improvements derived from usability, two of the main measures used are:
' Look to Book% • = Number of bookings/Unique users 'Search to Book%'= Number of bookings/Number of unique searches.
Below is usability testing and customer feedback obtained as part of the project to optimise search. Custom- ers tend to be frank - these are some examples of the direct feedback you can get from tests like these, which can be used to refine messaging and usability on a site to improve results:
• 'Your search and book could allow a range of dates and selection of details from all brochures. A dropdown for regional airports would help.'
• ' Search would be better if you could input destinations relevant to your departure airport.' • 'It won't let me select any destination in search.' • 'This is my third try. It will not show me anything!!! Useless site.' • 'Search facility restricted to brochure. I wanted to search for any holidays within a date period but I had to
state a destination - why when I wanted a good deal to any destination.' • ' I find the website appalling to search for a holiday due to the fact that it appears to search in a very specific
manner. I always get the message "sorry we aren't able . . . " I booked through <a competitor> instead.'
Basic analytics showed the scope for improvement and the optimisation project delivered this. Although these problems have now been resolved , we have included this example since many sites have not been optimised in this way.
Card sorting or web c:lassifocation The process ol arrang.ng a way ol organisng objects on the website in a consistent manner.
Card sorting is a useful app roach, since websites are frequcndy designed fro m the per- spective of the designer rather than rhe information user, leading to labels, subject grouping and categories rhar are nor intuitive to the user. Card sorting or web classification should categorise web objects (e.g. documents) in order to facilitate information task completion or information goals the user has set.
Robertson (2003) expla.ins a n approach to card so rring that identifies the followi ng q ues- tions when usi ng rhe techn ique to aid the process of modelling web classificario n systems:
• Do the use rs want to see the information gro uped by subject, task, bus iness or customer gro u pin gs, o r type o f info rmacion ?
• Wha t are the most impo rtant items to put o n the mai n menu ? • How many menu items s hould th ere be, a nd how deep should it go? • How similar o r different ar e the need s of th e users t hroughou t rhe o rga nisario n ?
Selec ted g ro ups of users o r representat ives wi ll be given index cards w irh rhe fo ll owin g written o n them, depending on rhe ai m of the card sorting process:
• types of documents; • organisational key words and concepts; • document tides; • descriptions of documents; • navigation labels.
The user groups may then be asked ro:
• group together cards that they feel relate to each other; • select cards that accurately reflect a given topic or area; • organise cards in terms of hierarchy - high-level terms (broad) to low-level terms.
3 1 6 Part 3 Digital marketing: implementation and practice
Blueprint Shows the relationships
between pages and other content components, and can be used to portray organisation, navigation and label6ng systems.
Wire frame Also known as 'schematics', a way of illustrating the layout of an indi-vidual web page.
Site design page template A standard page layout format that is applied to
each page of a website. Typically defined for different page categories (e.g. category page, product page, search page).
Cascading style sheets (CSS) A simple mechanism for adding style (e.g. fonts, colours, spacing) to web documents. CSS enables different style elements to b e controlled across an entire site or section of site. Style elements that
are commonly controlled include typography, background colour and images, and borders and margins.
At the end of the session the analyst must t ake the cards away and map the results into a spreadsheet to find out the most popular terms, descriptions and relationships. If two or more different groups are used, the results should be compared and reasons for differences should be a11alysed.
Blueprints
According to Rosenfeld and MorvilJe (2002), blueprints :
show the relationships between pages and other content components, and can be used to portray organisation, navigation and labelling systems.
They are often thought of, and referred to, as 'site maps' or 'site structure diagrams' and have much in common with these, except that rhey are used as a design device clearly show- ing groupings of informacion and linkages between pages, rather than a page on rhe website . . . to assist navigation.
Refer to Figure 7.12 for an examp le of a sire srrucrure diagram for a toy manufacturer website, which shows the groupings of content and also an indication of the process of t ask completion.
Wireframes
A related tedu1ique to blueprints is the wiretrames rhat are used by web designers t<> indicate the eventual layout of a web page. They can also be readily used by srudents to suggest top- level changes to websites as parr of assignments. Figure 7 .13 shows rhar the wireframe is so called because ir just consists of an outline of rhe page with the 'wi res' of content separaring different areas of content or navigation shown by whire space.
Wodtke (2002) describes a wireframe (sometimes known as a 'schematic') as :
a basic outline of an individual page, drawn to indicate the elements of a page, their rela- tionships and their relative importance.
A w ireframe wiU be created for all types of simi lar page groups, idenrified at the blueprint (si te map) stage of creating rhe information architecture.
Wireframes are rhen transformed into physical site design page templates, which are now traditionaUy created using standardised cascading s t yle sheets (CSS) that enable a standard look and feel to be enforced across different sections of the sire. Complete Activity 7 .3 to see the power of using CSS.
The standards body W3C (www.w3.org) defines cascading style sheets as:
a simple mechanism for adding style (e.g. fonts, colours, spacing) to Web documents.
CSS enable different style elements ro be controlled across an entu·e site or section of site. Style elements that are commonly controlled include:
• typography; • background colour and images; • borders and margins.
For example, CSS will use rhi s syntax to enforce the standard appearance of body copy . on a s1re:
body { margin:O; padding:O; colour:#666666; background-colour:#f3f3f3; font-family: Aria!, 'Trebuchet MS', Verdana; font -size: 70%;
Chapter 7 Delivering the digital customer experience 317
Figure 7 .12 Site structure diagram (blueprint) showing layout and relationships between pages
Home
Member login ~ On successful login -
Members' homepage 1+----------'
Membership benefits 1+------l Registration form ~ Confirmation (email sent to user)
Site search
Play by age
0-3 months
3-6 months
6-12 months
12-18 months
18-24 months
2-3 years
3-5 years
Toys
Science of play
Ask the experts
News
Forum
.-- -- -- ------ - ---- -~--------·-·-·---·----------1 ! Either a description of a specific play activity or an editorial article I I I
I Contains list of related articles and related toys ! '------------------ - - - ,--- -------·-------··-·---·-----J
I
H-r-1 Overview and article listing t---1 Article 1---,rl Email page to a friend
1-
1-
1-
1-
1-
1-
I-
....
I
• • r;~~~;;1; fo~·this-~~~ ran;~l ~-~s~~A~~- ;~---~ ~-~=Po=st=a=co=m=m=e=n=t =(m=e=m=be=r=s=o=n=ly=) ~ l List of articles grouped i I receive similar ! 1- Printer-friendly version I by topic ! I articles by 1 ~=============i l' i ! email' 1 '- View related videos (members only) List of activities for this : 1----- -- -------~ I I
l age range : ' I ·-------------------
Browse toys by age range Product listing 1- Product details 1-T-i Email page to a friend
Browse toys by type
Retailers
Offers
Research & development
Testing
Psychology
View answer
Post question
1-""T"'i Postcode search results
• •• Online retailer list
. ···~--- ---------- --, ' ' : 'Become a member : i to redeem vouchers' i ·------------- ---------~
background-repeat:repeat-x; background-position:top; }
• • • • ••
• • ~~ ..
Printer- ._ friendly version
• • • •• • ---- ------~ ----- -- --- -1 • i 'Become a member : : to receive product : ' ' updates' : I 0
----------------------
The benefits of CSS are:
• Bandwidth. Pages download faster after initial page load since sryle definitions only need to be downloaded once as a separare file, nor for each p age.
• More efficient development. Through agreeing sire sry le and implementing in CSS as part o f page templates, it is more efficient ro design a site.
3 1 8 Part 3 Digital marketing: implementation and practice
Fig ure 7.13 Example w ireframe for a children's toy site
Brand ident (logo) Member login
I Home I Toys I Science of play I Ask the experts I News j Forum I I Site search Become a membel'
Play by age
T)Pes of play 10=3113=5116=121 ~~~
12- 18 months
18-24 ~13=51 months ~~
Popular articles Topics from our forum
Development
Landing page An entrance page to the s~e when a user clicks on an ad or other form of link from a referring site. It can be a home page but more typically, and desirably, a landing page is a page ~ the messaging focused on the offer in the ad. This wtll maximise conversoon rates and brand favourabi~ty.
Activity 7.3
Featured toys
• Reduces updating and maintenance time. Presentational markup is stored in one place sepa- rate from the content, making ir quicker to update the site globally with less scope for errors.
• Inc rea sed inre rope rability. By ad hering to W3C recommendations, it helps with t he support of multiple browsers.
• Inc reases accessibility. Users can more readily conEgure the way a sire looks or sounds using browsers and other accessibi lity su p port tools. The sire is more likely ro render o n
a ra nge of access pla tfor ms s uc h as PDAs and smarrphones .
Landing pages
Deciding on the page te m pla te design for different forms of landing pages is particularly important for sire owners seeking to maximise conversion rare since many first-time visitors
Using CSS to separate site content from design
Visit CSS ZenGarden (www.csszengarden.com), which show s how CSS can be used to separate content from how it is presented. You can select d ifferent designs to see how the new design changes radically as different styles are applied.
Storyboarding The use of static drawings or screenshots of the different parts of a webs"e to review the design concept with user groups. It can be used to develop the structure - an O'lerall •map· with individual pages shown sepamtely.
Chapter 7 Delivering the digital customer experience 319
don't arr.ive on the home page, they arrive deeper in the sire from search engines or links from other sires. Chaffey and Smith (2012) suggest the following are typical aims and cor-
responding questions to consider for increasing landing page conversion rare:
• Aim 1- Generate response (online lead or sale and offline call back). Does rhe page have a prominent call-to-action, such as a prominent burton above the fold; and repeated in
text and image form? • Aim 2 - E ngage different audience types (reduce bounce ra re, increase value events,
increase return rate) . Does the page have a promi11ent headline and subheads showing rhe visitor is in the right place? Does rhe page have seem-trail trigger messages, offers or images ro appeal ro different audiences? For example, Dell has links on irs sire ro appeal to consum ers and differem types of businesses. A landing page containing form fields to
fill in is often more effective rhan ru1 additional click, since it srarrs commirred visitors on
their journey. • Aim 3- Communicate key brand messages (in crease bra nd fam ili arity and favourabil-
i ty ). Does the page clearly explain who you are, what you do, where you operate and
what makes you different? Is your online value proposition co mpelling? Do you use customer testimonials or racings to show independent credib ility? To help with this, use run-of-site messages (on aiJ pages) across the top of d1e screen or in the left or right
sidcba rs. • Aim 4 -Answer the visitor's questions (re duce bounce rates, increase conversion rates).
Different audiences will want to know differem things. Have you identified personas (Chapter 4) and do you seek to anS\ver their questions? Do you usc FAQ or messages that
say 'New to company'? • Aim 5 -Showcase range of offers (cross-seiJ). Do you have recommendations on related
or best-selling products and do you show the full range of your offering through
navigation? • Aim 6- Attract visitors through search engine optimisation (SEO) . How well do you rank
for relevant search terms compared to competitors? Do your navigation, copy and page templates indicate relevance ro search engines through on-page optimisation?
Blueprints illustrate how the content of a website is relared and navigated, while a wireframe focuses on individual pages; wirh a wireframe rhe navigation focus becomes where it will be placed on rhe page. Wireframes are useful for agencies and clients ro discuss the way a web-
sire will be laid our without gerring distracted by colour, sryle or messaging issues, which
shou ld be covered separately as a creative planning activity. T he process of reviewing wireframes is sometimes referred to as storyboarding , although
the term is often applied to reviewing creative ideas rather than formal design a.lternatives.
Early designs are drawn on large pieces of paper, or m ock-ups are produced using a drawing .
or pa111r program. At the wireframe stage, emphasis is nor placed on use of co lour or graphics, which w ill
be developed in conjunction with branding or marketing reams and grap hic designers and
integrated into the sire after the wireframe process. According to Chaffey and Wood (2010), rhe aim of a wircframe will be to:
• integrate consistently available components on the web page (e.g. navigation, search boxes);
• order and group key types of components together; • develop a design that will focus the user onto core messages and content;
• make correct use of white space to structure the page; • develop a page structure that can be easily reused by other web designe rs.
Common wireframe or template features you may come across are:
• navigation in columns on left or right and at top or borrom; • header areas and footer areas;
320 Part 3 Digijal marketing: implementation and practice
• containers, 'slots' or 'porclets' - cl1ese are areas of content such as an article or list of articles placed in boxes on me screen; often slots will be dynamically populated from a content managemenr system;
• containers on me homepage may be used ro: • summarise the online value proposition; • show promotions; • recommend related products; • feature news, etc.; • conrain ads.
Designing the user experience __ ] Design phase The design phase defines how the site will work In the key areas of website structure, navigation and security.
User-centred design Design based on optimising the user experience according to all factors, Including the user interface. that affect lhis.
Once analysis has determined rh e business and user needs for a site, the site can be designed. The design phase is cr itical to a successful website since it wi ll determine the quality of experie nce users have of a sire; if they have a good experience they will return , if not th ey will nor! A 'good experience' is determined by a number of factors such as those that affect how easy it is to find information- for example, the structure of rhe sire, menu choices and searching facilities. It is also affected by less tangible factors such as the graphical design and layout of the site.
As mentioned at the start of rhe chapter, design is nor solel y a paper-based exercise, bur needs to be integrated inro rhe prototyping process. The design should be tested by review with rhe client and customer to ensure ir is appropriate. Since the main reason given for returning ro a website is high-quality conrenr, and conrenr affects conversion roo, it is impor- tant ro determine, mrough analysis, mat the conrem is correct. H owever, the quality of content is determined by more man the text copy. It is important to achieve high-quality conrent through design. Nigel Bevan (1999a) says:
Unless a website meets the needs of the intended users it will not meet the needs of the organisation providing the website. Website development should be user-centred, evaluat- ing the evolving design against user requirements.
How can this customer-orienrared or user-cenrred content be achieved? User- ce ntred desi gn starts with understanding rhe nature and variation within the user groups. According to Bevan ( 1999a), key issues to consider that are sti ll fundamental for digital experiences, whether desktop or mobile sire, app or socia l network company page, include:
• Who are the important users? • What is their purpose for accessing the sire? • How frequently will they visit the sire? • What experience and expertise do mey have? • \Xfhar nationality are mey? Can they read your language? • What type of information are mey looking for? • H ow will they want to use the information: read iron rhe screen, print it or download it? • What type of browsers wiU they use? How fast will their communication links be? • H ow large a screen or window will they use, with how many colours?
Rosenfeld and Morville (2002) suggest four stages of sire design that also have a user-cenued basis:
1 Identify different audiences. 2 Rank importance of each to rhe business.
Chapter 7 Delivering the digital customer experience 321
3 List rhe three most important information needs of audience. 4 Ask represenradves of each audience type to develop their own wish lists.
We noted in Chapter 2 that customer persona and scenario analysis is a powerful tech- nique of understanding different audiences, which can be used to inform and test website design rh at looks ar additional factors from those i11 the lisrs abO\'e, such as device usage, location and comex'l of usage and integration with other online services including social media.
Evaluating designs
A tesr of effective design for usability is dependent on three areas, according ro Bevan (1999b):
• Effectiveness: can users complete their tasks correctly and completely) • Produc tivity (efficiency): are tasks completed in an acceptable length of rime? • Satisfa ction: a.re users satisfied with the interaction?
Elements of site design
Once the requirements of the user and marketer are established, we turn our attention to the desig11 of the human-computer interface. Nielsen (2000) structures his book on web usability according ro three main areas, wh.ich can be interpreted as follows:
1 Sire design an d structure - the overall structure of the site. 2 Page d esign- the layout of individual pages. 3 Conte nt design- how the rexr and graph.ic content on each page is designed.
There is also the addidonal area of branding and messaging, which is a key parr of persua-
sion, as explained earlier in this chapter.
Site d esign and structure
The stru ctu res created by designers for websites will vary greatly according ro their audience and the sire's purpose, but we can make some general observations about common approaches to sire design and s tructure and their influence on consumers. These arc often known as 'best-practice principles of website design' and in this section we will s ummarise some of the main factors. Of course, there arc excep tions to such rules of rhum b or ' h euristics', bur often a design approach that works on one type of si t e wi ll work o n another, particularly if it is a co mm on fea ture ac ross the m ajorit y of s1 res.
Ro se n and Purinton (2004) assessed the design factors rhar influence a consumer (based on questionnaires of a group of students). They believe there are some basic factors that determine the effectiveness of an e.-commerce sire. They group these factors as follows:
• Coherence: simplicity of design, easy to read, use of categories (for browsing products or topics), absence of information overload, adequate fonr size, uncrowded
. presenranon.
• Com plexity: different categories of text. • Legibi lity: use of 'mini home page' on every subsequent page, same menu on every page,
Site map.
You can see that these authors suggest that simplicity in design is important. Another exam- ple of research into website design factors supports the importance of design. Fogg et al.
322 Part 3 Digital marketing: Implementation and practice
(2003) asked students ro review sires to assess rhe credibility of different supp liers based on the website design. They considered these factors most important:
Design look 46.1%
Information design/structure 28.5%
Information focus 25.1%
Company motive 15.5%
Usefulness of information 14.8%
Accuracy of information 14.3%
Name recognition and reputation 14.1%
Advertising 13.8%
Bias of information 11.6%
Tone of the writing 9.0%
Identity of site sponsor 8.8%
Functionality of site 8.6%
Customer service 6.4%
Past experience with site 4.6%
Information clarity 3.7%
Performance on a test 3.6%
Readability 3.6%
Affiliations 3.4%
Howe,·er, ir should be borne in mind that such generalisations can be misleading based on the methodology used. Reported behaviour (e.g. through questionnaires or focus groups) may be quire different £rom actual observed behaviour. Leading e-retail sires (for example Amazon.com and eBay.com) and many media sites typically have a large amount of informa- tion and navigation choices available on-screen since the site designers know from resting alternative designs that consumers are quite capab le of finding content relevant to them, :md rhar a wider choice of links means that the user can find the information they need without clicking through a hierarchy. When performing a real-life product search, in-depth
informacion on the products and reviews of th e product are important in making the prod- uct decision and are one of the benefits that on line channels can give. Although design look is cop of the list of factors presented by Fogg eta/. (2003), you can see that many of the other factors are based on rhe quality of information.
In the following coverage, we will review the general factors that designers consider in designing the style, orga nisation and navigation schemes for the site.
Site style
An effective website design will have a style that is communicated through use of colour, images, typography and layout. This should support the way a product is positioned or irs brand.
Site personality
The style elements can be combined ro de,·clop a personality for a sire. We could describe a sire's personality in rhe same way we can describe people, such as 'formal' or 'fun'. This
Adaptive w eb design Also known as progressive enhancement, this desigltechnique delivers dfferent layouts and featues according to what is supported by browser and~ resolution of the device.
Chapter 7 Delivering the digital customer experience 323
personality has to be consistent with the needs of the target audience. A business audience often requires derailed information and prefers an itlformarion-inrensive sryle, such as that of the CiscoTM sire (www.cisco.com). A consumer site is usually more graphically intensive. Before the designers pass on their creative designs ro developers, they also need to consider the constraints on the user experience, such as screen resolution and colour depth, browser used and download speed.
Visual design
Despite modern browsers and broadband access, graphic design of websites still represents a challenge since designers of websites are severely constrained by a number of factors:
• The speed of downloading graphics: designers sti ll need to allow for page download speed, as we explained earlier in the chapter.
• T h e screen reso lu tion s of the com puter : designing for different screen resolutions is par- ticularly important today with the range of resolutions from smarrp hone to tablet to desktop.
• T h e number of colours on screen: rhe colour palettes available on web browsers. • T h e ty pe of web browser used : different browsers, such as Coogle Chrome, Microsoft
Internet Explorer ffi™ and Apple Safari™, and different versions of browsers, such as IE8.0 or 9.0, may display graphics or text slightly differently o r may suppo rt different plug-ins.
• Different access devices: with the increase in popularity of mobile and tablet browsers it has become very important to support users of these sites using techniques such as ada ptive web design.
As a result of these constraints, the design of websites is a constant compromise between what looks visually appealing and modern on the most advanced hardware platforms and highest-speed network connections and what works for other systems. This is referred ro as the 'lowest common denominator problem', since this is what the designer has traditionally had ro do - design for the old browsers, using slow links and low screen resolution s.
Mobile design requirements and techniques
In C hapter 2 we explained t.hat it's important to research the level of adoption of mobile devices such as smarrphones and tablets. For many site types such as socia l networks and news si res, the proportion of mobile users has been well above 50 per cent for severa l years. At rhe rim e of wr iting this edition, many retai l sires now see more than half of their traffic from molbile a nd rhis will naturally increase. So design ing websites such that they are effec- tive across desktop and mobile devices is now a key consideration for all businesses. The challenge of the many options for mobile si te design has been nicely summarised by ex-eBay designer Luke Wroblewski, as shown later in the chapter in Digita l marketing insight 7 .3.
We will now review five common options for mobile sire development identified by Thurner and Chaffey (2013):
A Si mple mobile si te (different content). B Screen -sc rape (same content). C Responsive design (same content, different mobile styling). D H TMLS, PWAs and AMPs (same content, different mobile sryling). E Adaptive design (potentially different content, different styling on different mobile
devices).
These are nor mutually exclusive- for example, an HTMLS site can typically offer adaptive and responsive design roo.
324 Part 3 Digijal marketing: Implementation and practice
Responsive w eb design (RWD) layout and formatting of website content is modified at the point or rendering to suit different screen resolutions and capabilities to produce a better experience to users of a range of desktop, tablet and smartphone devices using web development methods such as CSS and image scaling.
M edia queries A stying approach Within cascading style ~s (CSS) enabing the layout to change based on type of del/ice at its scale.
Mobile site design option A. Simple mobile site
The quickest method of crearing a mobile sire is to create a completely separate mobile sire on a domain http://m.company.com that has a different design, build, hosting and content. This option may be appropriate for very small businesses looking for a simple mobile sire that they don't update frequently, bur we would advise this is nor a viable long-term option for most companies for these reasons:
• updates to content have to be duplicated across each sire; • different tools and resources are often needed to manage each sire; • future updates to styling have to be duplicated roo; • it may nor give a consistent brand e.xperience for users.
Mobile site design option B. Screen-scrape
Although it's not an option we can recommend as best practice, it's worth noting that a number of high-profile retail brands such as ASOS and Jo hn Lewis opted for a temporary 'screen-scrape' approach, which invo lves dropping existing web content into a basic mobile
sire template without opting for back-end integration. The advantage of the screen-scrape approach is that it presents a quick route ro marker, and avoids potential conflict between PC web ::111d mobile web developers.
However, consider rhe widespread disadvanrages of screen-scraping when compared wirh
the fully imegrated approach, which provides rhe better long-term so lution :
• The screen-scrape option incurs additional time and cost ro manage the site, as changes
to the back-end CMS will need ro be updated manually on rhe mobile sire, rather than benefiting from automatic updates.
• A review of 'screen-scrape' sires reveals an alarming degree of standardisation across the sires, which lack the differentiation brands demand across their PC websires.
Mobile site design option C. Responsive design
Today's multiple-device-using consumers need content in rhe right format in real rime, which presents challenges as rhe form factor and operating system varies across most of their devices. Enter Responsive Web Design (RWD), which auromares the overlay of con-
textually relevant content matching the profiles of mobile users- allowing you to access social media feeds, loyalty offers and o ther data feeds triggered by your preferences to max- imise engagement and to optimise sales conversion.
First introduced as a concept in 2010, responsive design is rhe principle web developer's
deploy to design website styling that changes rhe display layout to sui t users of a range of mobile devices using modern web development m e thods such as CSS and irnage scaling. Blocks of content are moved and rescaled based on sc reen resolution, as shown in Figure 7.14.
Responsive design is an increasingly popular approach to bui lding mobile sires since it enables a single version of rhe sire and conrenr to be maintained, which adapts for different resolutions. It was formerly called a 'fluid design', since rhe layout 'flows' as resolution is changed (as you change the s ize of a browser for instance). Contrast rhis
ro what we often see when browsing using a smarrphone on a non-responsive site: tiny text and difficult-to-selecr buttons and navigation, which require us to zoom in to select the next page.
Technically speaking, responsive design uses cascading stylesheers, in particular an
approach called media que ries , to specify how the page is laid our based on device type and resolution. (See, for e;xample, Knight (7011) for an introduction ro the technical approaches.) This will produce an improved experience for users across a range of devices, bur there are limitations such as break points where less common devices may nor be supported or sites that aren't 'upwardly responsive' (i .e. high-resolution displays) may be less well supported
Chapter 7 Delivering the digital customer experience 325
than lower resolution. Responsive design disadvanrages include its being more technically complex to implement and rest, which leads to higher costs and a larger codebase (parricu- larly of stylesheets) to load, which can harm page load times. Despite this, it is now imple- mented for many new sires and sire redesigns. The disadvantages of responsive design can be overcome at cost through adaptive design.
Mobile site design option D. HTML5, Progressive Web Apps (PWAs) and Accelerated Mobile Pages (AMPs)
HTMLS blurs me line between sires and apps, and challenges the promi nence and cashflow of me appsrore hosts. Companies operating in the main sectors who were enthusiastic adop- rers of mobile, such as retail, packaged goods, travel, financial services and publishing, are rurning ro HTML5 'web apps' in order to build once and target all mobile platforms ar once. This is more cost-effective and less labour-intensive than building different native apps for iOS, Android™, Windows PhoneTM and BlackBerryTM.
H TML5 web apps allow developers and publishers to circum navigate the 30 per cenr commission ch arged by Apple and Google on app download costs a nd :1 fur ther 30 per cenr o n products a nd subscriptions sold ' in-app'. Both costs can be elimin ated with HTML5- based sires.
From rhe technical perspective, HTML5 apps have some problems that native apps do nor. HTML5 apps are ty pically slower than native apps and it is more costly ro sup port a range of apps. FT.com still uses native apps for Android and Windows platforms.
Rob Grimshaw of FT.com told The Guardian (2013) that switching to HTML5 wasn't just abour a spa t with Apple, bur was an attempt to ensure theFT could scale quickly across
differenr devices and platforms:
The origins of the web app come from thinking more broadly about our mobile strategy, and particularly how we are going to cope with developing for numerous d ifferent
Figure 7.14 Responsive design showing updated layout for different content blocks
r
••• ••
326 Part 3 Digijal marketing: implementation and practice
Progressive Web Apps (PWAs) A website dcMllopment technique that combines the benefits or web and mobile apps, enabl~ users to Install web apps to their home screen, receive push notifications and potentially worl< offline.
Accelerated Mobile Pages (AMPs) A standard to increase page download speed on mobile dlevices, the AMP lrameworl< consists of three components: AMP HTML, which is a standard HTML with web components; AMP JavaScripl, which manages resource loading; and AMP caches, which can serve and validate AMP pages.
Adaptive mobile web design Generally a 1Tl()(9 sophisticated approach than responsive web design that ii?JOives deiYeting an experience optirrused for targeted handsets, and spits the code and processing to render on dfferent devices between the dient and the server.
platforms. There are at least five [native mobile platforms] out there that you reasonably have to cover, and a web app is the obvious solution. We just accelerated it because of some of the things Apple did with their subscriptions.
Progressive Web Apps Prog ressive Web Apps (PWAs) are a relatively recent innovation that have been supported by Google. Google (2017a) e.xplains the benefits of PWAs and contrasts them to mobile apps like this:
It's not hard to see why leading brands would embrace PWAs. They realize the need to provide the best mobile experience for users - regardless of platform. PWAs eliminate friction by using the web to deliver app-level experiences. There's no need for consumers to find apps in the app store and install them - they can just navigate to the site on any browser, including Chrome and Safari. PWA techniques focus on reliably loading faster (even working offline) and using less data.
PWAs were first introduced in 2015 and they were ofte n used in countries that s uffer from poor internet connectivity, such as China and lndia . Google (2017a) shows the impo rtance of fast download speed, stating that 53 per cent of mobi le visits are abandoned if a site rakes longer than three seconds to load. MakeMyTripTM, a travel booking site in India, launched a PWA to offer alllndian smarrphon e users a n effective and reliable mobile booking experi- ence regardless of rime, location or network availability. The company saw overall conver- sion rates triple and a 160 per cent i ncrease in shopper sessions. Alibaba.com , the world 's largest onli11e business-to-bu siness trading platform, saw a 76 per cent ri se in conversions and four-times higher interaction rare after it upgraded its mobile site to a PWA. Beauty brand LancomeTM saw a 53 per cent increase in session length and its bouJlCe rates have dropped by a fulllO per cenr among iPhone users.
Accelerated Mobile Pages (AMPs) In August 2016, Google announced that these faster-loading page formats would appear in all search results, nor just news results, and so they have become more relevant for aU businesses- beyond publishers for who they were most relevant initially as an alternative to the Facebook Instant Articles format. Accelerated mobile pages (A MPs) load fas t since they have less styling and are loaded directly from Google's servers rather than the publisher's servers. You can see the importance rhar Google g ives to AMP as a method of decreasing page download in thi s quote from David Besbris (Accelera ted Mobile Proj ec t, 2017), who is the VP of Google Search a nd is also th e AMP Project Lead. He says :
In two years, we've seen the project grow from a few launch partners to over 25 million website domains that have published more than 4 billion AMP pages. And not only has the number of pages built with AMP grown, their speed has too. The median time it takes an AMP page to load from Google search is less than half a second.
AMPs can often be implemented using plug-ins and extensions available from conrem management systems. For example, WordPressTM ha s plug-ins to implement these. Different interaction optious are available within the standard, e.g. for email signup, which related closely to PWAs.
Mobile site design option E. Adaptive design
The a d aptive mobile web design is a hybrid approach combining different client- and server-based logic to give the best performance with the best experie nce o n priority devices
Chapter 7 Delivering the digital customer experience 327
Table 7.3 A summary of the advantages and disadvantages of different options for mobile-optimised websites
Approach Advantages Disadvantages J Responsive web design (RWD)
CSS media queries modify presentation for device resolution
Single template for all devices gives speed and cost benefits
Bigger page weight Compromises experience for higher resolutions
Client-side Adaptive
Server-side Adaptive
Mobile app Designed to I'U'l on smartphones and tablet computers, apps proYide users with rich mobile content by deploying the handset's mu~iple native capabilities. Apps are available for download from app stores hosted by the mobile operating systems (e.g. !Tunes for iOS, Google PlayrM for Android, Microsoft App Store, BlackBe~ App wond).
Javascript on the user's device loads different tem- plates based on device resolution
Dynamic serving of styles based on device detection
Complete rebuild of CSS not needed Only resources needed loaded onto client Experience customised for devices
Smaller mobile pages than other approaches
Maintenance of additional code
Multiple templates must be maintained
without the speed limitations of the responsive approach. The approach is contrasted with responsive web design in Table 7.3. You can see that by only serving code and styling needed for a specific mobile device, the approach can result in a faster experience, although devel- opment times and costs can be higher, so it is an approach best suited to the largest businesses.
Mobile app development and personalisation requirements
Separate from mobile-optimised website approaches, mobi le apps are a further option that must be considered separately for creating more personalised experiences. While most would agree that a website available via a mobile browser is essential, it's nor clear whether a dedicated mob ile app is essential for all bur the larger organisations, particularly with the development of responsive and adaptive website design.
Arguments for the creation of mobile apps are persuasive, in that, for many B2C sites, in most countries there are more mobile site visitors than desktop visitors. Furthermore, more than 90 per cent of consumers' mobile time is spent using apps, yet often this is spent in activities such as checking social media, email or news rather than using shopping or brand apps.
However, this doesn't mean that every existi ng business should have an app, since a mobile responsive site may be sufficient- as discussed in Digital marketing insight 7.3: Taking d1e mobile site vs app decision.
For new startup businesses without an existing site or user base it may be the case that the new business centres on a mobile app, and that a desktop app may not be necessary. Some sectors, such as financial services, a.re well suited to a mobile-app-only-centred experi- ence, which reduces the cost of creating and maintaining the platform. Here are some examples:
• app-only banks, for example AromTM, MonzoT111 , TandemTM (U K), N26TM (Germany), MovenTM and SimpleTM (US) and DBS DigibankTM (India );
• apps for price comparison based on scanning when on the move - for example, ShopSavvynt, PurchxTM and BuyViaTht (US);
. • gammg apps ; • business communications apps (e.g. SlackTh1, and BasecampTM), with desktop app options
also available.
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Internet of Things (loll A network of objects and devices at home and at WOI1< providng sensors and comectMty that enable them to be monitored and exchange data with other systems.
M achine-to-machine (M2 M) These comections include horne and office security and automation, smart metering and utitities, maintenance, building automation, automotive, healthcare and consumer electronocs.
Differences between mobile app design and development
The sequence of stages for app developmenr is similar ro rhar for website design shown at the starr of the chapter. Yet, there are some key differences ro consider:
• Conrext of use is differenr, with mobile apps often accessed 'on rhe go' in expectation that using the app will be quick
• Separate versions need ro be created for the rwo main alrernari,•e device operating sys- tems, which have their own store (Google Play for Android OS and Apple App Srore for Apple iOS).
• Each operating system bas standard design elements, for example for form fields and buttons, which meam that less creativity is possible within rhe interface.
• Mobile operating systems tend to be updated more frequently than desktop operating systems, meaning that more updates are requjred and app makers receive reviews for each version, rhus creating more of a challenge of keeping up to dare.
All of these combine ro typicalJy give a simpler, more functional design for mobile apps. Mobi le apps featuring personaJisation share many of the features of personalised web-
sires. A personalised mobile app site has the benefit that spec ific features can be developed for mobil e users based o n their context and beh aviour, such as location. This is not usually the case with a basic responsive web design approach. Back-end integration enabling linkage to individual customer records can be used to build bespoke sites rhat match the profile of each user.
How loT, VR and AR experiences will integrate with M2M interactions
The Internet of th ings (loT) , coupled with machine-to-machine (M 2M) interactions, prom - ises ro bring the connecri,rity of the Internet into every facer of our lives. These systems should make our devices and homes smarter and more efficient. More products wiU become loT enabled; for example, an agreemenr between loT provider EVRYTHTNG and label provider Avery Dennison wilJ see at least 10 bilJion apparel and foorwear products ro mar- ket over 36 months as web-ready #BornDigital physical products (EVRYTHTNG, 2017). This promises robe a revolurion on a par with the original connectivity revolution rhat the Internet has unleashed over the past twenty years. See Mini case study 7.7 for a brand example.
C isco (2017) explain s rhe importance of loT and M2M when it says:
The phenomenal growth in smarter end-user devices and M2M connections is a clear indicator of the growth of loT, which is bringing together people, processes, data, and things to make networked connections more relevant and valuable.
This section focu ses on the continued growth of M2M connections and the emerging trend of wearable devices. Cisco forecasts that, globally, M2M connections will grow from 780 million in 2016 m 3.3 billion by 2021- a 34-per-cent CAG R, or fourfold growth.
Porter and Heppelmann (2015) explain that all connected products, from home appliances ro industrial equipment, share three core elements: physical components (such as mechanical and electrical parts); smart components (sensors, microprocessors, clara storage, controls, software, an embedded operating system and a digital user interface); and connectivity components (ports, antennae, protocols and network s rhat enable communication between rbe product and the product cloud, which runs on remote servers and contains rhe product's external operating system). Together with thei r infrastructure, this gives connected products new producr capabilities. Fi rsr, prod - ucts can monitor and report on their own condition and environment, to generate insights into rheir performance and use; second, the users can control and customise
Virtual reality (VR) Virtual reality headset and software technology creates immersive three· dimensional spaces that simulate a user's physical presence in a virtual or imaginary environment.
Augmented reality (AR) In contrast to VR, augmented reality supports and enhances real-world interactions. Rlr example. retailers can enable consumers to try on new clothing or glasses using AR devices.
Site navigation scheme Tools provided to the user to move between different information on a website.
Flow Describes how easy it is for users of a site to move between the different pages of content of the site.
Chapter 7 Delivering the digital customer experience 329
pro d ucts remot ely; a nd th ird , o ptimi sa ti on algor ithms ca n su bs t an t iall y im p rove p rod - uc t per fo rm ance, utili sat io n a nd upt ime, and how product s work wi th related p rod ucts in broader syst ems .
Wh at about the marketing applicatio ns of co nnected prod ucts? T hese are com monl y t al ked a bo ut i n th ese ways:
1 Products as media . Some connected products rha r have screens can potenrialJy be used for ads, which will be more valuable if they are persona lised . Devices don't necessarily need screens, si nce Io T-enabled rags on product p acks can be used to con nect to informa - tio n, enrerraimuent and offers, as shown in Mini case study 7 .7 o n D iageo. In an o ther exa mple, Rebecca Minkoff bags h ave anno unced rhar alJ future bags w ill be smarr bags. A code will unl ock exclu sive offers and experiences with Rebecca Minkoff a nd wi ll autom atically qualify rhe c usto mer fo r a loyal ty program me. lr w ill also p rovide e-co m- merce services, priva te sty ling sessio ns with Rebecca, style recommendations, video co n- tent a nd an invi tat ion to the next fas hion show. T here will also be el ite experiences to en joy w ith lifestyle partners. M.in i case st udy 7.7 o n Di ageo Brasil™ exp lores a nother exam ple.
2 Products as a service. Th e 'sma rt ho me' co nrrol products are exa mpl es of rhis. These services are often ad min istered via mobile o r desktop apps. T his gives oppo rtun ities to keep audiences engaged t h rough noti fica tions when they are t imely, rat he r th an rhe p rev i- ous system o f monrhl y bi lls.
3 Products as connected ecosystems. Wi thin the h ome conrext, t here are a growing nu mber of popul ar sm a rt-ho me loT clouds o n t he market , sud 1 as H o mek itTM, NestTM, Sma rtT h ingsTM a nd Wink™. New products for rhe home will have to support inreropera-
tion w ith these and other p roduct s rha r are integra ted w ith them.
Virtual reality and augmented reality
C losely related to d1ese trends a re wearables including s mar r warclles a nd virtual reality (VR) a nd augmented reality (AR) enabled devices. See Mini case study 7.8 for an example.
Site navigation schemes
D ev isi ng a sire th at is easy to use is critica lly depende nr on rhe design of the s ite naviga - tion scheme. H offma n a nd Novak (1997) and man y su bsequ enr stud ies (e.g. Rettie, 2001; Sm ith a nd Sivaku mar, 2004) h ave stressed rhe imp o r tan ce of the concept of flow in
Mini case study 7.7 Diageo Brasil send personalised messages via loT-enabled whisky
Diageo Brasil decided to position itself as the drink to celebrate fatherhood by connecting 100,000 bottles to the Internet so they could be used to send a personalised, one-to-one digital video message to fathers on
Father's Day. The givers (of the whisky) were able to personalise the message with their own content. By doing so it calls upon the giver to create what is, in effect, the advertising message to augment the product, making this an example of participative {and, at scale, crowdsourced) creative.
Diageo saw a 72 per cent sales uplift on the lead up to Father's Day, and the cost of the campaign was repaid five times over. It also helped portray the brand as innovative and positioned whisky as the perfect Father' s Day gift in a way that will pay off for years to come. The campaign also won the International Advertis- ing Associations top award.
Source: http://thedigitals.storystream.1t/the-digitals-2013/items/67934/evrythng-for-diageo (accessed May 2018).
330 Part 3 Digital marketing: implementation and practice
governing sire usability. T he concept of 'flow' was first brought to prominence by Nli h aly Csikszenrmih alyi, a ps}-chology p rofessor at the University of Chicago. In his book, Flow: The Psychology of Optimal Experience, he explains his theory rhar people are most happy when they are in a state of flow - a Zen -like stare of total oneness with rhe acriviry ar hand. In an online marketing context, 'flow ' essentially describes how easy ir is for users to find the information or experiences they need as they move from one page of the sire ro rhe nexr, bur ir also includes other interactions such as filling in on-screen for m s. Rerric (2001 ) has suggested that the quality of navigation is one of the prerequisites for Aow, although other factors are also important. They include quick download rime, alternative versions, auto-completion of forms, opportunities for inreraction, navigation that creates choices, predictable navigation for control and segmenting conrenr by I mer- net expenence.
!r can be suggested that there are three important aspects ro a sire rhar is easy ro navigate. These arc:
• Con sistency. A sit e will be easier to navigate if the user is presented w ith a consistenr u ser interface when view ing the diffe rent parts o f t he sire. For examp le, if the menu o pti o ns in t he sup port secti on o f the site a re o n the left side of rhe screen, t hen they should also be o n the left when rhe user moves ro the ' news secti on' of t he sire.
Mini case study 7.8 How has Virgin Holidays used virtual reality?
When Facebook launched the Oculus Rift, and other consumer virtual reality (VA) headsets such as the HTC Vive and PlayStation VA were launched, Virgin Holidays wanted to apply innovative technology in some of its stores for more than a year.
You can see the show reel that summarises the campaign here: https://www.youtube.com/watch?
v=K9Pu0f27k1 Q Sunna van Kam pen, the marketing manager at Virgin Holidays, wanted to explore how VA could enhance
the in-store buying experience by offering waiting customers a virtual tour of Virgin Holidays' destinations, allowing them to 'try before they buy'.
To film the holiday experiences, they used a 360-degree rig made of multiple Go Pro cameras. These were used to film an excursion in the Riviera Maya in Mexico, including dolphins in Xei-Ha park, walking the ruins and cliffs of Tulum and touring the hotels and the beaches of Maroma. These were all filmed from a first-person perspective, so an idea of the experience could be captured at every angle, with the sensation and visuals a customer would experience themselves. Ambient sound was also recorded to create a real, sensory experience of what the holiday wou ld sound like, as well as look like.
To test the experience at a relatively low cost, the VA was delivered through Google Cardboard™, which enabled a low-cost test roll-out of what was, at the time, the biggest virtual reality roll-out in the UK. The tech
was branded 'Virgin Reality' in store, in line with the Virgin experience.
The resutts Overall the experience was successful, since where deployed it kept customers in the stores longer and gener- ated a significant rise in sales of holidays to Riviera Maya Sunna van Kampen of Virg in Holidays believes that virtual reality is here to stay.
Following the successful trial, the concept was extended and five tech-enhanced concept stores opened across the UK (Bluewater, Lakeside, Bristol, Newcastle and Leeds). In future, the Virgin Holidays shop will include an 'island bar' where customers can stop for a drink, a dedicated kids area complete with Disney- themed magic mirror and the opportunity to experience what it feels like to sit in a Virgin Atlantic Upper Class chair and sip champag ne.
Chapter 7 Delivering the digital customer experience 331
Digital market ing insight 7.3 Taking the mobile site vs app decision
Despite advances in web development and frameworks such as CSS, the challenge of developing for different p latforms has increased with the advent of new platforms such as smartphones and tablets. Consequently, key technology options include:
• mobile version of website (full site); • mobile version of site (most popular pages linking through to traditional pages); • separate mobile app; • which device formats and therefore screen sizes to support; • which mobile operating systems and mobile browser versions to support (for exam-
ple, Android , iOS, Symbian, etc.).
It will only be cost-effective for the very largest organisations to design for all of these target platforms and devices, so companies need to balance the costs against the benefits and select carefully. The decision is complicated by the improving quality of screen resolution through smartphones and tablets. Many of these now have a size that enables viewing of sites designed for desktops, although zooming and panning can be frustrating.
The challenge has been nicely summarised by former eBay designer Luke Wroblewski (2011), now lead designer at startup BagCheckrM, who says:
As use of mobile devices continues to skyrocket across the globe, we're seeing more ways to tackle the challenge of creating great web experiences across multiple devices. But which approach is right for any given project?
For us, site performance and speed of development were crucial. So many of the decisions we made were designed to make both of these as fast as possible. As part of our focus on performance, we also had a philosophy of 'just what's necessary'. This meant sending things to devices (and people) that didn't actually need them made us squeamish. We liked to optimise. With a dual template system we felt we had more optimisation of source order, media, URL structure and application design.
• Simplicity. Sites are easier to navigaw if there are a limited number of options. ft is usually suggested th at two or possibly three levels of menu are the most tha t a.re desi rable. For exa mple, th ere may be main menu options at the left of the screen th at rake th e use r to the di fferent pa rts of the s ire , and at the bottom of the screen there wi ll be specific menu optio ns rha r refer to that pa rt o f the si t e (Me nus in th is fo rm are o ften referred to as ' nested'.).
• Context. Context is the use of 'signposts' to indicate to use rs whe re t hey a re located within rhe si re - in other words, to reassure users that they arc nor ' lost'. To help wi th this, the website designer should use particular text or colour ro indicate to users which parr of rhe sire they are currently using. Context can be provided by rhe use of JavaScripr 'rollovers', where the colour of the menu option changes when the user positions the mouse over the menu option and then changes again when the menu oprion is selected. Many sires also have a sire-map option that shows the layout and content of the whole sire so the user can understand irs structure. When using a well-designed sire it should nor be necessary to refer to such a map regularly.
Nielsen (?000) pointed our what many people reviewing sires still forger - rhar many users will nor arr ive on the home page, bur may be referred from another sire o r according to
332 Part 3 Digital marketing: implementation and practice
Deep linking Jakob Nielsen's term for a user arriving at a site deep witiWl its structure.
a print or TV advert to a particular page. He ca ll s this process deep linkin g and sire designers should ensure rhat navigation and context are appropriate for users a.rriving on these pages.
As well as compromises on depth of links within a site, it is also necessary ro compromise on rhe amount of space devoted to menus. Nielsen {1999) poims out that some sites devote so much space ro navigation bars that the space available for comcnt is limited. Nielsen suggests that rhe designer of navigation systems should consider the following information that a site user wants ro know:
• Where am 1? The user needs to know where they are on the sire and this can be indicated by highlighting rhe currem location and clear titling of pages. This can be considered as context. Consistency of menu locations on different pages is also required ro aid cogni- tion. Users also need ro know where they are on the web. This can be indicated by a logo, which by convention is at the rop or top-left of a site.
• Where have 1 been? This is difficult to indicate on a site, but for task-orientated activities such as purchasing a product it can show the user that they a rc at the nth stage of an operation, such as making a purchase.
• Where do 1 want to go? This is the main navigation system, which gives options for future operaoons.
To answer these questions, clear succinct labelling is required. Widely used standards such as Home, Main page, Search, Find, Browse, FAQ, Help and About Us are preferable.
Since using the navigation system may not enable the user to find the information they want rapidly, alternatives have robe provided by the site designers. These alternatives include Search, Advanced search, Browse and Site map {a simplified site map in the footer is com- mon today). Whatis.com {www.whatis.com) illustrates these features well.
Menu options
Designing and creating the menus ro support navigation presem several options. A combina- tion of tc:>.:t-based menus, graphical buttons or images is usually preferred in modern sires ro meet the requirements of accessibility, persuasion, SEQ and usability. Yet some sires are still based solely on Flash or image-based menus, which will reduce the business effectiveness of the site. Most large retail sires now use 'mega-m enus', where there arc a wide range of products and promotions ro communicate.
Page design
The page design involves creating an appropriate layo ut of page elements ro meet the goals of findability and usability, as illustrated in the example in Activity 7.3. The main elements of a particular page layout are the ride, navigation and content. Standa rd conte nt, such as copyright information, may be added ro every page as a footer. Common page templates will be created for pages rhat share similar characteristics, such as home page, category/ sub-category page, product page, search results page and checkout pages for a retail sire. Through use of common templates, improvements can be implemented more efficiently.
Issues in page design include:
• Page elements. \Ve have to consider the proportion of a page devored to conrenr compared to all other material such as headers, footers and navigation clements. The location of these elements also needs to be considered. It is com·entional for the main menu to be at the top or on rhe left. The use of a menu system at the top of the browser window allows more space for content below.
Content marketing strategy The management of text. rich media, audio and video content aimed at engaging customers and prospects to meet business goals published through print and digital media including web and mobile platforms. which is repurposed and distributed to different forms of web presence such as publisher sites, blogs, social media and comparison sites.
Chapter 7 Delivering the digital customer experience 333
• Resizing. A good page layout design should allow for the user to change the size of text or work with different monitor resolutions.
• Consistency. Page layou t should be similar for all areas of rhe sire unless more space is required- for example for a discussion forum or product demonstration. Standards of colour and typography can be enforced through cascading style sheets .
• Printing. Layout should allow for pri.nting or provide an a lternat ive priming format.
Content design and auditing
It's evident that a compelling customer experience demands exceptional, compelling content and a well -planned content marketing strategy. Today, by content we refer to the combina- tion of static conrent forming web pages, bur also dynamic rich media co ntenr that encour- ages interaction. Videos, podcasts, u ser-generated content and interactive product selecrors should also be considered as content, wh ich should be refi.ned ro engage issues.
To create such resources req ttires a content strategy, since there is a challenge of delivering so many different types of content i.n different forms ro different places on different access platforms.
In Chapter 1 we introduced the importance of content marketing in modern marketing and the definition suggests certain elements of content marketing strategy that need ro be planned and managed: defining goals for content engagement value; content formats and media; con- rem distribution; content participation and co ntent management plat form . Halvorson and Rach (2012) describe the importance of these activities in terms of content management of a website. It can be seen that managing the creation and distribution of quality content is part of a broader cusromer engagement strategy rhar looks at delivering effective content across the whole customer lifecycle shown in Figure 1.1. As such it is an integral part of the CRM strategy development, which we covered in C hapter 6. It is also an important marketing activity affect- ing conversion optimisation, social media engagement and SEO. Increasing attention is directed at content marketing strategy roday si.nce it fuels much of d igital marketing. Content marketers such as Kieran Flanagan of HubS pot™ (Moz, 2012) now talk about 'Top, Middle and Bottom' of fwmel (ToFu, MoFu and BoFu) content to suggest how content needs to be researched and audited ro see bow effective it is at engaging audiences.
To implement a content marketing strategy requires a change of mindset for many com- panies (Pulizzi a11d Barrett, 2010). T hey need to think more li.ke a p ublisher and so invest in quality content th at 's superior to that of their competi tors. T h is requires:
• quality, compelling content - content is sti ll k ing; • quality writers ro create quality content, who may be internal staff or ext ernal freelance .
wnters; • an editorial calendar and appropriate process ro schedule and deliver rhe content; • investment in software tools to facilitate rhe process; • investmenr in customer research to determine the coment di.fferem audieuces will engage
with to support business goals; • careful tracking of which content engages and is effect ive for SEQ and which doesn't.
Pulizzi an d Barrett (2010} recommend creating a content marketing road map that is under- pinned by the BEST principles. BEST srands for:
• Behavioural. Does everything you communicate with customers have a purpose? What do you want them to do as a resu lt of interacting with content?
• Essential. Deliver information that your best prospects need if they are to succeed at work or in li.fe.
• Strategic. Your content marketing efforts must be an integral part of you r overall business strategy.
334 Part 3 Digital marketing: implementation and practice
Content audit A structured revew of the effectiveness of diftefent content types and fom1ats to meet the needs of users and the businesses usng quantitative and qualitative techniques.
• Targeted. You must target your content precisely so that it's truly relevant to your buy- ers. Different forms of content will need to be delivered through different social platforms.
Three specific techniques that marketers can use to improve their content effectiveness are content mapping for different audience personas (see Chapter 2), content audits and copy- writing for the web.
Content audits Before a business can decide where to prioritise contenr improvements across their digital assers, they need to evaluate what needs improving, and why, using a c ontent audit .
Halvorson and Rach (2012} note that there are two basic types of audit: quantitative audits and qualitative assessments. They remind us of their purpose by quoting Christina Wodtke, :1n expert on informacion architecture, who says the first asks 'what's there?', the second, 'is it any damn good?' The ' is the content any good? question can be answered through website analytics, as well as by asking through surveys and interviews. For examp le, measures from analytics such as revenue, or goal value per visit, page value or conversion rates to lead or sale for landing pages should be used as part of a co ntent audit.
Online copywriting As you would expect, effective copywriting for digital media is quire differenr from prim. Jakob Nielsen of Nielsen Norman Group has been researching how we read on line since the mid-1990s. He shows rhar on the average web page, users have rime to read, at most, 28 per cent of the words during an average visit; 20 per cenr is more likely Nielsen (2008). This shows the importance of achieving scannability of articles through headlines, and the 'scent trails' of links and buttons to other content and actions.
With the increase in smarrphones, the need for scann:tbility increases. Biederr eta/. (2012} found that three different reading modes exist on smarrphone - full screen, linewise and block wise - and scannability and skimmability are importanr to support each of these.
Scannability and skimmability Scannability is the use of writing and formatting techniques that compensate for the fact that most people don't fully read content on the web. These techniques help give online readers an overview ro navigate the page. Skimmability is using shorter copy and formatting tech- niques to make ir easier to read text once the reader has found context through scanning.
Other common errors we see on websires are too much knowledge assumed of rhe visitor about the company, irs products and services and using interna l jargon about products, services or departments- or using undecipherable acronyms.
Web copywriters a.lso need to rake account of the user reading the content on-screen . Approaches ro dealing wid1 the limitations imposed by the customer using a monitor include:
• writing more concisely than in brochures; • chunking, or breaking text into units of five to six lines at most, which allows users to
scan rather chan read information on web pages; • use of lists with headline text in larger font to aid scannability; • never including roo much on a single page, except when presenring lengthy informacion
such as a report, which may be easier to read on a single page; • using hyperlinks ro decrease page sizes or help achieve Bow within copy, either by L.inking
to sections further down a page or Linking to another page.
Hofacker (2000) described five stages of human information processing when a website is being used. These can be applied to both page design and conrent design ro improve usability and help companies get their message across to consumers. Each of the five srages summa- rised in Table 7 .4 acts as a hurdle, since if the site design or content is too difficult ro process then the customer cannot progress ro the next stage. It is useful to consider the stages in order to minimise rhese difficulries.
Chapter 7 Delivering the digital customer experience 335
Table 7.4 A summary of the characteristics of the five stages of information processing described by Hofacker (2000)
Stage
1 Exposure
2 Attention
3 Comprehension and perception
4 Yielding and acceptance
5 Retention
Description
Content must be present for long enough to be processed
User's eyes will be drawn towards headings and content, not graphics and moving items on a web page (Nielsen, 2000)
The user's interpretation of content
Is the information (copy) presented accepted by customers?
As for traditional advertising, this describes the extent to which the information is remembered
Applications
Content on banner ads may not be on screen long enough for processing and cognition
Emphasis and accurate labelling of headings is vital to gain a user's attention Evidence suggests that users do not notice banner adverts, suffering from 'banner blindness'
Designs that use common standards and met- aphors and are kept simple will be more read- ily comprehended
Copy should refer to credible sources and pre- sent counter arguments as necessary
An unusual style or high degree of interaction leading to flow and user satisfaction is more likely to be recalled
I
( Managing and t_e_s_ti_ng_ c_o_n_te_n_t __________ _
Content management system (CMS) A software tool for creating, editing and updating documents accessed by Intranet, extranei or Internet.
It is nor practical £O provide derails of the methods of managing conre m since marketers do nor need an in-depth understanding of development technologies as they will use spe- cialists for this. What marketers do ha,·e £O know is the aspects of cuswmer experience that can be affected by th e wols and development methodologies used. Then, when selecting suppliers they can ask questions so that the type of constraints on the cuswmer e-xperience described in Activiry 7.1 are accounted for. They can also rest to make sure the systems have been buil r successfully. Selecting the right content management system (C MS) is important w provide a good u ser experience and is also important for an efficient method of publishing co ntent since the faciliry ca n be made avai lable to people througho ut the company. Today there are two main forms of CMS, both of wh ich a re delivered as web serv ices that can be accessed through a web browser. Enterprise CMSs ca n be used for large, co mpl ex si res (and ocher corporate documents); as well as the standard page creation and editing facilities these offer version control and review of documems thro ugh workflow systems that notify reviewers when new documents a re ready for ed iting. CMSs for smal ler co mpa n ies traditionally lack wo rkflow or multi-a uth o r fa.:i lities , but o ffer many of t he o ther fea w res to create co ntent. However, blogging platforms such as Word Press and Mov- able TypeTM are increasingly used by smaller businesses for ma nagi ng rheir enrire sire since rhey have enrerp ri se features.
Criteria for selecting a content management system
A professional content management system should provide rhesc facilities:
• Easy authoring system. Editing of new and existing documenrs should be possible through a \VYS!WYG (what you see is what you get) faciliry similar ro a word processor, which makes it easy to embed images and supports a range of markups necessary for SEO.
• Search engine robot crawling. The contenr must be stored and linked such that it can be indexed by search engine crawlers to add it to their index. Sometimes URL rewriting ro a search-engine-friendly format without many parameters is required. The Google Web- master p ages describe the requirements: www.google.com/webmasters.
336 Part 3 Digital marketing: Implementation and practice
Devel opment The creation of a website by programmers. tt involves writing the HTML content, creatng graphics and writing any necessary software oode such as JavaScript or ActiveX (programming).
Testing Involves dfferent aspects of the content such as speling, valicity of links, formatting on diffetent web browsers and dynamic featl.niS such as form filing or database queries.
• Search -e ngine-optimi sation -friendly markup. Some bespoke content m:magemenr sys- tems created by design agencies do not enable easy editing of the key fields, such as <title>, <hl> and <meta name = 'descr iption' content= 'page description'>.
• Diffe ren t p age templa tes. The design and maintenance of content structure (sub-com- ponents, templates, etc.), web page structure and website structure. It should be pos- sible to create different layouts and designs for different site sections o r categories of pages.
• Link management. The maimenance of internal and external links through content change and the elimination of dead links.
• In put and syndication. The loading (spidering) of externally originating content and rhe aggregation and dissemination of content from a variery of sources.
• Versioning. T he crucial task of controll ing wh ich edition of a page, page element or the whole site is published. Typically this will be the most recent, bur previous editions should be archived and it should be possible ro roll back to a previous version .
• Secur iry and access control. Di ffere nt perm iss io ns can be assigned ro different wles of users and some co ntent may o nly be avai lable through log-in derai ls. In t hese cases, the CMS mai ntai ns a list o f users.
• Use o f plug-ins and widgets. Mashups a re possib le through embeddi ng widgets such as links to socia l netwo rks or th ird -pa rry ap plicat ions. 'Bur a content manage ment sys te m may not readily support embedding wi th in rhe ma in conrenr or sidebars.
• Publication workflow. Content destined for a website needs to pass through a publication process to move it from rhe management envi ronment to rhe live delivery environment. The process may involve tasks such as edirorial authorisation and the construction of composite documents in real time (personalisarion and selective dissemination).
• Tracking and mo nito ring. Providing logs and statistical analysis of use to provide perfor- mance measures, rune the content according to demand and protect against misuse. It should also be possible to rapidly add tags £O the page templates for web analytics tools such as Google Analytics.
• Navigation and visualisation. Providing an intuitive, dear and attractive represemation of the nature and location of content using colour, texture, 30 rendering or even virtual reality. It should be possible to make changes £O rhe navigation and containers holding content within the page tem plate.
• Flexibility to tes t new a pproaches . It should be possible ro test alternative designs and messaging using techniques such as A'B and multivariate resting.
Testing the experience
Ma rketing ma nagers res pons ible fo r websites need to have a basic awareness of website d evel op m ent and testing . \Yle have a lread y discussed t he importance of usabi lity tes ti ng with typical users of rl1e system. In brief, other necessary rest ing steps incl ude:
• test that the content displays correctly on different types and versions of web browsers; • test plug-ins; • test all interactive facilities and integration with company databases; • test spelling and grammar; • test adherence to corporate image standards; • rest to ensure all internal links and links to external sires are valid.
Testing often occurs on a separate test web server (or directory) or test environment, with access to the test or prototype version being restricted ro rhe development team. When complete, the website is released or published to rhe main web server or live environment.
Post-launch, ongoing improvements to site effectiveness can be made through review of the web analyrics and testing of different page layouts, messaging and offers using the A'B an d multivariate testing tools (as described in Chapter 10).
Chapter 7 Delivering the digital customer experience 337
Online retail merchandising ]
rmdabitity An assessment of how easy ~ is for a web user to locate a single content object or to use browse navigation and seaiCh system to find content. Like usability it is assessed through efficiency - how long ~ takes to find the content, and effectiveness -how satisfied the user is with the experience and relevance of the oontent they find.
Faceted navigation Enables users to rapidly filter resutts from a product search based on <ifferent ways of classifying the product by ~ attributes or features. For example, by brand, by sub-prr:rlJc1 category, by price bands.
For online retail sire owners, merchandising is a crucial activity, in the same way it is for physical retail store owners. In both cases, rhe aims are similar - to maximise sales poremial for each store visitor. Online, this means presenting relevant products and promot ions to site visitors, which should help boost key measures of site performance such as conversion rate and average order value. You wiU see that many of these approaches are related ro the concept of findabi lity. Some of the most common approaches used are:
• Expanding navigation through syno nyms. Through using a range of terms that may apply to the same product, the product may become easier to find if a site visi tor is searching using a particular expressio n.
• Applying faceted navigation or search approaches. Search results pages are important in o nline merchandising since conversion rates will be higher if relevant products and offers are at the top of the list. Faceted navigation enables website users to ' drill-down' to easily selec t a relevant product by selecting different product attributes (Figure 7.15).
• Featuring the best-selling products prominently. Featu ring st rongest product lines promi- nentl y is a common approach, with retailers s how in g 'Top 10' or 'Top 20' products.
• Use of bundling. The dassic retail approach of buy-one-get-one-free (BOGOF) is com- monly applied o nline through showcasing complementary products. For example, Amazon discou nts two related books it offers. Related products are also shown on the product page or i11 checkout, although care has to be taken here since this can reduce conversion rates.
• Use of customer ratings and reviews. Reviews can be important in influencing sales. Research &om online ratings service BazaarvoiceTM showed that for one of irs dients, CompUSA TM, the use of reviews achieved: • 60 per cent higher conversion; • SO per cent higher order value; • 82 per cent more page views per visiror.
Figure 7.15 Faceted navigation at Euroffice.com
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338 Part 3 Digital marketing: implementation and practice
Mini case study 7.9 Figleaves.com uncovers customer feedback to increase conversion
Figleaves.com™ is aUK-based online lingerie retailer established by Daniel Nabarro in 1998 and purchased by N Brown Group in 2010. Figleaves.com explains it s on line value proposition as follows:
• Figleaves.com is the world 's largest online seller of branded intimate apparel. The retailer offers branded underwear, swimwear, exercisewear, nightwear and hosiery for men and women. [Core proposit ion and audience]
• While the choice is huge, it couldn't be easier to find what you are looking for. You can shop by brand, size, price, colour, style or occasion; or, if y ou know exactly what you are looking for, we will take you directly to it in one click. [Ease of use/findability]
• You can easily return goods if they don't fit or if they don't meet your expectation. It's our famous 'no hassle' returns policy. If you' re in the UK we even pay the returns postage. [Returns policy]
• What's more, you can check out your purchases at home- no queuing or embarrassing moments in luridly lit changing rooms. [Unique channel-specific advantage of online service]
• Underwear makes a great gift for both men and women . If you are buying for a loved one then we can send your present in a beautiful gift box along with a personalised message. Alternatively, you can send a gift certificate so that the recipient can choose exactly what they want themselves. [Gifting]
• We know how much you appreciate speedy delivery- in-stock items are usually dispatched within 24 hours. [Delivery]
This research by Bazaarvoice shows the value of using customer reviews:
• Overall, products with reviews have a 12.5 per cent higher conversion rate than those without. • Products with 201 reviews have an 83.85 per cent higher conversion than those products without reviews.
Note that products prompting the most reviews tend to be the best sellers and thus are generally higher converting.
• Analysing the session conversion for the same products before and after going live, the same products with reviews have a 35.27 per cent higher overall session conversion rate.
• Conversion was not negatively affected for products without reviews. • The look-to-book ratio is four times lower (better) for products with reviews compared to those without . • Overall look-to-book is 32.6 per cent higher (worse) for products w ithout reviews. • Since going live, products with reviews have seen a significant decrease (better) in the look-to-book ratio . • Products without reviews saw no significant decrease.
Source: Bazaarvoice case study: https:// www.bazaarvoice.com/
Mini case study 7.9 about customer feedback at Figleaves.com shows anoth er exam pl e: • U se of pro duct visualisation systems. Th ese systems enabl e web users to zoom in and
rotate on products.
Weathers and Makienk o (2006) have also investigated t he effect o f merchandising on online store success rates based on a study of users of review site Bizrate.com™. They found that features to enable searching fo r products were particularl y i m porram , as was a choice of orderi ng options.
Site promotion or 'traffic building'
Promotion of a si te in ord er to boost vi sitors is a sign ificam topic that is par t of the strategy of d evelopi ng a website. I t will follow d1e ini t ial development of a site and is described i n det ail in Chapters 8 and 9. Par ticuJarly im portant issues that must be considered during t he course of site design are search engine opt imisation and the experience delivered on landing pages where the visitor arrives not on the home page, but d eeper with in the site.
Chapter 7 Delivering the digital customer experience 339
( The impact of service quality on e-loyalty ]
Delivering service quality in e-commerce can be assessed through reviewing existing market- ing frameworks for determining levels of service quality. Those most frequently used are based on the concept of a 'service-quality gap' that exists between the customer's expected le,·el of service (&om previous experience and word-of-mouth communication) and their perception of rhe acruallevel of service delivery. We can apply rhe elements of service quality on which Parasuraman eta/. (1985) suggest that consumers judge companies. Note that there has been heated dispute about the validity of this SERVQUAL instrument framework in determining service quality- see, for example, Cronin and Taylor (199?). Despite this it is still instructive ro apply these dimensions of service quality to customer service on the web (see, for example, Chaffey and Edgar (2000); Kolesar and Galbraith (2000); Zeithaml eta!. (2002); and Trocchia and Janda (2003), summarised by Val viet al., (2012):
• Tangibles- the physical appearance of facilities and com munications; • Reli abi lity- rhe ab ility to perform the service dependab ly and accurately; • Respon siveness- a willingness to help customers and provide prompt serv ice; • Assurance- rhe knowledge and courtesy of emp loyees and their abi li ty ro convey trust
and confidence; • Empathy- providing caring, individualised attention.
For e-commerce, such dimensions are often discussed for their impact on e-loyalty, i.e. reviewing whether service quality is sufficient for repeat purchases. Additional non-service factors such as perceived value also need to be assessed for their impact on repeat purchase, as noted by Val vi eta!. (2012), who review no less than 62 instruments or frameworks for reviewing e-loyalty! These authors propose a new general conceptual framework, which leads roe-loyalty dividing antecedents into prepurchase, during purchase and after-purchase factors, based on the act of purchase.
As well as applying these academic frameworks, organisations can use benchmarking services such as ForeSeeTM (www.foreseeresults.com), based on the American Customer Sat- isfaction Index methodology thar assesses satisfaction scores based on rhe gap between expectations and acrual service (see Chapter 6, Figt1re 6.12). Ncr Promoter Score (NPS), which is discussed in Chapter 6 in the section on 'Measuring the voice of rhe customer in digital media', is cl1e most commonly used measurement and technique for assessing loyalty within e·commerce.
I r should also be remembered that the level of service selected by an online transactional service is based on the relationship between the costs w serve, the value of the product and the likelihood of the chan nel to increase conversion. Figure 7. 16 shows the typical simation for a bank. Typically, costs to serve increase to the top-right of the d iagraru, as does the capabi lity to convert through a more extended dialogue and the va lue genera ted from sale . The figure shows a genera l pattern, bur the options are often nor mutually exclusive - for example, phone contact m ay be available for all levels, bur emp hasised for rhe most complex products. We introduced some of these methods of delivering service in Chapter 5:
1 Straight-through processing. Transaction typi cally occurs without inrervcnrion from staff for a relatively simple product such as a savings account.
2 Call-b acks. The customer has the option to specify the bank call if there is anything they are unclear on.
3 Live chat. Online discussion between sen·ice representative and the client. This may be invoked proactively if analysis suggests the customer is having difficulty in deciding.
4 Co-brows ing. Sharing of screen to walk through applicarion process. 5 Phone. Typically this has the highest cost, bur often the highest conversion rare.
Two of the most significant frameworks for assessing online service quality are:
• WEBQUAL (Loiacono eta!., 2000, 2007), which considers 14 dimensions. It has been criticised for relating roo much to functional design issues rather than service issues.
3 4 0 Part 3 Digital marketing: implementation and practice
Figure 7.16 Variation between product complexity, customer value and type of online experience used to deliver service
>- 3:< )(
! E 0 0
0 :::> "0 0 ~ a..
Typical product; Key 1 Straight-through processing 2 Call-backs Mortgage or loan
3 Uvechat Typical product: 4 Co-browsing
5 Phone Car insurance
Typical product: Travel insurance
Typical product: 0 Savings
0 Customer value
Consider other limitations, which could include raring of comem or products, trust fac- tors, support for different digital devices or integration with other online and offline channels. Green and Pearson (2011), for example, cover the trust factors and perceived risk. The dimensions of WEBQUAL are:
1 Information quality - the concern that information provided is accurate, updated and appropriate.
2 Functional fit to ta.sk - rhe extent ro which users belie,·e that the website meets their needs.
3 Tailored communication.s - communications can be tailored to meet the user's needs.
4 Trust - secure communication and observance of information privacy. 5 Response time - rime ro get a response after a request or an interaction with a
website. 6 Ease of understanding - easy ro read and understand. 7 lntuitiue operations - easy to operate and navigate. 8 Visual appeal- the aestberics of th e site. 9 lnnovativeness - rhe creativity and tmiqueness of the website.
10 Emotional appeal - the emotio nal effect of usi ng the webs ite and intensity of i nvol ve menr.
11 Consistent image - the website does not create dissonance for the user by an image incompatible with rhar projected by the firm through other media.
12 Online completeness - allowing all or most necessary transactions to be co mpl eted on line (for example, purchasing on the website).
13 Relative advantage - equivalent to or better than other means of interacting with the company.
14 Customer service - the response ro customer inquiries , comments and feedback when such response requires more than one interaction.
• E-SERVQUAL (Zeithaml eta/., 2002), which contains seven dimensions. The first four are classified as the core service scale, and the latter three dimensions are regarded as a recovery scale, since they are only relevant when online customers have questions or problems:
1 Efficiency refers to the ability of the customers ro get ro the websire, search for information or transact as required.
Online-service quality gap The mismatch between what is expected and delivered by an online presence.
Chapter 7 Delivering the digital customer experience 341
2 Fulfilment involves the accuracy of service promises, including products' in-stock availability and delivering the products in the promised rime.
3 Reliability is associated with the technical functioning of the sire, including avail- ability and performance.
4 Privacy is related to assurance that shopping behaviour clara are nor shared and rhar credit card information is secure.
5 Responsiveness refers to rhe ability of e-tailers to provide appropriate support information to customers when requested.
6 Compensation involves returns facilities for refunds and return shipping and handling costs.
7 Contact is the ability of customers to talk to a live service agent onl ine.
Both are useful frameworks that can still be applied to eva lu ate online service quality today, alth ough a rguabl y they omi t the importance of accessibi lity, fi ndabi li ty techniques, multi- channel integration and customer reviews and ratings (as discussed in the later section on merchandising as a determinant of satisfacto ry experi ence).
On lin e marketers should assess w hat customers' t:xpecrarions arc in each of these areas, a nd identify where there is an o nline service-qua lity ga p between the customer expectat ions a nd wh at is currently delivered.
As menti o ned at the start of the chapter, Klaus (2014) notes that there have been limited anemp ts ro revi ew more holistic digital customer experiences, despite the. development of broader custo mer experience ma nagement assessmenr such as EXQ: a mu ltiple-item scale for assessing service e..xperience developed by Klaus and Maklan (2012).
We will now examine how the five determinants of online service quality apply online.
Tangibles
It can be suggested that the tangibles dimension is influenced by ease of use and visual appeal based on the structural and graphic design of the site. Design factors that influence this variable are described later in this chapter.
Reliability and responsiveness
The reliability dimension is dependent on the availability of a website - in other words, how easy it is to connect to the website as a user. Many companies fail to ad1ieve 100 per cent avai lability and potential customers may be lost for ever if they anempr to use the site when it is unavailable.
Reli abi lity of email a nd social media res po nse remains a key issue. Superoffice (2017) a nal ysed the custo mer service quality of 500 companies across the W<>rld of a range of sizes. They found that:
• 41 per cenr of companies did not respond to a customer service req uest. • 90 per cenr of companies did not acknowledge an emai l had been received . • 99 per cenr of companies did not follow up with custome rs. • O nly 11 per cent of companies answered both questions in the first reply.
The average response time to handle a customer service requesr was 15 hours. Responsiveness is also indicated by the performance of the website - the time it rakes for
a page request robe delivered to the user's browser as a page impression, as discussed for the Coogle (2017b) data presenred earlier in this chapter.
Assurance
In an email or social media response context, assurance can besr be considered as rhe quality of response.
342 Part 3 Digital marketing: Implementation and practice
Multichannel communications preferences
Upton (2008) reports on research where 1,000 UK consumers aged 18+ were surveyed to identify the role and importance of customer services and communications for online busi- nesses. D espite the growing populariry of email as a communication tool, 53 per cent of those interviewed still prefer to communicate wirh businesses over the telephone, particu- larly for service enquiries, compared with 48 per cenr for email and 16 per cent for tradi- tional mail. However, when asked about rheir e..xperiences, rhree our of ten UK consumers stared they found it difficult to locate contact derails on websires.
Su rprisingly, 53 per cenr of consumers consider three minutes' waiting time a satisfactory period ro speak with an agent over rhe telephone. Consumers particularly disliked ringing a contact centre only to be mer wirh a computerised answering service. As Upton notes, replacing a skilled operator with an automated service might save money in the short term - howeve r, in the long term companies r isk losing brand advocacy and sales. Additional ly, customers believe 24 homs is a respect able amount of rime ro wait for a response when conracting a business via email.
Ht: concludes:
Overall the research shows that in this e ra of multi -communication, consumers are no longer allied to any particular mode of communication. They will select the most convenient or appropriate channe l eve n if th e retaile r trades solely online.
As a result, brands need to provide their contact centre agents with the tools to seam- lessly combine different co mmunication channels such as telephone, email, v-mail, web chat and SMS to communicate with the consumer and meet their expectat ions of service.
Agents also need to have real-time access to all past interactions with a customer. This should include text transcriptions of conversations and emails, scanned copies of letters received and despatched, as well as call recordings , comments and outcomes ensuring that the agent is fully briefed on the existing relationship that the customer has with the brand. Importantly, this information can be further used to tailor all future contact with the customer, delivering greater levels of customer satisfaction. By employing the customer's preferred channel of communication, which has been identified using the data from real conversations with individuals , it is possible to meet customer expectations, and as a result maximise retention and brand advocacy.
A further assurance concern of e-commerce webs ires is the privacy and securiry of customer information (see Chapter 3). A company rhar adheres ro rhe UK lnrernet Shopping Is Safe (ISIS) (www.imrg.org) or TrusrArc (formerly Trusre) principles (www.trustarc.com/) will pro- vide bt:tter assurance tha n o ne thar does nor. For security, ' hacker safe' accred itatio n is avai lable from Scan A lerrTM (www.scanalert.com}, which is owned by McAfeeTM security products. This involves auto ma ted dai ly scans to rest sire security.
Chaffey and Smi th (2012) suggest d1ar rhe fol lowing actions can be used to achieve assur- . .
ance 111 an e-commerce s1te:
• provide clear and effective privacy statements; • follow privacy and consumer protection guidelines in all loca l markets; • make security of customer data a priority; • use independent certification bodies ; • emphasise the excellence of service quality in all communications.
Empathy
Although it might be considered r:hat empathy requires personal human contact, it can still be achieved, to an extent, r:hrough email and web communications.
Chapter 7 Delivering the digital customer experience 343
Provision of personalisation facilities is also an indicarion of the empathy provided by the website, but more research is needed as to customers' perception of the value of web pages that are d yna mically created to meet a customer's information needs.
It can be suggested that for managers wishing to apply a framework such as SERVQUAL in an e-commerc.e context there are three stages appropriate ro managing the process:
1 Understanding expectations. Customer expectat ions for thee-commerce environment in a particul:u market sector must be understood. The SERVQUAL framework can be used with market reseru-ch and benchmarking of other sites to understand requirements such as responsiveness and empathy. Scenarios can also be used to identify customer expec.ta- rions of using services on a site.
2 Setting and communicating the service promise. Once expectarions are understood, mar- keting communications can be used to inform the customers of the level of service. This can be achieved through customer service guarantees or promises. It is better to tmder- promise than over-promise. A book retailer who delivers a book in two days when three days were promised will earn the customer's loyalty better than the retailer who promises one day bur deLivers in two! The enlightened company may also explain what it will do if it doesn't meet its promises- will the customer be recompensed? The service promise must also be communicated internally and combined with training to ensure that the service is delivered.
3 Delivering the service promise. Final ly, commitments must be delivered through on -site service, support from employees and physical fulfilment. Orl1erwise, online credibility is destroyed and a customer may never retttrn.
Tables 7.5 and 7.6 summarise the main concerns of online consumers for each of the ele- ments of service quality. Table 7 .5 gives the main factors in the context of SERVQUAL and Table 7.6 presents the requirements from an e-commerce site that must be met for excellent . customer serv1ce.
Table 7.5 Online elements of service quality
Tangibles Reliability Responsiveness
Ease of use Availability Download speed
Content quality Reliability Email response
Price Email replies Call-back
Fulfilment
Table 7.6 Summary of requirements for online service quality
Email response requirements:
• Use of autoresponders confirming processing of query
• Defined response times and individuals responsible
• Personalised emails if this is appropriate
Assurance and empathy
Contacts with call centre
Personalisation
Privacy
Security
• Opt-ins and Opt-outs must be provided for promotional emails with a suitable offer in exchange for customer information
• Accurate response to inbound email noting customer's preferred response type: email, or phone call
• Layout should be clear; with named individual and privacy statements included
344 Part 3 Digital marketing: implementation and practice
Table 7.6 (Continued}
Website requirements:
• Company targets for site performance and availability
• Support for customer preferred channels (email, phone, in person or postal maiQ
• Clear contact points, induding mailto (a link specified which sends an email or leads to a form)
• Personalisation options for customers
• Tools to help users answer specific questions, such as FAQs or interactive databases
• Testing of site usability and efficiency of links, HTML, plug-ins and browsers to maximise accessibility
• Graphic and site design to achieve ease of use and relevance of content with visual appeal
The relationship between service quality, customer satisfaction and loyalty
As we discussed in Chapter 6 (see Figure 6.11), it is key for organisations to understand not only rhe levers that determine service qual iry and customer satisfaction, bur also loyalry or repeat purchases.
Rigby et a/. (2000) assessed repeat-purchase drivers in grocery, clothing and consumer electronics e-rail. It was found that the key loyalry drivers were similar to those of Dell, including correct delivery of order, but other factors such as price, case of use and customer support were more 1mporranr.
Case study 7 Refining the online customer experience at i-to-i.com
This case is about a specialist travel and education com- pany, focusing on its online TEFL (Teaching English as a Foreign Language) courses. The company's site com- bines many of the features we have described in this chapter, blending accessibility, usability and persuasion. This case considers the challenges of delivering an effective design across different markets for different audiences.
i-to-i background i-to-i (www.i-to-i.com) is an international organisation with offices in the UK, USA, Ireland and Australia Around 40,000 people have selected Ho-i as they travel on ven- tures to support 5 00 worthwhile projects in five continents and it has also trained a further 180,000 people as TEFL (Teaching English as a Foreign Language) teachers.
The history of i-to- i The founder of i-to-i, Deirdre Bounds, was inspired to create the company following a career break that took her
to teach English in Japan, China and Greece and drive a backpackers' bus in Sydney. The company initially started t hrough creating TEFL courses, eventually leading to organising volunteer projects. Since 2003, the com- pany has supported the i-to-i Foundation - a registered charity committed to providing funds to the most needy community and ecological projects in the i-to-i family.
Proposition The main features of the i-to-i TEFL proposition com- municated through its site are:
• International accreditation: i-to-i is externally accredited by the ODLQC in order to ensure that its courses are rigorously monitored and always meet the highest industry standards.
• World-class reputation: i-to-i has four offices world- wide and it has over 12 years' experience teaching
TEFL • Partnership: i-to-i is the preferred TEFL course pro-
vider for STA Travei1 M , Opodo and Lonely Planet™.
• Complete student support: students receive advice on how to get work abroad, how best to prepare for their time away and up-to-the-minute advice on cur- rent job opportunities.
• Highly experienced tutors: all i-to-i tutors have at least three years' overseas teaching experience.
This proposition is backed up by 'the i-to-i TEFL Promise', which is communicated on the site:
• We will beat any equivalent and cheaper course by 150%.
• If you're not entirely satisfied after the first seven days, we'll give you a full refund.
• Our experience, our high academic standards and the quality of our courses means that i-to-i TEFL certifi- cates are recognised by thousands of language schools worldwide.
• Additionally i-to-i can offer to help students find TEFL jobs abroad.
Audience segmentation The main segmentation used by Ho-i is geographic:
• UK; • North America; • Europe; • Australia and New Zealand; • rest-of-world (same as UK).
Different brochures are available for each geographical area. Information is also collected on an optional basis about prospects' age and status, although this is not used for targeting emails. Career status categories are:
• student; • employed; • self-employed; • career break; • unemployed; • retired.
Since optional information is restricted to certain lead tools it is not used to target emails. For weekend TEFL the postcode/city is used to target courses to the nearest location of prospects.
Competitors Some of the main competitors for online TEFL courses based in the UK and Austra.lia include:
• www.cactustefl.com • www.teflonline.com
• www.eslbase.com
Chapter 7 Delivering the digital customer experience 345
In the US, competitors who also operate in the UK and other countries include:
• www.teflcorp.com
Media mix Ho-i uses a combination of these digital media channels to drive visits, leads and sales:
• pay-per-click (PPC) (mainly Google Ads); • social media marketing using Facebook, lnstagram,
Twitter and i-to-i's own traveller community; • natural search; • affiliate marketing; • display advertising; • email marketing.
Facebook (facebook.com/itoitefl/) is important for show- casing travellers' experiences throug h a 'Storyteller' series, often using video and blog diaries.
Customer experience and conversion process Detailed content to help visitors decide on purchasing a course is available on the site. This includes module outlines and videos. Specific landing pages are used to convert visitors from paid search or affiliates, for example.
A number of engagement devices are blended into the design used to generate leads, including brochures, 'TEFL tasters' quiz, an email guide and campaign promo- tions such as winning a course. Customers have the choice of requesting a brochure (post or download), requesting a callback or a live chat.
Such leads are followed up through a series of wel- come emails. Results are monitored, but emails are not proactively followed up on. There is no phone follow- up of leads due to the relative low value of the prod- ucts, but site visitors are encouraged to ring or setup a callback, which often leads to higher conversion rates.
Marketplace challenges The main marketplace challenges faced by i-to-i are:
• Increasing its presence and conversion effectiveness in a competitive market in different geographies.
• i-to-i has good exposure in the UK, its primary market, but operates in a cluttered marketplace with price being the main differentiator (products are similar and some competitors are just as established).
• Research suggests that there is good opportunity within the US, but exposure is more limited because of the cost of pay-per-click advertising and because presence in natural search favours the US.
346 Part 3 Digital marketing: implementation and practice
• Rest-of-world sales (outside of the UK, USA, Canada, Ireland/Europe, Australia and New Zealand) are increasing and this is believed to be a growing mar- ket. i-to-i seeks to penetrate these markets, but in a cost- effective way that will not distract attention from the main market:s.
• Increasing demand through reaching and educating those considering travel , who are not aware of TEFL courses and the opportunities they unlock. For exam- ple, many wi II look for casual work in other countries , e.g. in bars or in agriculture, but will be unaware of
TEFL.
Questions 1 Select one country that i-to-i operates in closest
to the area where you live. Define a persona based on their age and product needs and then identify the main customer journeys and content requirements for this persona. Which routes
through the site would this user follow? 2 Review the range of engagement techniques
on the i-to-i website to engage the audience to generate leads.
3 Identify key areas for improvement for i-to-i based on your use of the site.
1 An effective o nli ne customer experience is dependent on many factors, inc.luding t he visuaJ elements of the site design and how it has been designed for persuasion, usabi li ty, accessibility and performance.
2 Carefu l planning and execution of website implementation is important, in order to avoid the need for extensive reworking at a later stage if t he design proves to be ineffective.
3 Analysis, design and implementation should form an iterative, prototyping approach based on usability testing that meets business and user requirements.
4 A feasibility study should take place before the initiat ion of a major website project. A feasibility study will assess: • the costs and benefits of the project; • the difficulty of achieving management and staff commitment t o the project; • the avail abili ty of domain names to support t he project; • the responsibilities and stages necessary for a successful project.
5 The choice of host for a website shou ld be considered ca refully si nce th is will govern the quality of service of the website.
6 Opt ions for analysis of users' requirements for a website include: • interv iews with marketi ng staff;
. . . • q uesnonnatre sent to compames; • usability and accessibi lity testing; • informal interviews with key accounts; • focus groups; • reviewing competirors' websites.
7 The design phase of developing a website includes spec ification of: • the information architecture, or structure, of the website using techniques such as site
maps, bluep rints and wireframes; • the flow, comrolled by the navigation and menu opt ions; • the graph ic des ign and brand ident ity; • content strategy; • com1try-specific localisation ; • cl1e service q ual ity of online forms and ema il messages.
Exercises
Chapter 7 Delivering the digital customer experience 34 7
Self-assessment exercises
1 Explain the term 'prototyping' in relation to website creation. 2 What tasks should managers undertake during initiation of a web page? 3 What factors should be considered for domain name registration? 4 List the factors that determine website ' flow'. 5 Which requirements are important for an effective website? 6 List the options for assessing online service quality. 7 Which issues should be considered when developing a content strategy? 8 What are the factors that control the performance of a website?
Essay and discussion questions
1 Discuss the relative effectiveness of the different methods of assessing the cus- tomer's needs from a website.
2 Select three websites of your choice and compare their design effectiveness. You should describe design features such as navigation, structure and graphics.
3 Explain how strategy, analysis, design and implementation of a website should be integrated through a prototyping approach. Describe the merits and probfems of the prototyping approach.
4 When designing the interactive services of a website, what steps should the designer take to provide a quality service to customers?
Examination questions
1 What is website prototyping? Give three benefits of this approach. 2 What requirements should be defined at the initiation phase of an online project? 3 Which factors are important when selecting a web design agency? 4 How can customer analysis be used to develop a more effective online service? 5 Name, and briefly explain, four characteristics of an online service that will govern
whether a user recommends it.
6 What are the constraints on web service design depending on the technology platform the service is accessed on?
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[ Weblinks J ~- ----=---------=====:::::::
Retail a - commerce effectiveness compilations
• Moneta te Ecommerce Quarterly (www.monetate.com/research/) • IMRG (http:l/imrg.org)
Information architecture
• Boxes and Arrows (boxesandarrows.com). A great collection of best-practice articles and discussions about lA top ics such as controlled vocabu laries.
• Peter Morvill e (www.semanticstudios.com/writing). Blog of rhe author of rhe classic Information Architecture book. In-depth best-practice articles.
• L ouis Rosenfeld site (www.louisrosenfeld.com). Rosenfeld is also author of the classic Information Architecture book .
• Jesse J ames Garrett (http://jjg.net/ia). Design expert JJG's anicles on IA. • Step Two (www.steptwo.com.au). This design company has introductory outlines and
more derailed articles o n information architecture and other aspects of usability.
Chapter 7 Delivering the digital customer experience 351
Usability
• [nreraction Design Foundation (www.interaction-desig n.org). The biggest and most authoritative library of open-source UX Design resources.
• Usabi!ity.gov (www.usability.gov). A comprehensi,·e US portal sire covering every aspecr of usability, from planning and analysing ro designing, followed by resting and refining.
• Nielsen Norman Group (www.nngroup.com). One of rhc leading usability consulrants with quality anicles and videos on best practices, often based on user research sruclies.
• UIE (www.uie.com/articles). Jared Spool and colleagues' user interface engineering arti- cles provide good best-practice summary articles.
• Government Service Manual (www.gov.uk/service-manual). Describes rhe process for developing online services through Discovery, Beta, Alpha and Live srages.
• Webby Awards (www.webbyawards.com). Best practice- rhe international Oscars for the web.
Technology and web standard development
• Accessibility standards. (www.w3.org/WAI}. Guidelines and reso urces from rhe Worl d Wide Web Consortium (W3C).
• A Li st Apart (www.alistapart.com). Explores the design, development and meaning of web content, with a special focus on web standards and best practices.
• The World Wide Web Consortinm (www.w3.org). The globa l srand::uds body prominent in defining web standards.
• Web ofThings (www.webofthings.org). A community of developers, researchers and designers exploring the furure of rhe physical web.
Campaign planning for digital media
Introduction
Chapter 8 Campaign planning for digital media 353
Quest ions for marketers
Key questions for marketing managers related to this chapter are:
• How do the characteristics of digital media differ from those of traditional media?
• How should I p lan online marketing campaign elements?
• How do I choose the best mix of online and offline communications techniques?
Links to other chapters
This chapter is related to other chapters as follows :
• Chapter 1 describes the 61s, a framework that introduces the characteristics of Internet marketing communications.
• Chapter 2 introduces portals and search engines -one of the methods of online traffic building discussed in this chapter.
• Chapter 3 introduces some of the legal and ethical constraints on online marketing communications.
• Chapter 4 provides the strategic basis for digital marketing communications.
• Chapter 7 describes on-site communications.
• Chapter 9 reviews the different digital media channels in detail.
• Chapter 10 considers the measurement of communications effectiveness.
A compa ny tha t has d eveloped an effec tive o nline custome r expe rience, as di scussed in Chapter 7, is o nl y pa rt-way to success in digital ma rketing. In rhe days o f the d ot.co m boom a co mmo n expression wa s: ' If you build it, they w ill co me. ' T his famo us line proved true of a baseball stadium built in the film Field of Dreams, bu r un fortun atel y it d oesn' t apply to websires o r oth er fo rms of online presence such as mobil e apps o r social medi a sites. Berrho n eta /. (1998) make the a nalogy between o nline comm unicat io ns a nd a t rad e fair. Effecti ve pro mo tion a nd achieving visibility o f the stand is necessary ro attract so me of the ma ny show visi tors to th at stand and encourage them to interact. Sim ilarly, if you want to m axi - mise quality visi to rs wi thin a target aud ience to your on line presences to acquire new cus- romers on line, Internet marketers have ro select the appropriate on line and offiine marketing
. . COIUD1UI11Catl011S.
354 Part 3 Digital marketing: implementation and practice
Continuous or ' always-on' digital communications activities long-term use of e-matke~Wlg comrnt.lliCabons ontended to generate Site visitors for customer acqUISition (such as seateh engine. affiiate marl(eling and onine sponsorship) and retention ~or example, a-newsletter mar1<e1Wlg).
Planning for how d igita l media are used includes both short-term camp::tigns to support a p::trricular goal such as launching a new product, promoting a sale or encouraging pros- peers to ::trtend an event, and longer-term a lways-on or continuous digita l c ommunications a ctivit ies , which review rhe best mix of communications to use to drive visitors ro a sire and achiC\'C the main omcomes for rhe sire such as product sales (for a rerailcr),lead generation (for a business-ro-business company) and engagement with a brand or subscriptions or ad revenue (for an online publisher or consumer brand).
Chaffey and Smith (2017) refer to rhe relevance of timing for rraffic building. They say:
Some marketers may consider traffic building to be a continuous process, but others may view it as a specific campaign, perhaps to launch a site or a major enhancement. Some methods tend to work best conti nuously; others are short term.
An example of the benefits tha t can accrue through a continuous focus on improvi ng results is explored in M ini case st ud y 8.1. T h is is a n example of the approach of growth hack ing introduced in th e p revio us chapter, which blends improvemencs to communications w irh experience.
The structure of this chapter
We begin by reviewing the unique d 1aracteristics of digital media that should be appl ied for success in online campaigns. We then look at t he different practical aspects of communica- tions, which must be reviewed as parr of planning alw::tys-on communications or managing a c::tmpaign and integrating ir wirh traditional media. These are the secrions of this chapter an d the main questions we answer:
1 Goal setting and tracking. Wbich specific goals should be set for online campaigns and how do we measure success? Wbar response mechanisms will be most effective?
2 Campaign insigh r. Which data abom customer and competitor behaviour are available to infor m our decision?
3 Segm entation and targeting. H ow can we target and reach our differenc audiences? 4 O ffer and message development. How do we specify our offer and key messages?
Mini case study 8.1 A focus on 'always-on' marketing and growth hacking
Businesses can tap into the continuous demand for content via search engines and social media to grow their audience. Growth hackin g is sti ll a relatively new techn ique, which involves fast marketing experiments targeted at increasing growth In customer activity in digital channels. In this case, the business is a news publisher: Metro™. In VIP Wordpress, Metro.co.uk's Head of Development Dave Jensen (2014) wanted to increase visitors from 9 million to 25 million uniques in a single year. He applied '1 0 Growth Hacks' that sup- ported the increase in visitors . Some of these 'hacks' were technology and hosting related, such as adopting a responsive design, improving site performance and improving indexing of the site by Google to increase search referral from 2 million to 1 0 m illion visits a month. Other changes involved opening the platform up to offer more 'user-generated content', such as contributed blog articles. Social media optimisation was also a contributor of growth. Methods to encourage sharing via Facebook saw Page Likes increase from 173,000 to 562,000 Likes in a single year.
Summarising the process behind the increase in visits, Dave Jensen said:
None of the above would have been possible without the adoption of a lean mindset and the approach of build , measure, leam, iterate. It has been an amazing 12 months of growth at Metro and a great feeling to be part of a team that came up with and then executed a plan which delivered these results.
Chapter 8 Campaign planning for digital media 355
Essential digital skills Campaign planning for digital media
Digital media channel Ontine communications technique used to achieve goals of brand awareness. famiiarily. favourability. and lo Influence purchase intent by encouraging users of digital media to vis~ a website, where they will engage with the bo'and a product and ulumately purchase onine, a offine ttvough traddional media channets such as by phone a n store.
Referrer or referring site The source of a II!Sdor to a ~e deivered Ilia a digital media channel. Typicaly a specific s~e. e.g. Google At:!Words. or a media Site or an individual ad placement on the site.
The practical skills of managing paid, owned and earned media channels, which we will cover in Chapter 9, are much sought after in businesses. Yet creating integrated plans to coordinate these activities is even more sought after. These skills include:
• Setting a brief for agency or internal teams. Outline the goals and target audience for a campaign.
• Reviewing ins ight and analytics. Today's campaigns must be data-driven, so knowledge of insight sources (Chapter 2) and campaign effectiveness measures are useful.
• Campaign integration tactics. Campaigns are more effective when integrated, so understanding how to achieve this is useful.
Practical ideas to boost employability by showcasing your interests and experiences include:
• reviewing campaigns by brands and writing up the success factors on a blog; • using the Google Ana lytics Demo account to understand full referrer mix; • completing free online Google Ads or Analytics training.
To audit your digital marketing skills across the RACE p lanning framework use the Smart Insights Skills Assessment tool available at http://bit.ly/smartdigiskills.
5 Budgeting and selecting the digital media m ix. H ow should we set the budget and invest in different forms of digital medi a?
6 Integration into overall media schedule or plan. H ow should we plan the media schedule, which incorporates different waves of online and offline communications?
Building on this, in Chapter 9 we review the success factors for the main d igital media channels , such as affiliate, search a nd social media markering (shown in Figure 1.9), which make up the tactics of digital marketing campaigns. When a visitor is directed to a site from ano ther third-party site via a digital media channel , the origin is kn own as a referrer or referring site.
( The characteristics of digital media
Push media Communications are broadcast from an advertiser to consumers of the message. who are passive recipients.
Pull media and inbound marketing The consumer Is proactive in actMlly seel<ing out a soUtion and intetacbons with bo'ands and is attracted through content, search and social media marl<eling.
By und erstanding the key inreractive communi cations characteristics enabled through digital med ia we can exp loit these media while guarding against their weaknesses. In th is section, we will describe nine key changes in the media cha racteristics between traditional and digital media. No te that the 6Is in Chapter 1 provide a n alternative fra mework that is useful for evaluating the differences between traditional media and new media.
1 From push to pull
Traditional media such as print, TV and radio arc push media - one-way streets where infor- mation is mainly unidirectional, from company to customer, unless direct response elements are built in. In contrast, many digital marketing :tctiviries such as content, sea rch and social media marketing involve pull media and inbou nd marketi ng. Among marketing professionals this powerful new approach to marketing is now commonly known :ts inbound marketing (introduced in C hapter 1) (S hah and Halligan , 2009) . In bound marketing is powerful since
356 Part 3 Digital marketing: implementation and practice
l n teractivity The medium enables a dialogue between company and customer.
Mass-Customisation The creation of tailoted marketing messages ()( products for incJvictJat rustomers cx groups of rustomers lyplcaly using technology to retain the economies of scale and the capacity of mass marketing or production.
Personalisation Web-based personalisation involves delivering customised content for the indi..;dual through web pages, email or push technology.
advertising wastage is reduced. It involves applying content and search marketing to target prospects with a defined need - they are proactive and self-selecting. But this is a weakness since marketers may have less control than in traditional communications where the message is pushed out to a defined audience and can help generate awareness and demand. Advocates of inbound marketing argue that content, social med ia and search marketing do ha\'e a role to play in generating demand. The implications are that stimuli to encourage online interac- tions are still important through online or traditional ads, direct mail, physical reminders or encouraging word of mouth. 'Push' from email marketing remains important and is part of the inbound or permission marketing approach (Chapter 6): it should be an aim of websites and social media presences to capture customers' email addresses in order that opt-in email can be used to push relevant and timely messages to customers.
2 Interactive dialogues
Creating a dialogue through inte ra c tivity is rhe next important feature of the web and digital media, which provide the oppornmiry for two-way and mu lti-dimensional interactions with the customer. Tlcis distinguishing feature of the digital medium was procla im ed in the early days to be a significant benefit of the Internet and digital channe ls (Peters, 1998; Deighton, 1996) and also as a means of developing long-term relations hips with customers duough what would later be defined as permission marketing by Godin (1999).
Walmsley (2007) believed the main impact of digimJ media has not been to find new ways to connect brands to consumers as originally anticipated, but in connecring those consumers to each other. This unexpected shift in the direction has led ro new communication paradigms.
3 From one-to-many to one-to-some and one-to-one
Traditional push communications are one-to-many (from one company to many customers), often the same message to different segments and ofren poorly targeted. With digital media 'one-to-some' communications, reaching a niche or micro-segment becomes more practical - e-marketers can afford to tailor and target their message to different segments through providing different sire conrenr or email for different audiences through mass-custom isation and pe rsonalisation (Chapter 6).
Figure 8.1 illustrates the opportunities for mass customisation as interaction occurs between an organisation (0) communicating a m essage (M) to customers (C) for a single- step flow of commu11ication. It is apparent that for traditional mass marketing in (a) a single me ssage (M
1 ) is communicated to all customers (C
1 to C
5 ).
Hoffman and Novak (1997) believed that rhjs c hange was significant enough to represent a new model for m arket ing, or a new ' marketing paradigm' (Figure 8.1 (c)). They suggest that the fa ci lities of the Internet , including the web, represent a computer-mediated environ- ment in which th e interactions are nor between the sender :md receiver of information, but with th e medium itself. Their vision of the furure is now apparent in the popularity of social networks, blogs and specialist communities:
consumers can interact with the medium , firms can provide content to the medium, and in the most radical departure from traditional marketing environments, consumers can provide commercially-orientated content to the media.
4 From one-to- many to many-to-many communications
Digital media also enable many-to- many communications. Hoffman and Nm·ak (1996) noted that new media are many-to- many media. Here customers can inreract with other customers via a website, in independent conununities or on their personal websites and blogs. We will see in the section on online PR that the implications of many-to-many communications are
Chapter 8 Campaign planning for digital media 357
Fig ure 8.1 The differences between one-to-many and one-to-one communicat ion using the Internet [organisation (0) c ommunicating a message (M) to customers (C)]
0
(a) Traditional one-to-many mass marketing communication
e,
0 0
(b) One-to-one Internet - based c ommunication
0
0
(c) Many-to-many communi cations via the Internet medium
Key G Organisation ... (;:\ M = Communicating a message 0 Customers
a loss of control of communications requiring monitoring of information sources, bur an openjng up of more opportuniries to reach out to influencers to expand reach.
5 From 'lean-back' to 'lean- forward'
Digital media are a lso intense media - they are interactive, lean-forward media where the customer wants to be in control and wants to experience flow and responsiveness to rheir needs. First impressions and devices to encourage the visitor to interact are important. If the visitor to your site does not find what they arelooking for immediately, whether through poor design or slow speed, they will move on, probably never to return .
6 The medium changes the nature of standard marketing communications tools such as advertising
In addition to offering the opportunity for one-to-one marketing, the Internet can be, and widely stil l is, used for one-to-many advertising. The website or social media si te can be
358 Part 3 Digital marketing: Implementation and practice
Pay-for-perfonnance communications The wastage from traditional media buys can be reduced online through advertising models where the advertisers orly pay fa.- a response (cost-per- click), as in pay-per-click search marketing or for a lead or sale as in affiliate marketing.
considered as simiJar in function roan advertisement (since it can inform, persuade and remind customers abom the offering, aJrhough it is not paid for in the same way as a tradi- tionaJ advertisement) . Berthon et al. (1996) considered a website as a mix between advertis- ing and direct selling since ir can aJso be used to engage the visitor in a dialogue. Constraints on advertising in traditionaJ mass media, such as paying for time or space, become less important. The wastage in traditionaJ advertising where ads are either ignored or are not relevant for an audience is reduced in online marketing, and search marketing in particuJar. In pay-per-d ick (PPC) ad,·ertising, display of ads can be controlled according rouser need based on what searchers are looking for and cost is only incurred where interest is indicated by a click. Affiliate marketing is aJso a pay-for-performance communications technjque where cost is onJy incurred where there is a response.
Peters ( 1998) suggested that communication via the new medium was differentiated from traditionaJ media in four ways:
1 Communication style, which is changed with immediate, or synchrono us, transfer of information through online customer service; asynchronous communication, where there is a time delay between sending and receiving information, as through emai l, also occurs;
2 Social {Jresence or the feeling that a communications exchange is sociable, warm, per- sona l andl active may be lower if a standard web page is delivered but can be enJ1anced, perhaps by personalisation;
3 Control of contact has shifted rowards the consumer; 4 The user controls the content - for example, duo ugh personalisarion facilities or posting
their own user-generated content.
These ideas are stiJJ very rclevanr today and acr as a foundation for digital commwlications. Hoffman and Novak (1996) had aJso pointed our that the main relationships in digitaJ
channels are not directly between sender and receiver of information, but with rhe web- based environment, bur the classic communications model of Schramm ( 1955) can still be used to help understand rhe effectiveness of marketing communication using the lnterner. Figure 8.2 shows the model applied ro rhe Internet. Four of the elements of the model rhar can constrain the effectiveness of digiraJ marketing are:
• Encoding_ Tlus is rhe design and development of the sire con rent or email that aims to convey the message of the company, and is dependent on understanding of the target audience.
• Noise. This is the exrernaJ influence rhar affects rhe quali ty of rhe message; in an lnrerner context this can be slow download rimes, rhe use of plug-ins that rhe user cannot use or confusion caused by too much information on-screen.
Figure 8.2 The communications model of Schramm (1955) applied to t he Internet
N 0
r-----1! ! ! ! ! Source
(website) 1-------~· Message encoding Site content or e-mail
' Feedback (web analytics)
s E
Receiver (web browser)
Message decoding
Always-on (or continuous) communications Continuous Investment In paid, owned and eamed digital media to engage prospects and customers and meet purchase intent as they research products through search. SOCial meda and publisher sites.
Real-time mari<eting (and PR) Brands develop an agie. proactive approach to PR. content mar1<eting and advertiSing to participate in current news and trends to ~ Increase their visibility and influence through positive brand mentions. They also develop a reactive approach to respond to negative brand mentions through social media reputation management.
Memes An idea, theme or trend that engages an audience and spreads through viral communications.
Newsjacking A publisher or other brand seeks to take advantage of curmnt topical interest in a story and then add to or subvert H to Increase their own p!.bioty.
Chapter 8 Campaign planning for digital media 359
• Decoding. This is the process of imerpreting the message, and is dependent on the cogni- tive ability of the receiver, which is partly influenced by the length of time they have used the Internet.
• Feedback. This occurs through online forms and through monitoring of on-sire behaviour through web analytics (Chapter 10) .
7 Increase in communications intermediaries
If we contrast traditional advertising and PR with the options available in paid, owned and earned digital media, there is an increase in options ro reach audiences online through a large number of options for media and inBuencers. Traditional radio channels, newspapers and prim tides have migrated online, bur in addition there are a vast number of online-only pub- lishers, bloggers and individuals sharing through social networks. The concept of rhe long rail (Chapter 5) also applies ro websites in any sector. There ~ue a handful of key sites, but many others can also be used to reach customers. The on line marketer needs to select the most appropriate of this pled10ra of sites that cusromers visit ro d rive traf6c to their own websi te.
8 Integration
Although digital media have distinct characteristics compared to traditional media, it does not follow d1at we should concentrate our communications solely on digital media. Rather we should combine and integrate traditional and digital media according to their strengths, as explained in Step 6 in this chapter.
9 Timing of campaign communications have additional 'always-on' and reaJ-time marketing components
Earlier in this chapter and in previous chapters we have described the need for 'always-on' (or continuous) com munications activity across paid, owned and earned media ro tap into consumer intent to research new products through search engines, publisher sites and social media. Alongside this, investment in traditional 'bursr' marketing campaigns is, of course, sriU needed to promo te new products, seasonal promotions, brand engagement and demand (lead) generation. See Mini case study 8.2, which shows how a modern marketing campaign can blend offline experiential marketing with digital activation.
Another change in the timing of marketing campaigns and communications is from forward planning of campa igns to a more agile, dynamic approach now known as rea l-ti me market ing (a nd PR).
Real time means news breaks over minures, not days. It means ideas percolate, then sudden ly and unpredictab ly go viral ro a global audience. It's when companies develop (or refine) products or services instantly, based on feedbnck from customers or events in the marketplace. And it's when businesses see an opportunity and are the first to act on it. See Digital marketing insight 8.1: hashtag#Openyourworld about here.
This e-xperimental type of approach ro advertising can be risky; previously Pepsi failed to achieve its objectives when bringing together protestors and police over a can of soft drink (Hunt, 2017; Mortimer, 2017) . Brands can be proacti,·e in creating their own viral news, memes or storytelling through can1paigns to make proactive use of real-time marketing such as through newsjacking , but also need robe v when their brand is presented neganvely. This is part of reputation management and crisis communicanons, which are described in the next chapter in the sections on online PR and social media.
We conclude this section with our summary of some of the main differences between traditional and digital media (Table 8.1).
360 Part 3 Digital marketing: implementation and practice
Mini case study 8.2 Evian™ uses uses real-time social media to create an impact in New York, London and Paris
Evian, the bottled water company, began this real-time, local marketing campaign over three days in August 2014 under the hashtag #Evianbottleservice. In New York it targeted consumers in city parks such as Bryant Park and Madison Square Park at hot times of day (http://youtu.be/4EscVUOoFTw). AdWeek (2014) explained how to participate in the programme: consumers had to use the hashtag to Tweet a message to Evian describ- ing their current location. Evian's community managers, social media agency Team Epiphany and staffers from PR company Edelman then responded to the Tweets, triggering a team of brand ambassadors on the streets to deliver a bottle of water within five to seven minutes to each participant. Evian also bought Promoted Tweets to target postcodes around the neighbourhoods to amplify the real-time efforts.
A week after the Manhattan campaign ended, the initiative spread to the Billie Jean King National Tennis Centre in Queens, NY as part of Evian 's sponsorship of the US Open.
Before the campaign launched, Evian teased it via social media on 15 August, earning 147 followers per day to 21 August. The number of new followers represents an 11-fold increase from the same time period in July. Evian has roughly 19,200 followers on Twitter.
The water company also claims that there were 3.5 times more daily mentions of the brand between 15 and 21 August compared to competitors '. And, the engagement on Tweets passed the benchmark for CPG brands by 80 per cent. Overall, 2.8 million impressions and 75,000 engagements were generated on Twitter.
Digital marketing insight 8.1 #OpenYourWorld shares individual's views
Heineken's '#Open YourWor:ld' campaign reached 3 million views (within the first eight days) and over 50,000 shares (within the first month) and a trending hashtag. The campaign used Facebook as a platform and worked with The Human Ubrary. According toNic Casby, Heineken's marketing manager, the company wanted to foster human ideals around 'empathy, tolerance and also the simple act of talking to one another (Mortimer, 2017).
This leading beer brand- known for iconic and inventive ad campaigns- experimented with social issues and brought together individuals (not actors) who were complete strangers with contrasting political views. The aim was to prove that it is possible for people with divided opinions to find common ground- hopefully, but not necessarily, by sharing a beer.
Table 8.1 Summary of d ifferences in characteristics of traditional media and digital media (note that rows 10-12 are similarities between the two media types)
Traditional media
1 Push emphasis (e.g. lV and print ads and direct mail)
2 One-way communications
3 Targeting cost constrained by media placements
4 Umited customer-to-customer interactions
Digital media
Pull emphasis: relevance to context (search engine marketing (SEM))
Dialogue and interact ivity and trialogue through user- generated content (UGC)
Micro-targeting and personalisation through SEM and media placements on niche sites
Participation: through communities and social networks
5 Static campaigns -once campaigns have been booked with a media agency it is difficult to adjust them
6 Burst campaigns maximise ad impact over a short period
7 Umited media-buying opportunities with high degree of wastage
8 Detailed response measurement often limited to qualitative research
9 Pre-testing
1 0 Most communications to reach audi- ence via media owners
11 Integrated communications vital
12 Not cheap, quick or easy
Chapter 8 Campaign planning for digital media 361
Dynamic campaigns where it is possible to test alterna- tive creative and targeting and then revise during cam- paign according to performance
Continuous, 'always-on' media where a permanent 'real-time' presence is required in online media (e.g. in search, social media and on publishers' sites)
Umitless paid media-buying opportunities with pay- per-performance options plus owned and earned media (see Chapter 1 for definitions)
Potentially measurable at micro-level through web ana- lytics and ad tracking systems
Can also test and refine during campaign
Media owners are still important but communications also possible via website and non-media-owned blogs and social networks
Integrated communications vital
Not cheap, quick or easy
We will now recommend a series of steps that can be used when taking a structured approach ro planning an integrated campaign or an online customer acquisition plan. Our emphasis is ro focus on how digital media will be managed when integrated with other media.
( Step 1. Goal setting and tracking for interactive marketing communications l Digital marketers develop communications objecti,·es for different timescales:
• Annual marketing communication s objectives. For example, achieving new site visirors or gaining qualified leads could be measured across an entire year since this will be a continuous activity based on visitor building through search engines and other cam- paigns. Annual budgets are set to help achieve these objectives.
• Campaign-specific communications objectives. Digital marketing campaigns such as to support a product launch through online advertising and viral marketing. Specific objec- tives can be stated for each in terms of gaining new visitors, converting visitors ro custom- ers and encouraging repeat purchases. Campaign objectives should build on traditional marketing objectives, have a specific target audience and have measurable outcomes that can be attributed to the specific campaign.
The measures we cover in this section can be applied to both the short and long rerm. More depth on tracking through analytics and the specific measures used for measuring social media ROI is available in Chapter 10.
Terminology for measuring digital campaigns
There are a bewildering series of terms used to set goals and track the effectiveness of digital campaigns, so we start this section by explaining the main measures you will encounter in models for campaign planning and reports from online campaigns. Remember rhat as we explained in the goal-setting section with regard to strategy in Chapter 4, it's important that when setting goals and tracking we go beyond the volume measures of visitors attracted to a sire and use the full range of VQVC measures, that's Volume, Quality, Value and Cost of VISitOrS.
362 Part 3 Digital marketing: Implementation and practice
Visitor session (visit) A series of one 01' more page impressions, seNed to one user, which ends when there IS a gap of 30 minutes 01' mcwe ~ succes5Ml page impressions for that user.
Unique visitor lndilliduatllisitOI' to a site measured through cookies 01' the IP address on an indillidual computer.
Visit or session conversion rate An indication of the capability of a she In converting visitors to defined outcomes such as registration. Calculated by dividing the number of conversion events by the number of llisitor sessions within a time period.
Visitor conversion rate An indication of the capabiity of a site in converting 111sitors to defined outcomes such as regstration. Calculated by dillidng the number of conversion events by the number of unique \IISI!ors within a defined time period.
Figure 8.3 Measures used for setting campaign objectives or assessing campaign success, increasing in sophistication from bottom to top
Step2
Step 1
Step 0
Cost = cost-per-click (CPC)
Quality = conversion rate
Volume = unique visitors/ reach(%)
Figure 8.3 shows different measures for goal setting and tracking digital media campaigns from le.1st sophisticated ro more sophisticated, as s hown under the following headings.
0 Volume measures including clicks, visitor session and unique visitors
Traffic volu m e is usuall y measured as the number of click-chroughs o r '' isits to a site (visitor sessions) or, better, unique visitors. Unique visitors is preferable rousing page views or hits as a measure of effectiYeness, since it represem s opportunities to com rnunicate with indi-
viduals but, as we will explain in Chapter 10, it may be technically difficult to calculate 'uniques' accurately as measurement is based o n cookies. A more sophisticated measure is reach (%) o r on line audience share. This is on ly possible using panel data/audience data tools such as www.comscore.com or www.hitwise.com .
Example: An online bank has 1 million unique visitors per month.
1 Quality measures including conversion rates to action and bounce rate
Traffic volume me.<tsures give no indication of whether the audience refe rred to the site engages with ir or leaves straight away, so we need qua lity meas ures to s how us this. Conver- sion rate is the best- known quality measure, wh ich shows what proportion of visitors from different sources within a defined time period convert ro s pecific marke ting outcomes on the w eb, such as lead, sa le or subscription.
Example: 10 per cent of visitors convert to an outcome such as logging in to their accou nt, or asking for a quote for a product.
Conve rsion rates can be expressed in two different ways - ar the vi si r level (visit or session conversion rate) or the unique visitor level (visitor conversion rate).
E ric Petersen (2004) explains it this way:
the denominator you use [to calculate conversion rate) will depend on whether you're trying to understand how people behave during visits or the people themselves. If you're inter-
ested in people [and the overall buying process) use unique visitors, if you're interested in behaviour [on a single visit] use visits.
Examples:
Visit conversion rate = 1 0 conversion events =
1 %
1,000 visits
Bounce rate Proportion of visitors to a page or s~e who exit after visiting a single page only, usually expressed as a percentage.
Cost- per-click (CPC) The cost of each click from a referring site to a destination site, typicaDy from a search engine in pay-per -click search marketing.
Cost- per-thousand (CPM) The cost of placing an ad viewed by 1,000 people.
Cost-per-acqui sition (CPA) The cost of acquiring a new customer or achieving a sale. Typically limited to the communications cost and refers to cost-per-sale for new customers. May also refer to other outcomes such as cost -per -quote or enquiry.
All owable cost- per-acquisition A target maximum cost for generating leads or new customer promably.
Chapter 8 Campaign planning for digital media 363
For an e-rerailer this is the order conversion rare:
Order conversion rate =
Visitor conversion rate =
10 sales = 1
% 1,000 visits
1 0 conversion events = 1
. 25
%
800 visits
For an e-rerai ler, this can be cal led the buyer conversion rate, also known as the browse-to- buy ratio, or for a travel co mpany ' look to book':
. 10 sales buyer converston rate = = 1.25%
800 unique visitors
A rela ted! m easure th at is useful to monitor during ca mp<1igns is the bounce rate, wh ich indicates the proportion of referred visitors to a page or site w ho exit after visiting a si ngle page on ly, usually expressed as a percentage (i.e . those who arrive at the site and bounce off ir since they don't discover relevance!).
Reviewing bounce o r engagement .rates can improve the effectiveness of landing pages an d the quality of referrers to a page. The benefit of using bounce rates rath er t ha n conver- sion rates is rhar there is a much wider variatio n in bounce rates for a p age (i .e. typically 20 ro 80 per cent, compared to under 10 per cent), wh ich enables problems with individual refer rers, keywords or landing page conversions to be more readi ly identified. Bounce rates are calcula ted as follows:
100 x single page visits to a page (or site) Bounce rate % = ____ ..:::...._:__::.._ ____ .:_..:::........:.... _ ___:_ all visits starting on page (or site)
Engagement rate % = (1 00-bounce rate %)
2 Media cost measures including cost-per-click and cost-per-thousand
The cost of visit or acquisi tion is usual ly measured as the cost-per- click (CPC) specific to a parricula r digital media channel, such as pay-per-click search engine marketi ng, since it is difficult t o est ima te for an entire site w ith many visitors referred from offline advertising.
Example: £2 CPC (500 clicks delivered from Google Ads costing £1,000).
Cost-per-thousand (CPM) (M =mille) is usually used as th e currency when buying display ad space; for example, £10 CPM will mean that the ad wil l be served to 1,000 visitors (recll- nical ly visitor sessions) . An effective CPM can also be calculated for other media channels, such as p.ay-per-click advertising, for comparison.
3 Acquisition cost measures including cost-per-action or acquisition
A digi tal campaign is unlikely to succeed if it just meets its objectives of acquiring site visi - tors an d customers but d1e costs are too high. Iris essential to have specific o bjectives an d accurate costing for using different digital media cha nnels to achieve specific objectives an d drive visit ors to the si re and convert to transacti on. This is stated as the cost-per-acquisition (CPA) (someti mes cost-per-action) . Typical cost targets include:
• cost-per-acquisit ion - of a vis itor; • cost-per-acquisit ion - of a lead; • cost-per-acquisit ion - of a sale (most typical fo rm o f CPA, also known as CPS).
To control costs, ir is i mpo rrant fo r managers t o define a t arget allowable cost-per- acquisition , su ch as £30 for generat in g a business lead or £50 for ach iev in g sign-up t o a credit card . When rl1e cost of visitor acquisition is combin ed with conversion to o utcomes rlus is the cost of (customer) acquisition.
Example: £20 CPA (for £2 CPC , 10% conversion w ith one-in-ten visits resulting in sale).
364 Part 3 Digital marketing: Implementation and practice
Online site promotion Internet-based technique used to generate website traffic.
Offline site promotion Tradtional tee~ such as print and TV advertisi'lg used to generate website traffoc.
4 Return on investment (ROI} or value measures
Return on im·estmenr is used to assess rhe profirabiliry of any marketing activity, or indeed any im·cstment. You will also know rhar there are different forms of ROI, depending on how profitability is calculated. Here we will assume iris just based on sales value or profitability based on the cost-per-click and conversion rare.
profit generated from referrer ROI =----~~~---------------
amount spent on advertising with referrer
A related measure, which does not rake profitability into account, is return on advertising spend (ROAS), which is calculated as follows:
total revenue generated from referrer ROAS = d . . . h f
amount spent on a vertis1ng wit re errer
5 Branding measures
1l1ese rend to be most relevant to interactive advertising or sponsorship. They are the equiva- lent of oHiine advertising metrics, i.e. brand awareness (a ided and unaided), ad recall, brand familiarity, brand favourability and purchase intent.
6 Lifetime value-based ROI measures
H ere the value of gai11ing rhe customer is nor just based on the initial purchase, bur the lifetime value (and costs) associated with the customer. This requires more sophisticated models, which can be most readily developed for online retailers and onLine financial services providers. The technique for rhe calculation of LTV was outlined in Chapter 6.
Example: A bank uses a net present value model for insurance products that looks at the value over ten years but whose main focus is on a five-year result and takes into account:
• acquisition costs; • retention rates; • claims; • expenses.
This is valuable since it helps give them a realistic 'allowable cost per sa le', which is needed to get a return over five years. 1l1ey crack rhis in great derail- for example, they will know the ROI of different Google Ads keywords and will then select keyphrases and bid strategies accordingly.
Figure 8.4 shows an example of an online ad campaign for an insurance product placing many of the core volume, qualiry and cost measures covered in this section in context. Here an opportunity or lead is when a quote is requested. Note rhat the cost of acquisition is high but this does not take imo account rhe synergies of on! inc adve rrising with offline cam- paigns, i.e. those who are influenced by rhe ad, bur do nor click through immediately.
Examples of digital campaign measures
An interactive marketing communications plan should have five main types of goals included:
1 Audience o r traffic-building goals. These define targets for using online site p romot ion and offline site promot ion ro drive quality visitors or traffic ro a website or other social presence rhat convert to the outcomes required (sales, lead, newsletter sign -up, social interaction) at an acceptable cost.
SMART Specific, Measurable, Actionable, Relevant and lime-related.
Traffic building Using online and offline site promotion techniques to generate visitors to a site.
Chapter 8 Campaign planning for digital media 365
Figure 8.4 An example of effectiveness measures for an online ad campaign
Results
REACH of a-communications 21,700,000 Ad impressions
£700,000 Media cost
Attraction 0.23% Click-through rate efficiency ~-----1
Website VISITS
£32.26 Cost-per-mille/thousand (CPM/CPT)
50,000 Clicks (approximately equivalent to visitors)
£14.00 Cost-per-click (CPC)
Site conversion efficiency ~,__3_3_.4_o_%.....J Conversion rate (Click to quote)
LEADS or opportunities.9enerated 16,700 Opportunity response
£41.92 Cost-per-opportunity (CPO)
Lead conversion efficiency ~,__1_o_.so_%.....J Conversion rate (opportunity to sale)
Number of OUTCOMES delivered 1 ,770 Sales
£395.58 Cost-per-sale (CPS)
Here are some examples of SMART traffic-building objectives, which can be expressed as visi rors, visits or sales: • achieve 100,000 unique visitors or 200,000 visiror sessions within one yea r; • del iver 20,000 online sales at an average order value of £50 and a cost-per-acquisition
of £10; • converr 30 per cenr of existing customer base to active use (at least once every 90 days)
of onli ne service; • achieve 10 per cent 'share of searches' within a marker.
2 Conversion or interaction goals. Use o nsite communications to deliver an effective mes- sage ro the visitor that helps influence perceptions or achieves a required marketing outcom e. The message delivered o n-site will be ba sed on traditiona l ma rketing com mu- nica tions object ives for a company's products or se rvices. For exa mp le: • encourage trial (for example, achieve 10 per cent conversio n o f new unique visitors to
rcgistrarion or downloads of a music service such as iTunes or Spotify); • build in-house permission-based list (i ncrease ema il database by 10,000 during year
through da ta cap rure activities); • encourage engagement with content (conversion of 20 per cent of new unique visitors
ro product informacion area); • persuade customer to purchase (conversion of 5 per cem of unique new visitors); • encourage further purchases (com·ersion of 30 per cent of first-time buyers to repeat
purchasers within a six-month period). To estimate a realistic number of conversions, we recommend creating conversion-based models like that shown in Figure 8.5. Take, for example, the objecrives of a campaign for a B2B services company such as a consultancy company, where the ulrimate objective is ro achieve 1,000 new diems using the websire i11 combinarion with traditional media to convert leads ro action. To achieve rhis level of new business, the ma rketer will need to
366 Part 3 Digijal marketing: implementation and practice
M ixed-mode buying The customer's putehase decision is onfluenc::ed by a range of meda such as pri'lt, TV and Internet.
Figure 8.5 Conversion marketing approach to objective setting for web communications
Scenario 1 Scenario 2
REACH of website 1,000,000 200,000
S1. Attraction efficiency 1 0.00% 2.00%
Website VISITORS 1 00,000 4,000
S2. Site conversion efficiency 10.00% 2.00%
LEAD generated 10,000 80
S3. Lead conversion efficiency 10.00% 2.00%
Number of required OUTCOMES 1,000 II 2
make assumptions about the level of conversion that is needed at each stage of converting prospects to customers. This gives a core objective of 1,000 new clients and different criticaJ success factors based on the differenr conversion rates. If there are no products available for saJe online, such as a luxury car manufacturer or a high-value B2B service offering whitepaper downloads, rhen it is less clear how to calculate ROI. To get the most from campaigns that don't result in sales online and optimise their effec- tiveness, it is useful to put a vaJue or poinrs score on different outcomes - for example, in the case of the car manufacturer, vaJues could be assigned to brochure requests (5 points or £20), demonstration drive requests (20 points or £100) or simply visits to the site involving reviewing product features information (1 point or £1). This approach is known as 'value event scoring'. Through knowing rhe average percentage of online brochure requests or demo drive requests that convert to saJes, and the average order value for customers referred from rhe website, then the value of these on-sire outcomes can be estimated. This is onJy an estimate, bur ir can help inform campaign oprimisarion, by showing which referring sires, creative or PPC keywords and pages visited on rhe sire arc most likely ro generate desir- able outcomes.
3 Third-parry sire reach and branding goaJs. Reach , influence and engage with prospective custo mers on third-party sires such as online news and magazines sires, portals and social networks: • reach a targeted audience of 500,000 during rhe campaign; • create awareness of a product or favourability cowards a brand (measured through brand
research of brand awareness, brand favourability or purchase intent cl1rough using an onJine brand-trackiJJg service such as ScanmarQED, (https://www.scanmarqed.com).
4 Multicharmel marketing goaJs. Integrate all communi cations methods ro help achieve marketing objectives by supporting m ixed -mode buying . Examples of mixed -mode buying objectives include: • achieve 20 per cent of saJes received in the caJl centre as a resulr of website visits; • achieve 20 per cent of online saJes in response ro offline adverts; • increase average amount spent in store for every active sire visitor from £3 ro £4; • reduce contact-centre phone enquiries by 15 per cent by providing online customer
. serv1ces.
5 Longer-term brand engagement goaJs. One of the biggest challenges of online marketing, indeed marketing ilirough any channel, is to sustain long-term interactions leading to addi- rionaJ saJes. These are measured through lifetime value, loyalty and customer interactions.
M edia site Typical location where paid-for ads are placed.
Destination website Site typicaly owned by a retailer rx manufacturer txand, which users are encouraged to ctick ttvough to.
Landing page A desli'latlon page when a user cicks on an ad or other loon ollink frrxn a referring site. It can be a home page but. more typicaly and desitably, it IS a page with the messaging focused on the offer in the ad. This will maximise conversion rates and txand favourability.
URL strategy A defined approach to how content is labelled through placing " in different directories or folders w ith distinct web addresses.
Chapter 8 Campaign planning for digital media 367
Customer engagement commw1ication shows the importance of capturing a nd maintaining up-to-date customer details, such as emai l addresses and mobile phone numbers.
Campaign response m echanism s
Digital media have increased the choice of response mechanisms. Re,·iewing response mechanisms is important since roo narrow may li m it response, but too b road and unfocused may not give the right types of respo nse - marketers need ro emphasise the response types or customer journeys most favourable to the overall success of the campaign in their creative and messaging. Policies for response mechanisms across campaigns should be specified by managers to ensure the right approach is used for all campaigns.
Response mechanisms will naturally vary depending on rype of product. So, brands such as fas t -moving consumer goods brands do nor have to drive visitors to t heir ow n sire; through advertising and crea ting interacti ve microsites on th ird-pa r ty sires, th ey can poten- tially be mo re effective in reaching t heir a ud ience, who arc more likely to spend d1eir rim e o n o nlin e medi a s ites than on d estin atio n bra nd sites.
Online resp onse m echanism
T he required response mechan isms shou ld be specified in the digital campaign pla n a nd rhe number of responses from each m odeL Figure 8.6 suggests rhe typical op tions of o utcomes to online campaign media . From rhe creative shown using media such as a display ad, pay- per-dick ad or rented email newsletter, rhere are five main options.
1 Home page
Ln the rnajority of cases, investment in online media will be wasted if visitors are drh·en from the media sit e to rhe home page of rhe dest ina1io n we bsite . Typically, it is appealing to many audiences and offering roo much choice - it won't effectively reinforce the message of the online creative or convert ro further action.
2 Micr osite/landing page
A focused landing page or specially created microsite can more effectively convert visitors ro the action to help gain a return on the onli ne campaign investment. Figu re 8.7 shows an exa m ple of a la ndi ng page giving a range of response mechanisms, al tho ugh offli ne is omit- red . A URL s trate gy is used to make the page easy ro label in offl ine creat ive. This spec ifies h ow differe nt types of content on a site w ill be pl aced in d ifferent fo lders or d irectories o f a webs ite (this can also help with search engin e optimi sat io n). For exa mple, if you visit th e BBC site (www.bbc.co.uk), look ar how the web ad dress derai ls vary as you m ove from o ne sectio n to ano th er, such as N ews o r Sport. An indi vidua l destination page on a website may
Figure 8.6 Range of res ponse mechanisms from onl ine med ia
~
(a) View-through (b) Click-through
Home page
Microsite/ landing page
Online media
creative
Company social media
presence
Personal (chat or
call-back)
Offline: phone, post.
store
368 Part 3 Digital marketing: Implementation and practice
Figure 8.7 Alternative response mechanisms for a business-to-business landing page example
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Campaign URL or CURL A web address specific to a particular campaign.
Call-back servk:e A faciity available on the website for a company to contact a customer at a later tine as specified by the customer.
be labelled, for example, www.company.com/products/insurance/car-insurance. A further example is where site owners have to make a decision on how ro refer to content in different countries, either in rhe form:
http://<country-name>.<Company-name>.com
or the more common:
http://www. <companyname.corn> .coml<country-name>
Campaign URLs or CURLs are less widely used roday, the idea being that they will be more memorable than the standard company address and blend in with the campaign concept. For example, an insurer used the CURL www.quotemehappy.com , which represents memo- rable clements of the campaign. Also memorable is www.subservientchicken.com - a viral hit from ten years ago for Burger King and reinvigorated for 2015 under the hash tag #Chick- enRedemption. Another technique used to encourage viewers of prim, TV and video ads ro engage with a brand via their website is t o encourage a Coogle search arotmd the campaign . This also has the benefit that it can be tracked when searchers click on the organic or paid listings. Hashtags are another form of response mechanism available on social networks.
3 Company social media presence
It's a common technique for ads within social networks such as Facebook, lnstagram, Linkedin a11d Twiner to link directly to a social post or compan)' page. These ads can poten- tially also link through ro a website - both oprions are available. It's rare for ads on media sires outside of social networks to link ro a social nerwork since the communication mes- sages and response can be bener controlled on a website landing page.
4 Personal (chat or call-back)
In this case the creative or landing page encourages campaign respondents to 'talk' directly with a human operator. Ir is usually referred ro as a call -bac k service and integrates web
Chapter 8 Campaign planning for digital media 369
Digital marketing insight 8.2 Chatbots help you to cook
Microsoft and expert chef Heston Blumenthal are working together on a Skype bot, which provides tips on cooking skills, stories and recipes. The bot is updated monthly with seasonal menus and is available through Skype. The Heston.bot (according to Blumenthal) gives people an insight into his thought processes, his cooking methods and the inspiration to experiment with his recipes. The bot is built using AI technology and shows the potential for bots in terms of versatility and the extent to which they can begin to interact and learn from users.
Source: Woolaston (2017)
and phone. Burrons o r hyperl inks encourage a call-back from a telephone operator or an on line ch ar. T he advantage o f this ap proach is t hat it engages t he cus to mer more and wil l typica ll y lead to a higher conversio n-to -sale rate si nce the cusromer's questions a nd objec- tions are more likely to be answered and the personal engagement is more likely to encour- age a favo urable impressio n. Auto ma ted solu tions such as chatbots arc increasingly being used as a mechanism for providing customer support and developing relationsh ips. Bur care must be taken to ensure that the use of an automated so lution delivers rhe required value. See Digital marketing insight 8.2: Chatbots help you to cook.
Digit al marketing insight 8.3 Whafs in a hashtag - #!?
No major campaign today is complete without a hashtag, but where did the trend start? Here's the timeline:
• August 2007 - Hashtags first proposed for use on Twitter; • July 2009 - Twitter officially embraces the hashtag linking to a list of all Tweets for
anything proceeded by #; • January 2011 - lnstagram adds hashtag support; • Spring 2011 - Twitter plays a role in the civil unrest of the Arab Spring; #Bahrain
becomes one of the most used hashtags of all time; • October 2011 - Google+ begins automatically linking all hashtags in posts;
• January 2013- Half of Superbowl ads include a hashtag; • June 2013- Facebook begins supporting hashtags; • October 2013- celebrity use of Twitter for ads (discussed in Chapter 3); the Advertis-
ing Standards Authority (UK) and the Federal Trade Commission (USA) state that adverts made via a celebrity's Twitter page should incorporate the hashtag '#ad' or other indication of a commercial arrangement.
Since 2013 we've seen how hashtags can help make the connection between a social media concept and a campaign such as an offer or regular content. Perhaps the most interesting development in the applications of hashtags in marketing campaigns is the variety of applications that engender a 'competitive spirit'. From the ice bucket challenge to the race for the most 'reTweeted post', Tweeters everywhere engage in digital channels to be heard and shared.
Moreover, social media has fundamentally changed the communication landscape and surpassed traditional media's (radio, television) capacity to engage audiences (Moe et a/. , 2016). Which are your favourite or memorable hashtags? A good way to investigate them is through searching on a brand in Twitter.
370 Part 3 Digital marketing: implementation and practice
Web response model The website is used as a response mechanism 101' offline ~n elements such as drect mail e>r advertising.
5 Offline: phone, post or store
If parr of a campaign is run online it does nor mean rhar offline responses should be excluded. Offline response mechanisms should nor be discarded unless the cost of managing them cannot be justified, which is rarely the case.
Offline response goals for multichannel integration
We also need to include the right response mechanism for the offline media element of the campaigns such as TV ads, print ads or direct-mail pieces. The permission-based web response model is one that is frequencly used roday in direct marketing (Chapter 6). For example, this process could start with a direct mail drop or offline advert. The website is used as the direct response mechanism, hence 'web response'. Ideally, this approach will use rargeting of different segments. For example, a Netherlands bank devised a campaign target- ing six different segments based on age and income. The initial letter was delivered by post and contai ned a PIN (personal identification number) that had to be typed in when the custo mer visited the site. The PIN had the dual benefit that it cou ld be used to track responses to the campaign, wbi.le at the same time persona li sing the message to the con - sumer. When the PIN was typed in, a 'personal page' was delivered for the customer with an offer that was appropriate to their parricular circumstances.
(~s_t_e_p_2_._c_a_m __ p_ai_g_n_i_ns_i_g_ht----------------------------------------~~
Client discovery process An iritiatille to team what a cient 01' brand needs from a campaign, thei' strategic initiatives that it must align with, their goals and their ~bng outcomes.
Research into the target audience and how they selecr products and services within the marketplace is core to a campaign planning approach. When a company is working with an agency, the marketer at the client company will incorporate initial customer insight into a brief as parr of the agency completing a client discovery p rocess. This will give agency sraff valuable information abom the audience and marketplace.
More detailed campaign insight will be accessed and analysed once the agency or internal ream are working on the campaign. Large agencies use 'data planners' or 'customer com- mutlicarions planners' to review all available external data sources such as marker, audience and internal data on customer profiles and past campaign results on the most effective channels in generating product sales to assist clients in strategic development and execution of campaigns. This data is then used to inform campaign targeting and media selection.
For example, a brief might specify that a FMCG client wanrs to run an online promo- tional campaign , with the goal of st imulating trial of products and adding to a prospect database through encouraging online registration. The campaign straregy or offer is based around offering daily prizes. The data planner involved uses :~ II transactional data collected from previous similar campaigns to be linked to socio-demographic data, which is then coupled wid1 transactional information.
Customer insight for digital marketing campaigns
There is a wealcl1 of customer insight information available for digital marketing campaigns, but it varies by sector. So it is important during the briefing or pre-planning stage to list all the possible information sources and then evaluate which are worthwhile, since some are free and some are paid syndicated research.
Examples of the types of customer insight related to online competitor and audience behaviour that might be accessed ar this stage in the campaign from third-parry syndicated research sources include:
• Site audience reach and composition. What is the breakdown of audiences by age, gender or socio-economic group on different sires? This dara is available from online audience panel providers such as comScoreTh1 and Hitwi seTh1.
Chapter 8 Campaign planning for digital media 37 1
• Online buying behaviour and preferences. For example, audience panel services such as com Score, Nielsen and JumpshotTM are able to analyse customer journeys to determine preferences for browsing and buying on desktop o r smartphone, or ' 'ia retailers or direct with the manufacturer brand .
• Custo mer media consumption. The usage of different offline and online media for dif- ferent target demographics can be accessed from sources such as Hirwise.
• Custo mer search behavio ur. The proportion of different search phrases and their impor- tance can be used to inform messaging.
• Competitor campaign activity. The activity of current advertising campaigns and previ - ous seasonal campaigns - for example, in the UK this is available from www.ebiquity.com.
• Competito r performance. This will give information on the audience size (reach) and composition of competitor sites, and services such as Hirwise can show which marketing techniques (such as search engine marketing or affiliate marketing) are successful in driv- ing visitors to a competitor since referring sites and search terms can be accessed .
Big Data is increasingly be ing used t o provide market intell igence on insights into consum er and com periwr behav io r. Fo r ex a mple, Ebiq uiry™ is an independent market analyt ics com pa ny tha t helps businesses save mo ney o n a dvertising and pro motio ns a nd im proves ROI fo r markete rs (see https://www.ebiquity.com/en/about-us/client-results-case-studies).
(~s_t_e_p_3_. _s_e_g_m_e_n_m_t_io_n __ an_d __ tar __ g_e_ti_ng ___________________________________ ~ Campaign targeting strategy defines the target audience or type of people that you need to reach wirh your campaign communications. It's abom defining, selecting and reaching spe- cific audiences online. Targeting methods vary according to the ma rker, campaign and e-communicarions tools involved. The key targeting issues to define for the online elements of a campaign are:
• quality of insight abom customer or prospect available to assist with targeting; • range of variables or parameters used to target- e.g. audience characteristics, value,
needs and behaviours; • identifying the targeting attributes or variables that will influence response; • specific targeting approaches available for the key e-communicarions tools - e.g. online
advertising, search engine marketing and email marketing.
The targeting approaches used for acquisi tion and retention campaigns wi ll natu ra ll y depend o n established segmentations a nd knowledge about cuswmers. (We have also dis- cussed target ing ap proaches fro m a st rategic bas is in Chapters 4 and 6.) From a ca mpaign point of view, Table 8.2 shows so me of the m ain targeting variables t hat can be reviewed in digital ca m paign planning.
Let's look a t each targeting variable in a li t tl e mo re depth:
1 Rel ation ship with company. Campaigns will often be imended to target new contacts or existing contacts. Bur remember, some communications- such as e-newslerrers and email campaigns - w ill reach both. Marketers have to consider whether it will be cost-effective ro have separate communications for new, existing and lapsed contacts - or to target each of these groups in the same communications but using differem content aimed at each. \Vhen visitors dick through ro your website from online and offline campaigns, copy should be presented that recognises the relationship or, again, provides a range of content to recognise each different relationship. Visit Microstraregy~ (www.microstrategy.com) to see how irs registration page establishes the relationship.
2 D emog raphic segmentation. T his is typically based on age, gender o r social group. Online demographics are often used as the basis for sires ro purchase display advertising or for renting email lists. D emographics can also be used ro limit or focus who pay-per- click search ads are displayed to.
372 Part 3 Digital marketing: implementation and practice
Table 8.2 A range of targeting and segmentation approaches for a digital campaign
Targeting variable Examples of ontine targeting attributes
1 Relationship with company New contacts {prospects who haven't purchased}, 'nursery' (new customers), existing customers, lapsed customers
2 Demographic segmentation B2C: age, gender, social group, geographic location B2B: company size, industry served, individual members of decision-making unit
3 Psychographic or attitudinal segmentation Attitudes to risk and value when buying, e.g. early adopter, brand loyal or price conscious
4 Value
5 Ufecycle stage
6 Behaviour
Assessment of current or historical value and future value
Position in lifecycle, related to value and behaviour, i.e. time since initial reg- istration, number of products purchased, categories purchased in
Search term entered into search engine; interaction with content in websites or emails; responsiveness to different types of offers (promotion or product type); responsiveness to campaigns in different channels (channel prefer- ence); purchase history in product categories including recency, frequency and monetary value (Chapter 6)
3 Psychographic or attitudinal segmentation. This includes arrirudcs to risk and value when buying - e.g. early adopter, brand loyal or price conscious. It is less st raightfo rward to target on these a rrribures of a consumer si nce it is easier to buy media based o n demo- graphic breakdown. H owever, certain si tes may be more suitable for reaching a particular psychographic audience. The psychographic character istics of the audience are still a n importanr part of the brief, to help de\·elop particular messages. It is possible to collect arrirudinal information o n a sire and add it to the customer profile. For e.xampl e, Wells Fargo & CompanyTM asks investors to select:
• the type of investmenr preferred (individual stocks or mutual funds); and • what rype of investor best describes you? (aggressi,·e growth to more cautious).
4 Value. The higher-val ue customers (indicated by higher average order value a nd higher modelled customer lifetime values) will often warrant separate communi cations with dif- ferent offers. Sometimes digital channels are not the best approach for these custo mers - relationship managers will want direct contact with their most valuable customers , while digital channels are used ro communicate rnore cost-effectively with lower-value custom- ers. It is also worth considering reducing the frequency of ema ils to thi s audi ence.
5 Li fecycle stage. This is very u seful where customers fo ll ow a particu lar sequence in buying or us ing a service, such a s online grocery shopp ing o r o nli ne banking. As expbin ed in Chapter 6, automated , event-triggered email ma rketing can be developed for thi s audience. For example, online bank First DirectTM uses a six-mo nth welcome strategy based on email and direct mail communications. For other ca mpaigns, the status of :1 cusro mer can be used for t argeting- for exa mple, not pu rchased no r used service, pu rchased o nce, purchased more tha n five times and active, purchased more than five rimes and inactive, etc.
6 Beh aviour. Behavioural targeting is one of tbe big opportunities provided by digital mar- kering. It involves assessing customers' past actions in following links, reading content, using online services or buying products, and then follows up on these wi rh a more relevant message based on the propensity to act estimated on the previous action.
Online options for behavioural targeting can be illust rared by a travel company such as lastminute.com:
• Pay-per-click search engine marketing makes targeting possible according to the type of keyphrase typed when a potential customer searches for information. A relevant ad
Chapter 8 Campaign planning for digital media 373
specific ro a holiday destination the prospect is looking for - e.g. ' Hotel New York' - can then be shown .
• Display advertising makes behavioural targeting possible since cookies can be used to crack visirors across a sire or between sites and display relevant ads. If a sire user vis irs the travel section of a newspaper sire, then the ad about 'lasrminure' can be served as they visit ocher comem on this sire, or potentially on ocher sires.
• Email marketing can be targeted based on customer preferences indicated by links they have clicked on. For example, if a user has clicked a link on a holiday in North America, rhen a targeted email can be delivered rel evant to this product or promotion. More sophisticated analysis based on RFM (Recency, Frequency and Monetary value) analysis (Chapter 6) can also be used.
When reviewing the options for which variables to use, the ca mpaign planner must keep in mi nd rh a r those selected for targeting should be those that are most likely ro influence rhe level of response for the ca mpaign . It is possible to target on many var iables, bur the incre- mental benefi t of targeting on additional va ri ables may not be worth the cost and effort. Figu re 6.1 2 indi ca tes rhe general improvement in campaign respon se dependenr o n the type of rargering variables used.
Within digital media campaigns there are ma ny options for targeting, which we will explore in more detail in the next chapter, such as:
1 Targeting using search marketing. Targeting via in tent or the types of keywords people search on as they look for products, information or experiences.
2 Tar geting using dis play advert isin g. As with targeting using traditional publications, targeting is possible using audience composition of differem websires.
3 Targeting using social media . Each main social media platform offers opportuni ties for granular targeting, as shown in Figure 8.8 for Facebook. Simi larl y, Linkedin enables ta rgeting of Linkedin members by location , company type and size, role, seniority and group membership.
4 Targeting u sing affiliate marketing. This will use a combination of search, display and socia l media techniques.
Figu re 8.8 shows a rool related ro content marketing aimed at helping marketers ro review the effectiveness of different types of paid , ow11ed and earned media ro promote or disrribure rheir conrenr. Irs aim is to review existing and potential use of differenr digital media in genera ting sire visi ts, leads or sales compared to the level of invcsrmenr in applyi ng the media measured as paid media costs and the costs of marketi ng ream members.
lr uses a si milar 'gap analysis' approach to the Content Marketing Matrix (Figure 8.9) to compare current use of media ro promote content again st exi st ing inves rm em in co menr:
• Ste p l . Current use of media for content distribution. • Step 2. Rev iew promotion gap against competitor or sector use of content distribution
techniques. • Step 3. Select a nd prioritise new methods of content promotion.
The four types of media shown on the matrix are:
• Wasteful media (lowest volume, highest cost). Your aim here shou ld be to reduce costs through budget reallocation and/or efficiency improvements.
• Slow and steady media (lowest volume, lowest cost). The least important to act on, bur you need ro make sure you are not distracted by these. H ere, rhe aim is to minimise costs and review potential of techniques for improvemem.
• High-cost volume-driver medi a (highest volume, highest cost). You should aim to reduce costs and make efficiency improvemems.
• Star performers (highest volume, lowest co st ). The aim here is to add more focus to scale volume further. Companies use chis template in combination wicl1 analyrics or lead reporting systems to identify which media are driving volume and how cost-effec- tive rhey a re.
37 4 Part 3 Digijal marketing: implementation and practice
Figure 8.8 The Content Distribution Matrix
The Content Distribution Matrix
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Step 4 . Offer, message development and creative
Many digital campaigns have direct response as the primary objective. Defining the right offer is viral to achieving these response objectives. Bur there are also likely to be brand objectives, to communicate the 'big idea' or concept behind the campaign or to position the brand.
In an online environment, there is very little time for the message to be delivered and the design and position of content on the page can influence the success of a message. Lui eta/. (2011) discovered that visitors to web pages screen-out certain types of content: they respond more to visual information than text and if voiceovcr is used the viewer rends to fix their gaze on the image rather than the text. Eye-tracking studies, monitoring the gaze of website visitors, have also shown that the age, cognirive ability and gender affect the average gaze or dwel l rimes. The average dwell time for a whole page may be around ten seconds, but a high proportion leave a website immediately and individual fixation times on page elements such as page headlines or ads are much lower, so iris important the message is succinct and powerful.
The implication for digital creative designers is that there should be a clear primary mes- sage but its placemenr varies according ro rhe delivery and type of digital media:
• Paid search: within the headline of the ad. • Natural search : within the <ririe> rag and meta description tag (see Chapter 9). • Email marketing: within the subject line and the headline or title of the email, supported
by images. • Display ads: within the opening frame and possibly repeated in all frames.
Activity 8.1
Chapter 8 Campaign planning for digital media 375
The prim ary m essage sho u ld deliver releva nce accord ing to the contex t, so w ithi n pa id search the primary message should be consistent wit h t he search term entered by t he user and sho uld highlight t he value propos ition clearly. To successfu lly commun icate an offer and message, marketers also need to ensure that the creative a nd copy helps ach ieve the five st ages of infor mation processing shown in Table 7.3 - i.e. Exposure, Atrention, Comprehen- sion and Percept ion, Yieldi ng and Accept ance, a nd Retention. Additionally, it is also im por- tant to consi der th at whi le rl1e t im e spem looki ng at a single message is short , the ctunulative ri me spent consu m ing digit al conten t on a da il y basis can be q u ite significant; which increases t he opportunity to see a message. Acco.rding to t he JAB (2017) , in the UK adults spend o n average just over three hours a day on line and consume just under 50 per cent of t heir d igital co ntent via a m obi le phone. The dev ice used ro receive the content also has implicat ions for designing digit al messages.
Finally, it is also im porta nt to consider t he objectives of the offer - for example, capture attention , develop interest or stimulate actio n. T his may involve a primary offer and message; the creative need s to stim ulate desire and action with the secondary offer and message, which:
• reassures prospects by giving a little mo re evidence of t he offer or product benefits; • convin ces the sceptic and encourages them to dick; • can appeal to different types of person to t he p ri mru·y o ffer; • aga in, should have a clear call -to-action .
Content marketing
We introduced the growing role of content marketing wit hi n digital m arketing commun ica- tions i n Chapter 1. We bel ieve th at co ntent marketing sho uld be at t h e heart of d igital marketing for all types of bra nds, because comenr fuels all rhe main d igital m arketing ch an- nels we use to communicate with our audiences. Search, social media, conversion rare opti - misation and em ai l marketing all requi re content t hat helps a brand increase its visibility, engage its audience and d rives leads and sales. Withi n a ca mpaign, content is vital as rhe m ethod of engaging the audience and generat ing de mand, whether th is is educat ional con- tent as p art of a business-to-business ca mpaign or video content as pa rr of a con su mer campaign. The only case where the role of conrenr is diminished is where the main ca mpaign offer is a price cur, d iscowu or sale .
Given the importan ce of conrent marketin g, mru1y busi nesses now look to develop a content marketing strategy as part of t heir digit al market ing campa igns or always-o n activi - t ies. As w ith al l strategies, this wi ll involve review of the current approach , sett ing specific objectives and developing strategies to create and share content. To review how content can best support digital marketing, Dave Chaffey developed the Contem Marketi ng Matrix wi th Dru1 Bosomworth of Smart Insights (2014) . Activity 8.1 expla in s how this cru1 be used to identify the right content types.
Using the Content Marketing Matrix to audit and improve content effectiveness
We recommend the Content Marketing Matrix (Figure 8.9) as a key technique to review current use of d ifferent content formats and to identify new types of content that could be useful for a business.
The matrix is structured to help you think through the dimensions of different content based on how an audience could find content valuable and what you' re trying to achieve as a business.
376 Part 3 Digital marketing: implementation and practice
Activity
Complete this process to review a company's use of different types of content to sup- port marketing:
1 Review current use of content within the company through plotting different content types on the grid.
2 Repeat this review for two to three competitors (direct or indirect), again plotting on the grid.
3 Brainstorm future possible content types. 4 Define criteria for investing in content (e.g. generating reach, helping conversion,
existing customers). 5 Use your criteria from Step 4 to prioritise the two or three types of content needed
to trial in content campaigns.
Figure 8.9 The Content Marketing Matrix
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Awareness
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=
Sotxce: Srnartlnsights.com (with pemlission)
I
Purchase ~
:om ·~I
Chapter 8 Campaign planning for digital media 377
Step 5. Budgeting and selecting the digital media mix
Econometric modelling A quantita!Ne tec:IVlique to evakJate the past ini\Jence ()( preckt the future infuence on a dependent variable (t)picaly sales In a matkemg context) of independent variables. which may nctude product, price, promotions and the level and mix of media investments.
Digital marketing campaign plans require three important decisions ro be made abour investment for the online promotion or rhe online communications mix. These are:
1 Level of investment in digital media as opposed to traditional media. 2 Mix of im·estmem in digital media channels o r e-communicarions tools. 3 Level of investment in digital assets.
1 Level of investment in digital media techniques in comparison to offline promotion
A balance must be struck between online and offline commun ications techniques based on the strengths and weaknesses of the different media opti ons (Figure 8.10). A framework for considering media characteristics that influence decisions on wh ich ro invest in has been devt:lop ed by Cou lter and Srarkis (2005) and remains popul:lr (see Activity 8.2) . Offline media are often superior in generating attenti on, stimulatin g ::mention and gain in g credibil- ity. On line media rend to be better a t engageme nt due to persona lisation , interaction an d support of word of mouth. The offer can also often be fulfi lled on line for products that can be bought online. However, there are limits ro the number of people that can be reached through online media (a limit to the number searching on particu lar terms) and the cost is not necessarily always lower in competitive markets.
Econometric modelling
Econometrics or e cono metric mo de llin g is an established approach to understanding the cont ri bution o f different media in influencing consumers and ultimately generating sales and profit. It can also be use.d in a predictive way to plan for fun1re campaigns. It is increas- ingly used in integrated campaigns to assess the appropriate media mix.
One of its main benefits is irs ability to separate the effects of a range of influences, such as offline or online media usage o r other variables such as price or promotions used, and ro quantify these individual effects. A simpl e exa mple might be for the sales of a drinks brand:
Sales= 100 + + 2.5 x own TVRs (television ratings) - 1 .4 x own price + 1 .6 x competitor price + 1 .0 x distribution - 0.8 x temperature - 1 .2 x competitor TVRs
Figu re 8.10 Options for the online vs offline communications mix: (a) online>offline, (b) similar online and offline, (c) offl ine>online
(a) (b) (c)
Key
0 Offline 0 Online
378 Part 3 Digijal marketing: Implementation and practice
Activity 8.2 A framework for selecting media
Coulter and Starkis (2005) identified various factors when selecting media. For each factor area (e.g., quality, time), suggest how each factor can be applied when selecting digital media and what key considerations you should make.
Quality
1 Attention-getting capability (Attention): ability of an ad placed in this specific media to 'grab the customer's attention ' due to the nature of that media.
2 Stimulating emotions (Stimulation): ability of an ad placed in this specific media to convey emotional content and/or elicit emotional responses.
3 Information content and detail (Content): ability of an ad placed in this specific media to convey a large amount of information and/or product description.
4 Credibility/ prestige/ image (Credibility): ability of a specific media to lend prestige to a product through association (i.e. because that product is advertised within the media).
5 Clutter- degree to which it is difficult for a product advertised within a specific media to 'stand out' due to the large number of competitive offerings/messages.
Time
1 Short lead time: degree to which an ad can be created and/or placed within a spe- cific media in a relatively short period of time.
2 Long exposure time: degree to which the communication recipient is able to exam- ine the advertising message within a specific media for an extended period of time.
Flexibility
1 Appeal to multiple senses (Appeal): degree to which an ad placed within this spe- cific media can communicate via sight, sound, taste , touch and/or smell concurrently.
2 Personalisation: degree to which an advertising message placed within this specific media can be customised in order to target a specific individual or group of individuals.
3 lnteractivity: degree to which the customer can respond to information conveyed in an advertisement placed within this specific media.
Coverage
1 Selectivity: degree to which an ad placed within this specific media is able to target a specific group of people.
2 Pass-along audience (Pass-along): degree to which an ad placed within this spe- cific media is seen by those other than the original message recipient.
3 Frequency/ repeat exposure (Frequenc y): degree to which any single ad placed within this specific media may be seen by any one particular individual on more than one occasion.
4 Average media reach (Reach): degree to which an ad placed within this specific media reaches a relatively wide audience.
Tagging Tracking of origin of customers and their spending patterns.
Chapter 8 Campaign planning for digital media 379
Cost
1 Development/production cost (Development cost): relative cost of developing or producing an ad for this specific media
2 Average media delivery cost (Delivery cost): average cost-per-thousand associ- ated with this specific media.
The relative importance of these characteristics and the investment in different digital media will be dependent on the product and the type of campaign- whether it is direct- response-orientated or brand-orientated - and the scale of budget.
These relationships are typically identified using multiple linear regress ion models where a single dependent variable (typical ly sales) is a func tion of one or more explanatory or independent variables such as price, temperature, level of promotion.
Econometric models are developed from historic t ime-series data that record fluctuat ions dependent on different variables including seasonal variables, but, most importantly, varia- tions in media spend levels and the mix of media. In econometrics, sales fluctuations are expressed in terms of the factors causing rl1em .
2 Selecting the right mix of digital media communications tools
When selecting the mix of digital media for a campaign or longer-term investments, market- ers wi ll need to determine the most appropriate mix and they may make rlus decision based on their knowledge built np through experience of previous campaigns and raking input from their advisers such as experienced colleagues or digital agency partners.
But digital media gives opportwli ties for structured evaluat ion including factors such as t he ability of each medium to influence perceptions, drive a response, the cost of response and the quality of response- are respondents more likely to convert to the ultimate action sum as sale? What is their likely lifetime value? For example, some digital media channels such as affiliates are more likely to attract customers with a lower lifetime value who are more likely to switch suppliers .
Media planning and buying agency Zed Med ia™ now part of Zenit hoptimedia, pro- duced a useful summary of how a media m ix might typical ly vary according to budget (see Figure 8.11).
The figure shows that for a direct response campaign with I inu red budget, investment in controllable, targeted media that typical ly have a lower cost-per-acquisition such as affilia tes and paid search should be the main focus. If more budget is available, it may not be possible to buy further keywords or t here may be benefits from generating awareness of the offer ing through more display advertising.
With a brand campaign where the focus is on generating awareness, the recommendations of Zed Media, now known as Zenith Media™ are reversed where they recommend that , even at lower budgets, more investment should be made in display adverrising.
Deciding on the opt imal expenditure on different com municat ion techniques wi ll be an iterative approach since pas t results should be analysed and adjusted accordingl)r. Marketers can analyse the proportion of the promotional budget t hat is spent on different channels and then compare this wit h the contribution from purchasing customers who originated using the original chatmel. This type of analysis, originally reported by Hoffman and Novak (2000) and shown in Table 8.3, requi res two different types of marketing research . F irst, tagging of custo mers can be used. Here, we monito r, using specifically coded URLs or cookies, the numbers of customers who are referred to a website through different online techniques such as search ads, affilia te or banner ads, and then track the money they spend on purchases. Digital marketing ins ight 8.4 gives more det ai ls of how the Google Analytics system is used .
380 Part 3 Digital marketing: implementation and practice
Digital attribution Refers to assignong vatJe to a set of individual actions in a particular or multichannel digital environment.
Figure 8.11 Recommendations of the mix of investment in digital media for direct and brand response campaigns
• Cost effective and volume channels priority
• PPC search 60%
• Affiliates 30% • Display 1 0% • Test 2-4 weeks
£50k
• Highly targeted to key sites
• Display 80% • PPCsearch
20% • week period
test • Peak times
Direct response I • Display more
viable networks • PPC search
50% • Affiliates 30% • Display 20% • Up to 3 months
£100k
• Widen to target networks/more search
• Display 70% • Search 30% • Up to 2 months
I Brand
• More money available for display
• PPC search 50%
• Affiliates 25% • Display 25% • 6-8 months
£250k
• More involved creative and editorial
• Display 65% • PPC search
35% • Up to 6 months
I Source: Zenith Meda (www.zenithmediacom)
• Affiliates maxed out, more networks
• PPC search 40%
• Affiliates 20% • Display 40% • 12 months
£500k
• Sponsorships, partnerships
• Interactive formats
• Display 60% • PPC search
40% • Up to 12
months
Table 8.3 Relative effectiveness of different forms of marketing communications (on- and offline) for a B2C company
M edium Bud get Contribution Effectiveness
Print (off) 20% 10% 0.5
TV (off) 25% 10% 0.25
Radio (off) 10% 5% 0.5
PR (off) 5% 15% 3
Word of mouth (off) 0% 25% Infinite
Banners (on) 20% 20% 1
Affiliate (on) 20% 10% 0.5
Unks (on) 0% 3% Infinite
Search engine registration (on) 0% 2% Infinite
Digital attribution modelling and infl uen ce on sales to digital m edia c hannel
Digital attribution modelling offers a way t o assess rhe efficiency of d igital media channels (Sahl in, 2017). Marketers should seek to understand customer journeys and the multiple
channel s used during their journeys. Iris seldom the case that a custome r will go straight ro
Chapter 8 Campaign planning for digital media 381
Digital marketing insight 8.4 Campaign tracking in Google Analytics
Defining a standard set of online marketing source codes is essential to determining the value of different referral sources such as ad campaigns or email campaigns.
Many companies track Ads because of its automated integration enabled from Google Ads, b ut they may not track other codes or have a standard notation that needs to be defined and then added to all links involving media p lacements.
Google Analytics uses five standard dimensions for a campaign, which need to be incorporated into the query string of the URL for each ad placement as this example shows: http://www.domain.com/landing_page.php?utm_camp aign=spring-sale&utm_ medium=banner&utm_source=<mediasitename>.com.
The campaigns report in Google Analytics will then enable you to compare the value generated by different campaigns and media within t hem.
The meaning of each of the five dimensions is:
• utm_campaign (Required). The name of th e marketing campaign , e.g. Spring Campai.gn.
• utm_medium (Required). Media channel (i .e. email, banner, CPC, etc.). • utm_source (Required). Who are you partnering with to push your message, for
example a partner site. • utm_content (Optional). The version of the ad (used for AlB testing) or in Ad s. You
can identify two versions of the same ad using this variable. This is not always used and is NOT included in the above example.
• utm_term (Optional). The search term purchased (if the link refers to keywords). This is not always used and is NOT included in the above example.
Many email and social media marketing tools now set these up automatically, but you can set them up manually- search for the 'The Google URL builder' to see how to create these links.
a si te an d purchase, or tha t th ey w ill perform a single search a nd then purch ase. mstead, t hey wi ll com mo nl y perform mu ltiple searches an d wil l be referred to the ulti mate ptuchase site by different types of si te. Th is con sumer behaviotu is ind icated by Figure 8.12. T his shows that someone looking to purchase a car may be referred to a site several times via different d igit al com mu n ica tio n s cha nn els. The increase in indivi du al behavioral data ,
Figure 8.12 Example of different referrers contributing to a sale for a car rental company
View print ad Receives booking
Generic search: Brand search: Location search: Browsing Paid search: 'Car hire' 'Avis' 'car rental france' destination site 'Avis Paris'
Affiliate 1 Natural Kelkoo Display ad Affiliate 2 refers search refers refers refers
I Cookie 1 I I Cookie2 I I Cookie 3 I
382 Part 3 Digital marketing: implementation and practice
Figure 8 .13 Exa mple of different referrers contributing to a social media campa ign
Last-click method of digital media channel attribution The site that referred a visitor irmlediately before purchase IS credited with the sale. 11-evious refenals lllfluenced by other customer touchpcw1ts on other sites are ognored.
.. 'Qz •••
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5 ........ ...
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• •
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-·--- means grea te r measurability and ultim a tely more efficient digita l advertising spend. Accord - ing to C hose a nd Tod ri-Ad a mopoulos (2016), based on ana lysis of mass consumer cla ra sets 'mere exposure to display advertising increases users' propensity to search for the brand and the corresponding prod uct', and their work also revealed that display advertisi ng increased a shopper 's likelihood of direct searching for the products and services they require (i .e. , a visit to a particular website} . In a multichannel trading environment, it is critica ll y impor- tant ro undersmnd the efficiency and cost effectiveness of channels in order ro maximise the effectiveness of a digital marketing strategy.
A common approach to attributing the influence of different online media a customer consumes before purchase has been the last- click method o f d ig ita l me d ia c hannel attribution introduced by Lee (2010} . Figure 8.13 gives an example of using a social media marketing tool ro assess effectiveness on a last-click basis. It shows rhat when a business shares content across different social networks it can review how many clicks and conversion ro leads are generated. In t his example, Facebook is most effe·ctive by volume.
However, Lee explains that this can give a misleading picture of which market ing chrumels arc effective. In an analysis of \risitors to an airline site (Figure 8.14), he shows t hat although rhe overa ll p atterns of referrers to the site a t first appear sim ilar, there are so me major differences. If you refer to Figure 8.14 you can see tha t emai l markedng, SEO for non-brand
Figure 8.14 Examples of the referring mix for an airli ne
Contribution based on last c lick
3%
19%
2%
12%
58%
Source: Lee (20 1 0)
Contribution based o n all intera ctions
9% 18%
44% 17%
0 SEObrand 0 SEO non-brand 0 PPCbrand 0 Price comparison 0 Direct to site 0 E-mail
Digital media de-duplication A single referrer of a IIISit leading to sale IS credited with the sale based on the last -dick method of digital meda chamet alttb.Jtion.
Digital media ' assist' A referrer of a IIISit to a site before lhe ultmate sale is credrted with the sale, often through a weighting system.
Digital asset The graphical and intetaelive material that supports a campalgn displayed on tnrd-party sites and on microsites. lnclJdes display ads. emaltemplates, video, audo and other interactive meda such as Flash animations.
Chapter 8 Campaign planning for digital media 383
rerms and PPC for brand rerms are more significant when looking ar the contribution of all sources.
Referring ro Figure 8.12, you can see this has the benefit rhar we don'r credjr mulriple affiliates wirh sale for affiliare marketing- only Affiliate 2 is credired wirh the sale, a pro- cess known as digital media de-du plicat ion. Bur ir has the disadvanrage that it simplifies rhe reality of previous influence or digital media 'assists' and previous referrals influenced by orher customer rouchpoims on other sires are ignored, such as the natural search or display ad.
So, for the most accurare inrerprerarion of the conrriburion of different media, rhe online marketer needs ro use ragging and analysis rools ro rry ro build the besr picrure of which channels are influencing sales and then weighr rhe media accordjngly. For example, a more sophisricared approach is ro weighr the responsibiliry for sale across several different refer- rers according to a model - so jusr considering the affiliates, Affiliate 1 mighr be credired wirh 30 per cenr of the sales value and Affiliare 2 with 70 per cenr, for example. This approach is useful since it indicates rhe value of display advertisi ng - a common phenom- enon is the halo effect where display ads indirectly influence sales b)' crea ting awareness and sti mulating sale ar a later point in rime. These are so metim es known as 'viewthrough' or 'post-impression' effects.
These allocation approaches won'r be possible if agencies are using different rracking tools and reporting separately on differenr media channel s - for exa mple , the ad agency reports on rusplay adverrising, rhe search agency on pay-per-dick, rhe affiliate manager on affiliare sales. Instead it is jmporranr ro use a unified tracking sysrem thar typically uses common tags across all merua channels. Common unified tracking solutions that consider all media are available (e.g .. , from DoubleClickTM and some of rhe larger media agencies).
Furtl1er sophistication of tracking will be worthwhile for companies investing miWons in rugiral merua in order ro undersrand the customer journey and rhe contribution of merua. A useful analysis to perform is in the form shown in Figure 8.1 5. This anonyrllised example shows the importance of display ads, for example, and how different channels support each orher.
Achieving and measuring repear visits is worthwhile since, according to Flores and Elrvedt (2005), on average, purchase intenr sees a double-digit increase after someone has been to a sire more than once.
For some promotional rechniques, ragging of links on third-pa r ry sites will not be practi- cal. These will be grouped together as unarrributed rcfcrrers. For word-of-mourh referrals, we have to estimate rhe amowu of spend for rhese customers through rrarutional market research technjques such as questionnajres or asking at point of sale. The use of ragging enables much better insights on the effecriveness of promorional techniques than is possible in traditional media, bur due ro its comple.xi ry ir requires a large investmem in sraff time and rracki11g software to acb.ieve ir. It is also very dependenr on cookie deletion rates.
To see how a budget can be crea red for a digital campaign, compl ete Activity 8.3.
3 Level of investment in digital assets
The digital assets are the creative rhat supporr a campaign. They include:
• display ad or affiliate marketing creative such as banners and skyscrapers; . .
• nucrosltes; • email templates; • video, auruo and or her inreractive media sud1 as Flash animations, games or screensavers,
whjch form a mkrosire.
As with tradjrional merua, rhere is a tension between spend on the advertising creati\·e and the media space purchased ro run the executions. There is a danger that if spend on media is too high, then the qualjry of the execmion and the volume of digital assets produced will be too low.
384 Part 3 Digital marketing: implementation and practice
Ac tivity 8.3
Figure 8.15 Example of the sequence of visits to a site in generating conversions where two or more digital media channels were involved (codes for channels: D = Display, S = Search, X= Aggregator)
Channels Sequence % Conversions Channel allocation
OS 34.01% so 20.98%
2 xs 8.35%
74.75 % sx 7.33% ox 2.24% XD 1.83%
DDS 7.74% SDS 5.30% sxs 3.05%
3 DXD 1.02 % 18.53% DXS 0.81% xsx 0.41% sox 0.20%
SDSD 1.63% DSDS 1.43 % DXDX 0.41%
4 DSDX 0.20%
4.48% DSXD 0.20% DXDS 0.20% DXSD 0.20% SDSX 0.20%
5 DSDSD SDSDS
1.02 % 0.41%
1.43 %
DSDSDS 0.20% 6 SDSDSD 0.20% 0.61%
SDSDXS 0.20%
7 DSDSDSD 0.20% 0.20 %
Creating a digital campaign budget
Purpose
To illustrate the type of budget created internally or by digital marketing agencies. Figure 8.16 shows an extract.
Activity
Download the spreadsheet from http://blog.davechaffey.com/spreadsheet to understand how the different calculations relate to each other. Try changing the cost of media (b lue cells) and different click-through rates (blue cells), for which typical values are shown for
a compet itive retail product. View the formulas to see how the calculations are made. How would you make this model more accurate (i.e. how would you break down each
digit al media channel further)?
Cha pte r 8 Campaign planning for digital media 385
Figure 8.16 Spreadsheet template for digital campaign budgeting
' """'
Ov..albt.dgot £10.0011 , __ • tnpUl--VII'j _,., .......... ano~ysos - AY.._ on!« vak.le 1:50 I ~colo·-- (c:oolcWtod-do not""*'Y'>Il - Gross prolit """9" 30.0% -- S-.rd1 Partnors Ad buys Ad Paid Nobnl -... AQgrogalor$ (CPM) - - - (CPA! (CPM) P'Cl Sewp I =atm. / Mgt coots £0 £0 £0 ro ro £0 CPM £10.0 £10.0 £40 to• £10.0 £20.0 CPC ~.0 ~.0 £0.20 £0.20 1:5.0 £10.0
Medacoot Media coots £10.0011 £10.000 £30.000 £ 10.0011 £10,0011 £10.000 Total cos1sewp at>d media £10,000 tlO,OOO £30.000 £10.000 £10,000 £10.000 Budget '16 10'16 10'16 30'16 10'16 10'16 10'16
lmpmssions or names 1 .000.000 1.000.000 7.500.000 25.000.000 1.000.000 500.000 M«flalmp< ... lons em 02'1Eo 02'16 2 .0'1Eo 02'16 0.2'16 0.2'16
andf8SPO"se Clicks or srt& vls:its 2.000 2,000 150.000 50.000 2 .000 1.000 Conversion ra te to opportl.-,hV 100.0'16 100.0'16 100 0'16 100.0'16 100.0'16 100.0'16
Cooversjon LO Numb« ol opport..,lties 2,000 2.000 160.000 50.000 2.000 1.000 opport..,lly pead) Cost pe.-opportunity 1:5.0 ~.0 £0.2 £0.2 £5.0 t1o.o Convetsion raJe to sale 100.0'16 100.0'16 1000'16 100.0'16 50.0'16 100.0'16
Coo...., Number of sales 2,000 2,000 150.000 50,000 1.000 1,000 ........ '16 ol.salos 1 .0'16 1.0'16 72.7'16 242 '16 0.~'16 0 .5'16 Cost pe.- sale (CPA) £5.0 ~.0 £0.2 £0.2 £10.0 £10.0
R•'liW\Ue Total..-ue £100,000 £100.000 £7.500.000 £2,500.000 £50,000 £50,000 Cost of goods sold £70,000 £70.000 1:5.250.000 £1.750.000 £35.000 £:35.000
Costs Media costs £10,000 £10.000 £30.000 £10 .000 £1 0.000 £10.000 Total eos1s (Inc m<da) !:80,000 !:80.000 £5.280.000 £1.760.000 £45.000 £45.000 - t2o.OOO £20.000 £2.220.000 £740.000 1:5.000 1:5.000 Ptof.-y Rscumoolf1WSim<!nt 23.0" 25,096 42.0" 42.0. 11.1" 11.1.
Source: www.smartinsights.com/conversion-model· spreadsheets
( Step 6. Integration into overall media schedule or plan J Integrat ed mari<etlng A plamed approach to achieve communications goals by delivering consistent, coherent messaging, oreatlve and branding to audiences across different channels and media placements. Creative treatments and interactivity should be designed to take advantage of specific channels such as social netwoO<s. emai or webs~e to make them more effective.
In common with other communications media, digital media are most effective when they are deployed as part of an integrated marketing approach, which in the digital age is far removed from the traditional definit ions of Integrated Marketing Communications (TMC) that so ugh t to coordinate broadcast and print media channels and eventually digital media ro deliver a clear and co nsistenr message ro achieve communication goals (Kotler et al., 2001 ).
Digital media ca m paigns sho uld be integrated to reac h target markets, where i11div iduals cons ume message content across mu ltip le p latforms (e.g. mobi le;:, web, social media and combinations of all three}, bur also raking into consideration paid media (e.g., offline· adver- tising, direct marketing} , earned m edia (organic sea rc h, content marketing, PR} and owned media (social media, specific websires, email m arketing) (A ll en, 2017). Figure 1.1 s hows how different media types can be integrated to develop a coherent integrated market ing
. campa•gn .
The complex challenge of integrating this digital tapestry can be simplified by focusing on the characteristics of each channel, and identifying irs strength, weaknesses and com- munication potential in relation to the message.
For example, Twitter has extensive reach, a nd is good for 'short, witty and pithy mes- sages, whilst Pinterest is great for content related to design, and aspirational content works best on Instagram' (Allen, 2017) .
386 Part 3 Digital marketing: Implementation and practice
Key activities in media selection and planning
The starting point for rnedja planning, selection and implementation is to ha,·e clearly defined campaign objectives:
• For direct response campaigns, the most important objecrives are response volume, qual- ity and cost.
• For campaigns where awareness and branding are the main outcomes, branding metrics become important.
Pickron and Broderick (2001) idencify six activities in media imp lementation: target audi- ence selection, media objectives, media selection, media scheduling, medja buying and media evaluation. Digi tal markering insight 8.5 gives anorher perspective.
A particularly important aspect for onl ine media is t hat this evaluation and adjustment c:ln- and should- occur during the ca mpajgn, in order ro identify the best placements and crearives a nd to refi ne the o ngoing m edia pla n.
Figu re 8. 17 shows how communjcati o ns can be p la nned around a pa rticular event (SE denotes 'sea rch engin e'; C l and C2 are ca mpaigns 1 a nd 2). H ere we h:we chosen the launch of a new version of a website, bur other alternati ves include a new p rod uct la unch or a key semi n:lr. Thi s p la1mj ng w il l help provid e a conrinu ous message to custo mers. It a lso ens ures a maximum num ber of customers are reached usin g different media over t he period.
Digital marketing insight 8 .5 Different forms of campaign integration
The IPA (2011) report showed the popularity of alternative options for campaign integra- tion. There was analysis of over 250 IPA Effectiveness Awards c ase studies, entered over a seven-year period (2004-2010), including examples from Hovisn ... 0
2 , Virgin
AtlanticTM, HSBC, E4 Skins, Johnnie WalkerTM and more. The report defines four options for integration:
1 No integration - single channel or campaigns using a number of channels but not integrating consistently across them. Analysis suggests that campaigns with no obvi- ous integration or who use only one channel are good at reducing price sensitivity but have little impact on market share.
2 Advertising -led integration - channels unified around a common creative idea/' matching luggage' approach. Traditionally, integrated advertising-led cam- paigns were reported to be more effective at share gain and customer acquisition.
3 Brand idea-led ' orchestration' - unified around a shared brand concept or need- state platform, often built around core brand values of the organisation. Analysis of campaigns suggests that brand idea-led campaigns are highly effective In retention, share defence and profit gain.
4 Participation-led 'orchestration' -goal is to create a common dialogue or conver- sation, it has emerged in recent years, partly driven by digital media. The analysis in the report suggests that participation-led campaigns underperform on hard sales measures but excel in rewarding existing users and on brand fame. Since they are relatively new, they are a small proportion of the total.
The research also found that multichannel campaigns are better at driving effective- ness than single-channel activity: 78 per cent of cases with three channels demonstrated hard business effects versus 67 per cent of those with only one channel. There is, how- ever, a point of diminishing returns beyond three channels. It's surprising this difference isn't larger, but multiple channels fare well when considering other measures. j
--
Chapte r 8 Campaign planning for digital media 387
Figure 8.17 Integration of different communications tools through time
Seminars
Link building/affiliates Press release
+ E-catalogue
+ Postcard
+ SE registration
+ SE optimisation Press release
Print ads • )lo + Banner ads
• )lo
Email C1 Email C2
+ + + + + + + Jan Jun Dec
Key + Direct mail Re-launch
t E-newsletter
Finally, here are five questions about integration you must ask when creating a . camp<ugn:
1 Consistent bran ding and messaging. Is the branding and messaging sufficiently similar (coherent) throughout the campaign?
2 Varying the offer, messaging and creative through the campaign. Is offer and messaging vru·ied sufficiently through the cru11paign? Wiili each different medium and wave of d1e campaign, it can improve results to subtly vary the offer, message and creative. This might appear to conflict wit h the first guideline, bm the two can be compat ible, since: • different treatments and offers will appeal to different people and achieve different results; • if each communication in a campaign is identical, then future campaign waves will be
ignored; • escalating or improving offers during a campaign can achieve better response.
3 Frequency (number) and int erval of communications. AJ:e you exposing the audience sufficiently or too much to your messages? This is a difficult balance to strike. In our view, some marketers often undercommunicate for fear of overcommunicating!
Wit h online media buys, it's also important to think about frequency as well as reach. Increases in frequency will usually increase awareness, as for any mediLtm- though direct response will usual ly peak quire quickly before ebbing away. If you have defined touch strategies that mandate a minimum or maximum number of
communications within a period- and the interval between them -you should check mat your plans fit in with these or rhat they do nor constrain your campaign . 4 Sequencing of communications. Of the options available, should you:
• law1eh your campaigns online first; • law1eh your campaigns offline first; • lawKh your campaigns simultaneously online and offline?
Here are some examples where your online and offline activities might not launch simultaneously:
• a campaign for an event promotion starts with a direct mail or an email; • digital communications are reserved as contingency- in case offline response vo lumes
are not high enough; • a promotion is launched online first (notified by ema.il) to appeal to loyal customers; • an unusual ad execution is launched online first to create a buzz;
388 Part 3 Digital marketing: implementation and practice
• a press release is announced first online so that it can be transmitted by part icular ad,·ocates;
• a timed or limited offer is launched online, because timing of receipt can be more accurately assured .
5 Optimising riming. Do communications get delivered and received at the optimal time? For online display advertising, PPC and email marketing there are specific times of the day, days of the week or rimes of the momh that your message will work best.
Case study 8 Facebook - a Titan of the digital age
This case is about the social network Facebook, which needs no introduction. When we first featured it in an ear-
lier edition, it was a niche service mainly used in colleges and universities. Then in the first two years of operation Facebook reached 6 million users, by 2009 there were 360 million (Facebook, 2018) and now there are more than
two billion monthly active users, or nearly 40 per cent of the world's population (over 14 years) (Noyes, 2018).
The purpose of this case study is to review the success factors, that propelled Facebook into such a successful
position that it is able to influence global media, be a dominant player in online advertising and owns so much personal data that it is probably better placed to know who your best friend is than you are yourself. Learning
about the success factors is one part of this case, but we also consider the risks associated with becoming one of the world's most successful digital brands.
The mission - the big picture When Mark Zuckerberg launched a site call thefacebook. com in 2004, it was a student directory showcasing pho- tos and basic information. Growth was rapid in the US
and then internationally through universities and high schools. But it wasn't until 2006 that Face book began to expand its reach to everyone aged 13 and over w ith an email address. As the membership base grew, the func-
tionality of the site developed, enabling the sharing of photos and an opportunity to expand personal social networks.
By 2015, the social media giant was riding high and
its mission had become less about functionality and more about socially enabling members: 'We want to give you the power to share and to make the world more open and connected'. In 2017, the mission became more focused
on 'bringing the world together; and enabling the plat- form to encourage more connections, through newsfeeds and build "meaningful communities" to give individuals a voice to share a diverse range of viewpoints and opinions
in order to address major societal issues e.g., poverty, climate change, terrorism' (Zuckerberg, 2017).
Value proposition Consumer
When Facebook launched in February 2004, there were just three things users could do on the site: 1) create a
profile with their picture and information; 2) view other people's profiles; and 3) add people as friends. These are still core to its functionality and translate into core con- sumer benefits (as stated by Facebook):
• Connect and s hare with your friends. Staying con-
nected is the core feature as we would expect, but note the more emotional underpinnings of the other elements of the value proposition.
• Discover and learn. Facebook references public fig-
ures and organisations that interest them - available through Facebook company pages.
• Express yourself. A fundamental need. Facebook does this through its key features, which it describes
as the Timeline, News Feed, Photos and Videos and messaging through Email, Chat and Text.
• Stay connected everywhere. Referencing the impor-
tance of mobile use and use on other sites to Face- book's users and business model, people can access Facebook through the website, mobile sites, smart- phone apps, and feature phone products.
Marketers and bus inesse s
Facebook worked hard to monetise its audience, par- ticularly since its initial public offering (IPO) on 18 May
2012. This was the biggest IPO for an Internet company, with a peak market capitalisation of over $1 04 billion. Facebook describes its offer to business as follows:
Marketers can engage with more than one billion monthly active users on Facebook or subsets of our users based on information people have chosen to
share with us such as their age, location, gender, or interests. This offers marketers a unique combination of reach, relevance, social context, and engagement to enhance the value of their ads.
Commercial companies or not-for-profit organisations (e.g. www.facebook.com/joinred) create their own Face-
book pages for their company (currently free). Facebook users can then express their support by adding them- selves as a fan, writi ng on the company Wall, uploading photos and joi ning other fans i n discussion groups.
When users become fans, they can optionally agree to be kept up-to-date about developments, which then appear in their news feeds.
To encourage companies to advertise, Facebook
uses an algorithm known as EdgeRank Checker, which determines the percentage of company status updates that appear in a user's newsfeed and a suite of per- formance measures to test and optimise businesses'
creative corntent.
Revenue model Facebook has a targeted ad-based revenue model,
which is slightly different to its rival Google, which uses a model based around keyword searches. Facebook 's
approach utilises personal data (anonymised) to provide advertisers with lists of potential customers to target.
Some of the features of Facebook Ads (www.facebook. com/ads) include:
• targeting by age, gender, location, interests, politics, religion and more;
• alternative payment models: cost-per-click (CPC) or impression-based (CPM).
• 'Trusted Referrals' or 'Social Ads' - ads can also be shown to users whose friends have recently engaged with a company's Facebook page or engaged with the company website.
At the time of the launch of Ads, the Facebook blog made these comments, which indicate the delicate bal-
ance between advertising revenue and user experience. They said, first of all , 'what's not changing':
• Faoebook will always stay clutter-free and clean. • Facebook will never sell any of your information. • You will always have control over your information and
your Facebook experience.
• You will not see any more ads than you did before this.
And what is changing:
• You now have a way to connect with products, busi- nesses, bands, celebrities and more on Facebook.
• Ads should be getting more relevant and more mean- ingful to you. Facebook Ads offers opportunities for
Chapter 8 Campalgn planning for digital media 389
business to engage potential buyers at every stage in
their journey to purchase. • The company continues to grow its digital advertising
revenue and its strategy for global expansion and acquisit ions also contribute to this revenue stream.
Facebook's strategy Faoebook describes the key elements of its strategy in its SEC filing as:
1 Expand global community. Facebook names spe- cific 'relatively less-penetrated, large markets' such as Brazil, India, Mexico and Japan. So, in order to
expand its reach Facebook looked for potential acquisitions and in 2012 purchased lnstagram, which has developed as a separate brand , providing greater reach for both p latforms through the sharing of
images. Similarly, What's App TM the mobile messag- ing service, was purchased in 2014, giving Faceb ook access to millions of active users in a diverse range of global locations (Olson , 2014).
2 Develo p social pro du c t s to provi de t he most c ompellin g u ser e xpe rience. As with many SEC filings of successful Internet businesses , there is a
clear commitment to user experience. Facebook's approach is based on Facebook Insights:
To provide the most compelling user experience, we continue to develop products and technologies focussed on optimising our social d istribution channels to deliver the most useful content to each user by analysing and organising vast amounts of information in real time.
Smart Insights (2012) quotes Andrew (Boz) Bosworth,
then director of engineering at Facebook, as saying:
Every day, we run hundreds of tests on Facebook, most of which are rolled out to a random sample of people to test their Impact. For example, you may have seen a small test for saving news feed stories last week.
Other products might require network effects to be properly tested, so in those cases we launch to eve- ryone in a specific market, like a whole country.
3 Mobile products. Facebook is seeking to make these
more engaging and more easily available. In April 2014 Facebook passed 1 billion million average monthly users of mobile services. The acquisition of photo-sharing app lnstagrarn in August 2012 was part of this strategy.
4 Fac ebook Platfo rm. Facebook notes the importance of developing an open system through apps and web- sites built by developers using the Facebook Platform, including API (Application Programming Interfaces)
390 Part 3 Digital marketing : implementation and practice
and Social Plugins to help integration with other ser- vices such as websites. The Facebook Platform was introduced in 2007 and by January 2008 over 18,000 applications had been built on Facebook Platform with 140 new applications added per day. More than 95 per cent of Facebook members have used at least one application built on Facebook Platform.
5 Improve ad products. With the IPO this is a vital aim for Facebook, but it has to be balanced against the other elements of the strategy, particularly 2: Develop social products Facebook states: 'Our advertising strategy centres on the belief that ad products that are social, relevant, and well-integrated with other content on Facebook can enhance the user experi- ence while providing an attractive return.'
6 Build a scalable infrastructure. Facebook describes its investment in software and hardware infrastruc- ture, which enables its aim to provide a 'unique, per- sonalised experience to each of our users around the world'. To do this Facebook explains its technology investments as focusing on analytics and develop- ment in areas including content optimisation and delivery, graph query, media storage and serving, large-scale data management and software performance.
7 Using AI to control content. Fakenews and the legitimacy of content on Facebook 's Platform has become a major political concern. To address this and maintain validity of postings in line with the latest mission of building meaningful communities, the use of AI is being explored to find ways to differentiate from "news stories about terrorism and actual terrorist propaganda". Facebook wants to have the capacity to quickly remove content that is detrimental to its societal values (Solon, 2017).
Risk factors
Although it seems curious to think of a company as large as Facebook having competitors, it has new global rivals and local rivals. Globally, the competitive market chal- lenges for Facebook are in part its business markets; it needs to develop business in emerging markets. But many advertisers are not based in the US, and in China, and India South America, where emerging markets are devel- oping, Facebook does not dominate (MacBride, 2017).
Locally, lnstagram is an internal competitor, owned by Facebook but this social media platform is growing fast and attracting advertiser revenue. Unkedln is capturing business-to-business traffic and while much smaller than Facebook, has a strong business client base. Twitter and Google are also competitors. There is an intensity to the rivalry of these firms, based on the ability of the firm to attract the largest audience.
Facebook states that: 'Trust is a cornerstone of our business' and it now dedicates significant resources to the goal of building user trust through developing and implementing programs designed to protect user pri- vacy, promote a safe environment and assure the secu- rity of user data. Facebook has to some extent learnt this lesson from early mistakes, insofar as the importance of representing the business's core values. Mark Zuckerberg is seeking to refocus efforts on community connections. Changes to Facebook's newsfeeds algorithm in 2018, has shifted the focus away from business promotion towards social and personal communication. The risks are the effect on business referrals.
Facebook lists some of its other key risk factors as:
• users increasingly engage with other social media platforms, products and activities;
• users feel that their Facebook experience is dimin - ished with respect to the frequency, prominence, and size of ads, which detract from user core benefits;
• users adopt new technologies where Facebook may not be featured or otherwise available.
In 2018, Facebook's strategy and its exposure to risk has been tested and as a result its trusted position seriously questioned. Mark Zuckerberg has had to face the US congress and answer questions regarding selling adver- tising to unscrupulous propagandists and facilitating the growth of fake news. This global exposure of the com- pany's activities has seriously impacted on the business and highlighted the 'fragility of Facebook's standing in both the markets and public perception ' (Lapowsky, 2018). This situation arose due to how personal data was being handled and the company was accused of allow- ing this private data to be used inappropriately for poten- tial political gain. This situation affected the valuation of Facebook and consumer trust, but potentially more sig- nificant is this could lead to tighter regulations on the use of personal data.
The future for Facebook
Mark Zuckerberg is taking responsibility for the future direction of Facebook and looking to new technology, such as augmented reality, to deliver new applications. Messenger is Facebook's second-biggest product and it appears to be taking inspiration from the Chinese WeChat by introducing chatbots and other features to introduce more 'fun' and stimulate more traffic.
Many companies are moving away from the original Facebook Platform, for example Vice, Mashable and BuzzFeed, as they are receiving a growing number of referrals from Pintrest and lnstagram (Chaykowski, 2018). Business referrals have been slowing for the last two years, creating opportunities for competitors such
as Google, and there have been the trust issues over potentially inappropriate use of personal data.
Key sources for the latest information on Facebook:
• All Facebook (www.allfacebook.com) and Inside Face- book (www.insidefacebook.com) are sites specialising in reporting on developments at Facebook.
• Key Facts- updated quarterly at close of year (http:// newsroom.fb.com/Key-Facts).
• SEC updates - Security and Exchange Commission annual report filings give great insights into how Face- book positions itself and what it sees as its risk fac- tors (http://investor.fb.com/).
• Smart Insights Facebook updates and advice (www. smartinsights.com/social-media-marketing/facebook- marketing/) cover the major developments that mar- keters need to be aware of.
• Socialbakers (www.socialbakers.com/facebook-statis- tics/) Facebook statistics by count ry and brand popularity.
• Wikipedia pages for Facebook (http://en.wikipedia. org/wiki/Facebook).
r. Summary
Chapter 8 Campaign planning tor digital media 391
• Wired Beyond Facebook (https://www.wired.com/ story/beyond-facebook-its-high-time-for-stronger- privacy-lawsl), an article in Wired magazine.
Soun:es: Abram (2006): ~~ (2007); Facebook {2018): Noyes. (2018): Heath {2017).
Questions 1 As an investor in a social network such as Face-
book, which financial and customer-related met- rics would you use to assess and benchmark the current business success and future growth potential of the company?
2 Complete a situation analysis for Facebook focusing on an assessment of the main business risks that could damage the future growth poten- tial of the social network.
3 Imagine you are Facebook's marketing director. Suggest a marketing strategy for the next 18 months based on your answers to question 2.
1 Key characteristics of inreracrive communications are the combination of push and pull media, user-submitted conrenr, personalisation, flexibility and, of course, interactivity to create a dialogue with consumers.
2 We reviewed these elemenrs of a digi tal marketing communications plan:
• Step 1. Goal setting and tracking. T hese can include goa ls for campaign volume (unique visi tors a nd visits), q uality (co nvers ion to value evenrs), cost (in cl uding cost- per-acqu isitio n) a nd profitability.
• Step 2. Campaign insight. Info rm atio n to feed into the ca mpaign plan includes poten- tia l site a udience reach and co mpositio ns, o nline buyin g behav io ur a nd preferences, custo mer search behaviou r an d co mpetito r ca m pa ign act ivity.
• Step 3. Segmentation and targeting. Key segmentatio n approaches are rela ti o nshi p wi th com pany, d emographic segmenrat ion , psychograph ic or att itudi nal segmenra- tion, value, lifecycle stage a nd behaviour.
• Step 4. Offer and message developm ent. Includes idenrification of p rimary and sec- ondary offers.
• Step 5. Budgeting and selecting the digital media mix . Should be based on com·ersion models, reviewing aiJ the digital media chan nels.
• Step 6. Integration into overall media sch edule or pla n. The principles of inregration include coherence, consistency, continuity and complemenrariries.
392 Part 3 Digital marketing: implementation and practice
Exercises
[ References
Self-assessment exercises
1 Review the reasons why continuous marketing activity involving certain digital media channels is preferable to more traditional burst or campaign-based activity.
2 Describe the unique characteristics of digital media in contrast to traditional media. 3 Review the options for targeting particular audience groups online with different
digital media. 4 How should a company decide on the relative investment between digital media
and traditional media in a marketing campaign? 5 What are the options for integrating different types of digital media channels with
traditional media? 6 What are the issues that a marketer should consider when defining their offer and
message for an online campaign?
Essay and discussion questions
1 Imagine you are starting a new business: an independent coffee shop. Discuss how a website and social media can be used to enhance customer experience.
2 Select a company of your choice and assess the effectiveness of the integration between their traditional communications , digital media channels and their website.
3 Select a recent campaign from a not-for-profit organisation and, with reference to their website campaign pages, identify how they should set campaign goals and review effectiveness.
4 How should companies decide on the granularity of targeting in digital media cam- paigns? Select two digital media channels to illustrate your examples.
Examination questions
1 Outline the range of goals that should be used to define success criteria for an online marketing campaign.
2 Discuss the options a business-to-business company could use for targeting an audience through social media.
3 Assess why integration between online and traditional media might make a cam- paign more effective overall.
4 Describe different options for testing the effectiveness of competing offers online. 5 Evaluate the potential value of incorporating a mobile ' text-to -win' promotion into
an offline campaign.
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(_vv __ e_b_lin_k_s __ ~-------------------------------------------------J Add itio nal link s o n s pecific digital media channels such as em ail marketing and search engi ne m arketing are at the end o f Chapter 9. • ClickZ (www.clickz.com/). Has columns on different aspects of interactive com mwli ca-
tions including media planning. • iMediaConnection (www.imediaconnection.com). Media site reporting on best practice
in online advertising.
Chapter 8 Campaign planning for digital media 395
• US Internet Advertising Bureau (www.iab.com/). The widest range of studies about Inter- net advertising effect iveness.
• Marketing Sherpa (www.marketingsherpa.com). Articles and links on Internet marketing communications including email and online advertising.
• Smardnsights.com (www.smartinsights.com). Advice on creating effective marketing cam- paigns, includi ng customer insight and attribut ion modelling.
• \Vorld Advertising Research Centre (www.warc.com). Covers offline and online media. Mainly subscription service, but with some free resources.
Marketing communications using digital media channels
398 Part 3 Digital marketing: Implementation and practice
Table 9 .1 Summary of different digital media channels
Digital media channel
Search engine marketing (SEM)
Online public relations
Online partner- ships including affiliate marketing and co-marketing
Interactive display advertising
Opt-in email marketing
Social media marketing including viral and electronic word - of-mouth marketing
Description
Gaining listings in the search engine results pages of the major search engines, Google, Bing , You Tube and popular country-specific engines. Also includes advertising on third-party publisher sites, which are part of the search display networks, to generate awareness and for remarketing
Using influencer outreach to maximise favourable mentions of your company, brands, products or websites on third-party sites such as media sites, social networks or blogs that are likely to be visited by your target audience; also includes monitoring and, where necessary, responding to negative mentions and conducting public relations via a site through a press centre or blog, for example
Creating and managing long-term anrangements to promote your online services on third-party websites or through email communications; different forms of partnership include co-marketing, link building, affiliate or performance marketing, aggregators such as price comparison sites, online sponsorship and co-branding
Use of online display ads such as banners and video ads on publisher and social network sites to achieve brand awareness and encourage c lick-through to a destination site
Using legal, permission-based emailing to prospects or customers who have agreed to receive emails from an organisation; Solus emails can be booked, where a publisher sends an email on behalf of a brand or the brand can be featured in an a-newslet- ter; companies can build up their own 'house list' containing customer or prospect details, and com- pany emails encourage purchase
Organic social media marketing (covered at the start of Chapter 6) is online word of mouth- compelling brand-related content is shared, forwarded or d is- cussed electronically or discussed offline to help achieve awareness and, in some cases, drive response; paid social advertising involves paid ads for awareness or retargeting to support conversion goals
Different communications techniques
Search engine optimisation (SEO) listing in the organic listings, which does not attract a fee- per-click; based on on-page optimisation and link-building Pay-per-click advertising sponsored listings using Google Ads, for example
Influencer outreach to co-create content and press releases to gain positive mentions, managing reputation on third-party sites, particularly forums and social networks Use of owned media - own-company feeds, blogs Blogger and influencer outreach for earned media
Commission -based affiliate marketing for transactional a-commerce sites Creating long-term partnership relationships such as sponsorship, link-building or joint editorial
Programmatic advertising Site-specific media buys Use of ad networks Behavioural retargeting or remarketing based on action
Acquisition email activity including list rental (rarely permitted by law today), co-branded publisher campaigns, advertising on a-newsletters Retention and growth activity, e.g. house list for a-newsletters and customer email campaigns Marketing automation of event-triggered email lifecycle activity
Branded presence of company page or advertising on social network Creating 'viral agents' or compelling interactive content Encouraging amplification of viral messages Use of social ads as explained in this chapter Using customer advocacy effect Widget marketing
different techniques and to assist with assignments and revision, we have structured each section the same way:
• Wbat is it? A description of the digital media channel. • Advantages and disadvantages? A structured review of rhe benefits and drawbacks of
each channel. • Best practice in plannmg and management. A summary of the issues such as targeting,
measurement and creative that need to be considered when r unning a campaign using each digital channel. This expands on the coverage given in rhe previous chapter on these ISSUeS.
I
Chapter 9 Marketing communications using digital media channels 399
As you read each section, you should compare the relative strengths and weaknesses of the different techniques and how consumers perceive different options in terms of trust. In the final section, we summarise their strengths and weaknesses for different applications.
The importance of each of these digital media channels in driving visitors will vary from company to company, bur to give you an indication of how important they are on average see Digital marketing insight 9.1. You can see why search engine marketing is an important channel, and this is why we start our coverage in this chapter with SENL You can also see that direct traffic is high, reflecting rhe importance of visits driven by traditional channels or visits from email or social networks that are nor being tracked separately. You can also see that links from other sites are also qui re significant.
Digital marketing insight 9.1 How balanced is you r referrer mix?
One approach to determining the most appropriate mix of digital media channels is to compare the mix of digital site referrers in a digital analytics service. Figure 9.1 shows the average mix of referrers or 'traffic sources' for sites tracked by Google Analytics.
This is a summary of the different terms in the pie chart:
• Search engine. This groups both natural and paid search Ads. • Ref erral. This is traffic from other sites that have direct links to a site. This can include
social media sites, but Google and other analytics services now separate out 'social traffic'.
• Direct. Direct traffic results from URL type-ins, bookmarks or when email marketing isn 't tracked by marketers adding specific link tracking to their email so that they show up in analytics. These days, direct traffic will also include non-browser traffic from visitors clicking on apps for reading social media updates such as Hootsuite or Buffer, or other mobile apps linking to a site. This traffic is sometimes called 'Dark Social' since it is difficult to attribute to social media updates.
• Other. Campaigns include Google Ads when linked to the Google Account and any other campaigns such as affiliates, display ads and email campaigns when these have had marketing campaign tags attached. In this compilation, Google Ads is included under search engines.
Note: This industry benchmark data is no longer updated and published by Google. Marketers can use the Benchmarks feature in Google Analytics to compare their mix of
Figure 9.1 Average percentage of traffic from different sources referred to a website
15.50%
36.50%
27.00%
21.00%
&xRce: Smart Insights (2011)
D Direct D Referral D Search engines D Other
400 Part 3 Digijal marketing: implementation and practice
referrers to their website, or reference the SimilarWebn 1 compilation (www.similarweb. com), which is also useful for students reviewing the traffic sources for case s tudy companies they are using in assignments. Similar data was published by Adobe™ (2017) for 500 large US retail clients that shows the importance of search and email marketing and that, perhaps surprisingly, social and display advertising drive relatively small volumes:
• natural search 41 %; • paid search 27%; • email marketing 25%; • social media 3%; • Display 3%.
Note that direct traffic and affiliates are excluded from this analysis.
Essential digital skills Digital media
Many of the practical skills sought after by businesses in digital marketing involve the techniques covered in this chapter. These include:
• SEO: Perform a gap analysis, content audit and backlink analysis to define the oppor- tunities or organic search traffic and then achieve them through content creation and influencer outreach.
• Paid search: Become a Google Ads professional.
Practical ideas to boost employability by showcasing your interests and experiences include:
• Create a blog and set up Google Analytics tracking so you understand site referrers. You can use the Google Analytics Demo account to understand a full referrer mix.
• Complete free online Google Ads or Analytics training. • Understand the purpose of the most popular search marketing tools , including
Google Search Console, SEM Rush, Moz and AHREFs. • Follow different marketing influencers on Facebook, Twitter or Unkedln and understand
the content they share and how they interact with companies and other influencers. • Create a marketing-focused blog or Twitter or Linked In profile and share content from
your course and the influencers you follow. Focus on the areas of marketing that interest you most.
To audit your digital marketing skills across the RACE planning framework use the Smart Insights Skills Assessment tool avail able at http://bit.ly/smartdigiskills.
( Search engine marketing ----------------------------------------
Search engine marketing (SEM) is a key technique for generating quality visitors to a web- sire, as suggested by Figure 9.1. We all now naturally turn ro a sea rch engine when we are seeking a new product, service or entertainment. T he main options include Google, Bing, rhe Google-owned YouTube, wh ich is rhe second- largest search engine by volumes of sea rches in m any countries, or mher regional search engines. We also rurn to search engines when we a re familiar wi th a brand, sho rrcurring sire naviga£ion by searching for a brand,
Search engine marketing (SEM) Promoting an organisatiOn through search engnes to meet tts objectives by delivenng relevant cont91t i'lthe search listi'lgs for searchers and encouragi'lg them to dick tlvough to a destination site. The two key techntques ol SEM are search engne optimisation (SEQ) to inprCNe rosutts from the natutalltstings, and paid- search matl<eting to deliver results from the sponsored listings within the search engines. Note, in the US and some European countries the acronym SEM Is sometimes used just to describe paid-search advertistng. Confusing!
Navigational (or brand) search Searchers use a search engine such as Google to find information deeper within a company site by appendi'lg a qualifier such as a product name to the brnnd Ot site name. Organisations need to check that Allevant pages are avaiable tn the search results pages for these situations.
Search engine optimisation (SEO) A structured approach used to increase the position of a company or its products tn search engine natural or organ•c resuns listi'lgs for selected keywords or phrases.
Natural or organic listings The pages listing results from a search engine query, which are displayed in a sequence according to relevance of match between the keyword phrase typed into a search engi'le and a web page acoording to a ranking algorithm used by the search engi'le.
Search engine results pages (SERPS) The page(s) containng the results after a user types a keypiYase i'lto a search engi'le. SERPS contain both natlr'al or Otganic fismgs and patti ()( sponsored listi'lgs.
Chapter 9 Marketing communications using digital media channels 401
appendjng a brand name ro a product or ryping a URL into Coogle. This is known as navi- gational (or brand) search. Given rhe obvious importance of reachi11g an audience during rheir consideration process for a product or when rhey are locating a brand, search engine marketing (SEM ) has become a fiercely competitive area of digital marketing.
There are two main rypes of SEM that are quire distinct in the marketing activities needed w manage them, so we will srudy them separately, although in practice they should be integra ted:
1 Search engine optimisation (SEQ) involves achieving the highest position or ranking practical in the natural or organic listings , shown in Figure 9.2 as the main body of the search engine results pages (SERPS) across a range of specific combinations of key- words (or keypbrases) entered by search engine users. You can see there are a limited number of organic search resuhs compared to the four ads at the top of the SERPs.
As well as listing pages tbar the search engine determines as relevant for the search per- fo rmed based on the text it co ntains and other factors, such as links to the page, the SERPs also conrain other rools that searchers may find usefu l. When th ese were first introd uced, Coogle label led these universal search or b lended sea rch. Today, we si mply talk abo ut specific SERPS fea rures with different labels. Complete Act ivi ty 9.1 to review these in more detail.
2 Paid search (pay-per-click) marketing (PPC) is similar to conventional advertising; here a re levant text ad with a link to a company page is displayed when the user of a search engi ne rypes in a specific phrase. A series of text ads usually labelled as 'sponsored links' are displayed above or ro rberighr of the natural listings, as in Figure 9.2. Although many searchers prefer ro click on the naruralli.stings, a sufficienr number do cJjck on the paid listings (typically around a quarter or a rhi rd ro a half of all clicks) such rbar they are
Figure 9.2 Search engine results page in Google (www.google.co.uk) illustrating the natural and p aid listings
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402 Part 3 Digital marketing : Implementation and practice
Activity 9.1 The changing faces of the SERPs features
I Search engine marketing tools service Moz has regularly updated research called MozCast, which shows the popularity of different types of features within the search results pages for the most popular queries.
Activity
Visit MozCast and review the latest SERPs features (Figure 9.3) so that you understand the difference between them. Complete different navigational, generic and specific searches tor products in a sector of your choice and see how many of these you can identify. Are some companies better at achieving visibility than others?
Figure 9.3 Popularity of different Google Search features for a selection of 10,000 keywords
• Ads / Paid • local • Knowledge Graph • Venicals
HTIPS Results 89.4%
Knowledge Panels 53.7%
RelatedQuest•ons 495%
AciWords (Top) 42.9%
ReVIews (Stars) 38.8%
Local Packs
AdWords (Bottom) 25.1%
V deos 23.3%
Site-links 215%
Images 16.8%
Shopping (Paid) 16.6%
Top Stories 13.2%
Featured Snippets 12.6%
Local Panels 8.2%
Tweets 7%
In-depth Art cles 6.3%
Knowledge Cards 4.4%
Med•c.al Panels 2.6%
Carousels (KG) 1.1%
Souroe: MozCast (http://mozcast.com/features)
Universal search The natural listings incorporate other relevant results from vertical searches related to a query, such as video, l:xloks, news, real-time social media recommendations, s~e 6nks and images.
Paid search (pay-per- click) marketing (PPC) A relevant text ad with a 6nk to a company page is lisplayed on the SERPs when the user of a search engine types in a specific phrase. A fee is charged for every click of each link, with the amount bid for the click mainly determining ~s position. Additionally, PPC may involve advertising through a display network of third-party sites (which may be on a CPC, CPM or CPA basis).
Robots or spiders Spiders are software processes, technically known as robots, employed by search engines to index web pages o f registered sites on a regular basis. They follow or crawl finks between pages and record the reference URL of a page for future analysis.
Chapter 9 Marketing communications using digital media channels 403
highly profitable for companies such as Google, and a well-designed paid -search cam- paign can drive a significant amount of business for companies. There are also opporm- nities to create awareness and response from pay-per-click ads displayed on third-party sites, as we will see in the section on paid search marketing.
The importance of effective search engine marketing is suggested by Figure 9.4, which shows that generating the highest ranki.ngs for a company in the search engine results pages (SERPs) can generate many more visits because of a higher click-through rate. Note rhar click-through rate according to position will vru·y dramatically by type of keyword such as brand or generic keyword , but this research is based on 10,000 keywords across 250 B2C and B2B companies.
What is SEO?
Improving positions in the natural listings is dependent on marketers understanding rl1e process whereby seard1 engines compile an index by sending our spiders or robots to crawl around sites that are registered with that searcil engine (Figure 9.5). The figure shows that the technology harnessed to create rl1e natural listings involves these main processes:
1 Crawling. The purpose of the crawl is to identify relevant pages for indexing and assess whether they have changed . Crawling is performed by rob ot s (bots) that are also known as spiders. These access web pages and retrieve a reference URL of rl1e page for larer analysis and indexing. Although the terms ' bot' and 'spider' give the impression of something physical visiting a site, the bots are simply software processes running on a search engine's server that request pages, follow the links contained on that page and create a series of page refer- ences with associated URLs. This is a recursive process, so each link followed will find additional links that then need to be crawled.
Figure 9 .4 Click-through rates depending on position in the natural search results
• Branded • Unbranded
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Source: Advanced Web Ranking (2018)
404 Part 3 Digital marketing: implementation and practice
Link anchor text Thetextusedtofomnthe blue underlined hyperlink viewed in a web browser defined in !he HTML source. For example, a link: Visit Dave Chaffey's Digital Marketing site is created by the HTML code: <A href="http:// www.smartinsights, com"> Visit Dave Chaffey's Digital Marketing site</ A>.
Figure 9.5 Stages involved in producing a search engine listing for the natural listings
TheW\NW web pages and
documents/media
-o a; ~ t:.B CD .!!? E.c.
Crawl/Index processes
Crawl control
Crawlers
G ~ Inverted o= o index servers
Inverted index servers
Query/Rank processes
User searches
Search query string
SERPs
Phase 1 Determine relevant
document set. Rank in order of
relevance
Phase2 EXtract document
titles and snippets. Return as SERPS
2 Indexing. An index is created to enable the search engine to rapidly find the most relevant pages containing tl1e query typed by tl1e searcher. Rather than searching each page for a query p hrase, a search engine ' inverts' the index to produce a lookup table of documents containing particular words. Marketers can use Google's Search Console (formerly Web- master Tools) to understand which pages are indexed and get recommendations about potential duplicate contenr. The index information consists of phases stored within a documenr and also orher infor- mation characterising a page such as the document's ride, meta description, Page Rank, trust or authority, spam rating, etc. For the keywords in the document, additional attrib- utes wil l be stored such as semantic markup {<hl>, <h2> headings denoted w ithin HTML), occurrence in link anchor text, proximity, frequency or density and posi tion in document, etc. The words contained in link anchor text ' pointing' to a page are particu- larly important in determining search ran kings.
3 Ranking or scoring. The indexing process has produced a lookup of all the pages tha t contain particular words in a query, bur they are not sorted in terms of relevance. Rank- ing of the document to assess the most relevant set of documents to return in the SERPs occurs in real time for the search query entered. First , relevanr documents will be retrieved from a runtime version of the index at a particular data centre, then a rank in the SERPs for each document will be computed based on parsing many ranki.ng factors, of which we highlight the m ain ones in later sections.
4 Query request and re sult s serv ing. The familiar search engine interface accep ts the searcher's query. The user's location is assessed th rou gh tl1eir IP address and the query is then passed to a relevant data centre for processing. Ranking then occurs iu real time for a particular query to return a sorted list of relevant documents and these are displayed on the search results page.
On-page optimisation Writing copy and applying markup such as the <title> tag and heading tag <h 1> to highlight to search engines relevant 1<eyp1vases within a document.
Back! ink Hypenn< that IW<s to a particular web page (or website). Also known as an inbound ink. Google PageRank and Yahoo! WebRank are methods of enumerating this.
External link building A proactive approach to gain quality finks from third-party sites. It can be considered to be an element of online PR since it involves getting your brand visible on third-party sites and creating backlinks related to your site.
Internal link architecture Structuring and labelling &nks wrthin a site's navigation to improve the results of SEQ.
Nofollow and Dofollow tags A nofollow tag IS a basiC piece of HTML Appended to a hyperink, it allows webmasters to control whether seatdl ~ folow a link or not. For example, the folloo,mg URL on a page of another site allows search engines to visit Smart lnSiglts' website and credit the website with the iN<: each &nk Is scored by the search engines, supporting SEO: <a href=" http://www. smartinsights.comf' title="Smart Insights'> Visit Smart lnsights<la> This normal, natural type of link is sometimes known as 'do-followed'! Here's the same hypertink, rQW including a nofollow tag (highlighted in rno): <a href="http://www. smartinsights.comr title="Smart Insights" re~~·'lO'"'ol ">Visrt Smart lnsiglts<la>.
Social graph A term popUarised by Facebook n 2007 when desaili1g its Facebook Aatform. The social graph descttles the telationstip between incividuats lilked through social networks and other connections such as email or personal contact.
Chapter 9 Marketing communications using digital media channels 405
Search engine ranking factors
Google has stared rhar ir uses more rhan 200 factors or signals within irs search ranking algorithms. These include positive ranking factors rhat help boost position, and negative factors or filters that are used ro remove search engine spam (also known as websparn) from rhe index where SEQ companies have used unethical approaches such as automatically creat- ing links ro mislead the GoogJe algorithms. The importance of ranking factors are much disputed br SEQs, since wirh so many factors it is difficult to isolate their impact to pro,·e a correlation or, more importantly, a causative relationship between. The interested should read the balanced article by Fiorelli (2014) discussing the The Myth of Coogle's 200 Ranking Factors. Ln this coverage we will summarise rhe current thinking based on Dave Chaffey's more-than-15-years of experience as an SEQ consultant and publisher.
At a top level, the rwo most important factors for good ranking posi tions in all the main search engines are:
• Matching b etween web page copy an d t he key phrases searched. The main factors to optimi se on are ' keyword density ', keyword formatting, keywords in anchor text and the documenr meta-data including page ririe rags. T he SEQ process m improve resu lts in d1is area is known as on-page optimisation. We will cover some of details of best practice for this process in a topic larer in this section.
• Links into the pa ge (inb ou nd o r backlinks). Google counts each link to a page from another page or an or her sire as a vore for this page. So pages and sites with more external links from od1er sites will be ranked more highly. T he quality of the li11k is also impor- tant, so if Ji11ks are from a sire with a good reputation and relevant context for d1e key- phrase, then rhis is more valuable. Internal links are also assessed in a similar wa}' The processes to improve this as peer of SEQ are external link building and internal link archi- tec ture. To reduce the impact of webspam, search engines introduced nofollow tags, which means that links added ro commenrs in blogs and social media blogs have a limited impact, although it seems that many search spammers aren't aware of this.
When we first wrote abour SEQ in the fi rst edition of this text, the concept of conrenr mar- keting didn't exist. Today, among practising marketers, it is now recognised that the besr, scalable way to gain quality backli nk s is through content marketing described in the 'Content marketing' section in Chapter 8. This involves developing quality contenr and rhen working with partner si res through a process of 'outreach'. Some have suggested thar SEQ has become less important, bur rhe reality is that SEQ has always involved a combination of technical SEO to ensure pages are indexed, development of content a nd working with other site owners. This hasn' t changed.
With the growing importance of sharing of link s through socia l media, the search engines can potential ly use d1e number of social menrio ns to a page and across a site to d etermine ranking positions (Smart Insights, 2010). For exa mp le, a rep resentative of Bing said of assessmenr of Twitter ar the time :
We take into consideration how often a link has been tweeted or retweeted, as well as the authority of the Twitter users that shared the link.
However, Google's search engineers have never officia ll y confirmed that social signals are used when asked. Although analysis has shown there is a correlation between number of social shares and articles thar rank more highly, rhis doesn't indicate causation. There may be other known ranking factors in play, e.g. pages with more social shares rend to last longer, ha\'e higher user engagement and are more likely ro attract organic links from other sites as more people become aware of them. Certainly ir is positive for many reasons to create arti- cles that encourage social sharing, and most media sires and blogs use prominent widgets to show the number of shares and encourage further sharing.
The implications of rhis are thar if companies can get influencers to recommend their content or offers through social networks rhis can have rhe dual effect of reaching more people through their social graph and improving ran kings.
406 Part 3 Digital marketing: Implementation and practice
Advantages and disadvantages of SEQ
Advantages of SEO
The main benefits of SEO are:
• SigniEcant t raffic driver. Figure 9.1 showed that search marketing can attract a significant proportion of visitors to the site if companies are successful in implementing it.
• H ighl y targeted . Visitors are searching for parricular products or services so wiU often have a high intent ro purchase - they are qualified visitors.
• Poten tially low-co st visitors. There are no media costs for ad display or dick-through . Costs arise solely from the optimisation process where agencies are paid to improve posi- tions in the search results.
• Dyn amic. The search engine robots will crawl the home page of popular sites daily, so new content is included relatively quickly for the most popular pages of a site (less so for deep links).
Disadvantages of SEO
Desp ite th e t a rgeted reach a nd low cost of SEQ, it is not st raigh tforward as t hese d isad va n- tages indicate:
• Lack of predicta b il ity. Compared wi th other media, SEQ is very unreliable in terms of the return on investment - it is difficult to predict results for a given investment and is highly competitive.
• Time for results t o be implem enred. The results from SEQ may rake months t o be achieved, especially for new sires.
• Com plexity an d dyn am ic nature . The search engines rake hundreds of factors into account, yet the relative weightings are not published, so there is nor a direct correlation between marketing action and results - 'it is more of an arr rhan a science'. Furthermore, the ranking factors change through rime.
• O ngoing investm ent. Investment is needed to continue ro develop new content and generate new links.
• Poo r fo r developing aw areness in compariso n with oth er media channel s. Searchers already have to be familiar with a brand or service ro find it. However, it offers the oppor- tunity for less \veil-known brands to 'punch above their weight' and to develop awareness following dick-through.
For these reasons, investment in paid search may also be worthwhile.
Best practice in planning and managing SEO
In this section we will review six of th e main approaches used to improve the results from SEO covering different search engine ranking factors. We describe these in some deta il si nce it is one of the most cost-effect ive digi tal marketing techniques, so it's important to w1derstand that SEO is a technical discipline and that the techniques used change through time. For this reason SEO is often outsourced to a specialist SEO agency, although some companies believe they can gain an edge through having an internal specialist who understands the company's customers and markers weU. You wiJI see that some of the on-page optimisation techniques recommended in this section are relatively straightforward and it is important to control brand and proposition messages. Content editors and reviewers within a company therefore need to be trained to understand these facrors and incorporate them into their copywriting.
1 Search engine submission
When a new site is launched irs pages needs to be crawled for it ro be included within the search engine index and potentially ger visibility. While you can register with the search
I ndex i nclusion Ensuring that as many of the relevant pages from your doma.in(s) are included within the search engine indexes you are targeting to be listed in.
Duplicate content Different pages which are ev.Wated by the search 9fl!jne to be smlar and so don't ~ hig11y. 9\IEIIl though they may be for distinct products or SE!t'Aces.
Keyphrase (keyword phrase) The oorntmalion or words users of search engines type into a search box that form a search c:pery.
Ch ap ter 9 Marketing communications using digital media channels 407
engines, most existing companies and even startups will be automatically included in the search index since the search engine robots will follow links from other sires rhar link ro them and do nor require submission services. Coogle has allegedly placed new sites in a review status sometimes referred to as the Coogle sandbox effect. However, Coogle search engineers deny the existence of this and explain it is a naruraJ artefact produced by new sires having limited links from other sires, history and rhus reputation. Either way, ir is important to remember this constraint when creating startup companies or separate unlinked microsires for a campaign since you may have to rely on paid search to gain SERPS visibility.
2 Index inclusion
Although a search engine robot may visit rhe home page of a sire, it wiU not necessarily crawl all pages or assign rhem equal weight in terms of PageRank or relevance. So, when auditing sires as part of an SEQ init iative, SEQ agencies will check how many pages are included within the search engine index for d ifferenr search engines. Thi s is known as index Inc lus ion .
Among rhe p otentiaJ reasons for not ga ining complete index inclusion are:
• Technical reasons why the search robots do nor crawl all the pages, such as the use of SEQ-unfriendly content management system with comp lex URLs.
• Pages identified as webspam or of less importance or considered to be duplicate con- t e nt , which are then contained in what used ro be known as the supplemental index in Coogle, which don't rank so highly. In rh ese cases it is sometimes best to use a specific 'canonicaJ' meta rag, which t ells the search engine which is the primary page. If you are a ruulrinationaJ company with different content sires for different countries, then it can be challenging to deliver the relevant content for local audiences with use of regionaJ domains tending to work best, bur rhere are specialist techniques such as HREFLANC code markup, which can be used ro rell Coogle which country and language a page is intended for.
Companies can check rhe index inclusion by means of:
• using web anaJytics referrer information ro find our which search engines a sire's visitors origina te from, and the most popular landing pages;
• checki ng the number of pages that have been successfu lly indexed on a sire- for example, in Coogle the search ' inurl:www.smartinsights.com' or ' site:www.smartinsights.com' lists all the pages of Dave's site indexed by Google and gives the rota! number in the t op-right of the SERPs;
• usi ng Coogle Search Console, for merly known as 'Webmasrer Tools'- a free serv ice that sire owners ca n register wi th d1at shows pages indexed and potential webspam problems, such as the penalty described in Digital marketing insight 9.2.
3 Keyphra se analysis
The key ro successful search engine marketing is achieving keyphra se relevance, since this is what the search engines strive for- ro match the combination of keywords typed into the search box to the most relevant destination contem page. Notice that we say 'keyphrase' (short for 'keyword phrase') rather than 'keyword', since search engines such as Coogle attribute more relevance when there is a phrase march between the kepvords that the user types and a phrase on a page.
Key sources for identifying the keyphrases your customers are likely to type when search- ing for your products include your marker knowledge, competitors' sires, keyphrases from visitors who arrive ar your sire (from web analyrics), rhe internal sire search tool and the keyphrase anaJysis tools such as the Coogle Keyword Planner. When completing keyphrase
408 Part 3 Digital marketing: implementation and practice
Digital marketing insight 9.2 Is SEQ a zoo of Pandas and Penguins?
Panda and Penguin a lgorithm updates Changes to Google's algorithm aimed at reducing the impact of webspam. They caused the rarl<ings of many sijes to fall. Panda targeted low-quality mes with ' thin· content. Penguin targeted mes using aggressive li'lk bttilg.
Knowledge Graph An infrastructure developed by Google to display related information about people, places and objects.
Since it was launched, Google has named many of the major updates to its algorithm. The best source to review the latest changes is the Moz Algorithm change history (moz. com/google-algorithm-change). Some of the earlier updates, such as Florida in 2003 and Jagger in 2005, marl< the start of Google proactively combatting webspam . In the entry for Florida, Moz explains:
This was the update that put updates (and probably the SEO industry) on the map. Many sites lost ranking, and business owners were furious. Florida sounded the death knell for /ow-value late '90s SEO tactics, like keyword stuffing, and made the game a
whole lot more interesting.
Each year has seen hundreds of minor changes, which SEO specialists have to assess the importance of and review the impact on their sites using analytics. This is one reason that so many people work within SEO.
More recently, the Panda and Penguin algorithm updates have had a large impact, which has reduced the visits to many companies and can potentially destroy the busi- ness for an online pureplay or a small business. For an example, see the story of Joe, a plumber, related by Haynes (2012).
Panda involves a series of major algorithm updates by Google dating from 2011 that are still in place today, aimed at reducing the visibility of low-quality sites with 'thin' content. It was originally known as ' Farmer' to reduce the visibility of 'article farm' sites where webmasters could submit low-quality keyword-stuffed articles to sites targeting specific anchor text. Some also said it penalised 'scraper' sites where content was copied from other sites, but this was, in fact an existing filter.
Penguin was another series of major algorithm updates by Google dating from April 2012 to Autumn 2014 aimed at reducing the visibility of sites involved in aggressive link building. Google described it as an 'important algorithm change targeted at webspam. The change will decrease rankings for sites that we believe are violating Google's exist- ing quality guidelines'. Specific techniques to avoid, which could result in penalties, include:
1 a link profile with too many links with similar exact-match anchor text, i.e. the same keyphrases from multiple sites;
2 keyword stuffing in inbound and outbound links; 3 use of keywords in 'exact-match domains (EMO)' where the domain name targeted
a specific phrase; 4 related on-page factors where Google penalised poor-quality pages violating its
guidelines.
Google has also developed many specialist updates, such as Pigeon in 2014 that governs Local SEO - search results related to a service In a region - and Pirate in 2014 , which targeted sites offering downloads of videos and software. In addition to changes intended to combat spam, there are also algorithm updates related to infra- structure such as Caffeine and Hummingbird, which developed a concept called the Knowledge Graph.
Chapter 9 Marketing communications using digital media channels 409
analysis we need ro understand different qualifiers that users type in. Here are examples of common types of qualifiers for 'car insurance':
• com parison/ quality- compare car insurance; • adjective (price/product qualifiers)- cheap car insurance, women's car insurance; • intended use - high-mileage car insurance; • product type - holiday car insurance; • vendor- Churchill car insurance; • location - car insurance UK; • action request- buy car insurance.
According to the Google Keyword Planner roo!, for a single month in 2015, for searches completed in the UK, the most popular exact phrases related to car insurance were:
• car insurance: 450,000; • car insurance quotes: 161,000; • classic car insurance: 151,000; • cheap car insurance: 145,000; • com pare car insurance: 109,660; • temporary car insurance: 47,000; • you ng drivers car insurance: 9,000.
These data suggest the importance of ranking well for high-volume 'generic' keyphrases such as 'car insurance quotes' and ro consider products and services that target a need such as 'temporary' or 'young drivers insurance' and name them accordingly.
4 On-pa ge optimisation
Although each search engine has its own algorithm with many weighting factors that change through time, fortunately there are common factors in the match between search terms entered and the occurrence of the words on the page that influence search engine rankings.
Occurrence of search term in body copy The number of times the keyphrase is repeated in rhe rext of the web page is a factor in determining the position for a keyphrase, but it is less important than when search engines were first developed, as discussed by Fiorelli (2014). Copy can be written to increase the number of times a word or phrase is used (technical ly, keyword density) and this can have a limited impact ro boost position in the search engine. Note, though, that search engines carry out checks that a phrase is uot repeated roo many times (such as 'cheap flights ... cheap flights ... cheap flights ... cheap flights ... cheap flights ... cheap flights ... cheap flights ... cheap flights ... ' or the keyword is hidden using rhe sa me co lour rexr and background) and will not list the page if this keyphrase density is roo hig h o r it believes 'keyword stuffing' or 'sea rch engine spamming' has occurred. Today, other ranking factors such as anchor rext of backlinks pointing ro the page from other pages and other sites and the natural occurrence of synonyms within the page body copy, headings and tide are more important. User behav- iour signals are also important, so Google favours pages thar engage visitors for longer and so have longer dwell tin1es or lower bounce rarcs compared ro other pages.
In its guidance for Webmasrers, Google (2018) srates:
Google goes far beyond the number of times a tenn appears on a page and examines all aspects of the page's content (and the content of the pages linking to it) to detennine if it's a good match for your query.
41 0 Part 3 Digijal marketing: Implementation and practice
These other factors include:
• frequency (which must be nor roo excessive, i.e. less than 2-4 per cent); • occurrence in page ririe and headings, marked in HTML code as <title>, <hl>, <h2>; • occurrence in anchor text of hyperlinks; • markup such as bold; • proximity of phrase to starr of document and rhe gap between individual keywords; • links out to other related sires; • alternati,·e image text (explained below); • document meta-data (explained below).
Alternative image text Graphical images can have hidden text associated with them rhar is not seen by rhe user (unless graphical images are turned off or the mouse is rolled over the image) bur will be seen and indexed by rhe search engine a nd is a m inor ranking factor, particu larly in images linking to ot her pages. For exam ple, rexr about a company name and products ca n be assigned to a co mpan y logo using the 'A L T' rag o r attribute of the image rag as fo llows:
<img src="car-insurance-photo.png" alt="Car insurance">
Document meta-data ' 1\1era' refers to information 'about' rhe page that characterises it. The three most important types of meta-data are the document <title> rag, the document 'descriptions' meta tag and the document 'keywords' meta tag. These need to be unique for each page on a site, other- wise rhe search engine may assess the conrem as duplicate and some pages may be down- weighted in importance. Let's look at ir in a little more derail:
1 The document title. The < title> tag is arguably rhe most important type of meta-data since each search engine places significant weighting on rhe key phrases contained within ir and iris the call-ro-acrion hyperlink on rhe search engine results page (Figure 9.3) . If ir contains powerful, relevant copy, you will ger more clicks and the search engine will assess relevance relative to o ther pages that a.re gerring fewer clicks.
2 The ' description ' m eta tag. A meta rag is an arrribure of rhe page within the HTML <head> section which can be set by the content owner. lr doesn't directly affect ranking, but shows the information that will typically be displayed in the search engine results page. If it is absent or roo short, relevant 'snippets' will be used from within the body copy, but iris best to control messages and t his can he lp identify the page as uniq ue to prevent d up licate content pro blems . So, rhe page creator can modify th is to m ake a stro nge r call-to -act io n in the sea rch engi ne list ings, as in this case:
<meta name="description" content="Direct Line offers you great value car insurance by cutting out the middleman and passing the savings d irectly on to you. To find out if you could save, why not get a car insurance quote? Breakdown Cover Insurance also available.">
To see how relevant and liJlique your <title> and meta descriptions are, use the Google 'sire': syntax with a keyphrase - t his will rerum all the pages on your sire about a par- ticular topic. For example:
<digital marketing strategy site:smartinsights.c om>
To view meta tags for a site, select View, Source or Page Source in your browser. 3 The ' keywo rds' meta tag. The meta keywords meta tag is used to summarise the content
of a document based on keywords. Some unscrupulous SEOs can still be heard to say ro potencial clients ('we will optimise your meta tags'). Bur this is not significant today since the keywords meta rag is relatively unimportant as a ranking facror (Google bas never
M icrof ormats A semantic definition of a specific information type suoh as a product, event, recipe or review. Schema. erg manages. some of the most common definitions.
Page Rank and Domain Authority (OA) PageRank is a scale between 0 to 1 0 used by Google's internal algorithms (named after Google founder larry Page) that is used to assess the importance of web pages according to the number of inbound 6nks or backiinks. It was publically shown in Google's browser toolbar until 2016. Today, to get an indication of the authority of a site and page other options are available such as Moz Domain Authority (DA) and Page Authority (PA), which varies between 0 and 1 00 and can also be accessed from a toolbar and is useful for benchmarking the relative authority of sites based on the number of unique 6nks to them.
Chapter 9 Marketing communications using digital media channels 411
used th em), al tho ugh these keywords m ay be import ant to imernal search engi nes. For exa mple:
<meta name="keywords" content="Car insurance, Home insurance, Travel insurance, Direct line, Breakdown cover, Mortgages personal loans, Pet insurance, Annual holiday insurance, Car loans, UK mortgages, Ufe insurance, Critical illness cover">
4 Semantic markup. In order ro better manage the interrelationships between different data on the web, the W3C has introduced specific HTML m arkup in a format defined by Schema.org kn own as microformats, which can be u sed to reinforce th e sema ntics, or meaning, of the information on web pages so that it can be better understood and man- aged by search engines. These are particularly important in some markets si nce they give more prominence ro busi nesses in the search results, as described by Smart Insights (2014)•, for exampl e:
• local business informacion such as names a nd add resses; • product derails such as pricing, size; • reviews and racings awarded for art icles, products or service qualit y.
5 External linking
Boosting externals links from other si tes is vital ro SEO in competitive markers- on -page optimi sation is insufficient, although it is less easy to control a nd oft en neglected. The founders of Coogle realised that the number of links into a page and the ir quality was a great way of determining the relevance of a page ro searchers, especial ly when combined with the keyphrases on that page (Bri.n and Page, 1998). Although the Coogle algorithm has been upgraded and refined continuously since then, the number and quality of external links is still recognised as an important ranking factor and this is similar for other search engines. As we mentioned above, links shared th.rough social media are now also used as ranking factors.
Ge nerally, rhe more links a page has from good-q uality sites, the better its ranking will be. PageRank is one factor th at helps Coogle d eliver relevant results si nce it counts each link from another site as a vote. However, not al l votes are equal - Coogle gives greater weight to links from pages that themselves have a high PageRa.nk and where the link a nd 1or text or adjacent text contains text relevan t t o the keyphrase. It has been refi ned to identify sites that are 'authorit y sires' or hub sites for a particular type of search. For keyphrases where t h ere is a lor of co mpetition, such as 'car insurance', the quantity and quality of in bou nd links w ill be far m ore imp ort an t than keyphrase density in de ter minin g ranking.
Whi le natural links will be generated if content is useful, a proactive approach to link- buildi ng is required in competitive markets. Chaffey and Sm ith (2017) recommend these steps to help boost your external links.
1 Identify and create popular content and services. By creating more val uable 'cornerstone content' and then showcasing ir within you r navigation, or grouping it within a few pages sucl1 as a 'Useful Resources' or a more extensive ' Resource Cen tre', you can encourage mo re p eople ro link to your content n aturally, or approach them and suggest they link or bookmark Ilot on ly to the home page, bur directly to the useful tools that have been cre- ated . This is part of th e content marketing app roach described in Chapter 8.
2 Identify potential partner sites. There are several options ro find partner sires. ft is helpful ro try to identify the types of sites th at you may be able to link with, for e.:xample:
• directories of links (typically less valuable today); • traditional media si tes; • niche online-on ly media sites; • trade associations;
412 Part 3 Digital marketing: Implementation and practice
• manufacturers, suppliers and orher business partners; • press rdease distribution sires (rypically less valuable today); • bloggers including cusromers and parrners; • social networks.
Note: The section on online PR later in rhis chapter has more guidance on approaches for Link-building and influencer outreach, which is the technical term fo r this activity and is one method of 'conrem distribution' described in rhe 'Comenr marketing' section in Chapter 8.
3 Contacr partner sites as parr of link-building. A typical sequence is:
• Step 0- Devdop relevam conrem or offer to encourage linking as parr of comenr marketing.
• Step 1- write email encouraging link (or phone call ro discuss with so meone inside the company will often work bes t}.
• Step 2- follow-up link . • Step 3- set up Links.
Coogle suggesrs rhat site owners should rely on organic linking ro their content because of irs value and has criticised many approaches ro proactive link-bui lding that marketers have found effective. For example, Coogle has cautioned rhat 'guest blogging', where a writer creates an article for another sire linking back ro their own s ire, shou ldn't be used. Yet it is a common, effective practice and is essential ly a form of PR, so it is no surprise that market- ers persist with dus practice. However, Google has pur filrers such as the Penguin algorirhm in place to reduce the impact of links from orher sites thar are clearly used to 'game' the sysrem. So if an ignorant Link-builder has creared many identical links to a site from differenr sites with the same anchor rexr, such as 'car insurance quores' for example, then Coogle will see this as an unnatural 'backliok profile' for rhe site. Coogle has put tools in place to 'undo the damage' creared by link -building, such as a Disavow link tool in Coogle Search Console.
Given that the qualiry (and quantity) of inbound or back links is one of the main factors that determines SEQ success, ir is imporram rhar an in-house or agency specialist uses the types of tools shown in Digiral marketing insighr 9.3 ro review their approach.
Many of the principles of external Link-building can also be applied to links within sires. The most imporrant principle is to include keyphrases used by searchers within the anchor rext of a hyperlink to point ro relevanr conrenr. It's also important to consider bow ro increase the number of internal links ro pages that you want to rank well. A meshed struc- wre with lots of interlinks can work better than a si mple hiera rchy.
6 SEO f or mobile devices
Since smartp hone use h as increased subsramially, Coogle has taken many steps to ensure users of its search engi ne have a good experience on mobi le. These are some of the key initiatives that marketers have ro be aware of since they may lose visibility or miss out on opporrunmes:
1 Page download speed. With much of rhe world sti ll using 2C rather than 4G or broad- band, Google assesses page download speeds, publishes benchmarks and may penalise particularly slow sires.
2 Mobile rendering. Coogle provides developers with resting tools to ensure all sires render so they are usable on smarrphones and tablets as well as desktops. Coogle has recom- mended the mobile responsiYedesign approach we covered in Chapter 7. Pages thar don't follow mobile design standards may lose visibility.
3 Pop-ups and interstitials. Pop-ups and interstitial promotions are displayed on some sites when a page loads - for example, retailers and publishers encourage site visitors to sign
Chapter 9 Marketing communications using digital media channels 41 3
Digital market ing insight 9.3 Reviewing the links into a site
You can use the syntax link:site in Google to see examples of links into a page on a site as judged by Google, e.g. link:www.smartinsights.com. But note that this also includes internal links and is not comprehensive. A better option to display links is the Moz Site Open Site Explorer to ol (www.opensiteexplo rer.com) or Majestic (www.majest ic.com, Figure 9.6), which has a free backlink history tool to show the growth in links. Note that it is the growth in unique linking domains that is more important to review for ranking competit iveness. For alerts of new links or new mentions on other sites, Google's own alerts (www.google.c om/alerts) and www.talkwalker.com/alerts are useful tools. Other f ree services such as BuzzSumo™ (www.buzzsumo.co m), Shared count. com and the Google Search Co nsole can also give this information.
Figure 9.6 Backlink analysis
._ ____ ~,_ I ca.l ... ~ I ,_. All I
• -·- --·-· .....
Source: Majestic (Www.majestic.com)
"'" ___ _, .... ...., ... _ --•••n..,sq"i?J t sw _..
l...,.__ -
up to an e-newsletter. Google ha s advised site owners that these sho uldn't be used ou smarrp hones a nd rhar it may penalise sires that display these.
4 Accelerated Mobile Pages (AMPs). ln Augus t 2016, Google announced tha t these faster- loading page formats, which aJ·e served from Google's servers rather than a company's server, would appear in all search results, not just News results, and so rhey have become more relevanr for all businesses beyond publishers for who they were most relevam ini- tially. At the time of writing, only a minoriry of sites use them, yet )'OU can see the imporrance that Google gh·es to AMP, since David Besbris who is the VP of Google Search, is also rhe AMP Project Lead. He says (Besbris, 2017):
In two years, we've seen the project grow from a few launch partners to over 25 million website domains that have published more than 4 billion AMP pages. And not only has the number of pages built with AMP grown, their speed has too. The median time it takes an AMP page to load from Google search is less than half a second.
414 Part 3 Digital marketing: implementation and practice
Google's Product Usting Ads (PLAs) Product information such as pricing and images are uploaded to Google's servers using a product feed in XML or text formats for display in ads within Google Ads or Google Shopping.
Biddable media Businesses have to bid against other businesses in auctions to achieve viStbmty for their adverts, for example, when using pay-per -click advertising or programmatic advertising.
Display (or content) network Sponsored links are displayed by the search engine on third-party sites such as online publishers. aggregators or social networks. Ads can be paid for on a CPC, CPM or a CPA basis. There are also options for graphical or video ads as well as text-based ads.
Contextual ad Ad relevant to page content on third-party sites brokered by search ad networks.
He conrrasts t he half-second figure w ith a benchmark statist ic that 53 per cenr of mobile s ite visit s are abandoned if pages rake longer than three seconds ro load, although sire abandons are naturaJ regardless of load rime . A related technology is Progressive Web Apps (PWAs), which can be used alongside AMPs and are designed for rapid serving of content wi rhour rhe need for a native mobile app &om an app store.
Paid search marketing
Although SEO has p roved a popular form of digital marketing, paid search marketing is still of grea t relevance si nce it gives much more control on the appearance in rhe listings, su bject ro the amount b id a nd the relevance of cl1e ad .
Each of the main Western search engines has irs ow n paid advertising programme:
• Google Ads (www.ads.google.com); • M icrosoft Bing (https://advertise.bingads.microsoft.com).
What is paid search marketing?
We explained the principles of paid search marketing or sponsored links in t he introduction to the section on search engi ne ma rketing. Although we said that the main model for paying for ads in the search engines is pay-per-click marketing, we have called cl1is section paid search marketing since there are, increasingly, other options for payment on what is known as the co ntent network. Retailers have an additional optio n for paid search known as Product Lis ting Ads (PLAs) , which are ads showing product images an d prices rhar you may have seen when searching for retail product s. These account for more than 50 per cent of paid search ad spend according to Merkle (2017} .
Paid search marketing is an example of biddable med ia , where businesses h ave to bid aga.ins r other businesses to ach ieve visibility for their adverts. Note that, as we wil l see in cl1e section on quality score, the amount bid isn't the only factor clur affects th e prominence of the ad, si nce relevance of rhe ad is also imp ortant.
Paid s earch content network
Paid listings are also available tluough rl1e d isplay network of th e search engines such as Google AdSense and Yalwo! Content Match. These contextual a ds are aut omatical ly dis- played according to the p age content . They can be paid for on a CPC or CPM basis an d include not only text ads but also options for graph ical display ads or v ideo ads. Google generates around a iliird of irs revenue &om ilie content network, so rhere is a sign ificant amount of expenditure on the network.
What controls position in paid search?
In early pay-per-click programs, the relative ranking of sponsored listings was simpl y based on the highesr-bidded cost-per-click (CPC) for each keyword pluase. So it was a pure auction arrangement, wi th the cost -per-click dependent on the balance of rhe ext ent of competition in the mru·kerplace against the revenue or profit cl1at cru1 be ge nerated dependent on conver- sion rates to sale an d retention. The inflated CPCs (Table 9.2) at d1e time of writing in different product sect ors show bow competitive Google Ads is. Since o nly a smaJI proportion of visitors to a sire clicking from t he ad wi ll convert, it is diffic ult to generate a positive return-on-investment for these generic rerms.
Contrary to what many web users may believe, today it is nor necessarily the company tha t is prepared to pay the most per click t hat will get top spot. The search engi nes also rake the relative d ick-th rough rates of the ads dependent on their position (lower positions natu - rally have lower click-through rates) into account when ranking the sponsored links, so ads tha t do nor appear relevant, because fewer people are clicking on cl1em, will drop down or
Quality score All assessment in paid search by Google Ads (and now other search engines) of an indMdual ad triggered by a keyword that, in combination with the bid amount, determines the ranking of the ad relative to competitors. The prlmaty factor is the cick·thrt>Ugl rate for each ad, but quality score also considers the match between the keyword lWld the occurrence of the keyword n the text, l'&storical click-ttYougl rates, the engagement of the searcher when they click through to the site and the speed at which the page loads.
Chapter 9 Marketing communications using digital media channels 415
Table 9.2 Example variation in cost-per-click for different keywords in UK campaigns
Category CPC (£)
Broadband £10.35
Car insurance £9.66
Digital marketing agency £8.79
Holiday Barbados £1.79
Laser eye treatment £30.91
Marketing Automation £32.33
Souroe: Suggested position 1 bids from the Google Keyword Planner in 2018
may even disappear off the listing. The analysis of CTR to determine position is part of the q u ality s core , a concept origi.nally developed by Coogle but now integrated as parr of the Microsoft Bing and Yahoo! search networks.
Google quality score
Understanding quality score is the key to successful paid sea rch marketing. You should cons ider irs implications when you structure the acco unt and write copy or review p erfor· mance with an agency. Coogle developed the quality score because it understood that deliv· cring relevance through the sponsored links was essential to irs users' experience, and the company's profits. Coogle Ads help system explains:
The Ads system works best for everybody; advertisers, users, publishers and Google too when the ads we display match our users' needs as closely as possible. We call this idea
'relevance'. We measure relevance in a simple way: Typically, the higher an ad 's quality score, the
more relevant it is for the keywords to which it is tied. When your ads are highly relevant, they tend to earn more clicks, move higher in Ad Rank and bring you the most
success.
A su mmary formula for the Coogle quality score is:
Quality score= (keyword's click-through rate, ad text relevance, keyword relevance, landing page relevance, speed and other methods of assessing relevance)
So, higher cl ick-through rates achieved duough better-targeted creative copy are rewarded, as is relevance of rhe lauding page (Coogle now sends our AdBors-Google ro check them o ur). More relevant ads are also rewarded through ad text relevance, which is au assessment of rhe march of headline and description to the sea rch term. Finally, the keywo rd relevance is th e march of the triggering keyword to the search term ente red.
If you have ever wondered why the number of paid ads above the natural listings varies from no ne ro four, rheu ir's down to the quality score as well as amou nt bid - you can only get the covered positions for keywords that have a sufficienrly high quality score- yo u can't solely 'buy your way ro the top', as man y think.
Advantages and disadvantages of paid search marketing
Paid search li stings, or sponsored links, are ve ry important ro achieve visibility in search e ngines when an organisation is in a competitive marker, given the competition to appear on the first page of the natural listing for target keyphrases.
416 Part 3 Digijal marketing: Implementation and practice
Google Di splay Network (GON) Different types of online publishers agree for Google to display contextual ads on their sites for a fee, for example as part of the AdSense programme.
As a result, many companies with an established paid search programme may generate more visits from paid search than SEO, although this wouldn't be true for companies that are class leaders in SEO.
Advantages of paid search marketing
The main benefits of paid search marketing are:
• The advertiser is not paying for the ad to be displayed. As we explained at the start of Chapter 8, wastage is much lower with paid search compared to traditional advertising. Cost is only incurred when an ad is clicked on and a visitor is directed to the advertiser's website. Hence it's a cost-per-click (CPC) model! However, there are increasingly options for paid search marketing using other techniques - Coogle also offers CPM (site target- ing) options on the Goog le Display Network (G DN), where contextual ads are displayed on third-party sires relevant to the content on a page.
• PPC advertisi ng is highly targeted . The relevant ad with a link to a destination web page is only displayed when the user of a search engine rypes in a specific phrase (or the ad appears on the con tent network, triggered by relevant content on a publisher's page) , so then: is limited wastage compared to other media. You Tube users can also be targeted through Google's ' promoted video' PPC option. Users respondin g ro a particular key- phrase or reading related content have high intent or interest and so tend to be good- quality leads.
• Good accou ntability. With the right tracking system, the ROI for individual keywords can be calculated.
• Predictable. Traffic, rankings and results are generally stable and predictable in compari- son with SEO.
• Technically simpler than SEO. Position is based on combination of bid amount and qual- icy score. Whereas SEO requires long-term, technically complex work on page optimisa- tion, sire re-structuring and link building.
• Remarketing. Google offers a remarkering option for retargeting through cookies placed on the searcher 's computer ro display ads on the content network after someone has clicked on a paid search ad or visited a specific page on a sire as a reminder to act. These can be effective in boosting the conversion rate to lead or sale.
• Prospecting with customer match . By uploading similar audiences Google can serve ads to people who are similar in terms of their profile and behaviour.
• Speed. PPC listings get posted quickly, usually in a few days (foll owing editor review). SEO results can take weeks or months to be achieved. Moreover, when a website is revised for SEO, rankings will initial ly drop while the sire is re- indexed by the search engines.
• Brand i11g. Tests have shown that there is a branding effect with PPC, even if users do not click on the ad. This can be useful for the launch of products or major campaigns.
Disadvantages of paid search marketing
However, there are disadvantages to be managed:
• Competitive and expensive. Since pay-per-click has become popular, some companies may get involved in bidding wars that drive bids up to an unacceptable level. Some phrases such as 'car insurance' can exceed £10 per click.
• Inappropriate. For companies with a lower budget or a narrower range of products on which to generate lifetime value, it might nor be cost-·effective ro compete.
• Requires specialist knowledge. PPC requires a knowledge of configuration, bidding options and of the reporting facilities of different ad nerworks. Internal staff can be trained, but they wiiJ need to keep up ro dare with changes ro the paid search services.
• Time-consuming. To manage a PPC account can require daily or even hourly checks on the bidding in order to stay comperirive. This can amount ro a lor of time. The tools and best practice varies frequently, so keeping up £O date is difficult.
Ch ap ter 9 Marketing communications using digital media channels 417
• Irrelevant. Sponsored Listings are only parr of the search engine marketing mix. Many search users do not dick on these because rhey don't trust advertisers, although these are mainly people involved in marketing!
Best practice in planning and managing paid search marketing
With PPC, as for any other media, media buyers carefully evaluate the advertising costs in relation to the initial prnchase value or lifetime v:~luc they feel they will achieve from the average customer. As well as considering the cost-per-click (CPC), you need to think about rhe conversion rare when the visitor arrives at your site. Clearly, an ad could be effective in generating click-throughs or rraffic, bur not achieve rhe outcome required on the website such :IS generating a lead or online sale. This could be because there is a poor-incentive call- to-:lction or the profile of the visitors is simply wrong. One imp lication of this is that ir will often be more cost-effective if t argeted microsires or landing p:1ges are created specifically for certain keyphrases to convert users ro making an enquiry or sale. These can be parr of the sire structure, so clicking on a 'car insurance' ad will take the visitor through to the car insurance page on a site rather than a home page.
Table 9.3 shows how cost-per-click can differ between different generic (e.g. 'ca r insu- rance') and specific (e.g. 'women's car insurance') keywords, as well as the impact of differ- ent conversion rates on rhe overall CPA. The table a lso shows rhe cost of PPC search in competitive ca tegories and why companies will strive ro maximise their quality score to help reduce costs.
The cost per customer acquisition (CPA) can be calculated as follows:
C . . . 100 ,. k
ost per acqu1s1tion = . t % X cost-per-c IC convers1on ra e
Given the range in costs, rwo types of strategy can be pursued in PPC search engine advertis- ing. If budget permits, a premium strategy can be followed to compere with the major competitors who are bidding the highest amounts on popular keywords. Such a strategy is based on being able to achieve an acceptable conversion rare once the customer arrives on the website. A lower-cost strategy involves lower bids or bidding on lower-cost, less-popular phrases. These will generate less traffic, so ir will be necessary to devise a lor of these phrases ro march rhe traffic from premium keywords.
Optimising pay-per-click
Each PPC keyphrase ideally needs to be managed individually in orda to make sure rhar the bid (amount per click) remains comper.irive in order ro show up in rhe top of rhe results. Ex peri enced PPC marketers broaden t he range of keyp hrases to include lower-volume phrases. Since each adverriser w ill typically manage thousands of kt:ywords ro generate dick-throughs, manual bidding soon becomes impractical.
Some search engines include their own bid management too ls, bur if an organisation is using different pay-per-dick schemes, ir makes sense to use a single roo I ro manage them aU.
Table 9.3 Examples of cost-per-click and CPA figures
Keywords Clicks/day Avg. CPC CosVday CPA @ 25o/o CPA@ 10o/o conversion conversion
'car insurance' 1,323 €15.6 €20,640 €62 €156
'cheap car insurance' 199 €14.6 €2905 €58 €146
'women's car insurance' 4 €11.6 €46 €46 €116
418 Part 3 Digital marketing: implementation and practice
It also makes comparison of performance easier too. Bid management software such as Kenshoo™ (www.kenshoo.com) and WordStream™ (www.wordstream.com) can be used
across a range of PPC services to manage keyphrases on multiple PPC ad networks and optimise the costs of search engine advertising. The current CPC is regu larly reviewed and your bid is reduced or increased to maintain t he position you want according to different strategies and ROI limit s, with amounts capped such that advertisers do not pay more than the maximum they have deposited.
Although pay-per-click marketing does not initially appear as complex as search engine optimisat ion, in reality there are many issues to consider. In the next section we explain some of the main techniques and questions for the digital marketer to ask.
1 Targeting
• Search ad network Strategy. Which of the search networks mentioned above do you use? Which are used in different countries?
• Content network strategy. How do you treat the content network? Do you disable it? Create separate campaigns? Target specific sites using the Placement tool? Develop dif- ferent creative? Use placement targeting in Coogle?
• Camp aign structure strategy. Campaign srrucrure is important to ensure d1at searches using a specific searcll term trigger the relevant ad creative. Are Ad Groups small enough to deliver a message relevant for the keyphrase entered? To understand the rype of target- ing that is possible, look at these two examples. First, in Figure 9.7(a) we have a campaign structure for an online clothes retailer. It monitors spend and budget by product type, so structures irs campaigns accordingly and targets them nationall)c Keywords related to each product will trigger ads defined within each AdGroup. In Figure 9.7(b) is an example of a campaign for a restaurant chain. It monitors spend and budget by outlet, so struc- tures its campaigns accordingly and targets t hem to local areas.
• Keyword matching strategy. How is creative targeted using the combination of broad matcll and negative match, phrase match and exact match?
• Search-term targeting strategy. Wha t are the strategies for targeting different types of keyphrases sucl1 as brand, generic, product-specific and different qualifiers (cheap, com- pare, etc.)?
Figure 9.7 Google Ads campaign structures: (a) clothing retailer; (b) restaurant chain
(a) Account ClothesUd -UK
Campaign Dresses Suits ,_
..---
Adgroup Summer Evening Pinstripe ~~Suits Dresses Dresses Suits
(b) Account FoodsUd - UK
,....
Campaign Plymouth .,._, ~
~ r
Adgroup 1 j=r:r Dining RestaurantS Dining Plymouth .,._, El<elar
~
Bid adjustments AA approach introduced by Google ln 2013 as 'enhanced campaigns', but later renamed to simpli1y the management of ads displayed in different locations, different day parts (times of day) and different devices.
Chapter 9 Marketing communications using digital media channels 419
2 Budget and bid management
• Budgeting strategy. Is budget set as maximum cost-per-dick (CPC) :.tt the appropria te level to deliver satisfactory rerum on investment? Ls daily budget sufficiem that ads are served at full delivery (always present)? Should we use Coogle's machine learning bid m:.tnagemenr tools, which can, for example, optimise on conversions?
• Listing position strategy. Which positions are targeted for different keywords? • Bidding strategies. What is the appropriate maximum cosr-per-click for different target
keywords and campaigns to maximise effectiveness? • Oayparting strategy. Are ads delivered continuously through the day and week or are
certain days and rimes targeted (e.g. office hours, evening after ad breaks)? • Bid a djustme nts. This is a rool to simplify the complexity of advertising when differ-
ent types of mobile devices can be targeted in different locations at different rimes. If a business isn't seeing such a high return on mobile devices then it ca n reduce bids.
• Bid management tool st rategy. Is a tool used to automate bidding? Which? • Importance of fake clicks. Whenever the princ iple of PPC marketing is described to
marketers, very soon a light bulb sw itches on and they ask, 'So we ca n click on competi - tors and bankrupt them?' . Well, actual ly, no. The PPC ad networks detect multiple clicks from the same computer (IP address) and filter them out.
3 Creative testing and campaign optimisation
• Ad creative and copy strategy. H ow are the 95 characters forming ad he:.td lines, descrip- tion and creative used to encourage click-through (and reduce dick-through from tmqual- ified visitors if necessary)? Is alternative copy tested? How arc ads rested?
• Destination or landing p age strategy. How are landing p:.tges improved? • Cam paign review and optimisation strategy. What is the workflow for reviewing and
improving success? Which reports are used? H ow often arc they reviewed? By whom? Which rests are used? What are the follow-ups?
• Specialist and innovative paid search techniques. These include ad extensions, local, inter- national and pay-per-call.
4 Communic ations integration
• SEO integration strategy. How is SEO integrated with paid search ro maximise ROI? • Affiliate integration strategy. How is affiliate marketing integrated with paid search to
maximise ROI? • Market ing campaign integration strategy. How are budget and creative changed during
offline campaigns?
Online public relations and influencer relationship management
Public relations (PR) The management of the awareness, lXlderstanding and reputation of an orgarisabon or brand. prTnarily achievEd tlvough nfveoang exposutl n themeda.
What is online public relations?
Digital media have become a very important element of public re lation s (PRJ and the Internet has influenced PR practices (Ye and Ki, 2012). More funds have been allocated to online PR projects, especially through corporate and social blogs, and irs contribution to branding strategies has increased significantly (Bush. 2010). Online PR is relevant for busi- nesses of all sizes since improving reputation, trust and awareness is so important. It is also relatively cost-effective and so appeals to small businesses and startups who can potentially make a big impact witb online PR, coupled with content marketing if they harness it effectively.
420 Part 3 Digital marketing: implementation and practice
Online influencers o r Key Opinion Leaders Online influencers can include any type of person who publishes online who has a significant following. They can include journalists, bloggers or celebrities.
Online public rel ations (e-PR) Maximising favourable mentions of your company, brands, products or websites on third-party websites that are likely to be visited by your target audience. Online PR can extend reach and awareness of a brand within an audience and will also generate backlinks vital to SEO. It can also be used to support viral or word-of- mouth marketing activities in other media.
Online influencer outreach Identifying online influencers such as bloggers, media owners or indMduals with a large onfine following in the social networks and then approaching them to partner together to communicate with their audience.
Online reputation management Controlling the reputation of an organisation through monitoring and controfting messages placed about the organisation.
Inf l uencer relationshi p management (IRM) A structured process to continuously manage and measure influencer outreach as a programme of campaigns based on content -assets and 'always-on' activities against defined goals.
Online PR activity is closely associated wi rh imp roving results from many of the o rher collllnunkations teclmiques described in this chapter, in particu lar SEO (link-building), partnership marketing a nd social media m arketing. It is also closely related to content mar- keting sin ce a core act ivity in content marketing is 'content dis tribution', which can invo lve working with influencers to fea tu re content that h as been developed .
Bur let's starr w irh an understanding of traditional public relations. O n its websire, the Ch artered Institute of Public Relations defines PR as fo ll ows:
Public relations is about reputation - the result of what you do, what you say and what others say about you. Public relations is the discipline which looks after reputation, with the aim of earn ing understanding and support and influencing opinion and behaviour. It is the planned and sustained effort to establi sh and maintain goodwill and mutual under-
standing between an organisation and its publics pts target audience including potential customers and stakeholders].
From a practical m arket ing communications and traffic building perspective, rhe main PR act ivities are media relations or managing influencer outreach wirh different t ypes of online influencers or Key Opinion Leaders (KOLs), which can be used t o reach and influence potential cus tomers. While websites are important tools for promoting investor relations and CSR (cor porate social responsibility), t his is not our main focus here.
Online pub lic relations (e-PR), or digit al PR, leverages the network effect of the Internet and social networks. Remember tha r Internet is a contraction of ' interconnected networks'! Mentions of a brand or sire on other sites are powerful in shaping opinions and driving visi- tors to your sire. T he main element of o nl ine PR is maximising favourable mentions of an o rganisation, its brands, products or websites on third -parry websites that are likely ro be visited by its rarget audience. Fur thermore, as we noted in the section on search engine optimisation, the more links there are from ot.l1er sites to your site, t.l1e higher your site will be ranked in th e natural or o rganic listings of the search engines. Online influencer outreach is now an important activ ity to identify companies or ind ivid uals with a srro ng on line fo l- lowing a nd rhen use these contacts to infl uence their audience. Minimising unfavourable mentions, for exam ple monitoring and influencing conversations in blogs and social net- works through online reputati on management , is also an aspect of onl ine PR.
Today, online PR and influencer outreach are often managed as a cont inu ous, year-round process of influencer relationship m anagement (IRM) . We thin k the reason for this change is rwo-fold. First, an emerging category of software services ro identify and commtmicate with influencers has evolved. This category has been labelled IRM by service vendors since this shows the value of their products. Seco nd, savvy compan ies are using influencer out- reach on a more structured, more continuous basis ro fi t with an ' always -on' inbound or
content marketing strategy.
Differences between online PR and traditional PR
Researchers suggest th at digital media tends to bolster stakeholders' strength and increase organisations' ability to coUect information, moniror public opinion and engage in direct dialogue w it.l1 their publics regarding key issues (McAllister and Taylor, 2007). Ranchhod et al. (2002) idemify four key differences be rween on line PR and tradit ional PR t hat ru·e fundamentals of on line PR that remain true roday:
1 The audience is connected to organisations. Previously, there was deraclunent- PR peo- ple issued press releases that were distributed over the newswires, picked up by the media a.nd t hen publ ished. These authors say:
The communication channel was unidirectional. The institutions communicated and the
audiences consumed the information. Even when the communication was considered a two-way process, the institutions had the resources to send information to audiences t hrough a very wide pipeline, while the audiences had only a minuscule pipeline for communicating back to the institutions.
Social media governance A definition of how companies should respond to social mentions that may give rise to leads or reputationaJ damage.
Social media ~stening The process of using monitoring tools to review mentions of a brand and related keywords w ithin social networks and other online sites.
Chapter 9 Marketing communications using digital media channels 421
2 The members of the audience are connected to each other. Through publishing rheir own blogs, social p rofiles ore-newsletters or contri buting ro reviews or disc ussions on others, information can be rapidly distri buted from person to person and group to group. Con - sumers w ill also have their own conversations abo m their needs and brands, which will shape brand perception and purchase inrent. The authors say:
Today, a company's activity can be discussed and debated over the Internet, with or without the knowledge of that organisation. In the new environment everybody is a communicator, and the institution is just part of the network.
3 The audience has access to other information. Ofren in rhe past, the communicamr was able ro make a statement rhat it would be difficult for the average a udi ence member to challenge - the Internet facilitates rapid compari son of statemenrs. The aurho rs :say:
It takes a matter of minutes to access multiple sources of information over the Internet.
Any statement made can be dissected, analysed, discussed and challenged within hours by interested individuals. In the connected world, information does not exist in a vacuum.
4 Audiences pull information. Today th is is often known as inbound marketing. Previously there were limited d 1a nnels in terms of television and press. Today there are many sources and d1annels of information - this makes it more difficult for the message to be seen. The authors say:
Until recently, television offered only a few channels. People communicated with one another by post and by phone. In these conditions, it was easy for a public relations practitioner to make a message stand out.
For the marketer or PR professional managing PR, the main differences are:
• Less easy to control. There are many more places a brand can be discussed onli ne, such as in blogs and foru ms, compared to traditional media where rhere are a sm aller number of media outlets w ith news filtered through journalists and other editorial staff.
• More options to create their own stories. Si nce a company w ill have its own site, press centre, feed s and blogs, it is possible to bypass other media owners to some exte nt. Many compa nies have now created a 'social media newsroom'.
• Need for faster response. It is often said that 'bad news travels fast'. T his has been fac il i- ta ted o nline and a 'social media storm ' can soon arise where m any are critical of a brand's action . Rapid response ' crisis communications' reams are needed. Some brand s have created a social media command cemre as parr of a social media governance process based on socia l media listening . For examp les of social media governance po licies in a range of sectors, see www.socialmediagovernance.com.
• Opportunities for proactive real-time campaigns. Businesses ca n rake advantage of cur- rent public interest in break in g news ro gain awareness, so m eti mes known as 'newsjacking' .
• E asier to monitor. Since Coogle and online reputation management tools index many pages, it is argua bly easier ro id entify when a brand is discussed on line.
Advantages and disadvantages of online public relations
Advantages of online public relations
The advantages of the proactive online public relations t edmiques that seek ro build a buzz around a camp aign or to gai n favourable mentions and links on thi rd-party sites are:
• Reach. Online PR can be a relatively low-cost method of directly reaching a niche audi- ence, or a mass a udience if the brand is amena ble to stories that are of interest to publish- ers. T his is often the case for new o nline brands and star tups. For exa mple, D ollar Shave C lub™ (www.dollarshaveclub.com) gained ini tial awareness of irs subscription service
422 Part 3 Digital marketing: implementation and practice
through a humorous, self-deprecating video £rom irs fow1der {https://www.youtube.com/ watch?v=ZUG9qYTJMsl). If buzz around an online campaign orchestrated through online PR is successfu l, then additional reach and impact may also be generated by traditional media such as TV, prim and radio.
• Cost. The costs for online PR are the agency or internal staff fees for developing the online PR plan, concepts and content. Since there are no media placement costs, this can be cost-effective.
• Credibility. Comments t hat are made by a person independent from a company are con- sidered more authentic and so can help raise trust about an online provider sud1 as a retailer. You can see that personal recommendations are particularly important and seem to be trusted more than content sires givi11g reviews and opinions {although these are still given credence by many web users).
• Search engine optimisation. Online can help generate backlinks to a sire that are favour- able for SEO, often from large sites such as online newspapers or magazines that have good link equity.
• Brand-enhancement and protection. Favourable stories can enhance the reputation of a brand among irs target audience and amplification through influencers can help reach a new audience. But since unfavourable media mentions may damage a brand, so monitor- ing and response to these is a necessity for most brands.
Disadvantages of online public relations
The main disadvantage of online PR is that it is nor a controlled discipline like online adver- tising techniques such as pay-per-click marketing or display advertising, where the returns generated will be known for a given expenditure. In other words, it cou ld be considered a high-risk investment.
Many marketers are also wary of creating blogs or forums on their sires that may solicit negative comments. However, there are counter-arguments to this, namely that it is best to control and be involved with conversations about a brand on the site rather than when it is less controlled on third -parry sires. For example, brands such as Dell {www.ideastorm.com) and Honda enable web users to make comments about their brands; this shows they are listening to customer comments and gain valuable sentiment that can feed into new product development ideas.
Best practice for online public relation·s and IRM
In this section we will review the different types of online PR activities and techniques to improve results from these activities. Onalytica {2017) have created th.is useful framework {Table 9.4), which suggests how you can measure your influencer program at a top level. It is effectively an 'influencer pipeline' , where the top of the funnel is on the left and specific activity t<> outreach to and engage influencers is measured to the right. At a program level, a number of invited influencers are compared against influencers who have accepted and are active and what they have shared. l11is can be measured through social media updates or, ideally, in B2B articles and blog posts on their sites. The activity of an IRM program is also indicated by influencer involvement in online and real-world attendance. If a business has
multiple sectors and audiences that will require different specialist influencers, then you may need different measures for different sectors for each row. This is alluded to in the employee advocate recruitment row, where di.fferent subject matter experts in the company will recruit different iufluencers. As an example of how di.fferent influencers can be managed and meas- ured separately, at Smart Insights we use the IRM tool Buzzsrream to have a list of influenc- ers ragged for each digital marketing activity, e.g. digital strategy, SEO, email marketing, e-commerce, etc. Influencers are tagged by activity and their influence level. Cusrom-short- ellJed links from a service such as Bidy (httpJ/bitly.com) for each influencer can be used with different Coogle Al1alytics campaign tracking parameters.
Table 9.4 Measures for assessing an influencer relationship management program (IRM)
INPUTS OUTPUTS OUTCOMES
ACTIVITY ACTIVATED ADVOCACY ACTION
Program Number of influ- Program Number of inftuenc- Brand Volume of target Brand Volume of influencer enoers invited to lnfluencers ers who have attention influencer posts awareness posts from wider inftu- your influencer accepted your talking about your encer community/ program program invitation brand, sub-brands media talking about
or products com- your brand, sub- pared to brands or products competitors' compared to
competitors'
Social influencer Number of offline & Event influencer Number of influenc- Brand Volume of target Brand Change in semantic outreach social outreach attendance ers attending your association influencer posts perception language from wider
posts to target events (offline/ about your brand or influencer community/ influencers online) products in associ- media around a brand ,
ation with key product, policy or rep- themes , product/ utationat issue solution categories or reputation drivers compared to competitors
Event invites Number of events Brand influencer Number of inftuenc- Influencer Volume of content Lead gen Volume of site traffic/ (offline/online) engagement ers engaging with generated created in oollabo- down load s/subscri p- organised where your brand , internal content ration with target lions/user adoption influencers are SMEs, advocates or influenoers on key though influencer invited to evangelists (offline/ topics or themes referral traffic (unique participate online) compared to content URL.s)
competitors
Employee Number of internal Influencer Number of influ- Brand Volume of target Sales % of influencer referral advocate subject matter enoer relationships preference influencer posts revenue site traffic/total site recruitment experts, advocates you have developed talking positively traffic multipled by
or evangelists about or recomend- conversion revenue OR recruited to ing your brand, sub- number of sales influence the brands or products through unique coupon lnfluencers compared to code/landing page
competitors used only for program
INFLUENCER PIPELINE
IDENTIFIED I ENGAGED I ADVOCATE Source: Onalytica
424 Part 3 Digital marketing: implementation and practice
Segmenting influencers
lnfluencers come in many 'shapes and sizes', and some are potentially more influential than others. Through defining criteria for influence and grouping similar types of influencers, businesses can prioririse rheir use of resources for managing. Onalytica (2017) defines these types:
• Everyday influencers. Typical web and social media users who don't consider themselves influencers, but can influence friends and colleagues.
• Brand advocates. A customer th at is highly satisfied with your product/brand, who rends to spread positive word of mouth , content and recommendations without being paid ro do so.
• Micro-influencers. Have a relatively low reach but are highly relevaut, tend to enjoy high engagement rates and create high-quality content on a blog or social media.
Example: Sharon, 21 years old, fashion student. 2,000 followers on lnstagram. She loves her camera and creates great content, but she likes the perks of being able to work with brands to create content and earning money in the process. Example 8: Mike, 30 years
old, 10,000 followers on Twitter. He is passionate about the environment, creates great content on his blog, generates high levels of engagement on social and is very well connected to industry experts and fell ow influencers.
• Professional influencers. These influencers have suffic ient reach and potential impact rhar they are paid, or their content supports their business or personal aims. They rypicaUy get referenced by d1eir peer influencers as the authority on certain topics or product
. categones:
Example A: Dave, 40 years old, Fin Tech expert, 60,000 followers on Twitter. He has written a book, speaks at events across North America, Europe and Asia and consults with brands to help deliver innovation to the financial industry. Example: Claire, 45 years old, parent and lifestyle blogger, 80,000 followers on lnstagram and/or Twitter and lhas a blog with 1.5 million views per year. She is well known and very influential within the parent forums and community globally and focuses on health and wellbeing as well as promoting products for babies and young children.
• Macro-influencers. This rype of influencer is more established, both in personal.ity and content, and their fame has risen to a level where they are now represented by a manager or a talent agency:
Example: Joe has been creating video game YouTube videos since 2012- has been working steadily with brands for the past few years, has an established audience of 200,000 subscribers and has been approached by talent agencies to help him grow as an influencer.
• Celebrity influencers. Also represented by a manager or talenr agency, they are perceived as insp iring and consumers often look to celebrity influencers for guidance and inspira- tion. They are often expensive, you pay a premium for this type of influencer, and engage- ment rates are significantly lower than those with fewer followers.
Example: Kim Kardashian.
Assessing influence Assessing the relative value of diHerenr influencers is challenging. It's common to start with the size of reach- for example, the number of Twitter followers, but this can be dangerous. Some Twitter users grew their followers rapidly through ' autofollow' bors before Twiner prevented this. You can see this phenomenon with a free tool like Followerwonk (www.moz.
Blog M onine diary or news source pr-epared by an individual or a g-oup of people. Derived from 'web log'. Busmess blogs are created by an organosabon for COOVYUliCabOn wrth their audiences.
Podcast Individuals and organisations post online rnecia (atdo and video) that can be viewed n the appropnate players i1cluding the Pod. which first spatked the gowth n this tednque.
Chapter 9 Marketing communications using digital media channels 425
com/followerwonk) in place., where the rop users arc following hundreds of thousands of users. They have clearly not done this manually.
The following 4Rs framework for assessing influencer popularity recommended by Onalytica (2017) doesn't starr with reach, instead ir starrs with other factors:
• High relevance is where inBuencers are focused/known fo r discussing a topic that is of interest to an audience and related ro a product or service.
• High resonance demonsrrates that the influencer is creating an impact with their audience, rather than having a large audience that they fail to engage.
• High reference is useful for identifying thought leaders o r conference speakers who are respected as an authority by their peer influencer's. This can emphasise the network effective as their connections may share content.
• Hi gh reach is simply the size of an influencer's audience and their popularity.
Creating effective content to support influencer outreach
Ulrirnately, particularly for using influencers in B2B marketing, defining the right types of content for them to create, discuss and share is critica l to success. lnfluencers will be more passionate about a brand and more likely ro share contenr and product recommendations if it is of a high quality. Defining a content marketi ng strategy is outs ide the scope of this chapter and we referenced ir in Chapter 8.
Blogs and blogging Blogs give aJl effective method for companies ro regubrly publish articles, images and video ro engage their prospects, customers and influencers. Feedback and link trackback com - ments from other sires are sometimes incorporated, bur have become less common due to 'spamming' of comments for purposes of SEO, even though they typically have little influ - ence on organic search, because search engines such as Coogle ignore them.
There are many free services that enable anyone ro blog (fo r exa mple www.wordpress.com and www.blogger.com).The blogging format enables rhe content on a website to be delivered in different ways. For example, the Smarr Insights blog has a lot of rich content related to digital marketing, which can be accessed in different ways:
• By topic (in categories or topics ro browse). For example, social media marketing care- gory (Figure 9.8).
• By tag (more detailed ropics- each article will be tagged with several tags to help them appear in sea rches). For example, 'B7B' or 'case studies'.
• By author (features from differenr columnists who can be internal or external) . Guest posting is an effective method for both guest author and blog to increase ream.
• By time (all posts broken down by rhe different methods above are in reverse dare order) .
Through considering how the si re is structured and following best practices for SEO, even a niche marketing blog such as Smarr Insights ca n attract millions of visitors each quarrer, the majority (75 per cent) through organic.
Although some forecast d1at blogs would become less important with the publishing of content on social networks, they remain important in many business and consumer sectors since they enable a more in -depth exploration of interest in topics, and many influencers have their own blog.
Podcasts are related to blogs since they can potentiall y be generated by individuals or media organisations ro voice an opinion either as audio (typically MP3) or video (video podcasts used by video bloggers or vloggers). Video-sharing si res include You Tube, Vid- eoEgg and Dail y MorionTM.
Another way of sharing content important in professional B2B markets is through slide- sharing sites such as Scribd and SlideShare.net.
426 Part 3 Digijal marketing: implementation and practice
Figure 9 .8 Smart Insights blog (www.smartinsights.com) showing content available from within a category of 'social media marketing'
ft ...
Really Simple Syndication feed (RSS) Slog, news or other content is pubished by en XML standard and syncfocated for other s~es or read by users In RSS reader software services. Now typically shortened to 'feed', e.g. news feed or sports feed.
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Really Simple Syndication (RSS) is closely relared ro blogging, where blog, news or any type of content such as a new podcast is received by s ubscribers using a feed reader such as FeedlyTM (http://www.feedly.com) . Although typically limited to business professionals and journalists, they offer a method of receiving multiple news sou rces in a feed that uses a dif- ferent broadcas t method from email, so is nor subject to the sa me conflicts with spam or spa m fi lters. Unlike social media, all upda tes are displayed rather than some. Many journal- ists now subscribe to RSS feeds a11d access them throug h feed readers such as Feed ly, which ca n a lso be used by marketers for comperitor rev iew.
His toricaJly, jomnalists could be influ e nced o nline through a press-release a rea or social media newsroo m on the website; creating e mail a lerts, soc ial media or RS S updates about news that journalists and other third parri es can sign up ro; news s tories or releases s ub- mitted to o nline news feeds. Examples of feeds include PR N ewswire™ (www.pmewswire. com), PressBoxTM (www.pres.sbox.co.uk), PRWebTM (www.prweb.com) and Business WireTM (www.businesswire.com). Press releases can also be written for sea rch engine optimisa tion (S EQ) sin ce they will link back to t he sire, although most links ro sites are now nofol- lo wed , which, as explained in th e earlier section o n SEQ, don't confer direct SEQ benefits.
H owever, an increasing number of journalists now rely on blogs a nd feeds for finding sources for stories rather rhan traditional press releases, so engaging influencers through IRM is now more important given the limited impact of press releases. Charles Arthur (https://www.theguardian.com/profile/charlesarthur), a contributor to The Guardian, in a posting 'Why I' m nor reading PR emails to get news stories any more', says:
I'm not going to read things that are obviously press releases because the possibility of it just being annoying or irrelevant is too great; I'm going to go to my aggregator instead, because
Mashups Websites, pages or widgets that combine the content or functionality of one website or data source with another to create something offering a different type of value to web users from the separate types of content or functionality.
Chapter 9 Marketing communications using digital media channels 427
I've chosen every feed there for its potential interest. I pay more attention to my ASS feeds
because they're sources I've chosen, rather than the emails I get from PR companies.
Mashups Mash ups (a term originally referring to the pop music. practice, notably hip-hop, of produc- ing a new song by mixing two or more existing pieces) are sites or w idgets th at combine the content or functionality of one website with another to create something offering a different type of value to web users from the other types of content or functionality. In practice they provide a way of sharing content between sites a11d stitchi11g together sites rhrough exchang- ing dara in common XML-based standards such as RSS or APis. For example, some blogs include widgets showing their latest updates from Facebook and Twitter.
Online partnerships including affiliate marketing
Affiliate marketing A commission-based arrangement where referring sites {publishers) receive a commission on sales or leads by merchants (retailers or other transactional sites). Commission is usuaUy based on a percentage of product sale price or a fixed amount for each sale (CPA or cost per acquisition), but may also sometimes be based on a per -click basis, for example when an aggregator refers visits to merchants.
We showed in Chapter 5 thar partnerships are an important parr of today's marketing mix. We have also seen in this chapter that working wirh partner sites in influencer outreach is a key part of content marketing, SEQ and on line PR. Resources musr be devoted to managing your online partners. Many large organisations have specific staff to manage these relation- ships. In smaller organisations parmership management is often neglected, which is a missed opportw1ity. There are three key types of online partnerships that need to be managed: co-m arketing and influencer outreach (covered in the previous secti on); affiliate marketing; and online sponsorship. The main and most important form of parmership marketing for transactional e-commerce sites that we review in this section is affiliat e marketing. We explained at the start of Chapter 5 that co-marketing involves a formal or informal parmer- ship agreement reached between different businesses ro promote each other, typically based on sharing content (and potentially promotions) principally to rhe audience of owned media channels such as social media, blog and email marketing. Co-marketing, also known as 'co ntra-deals' , has the advan t age that it is low-cost, since rhe main cost is st aff t ime to develop joint campaigns and share content.
Affiliate marketing
Affiliate marketing divides marketers and agencies as to its value. The discussion revolves around the value of affiliate marketing in generating incremental. sales. There is no doubt that affiliates can generate more sales at a controlled cost, the question is whether these sales wou ld have occurred anyway if a brand is well known. For example, Amazon has an affiliate programme bur it could be argued that its brand is so well known and it has such a large customer base that it would receive many sales anyway. However, Amazon has run its pro- gramme for over ten years and, although it has reduced commissions, it is still running and is used to promote new product offerings such as music downloads.
What is affiliate marketing?
Affili ate marketing is the ultimate form of marketing commtmications since it is what is known as a ' pay-per-performance marketing' method and it's a commission -based arrange- ment where rhe merchant on ly pays when they make the sale or get a lead. Compare tnis to the wastage with traditional advertis ing or direct mail! It can also drive a volume of business in a range of sectors- many banks, travel companies and online retailers get more than 10 per cent of their sales fro m a well-run affiliate marketing programme. It's not so suitable though for business products or lower-priced consumer products since ir will nor be
428 Part 3 Digital marketing: implementation and practice
Performance marketing Sometrnes used as an al!emati\oeterm lor affiliate marketing, which Includes payment lor lead, sale. but also cick, so illS a broader term includng other onine paid meclia such as dsplay advertisi'lg and biddable media irlcluOOg pay-per- dick and programmatic advertising.
sufficiently profitable for the affiliates, and it may be difficult to recruit sufficient affiliates. In creasingly, affiliate marketing is known as performanc e marketing (PM). The Performance Marketing Association (PMA) describes performance marketing as a:
comprehensive term that refers to online marketing and advertising programs in which advertisers (a.k.a., 'retailers' or 'merchants') and marketing companies (a.k.a, ' affiliates' or ' publishers') are paid when a specific action is completed; such as a sale, lead or click.
You can see from this definition that performance marketing is similar to a£filiate market- ing, but it is expanding in scope to include paid media such as pay-per-click advertising, which includes display advertising, programmatic adverrising and Coogle Ads. This reflects the way that paid media is organised in some larger organisations with some people who are responsible for all these types of paid media.
Figure 9.9 summadses the affi liate markeling process. You can see that when a visitor ro an affiJiate site (who may be an online publisher or aggrcgator) clicks-through to a merchant si te, this prospect wi ll be tracked through a cookie placed on the visiror's PC. If the prospect later transacts within an agreed period, usually 1, 7, 30, 60 or 90 days, the affi liate will be credi ted with the sale through an agreed amoum (percentage of sale or fixed amount}.
Digital marketers need to be selective in choosing the right forms of affiliate marketing, and not all may be desirable. These are the options of affiliate marketing models for you to consider.
• Aggregators. These are the major comparison sires, such as Kelkoo, uS witch TM and Moneysupermarket. These aren't stricrJy affiliates since some, such as Kelkoo and Shopzilla'I'M, charge on a cost-per-dick basis, bur USwirch and Moneysupermarket have a CPA model as well. Coogle Product Lisring Ads (PLA) (formerly Froogle, now part of Coogle Ads) uses a CPC model,.
• Review sit es. For example, CNet software or hardware reviews, or maybe startups such as ReevooTM or Review Cemren1• These all link ro merchants based on cost-per-click or cost-per-acquisition deals.
• Rewards sires. These split the commission between the reward site and its visitors. Exam- ples are GreasyPalm™ or QuidCoTh1•
• Voucher code sites. MyVoucherCodes or Hor UK Deals are typical. Lf you have some great deals to entice first-rime shoppers you should generate business, although many search by well-known brand .
Figure 9.9 The affiliate marketing model (note that the tracking software and fee payment may be managed through an independent affiliate network manager)
Visitor PC
Visit Affiliate site
Click
Sets time-limited cookie Checks click-to-purchase period
Commission fee
Creative
Tracking Re-direct Merchant software software
Sale or lead
Chapter 9 Marketing communications using digital media channels 429
• Ube r- bloggers. Martin Lewis's MoneySavingExpcrr.comTM is an incredibly popular site due to his PR efforts and great content. Although he has no ads, he is an affiliate for many sites he recommends.
• E veryone else. They don't rend robe high-volume super-affiliates Like all rhe aboYe, bur they're collecrivelr import.ant and you can work with them via affiliate networks such as Commission JunctionTh1 or TradedoublerTh1• They often specialise in SEQ or PPC.
Advantages and disadvantages of affiliate marketing
Advantages of affiliate marketing
Many of the benefits of affiliate marketing are closely related to search engine marketing since affiliates are often expert ar deploying SEQ or PPC to gain visibi lity in the search results pages. The mai n benefits of affilia te marketing arc:
• SERPS visib ility. Gain m ore vis ib il ity in the paid and natural listi ngs of t he SERPs (i ncrease 'share of sea rch ' page) .
• Reach differe nt audiences. Ca n use di fferent affi liates to target different a udiences, prod- uct ca tegories a nd rela ted phrases .
• Respo nsiven ess to m arketplace changes. Affi li ates may be more responsive th an your in- house or agency teams in terms of algorithm changes for SEQ or changes in bidding approaches for PPC. They are also great at identifying gaps in your search stra tegy. For example, rhey may be quicker at advertising on new products, or may use key ph rase vari - ants that you haven't considered.
• Target gen e ri c phrases in SERPs. Enables you to reach customers through generic phrases (e.g. 'clothing') at a relatively low cost if rhe affiliates secure bener positions in natural listings.
• In crease reac h in SERPs. lncrease rhe reach of your brand or campaign since affiliate ads and Links featuring you will be displayed on third-parry sites.
• Gene rate aware ness. Can be used to generate awareness of brand or new products for which a company is nor well known.
• Diversity risk. Use of affiliates reduces the risk caused by temporary or more fundamental problems with your SEM management or orher digital marketing programmes.
• Pay-per- pe rfo rmance. The costs of acquisition can be controlled wel l.
Disadvantages of affiliate marketing
But there ca n be s ubs ta nti al drawbacks to a n affi liate marketing programme tha t arise from the fact th a t your affilia tes are mai nly motivated by money. It fo llows that so me of the m may use une thical techn iques to in crease th eir revenue. Potenrial d isadva ntages a re:
• Inc re men tal profit or sales may be limited. You may be c:~nniba l ising busi ness you would have achieved anywa}'
• Affili a tes may exploit your brand name. This is particularly the case where affil iates exploit brand names by bidding on variations of it (for example 'Dell', 'Dell Computers' or 'Dell laptop') or by gaining a presence in the natural listings. Here there is already awareness. It is important ro prevent this, and many affiliate programmes exclude brand bidding, although affiliates can have a role in displacing competitors from rhe listings for brand terms.
• M ay damage brand re putation. Your ads may be displayed on sites inconsistent with your brand image, such as gambling or pornography sires. Alternatively, creati\·e may be our of date, which could be illegal.
• P rogram me management fees. If using an affiliate network ro manage your campaigns they may take up to 30 per cent of each agreed affiliate commission as additional 'network override'.
430 Part 3 Digijal marketing: Implementation and practice
Affiliate network Third-party brokers also known as affiliate managers who manage recruitment of affiliates and infrastructure to manage a men::hant's affiliate programme In the form of links, tracking and payment of a range of affiliates.
Earnings per click (EPC) A relative measure of the effectiveness ol a site or section of a site in generating revenue for the site owner through aff•iate marketing for £Nary 1 00 outbound dJCks generated.
• Programme management time. Affiliate marketing is founded on forming and maintaining good relationships. This cannot be done through rhe agency alone and marketers within a company need to speak to their top affiJiares.
Best practice in planning and managing affiliate marketing
In this section we will review how affiliate networks can be used to impro,·e the results from affiliate marketing and the main controls on affiliate marketing, i.e. commission, cookie periods and creative. It is important that rhese parameters are clearly defined in the affiliate agreement to reduce the likelihood of abuse.
Affiliate networks
To manage rhe process of finding affiliates, upd atin g product in formation, tracking clicks and making payments, many companies use a n affiliate network or affiliate manager such as rhe US/European net\¥o rks Commission Juncti o n™ (www.cj.com), Link Share™ (www. lin ks hare.com) o r Trad e DoublerTM (www.tradedouble r.com , main ly European). Since the affi liate ne twork takes a cur on each sa le, man y mercha nts also try to set up separate rel ations hips with preferred affiJiares, often know n as 'super-affi li ates' .
Since many of rhe important affiliates a re members of more than one affiliate net\1\fo rk programme, iris usuaJiy found tha t it is not worthwhile for a merchant ro join more rhan two affilia te net\1\forks. They also need to be careful rhar several affiliates are nor credited for multiple saJes since rhis quickly becomes unprofitable for the merchant.
Commission
In affiliate marketi ng, it is vitaJ rhat commission is ser at such a level rhar it incentivises affiliates to preferentialJy promote a merchant's products, while ar rhe same time being profitable.
The affiliates or publishers are naruraJiy obsessive abour their e arnings per c lick (EPC). This is average earnings per click and is usually measured across 100 clicks.
EPC is a cruciaJ measure in affiliate marketing since an affiliate will compare merchants on this basis and then usually decide to p romote those with rhe highest EPC, which wiJJ be based on rhe commission levels a nd the conversion rates ro sale for different merchants.
A merchant wi ll set commission levels accordi ng ro a product's awareness level within a merchant's portfolio of products or how mu ch th ey feel they need to promote them. It will aJso be worth increasing commissions when there is a favourable promotion on a product since affi liates will then promote it, knowing tha t their EPC is more likely ro increase. Less well-known products or newly law1ehed products will often have more favourable commis - sions. For exampl e at rhe rime of wr iting, Tesco.com used affi liates for different products w ith different co mmi ssion as foiJows:
• e-diers commission from £12 on 1-9 sa les to £20 on 61 + sales; • w in e ar 2 per cent on lowest tier to 3 per cent on the Go ld tier of saJes of > £2,500; • grocery a nd utilities- flat fee of £5 for firs t-rime purchase only.
Cookie expiry period
Affiliates' EPC will also depend on the cookie expiry period agreed on rhe time between a visitor clicking on the affiliate link and rhe sale being accredited ro rhe affiliate. Common rimes are 7, 30 or 90 days. A Jonger cookie period will result in a higher EPC. Prussakov (20lla) recommends rhat 60 to 90 days is often best ro incenrivise affiliates in competitive markers wirh a longer decision -making period. Merchants don't rypicaJly want ro pay multiple affiliates for a single saJe. Instead, it is usually the last referring affiliate rhat is credited, or a mix between rhe first and last. So a good tracking system is required to resolve
Co-branding M arrangement between two or more companies that agree to jointly display content and perlorm joint promotion using brand logos. emaa marketng or banner advertrsements. The aim is that the brands are strengthened ~ they are seen as oomplemenlaly. Co-branding is often a reciprocal arrangement . which can occur without payment as pan of a wider agreement between partners.
Chapter 9 Marketing communications using digital media channels 431
this. Prussakov (2011b) argues that rhe majoriry purchase within a shorrer period of within a few days, so a longer period gives a berrer incentive without adversely affecting profitability.
Creative and links
Managing the creative that affiliates use ro promote a merchant is a challenge since creari,·e needs ro be up to dare in line with different promotions o r it may be misleading, or e\·en illegal. So this needs robe monitored by rhe affiliate manager. Many merchants now provide live product feeds ro affiliate networks in order ro keep their promotions and product pricing up to date.
There are risks of brand damage through affiliates displaying creative on content that a merchant might feel was nor complementary ro their brand (for example, a gambling site). This needs to be specified in the affi liate agreement- sires need ro be reviewed carefully before affiliates are permitted ro join a specific programme, and additional sites used by each affiliate should be monitored.
Another form of brand or trademark abuse is when an affi liate bids on a merchant's brand name such that they may receive credit for a sa le when a prospect was already aware of the merchant (as explai ned in Chapter 3 in the legal section) . The limits of d1is should also be specified within the affiliate agreements and monitored carefully.
Online sponsorship
Online sponsorship is not straightforward. Ir's nor just a case of mirroring existing 'real - world' sponsorship arrangements in the 'virmal world', although this is a valid option. There are many additional opportunities for sponsorship online rhat can be sought our, even if you don't have a big budget at your disposal.
Rran and \Vhiteman (2000) define online sponsorship as:
the linking of a brand with related content or contex1 for the purpose of creating brand awareness and strengthening brand appeal in a form that is clearly distinguishable from a banner, button or other standardised ad unit.
For rhe advertiser, online sponsorship has the benefit rhat their name is associated with an online brand that the sire visitor is already familiar with. So, for users of a publisher's si re, with which they are familiar, sponsorship builds on this existing relationship and trust.
Paid-for sponsorship of another site, or part of it, especia lly a portal, for an extended period is another way to develop permanent links. Co-branding is a lower-cost method of sponsorship and can exploit synergies between different companies. Note that sponsorship does not have to directly drive visitors ro a brand site - it may be more effective if interaction occurs on the media owner's microsite.
A great business-to-business example of online sponsors hip is offered by WebTrends, which sponsors the customer information channel on ClickZ.com (www.clickz.com/experts). It combined this sponsorship witl1 different ads each month, offering e-marketers the chance to learn about different topics such as sea.rch marketing, retention and conversion marketing through detailed whirepapers and a 'Take 10' online video presentation by industry experts that could be downloaded by registered users. The objective of these ads was to encourage prospects to subscribe to rhe WebTrendsWebResulrs e-newslerrer and to assess purchase intent at sign-up, enabling follow-up telemarketing by regional distributors. Web Trends reported the following results O\'er a single year of sponsorship:
• list built to 100,000 WebResults total subscribers; • 18,000 Take 10 presentations; • 13,500 seminar attendees.
4 32 Part 3 Digital marketing: implementation and practice
Contra-deals A recPocai ageement In the lorm of an exchange where payment doesn't take place. Instead services or ad space to promo!e another company as part of co-tJraro<mg occus.
Co-branding and c ontra-deals
Co-branding of sires or emails are closely related ro online sponsorship. These co ntra-deals, as rhey are sometimes referred ro, typically occur where there is an association between rwo brands and rhey are complementary bur not competitive.
For example, one online publisher may offer subscribers the chance ro sign up wirh news- letters from another company, a process known as 'co-registration'.
Co-branding can be a cost-effective form of online marketing, but specific resources such as 'online partnership manager' have ro be put in place to set up and manage the relarion- sh ips between partners. This will often be part of an affiliate manager's role.
[~l_n_te_m __ c_ti_ve __ d_is_p_l_ay __ a_d_v_e_rt_is_in_g __ ~==========================~======~~
Display advertising Display ads are paid ad placernoots usllg graphical or rich media ad units within a web page to aclieve goals of deillertlg brMd awareness, famiiarity, f<Muabity and pud1ase i:Jtent. M<nt ads enc:axage i1teracbon ltrough prorll)li 191he ~to interact or rtbler to 1*1' videos, ro 1 pete M <rine lam or to view more delails by <::1cmiJ ltrough 10 a site.
Ad serving The Ism klr dsplayi1g .... advertisement on a webSite. Often the advertisement wl be seMld from a web SE!IVa' diffaa rt from the site onv.tkh his~
Destination site The site reached on click· through.
Microsite A smail·scale destination site reached on c lick· through that is part of the media owner's she.
Run-of-site Cost per 1 ,000 ad impressions. CPM is usually higher for run-of site advertisements where advertisements occur on all pages of the site.
Results-based payment Advertisers pay according to the oomber of times the ad is dicked on.
What is display advertising?
Display advertising involves an advertiser paying for an advertising placement on third-parry sites such as publishers or social networks. The process usually involves a d serving from a differenr server from rhar on which the page is hosted (ads can be se rved on destination sires in a similar way). Ad serving uses a specialist piece of software, possibly mounted on an independenr server such as Doubledick (now owned by Coogle). In 2008, Coogle launched its free ad manager service (www.google.com/admanager) to help site ow ners sell, schedule, optimise revenue, serve ads and measure directly sold and network-based inventory.
Adverrising is used on a range of sites in order to drive traffic ro :111 organisation's desti- nation sit e , or alternatively a microsite or nested ad content on the media owner's sire or on rhe destination sire. The destination page from a banner ad will usually be designed as a specifically created direct-response page to encourage further acrion. For example, the nappy supplier HuggiesTM placed an ad\·ertisement on a childcare sire that led the parents clicking on this link to more detailed information 011 Huggies conrained on the sire and encou raged them ro opr in to a loyalty programme.
Display advertising is still colloquially known as banner advertising, bur practitioners such as the trade body the Inrerner Adverrising Bureau (www.iab.net and www.iabuk.net)and media owners such as publishers, advertisers and their agencies now commonly refer to 'display advertising'. This reflects rhe increasing range of ad formats we will discuss below.
Purchasing ad placements
When media is purchased, iris either purchased 011 a specific site such as The Times or New York Times, or iris purchased across several sites, which are known as an ad network.
Display advertising is purchased for a specific period. It may be purchased for rhe ad to be served on:
• the ru n-of-site (the entire site); • a section of si re; • according ro keywords entered on a search engine.
Traditionally, rhe mosr common payment is according to the number of cusromers who view the page as a cost-per-thousand (CPM) ad or page impressions. Typical CPM is in rhe range £t0-30. Other options rhar benefit the advertiser if they can be agreed are per click-through or per action, such as a purchase on the destination site. Although initially media owners were able to control charging rates and largely used a per-exposure model, with rhe increase in unused ad invenrory there has been an increase in results -based payment methods, par- ticularly within ad networks.
Progr ammatic ad buying Describes the purchase of onh! display advertisng that is aggregated, booked, flighted. analysed and optunsed 1118 demand-Side software nterfaces and algorithms. ~ incUdes RTB and also non-RTB methods and buy types such as Facebook Ads API and the Googte Display NetWOf1(.
Demand Side Platforms (OSPs) A se<vice that enables ads to be managed across multiple ad networks and ad exchanges through a single interface designed for managing reporting and performance.
Real-time bidding (RTB ) Bids for buying ads against keywords cen be managed in real time in conjunction with a DSP.
Chapter 9 Marketing communications using digital media channels 433
Programmatic ad buying
The options for purchasing and managing display advertising arc now much more complex, as suggested by the summary in Figure 9.10 of the ad buying ecosystem created by the lAB.
A major change in online advertising is through the use of new p rogrammati c ad buying techniques, based on Demand Side Platforms (DSPs) , which use an approach called real- t ime bidd ing (RTB). Progammatic ads now account for the majority of online display ad\•er- rising by large companies. Traditionally, display ads have been served to target audiences based on the demographics of the visitors to different publishers or the content o n specific sections of those sires. Impressions were purchased in units of thousands from sires that were felt to be a good fir. Programmatic enables purchase of ads served to individuals based on a wide range of information known about individuals and, in particular, content they have previously interacted with. When a page is loaded on a publisher site by an individual, different businesses have the option to bid in a n auction (lasting around 0.1 of a second) whether they want to reach this indi vidu al usi ng different ad contai ners o r placements on t he page. The purpose of this is to exploit efficiencies through using technology to automati- ca ll y bid on rhe most cost-effect ive ad inventory in an auct io n. Since individuals are tracked across different sires, t hese individuals can be targe ted acco rdin g to their inreresrs shown by conte nt viewed, products purchased and profile information. This knowledge of an indi- vid ua l is based o n cookies and digit al fingerprints used to identify th e individual , as dis- cussed in C hapter 3, which act as an identifier linking this individua l to information on other sires. There are privacy implications, which is one reason for the in c rease in ad blockers. View the tutorial s from the Real-time Advertising Academy (http://rta academy.c om/) to understand the principles of programmatic in detail.
Figure 9 .10 Ad buying ecosystem
pUBLISHERS
BRAND
SSP
Source: lAB (https:/lwww.adweek.com/digitaVIab-t.nveds-own-ad-tech-org-dlart-14 75331)
434 Part 3 Digital marketing: implementation and practice
XMOS (cross-media optimisation studies) Research desigled to help marketefS and their agencies answer the question 'What IS the optimal mix of advertising vehicles across different media, in terms of frequency, reach and budget allocation, for a given campaign to achieve ns marketing goals?' The mix between ontine and offline spend Is varied to maximise campaign metrics such as reach, brand awareness and purchase intent.
Advantages and disadvantages of display advertising
Robinson et a/. (2007) have noted that the two primary goals of online display advertising are: first, using display adverts as a form of marketing communication used to raise brand awareness; and, second, as a direct response medium focused on generating a response. Carrellieri eta/. (1997) refer ro a wider range of goals for online campaigns, including:
• Delivering content. This is the rypical case where a dick-through on a banner advertise- ment leads ro a destination sire giving more detailed information o n an offer. This is where a direct response is sought. Today ads often etubed videos or whirepapers ro deliver content directly within the ad.
• Enabling transaction. If a click-through leads to a merchant such as a travel sire or an on line booksrore this may lead directly to a sale. A direct response is also sough t here.
• Shaping attitudes. An advertisetnent that is consistenr with a company brand can help
bui ld brand awareness. • Soliciting response. An advertisement may be inte nded to identify new leads or as a start
for two-way communication. In these cases an interact ive adverti seme nt may encourage a user to type in an ernai l address or o th er information.
• Encouragmng retentio n. The advertisement may be placed as a reminder about the company and its service and may link through to on-site sales promotions such as a prize draw.
These objectives are not mutually e.'Cclusive, and more than one can be achieved with a well- designed ad campaign.
Advantages of online advertising
• Reach to drive awareness. Ads enable companies to reach and in8uence consumers and business people as they use publisher sires and social nerworks. The visual imagery of a display ad can generate awareness about a brand, product or need. At the end of Chap- ter 8 we explained how X MOS (cross-med ia optimisation s tudies) showed rhar display ads are useful for reaching audiences whose consumption of tradition al media has decreased. \Vith the growth of Facebook and lnstagram, whicl1 both have ad programmes, Facebook has become one of the largest media cornpanies. In November 2017 its quarterly ad revenue passed $10 billion for tl1e first time.
• Direct resp onse. Display adverrisi11g can generate an immediate direct response via click- through to a website, enabling transaction for retail products, for example.
• Retargeting. As well as raising initial awareness, ads have an important role in reminding people who have already interacted with a brand to nudge them along the path to pur- c ha se, as s hown in Figure 1.1. Retargeted ads arc ava il able through the Coogle Display Network, w hich covers many publisher sites, and a lso on socia l networks including Face-
book, Linkedln and Twitter. • Advertisi ng n ow available for smaller advertisers. Previously, ad buying o nline was limited
to larger advertisers. But now a small business can purchase a small-scale, hig hl y targeted ad campaign for a few dollars using the Google Display Network options in Coogle Ads or the advertising programmes available on the social networks such as Facebook, Twitter or Linkedln. They can now use self-service tools such as AdRollTM (www.adroll. com) to retarget across all of these to boost conversion.
• Indirect response. We will see in the section on the disadvantages of display advertising that click-rhroughs are so low rhar ir suggests display advertising is nor worthwhile. However, the indirect response should not be underestimated. This is where viewers of an ad later visit a website or search on rhe brand or category. Research by OPA Europe (2010) showed that for members' sites, one-th ird exposed to display advertising con- ducted searches for the advertised brands while 42 per cent visited advertised brand sires. Note rhar these resulrs are for well-known brands and control figures were not presented to show rhe uplift compared to those not exposed.
M edia-multiplier or halo effect The role of one tnEIOa channel in onftuencing sale or uplift in brand metrics. Commonly appied to onlne Osplay advertiSing. wheAl e><posU'e to diSPlaY ads may increase chck- through rates when the consumer is later exposed to a brand through other media. for example sponsored links or affiliate ads. It may also •mprove conversion rates on destination sites through higher confidence in the brand or familiarity with the offer.
Chapter 9 Marketing communications using digital media channels 435
• Med ia-multiplier o r halo effect. Repeated exposure to ads on line, particularly in asso- ciation with other media, can increase brand awareness and ultimately purchase intent. Furthermore, practitioners report a media -multiplier or ha lo effect of buying online ads, which can help increase the respon se rates from other online rnedia. For example, if a web user has been exposed to banner ads, this may increase their response to paid sea rch ads and may also increase their likelihood of com·e rting on a site since brand awareness and trust may be higher. Arrribution modelling, which we introduced in Chapter 8, can help determine the conrribution of display ads, as shown in Digital marketing insight 9.2.
This is suggested by research reported by MAOTM (2007) in the travel market, which involved asking respondents what their response to an online ad that appealed to them would be. Surely it would be a click? In fact the results broke down as follows:
• sea rch for a general term relating to the advertisement (31 per cent); • go straight to advertiser's site (29 per cent); • search for the advertiser's name (26 per cenr); • dick on banner to respond (26 per cent}; • visit a retail store (4 per cenr}.
Of course, this methodology shows us reponed behaviour rather than actual behaviour, bur it is still significant that more than twice as many people are being driven to a search engi ne by banner advert ising than by clkking directl y o n rhe banner! Th e research concludes that paid search marketing needs to be optimised ro work with banner advertising, by antici- pating searches that are likely to be prompted by the banner and ensu ring a higher rank for sea rch results. For example, a brand featuring a Cyprus holiday offer will generate generic search terms such as ' package holiday Cyprus' rather than brand searches.
Abraham (2008) has also shown that online ads can stimulate offline sales. For one retailer with a turnm·er of S15 billion, research showed that over a three-month period, sales increased (compar ed to a control group) by 40 per cent online and by 50 per cent offline among people exposed to an on line search - and display - ad campaign promoting the entire companr Because its baseline sales volumes are greater in physical stores than on the Internet, this retailer derived a great deal more revenue benefit offline rhan the percentages suggest.
• Achieving bran d interactions_ Many modern display ads comprise two parts- an initial visual encouraging interaction through a rollover and rhen another visual or application encouraging interaction with a brand. Thi s enables advertise rs ro calculate an interaction rate (IR) to assess the exrent to which viewers interact with a brand ad.
• Tar geting. Media buyers can select the right site o r channel within a site to reach the audience (e.g. a specialist online car magazine or review site or the motoring channel within an online newspaper or TV channel sire). Aud iences ca n also be targeted via their profile through serving personalised ads, or ads in emai ls if visitors have registered on a site. Behavioural re-targeti ng options are used in an ad netwo rk to preferentially serve an ad ro so meone who seems to have an interest in a topic fro m the co ntent they consume. Effec- tively the ad fo!Jows the viewer around rhe sire. For exa mple, if so meone visits the car section of a site, then the ad is served ro them when they view other sections of the site. Re-targeting can work across an ad nenvo rk roo a nd ca n even be seq uential , where the messages are varied for au individual rl1e more rimes they are exposed to the ad. Search re-targeting offers the option to display an ad after a visitor has searched on a particular term, such as a car marque. Tracking of individuals is achieved through use of cookies.
• Cost. Th ere are opporrunicies to buy online media at a cheaper rate compared to tradi - tional media, although this is less true in focused, competitive markets such as financial services, where there is limited premium invenrory for media buyers to purchase. Programmatic advercising and ad networks give ad\·errisers the options of advercising across a network of sires to reach a particular demographic, e.g. female 18-25 with spe- cific interests, bur at a lower cost th an media buys on a specific sire since the actual site
436 Part 3 Digital marketing: Implementation and practice
Native advertising Online content that is created to promote or enhance a brand such as a publisher article or social media update. Such content should be disclosed as advertising by law in many countries, and for this reason publishers refer lo it as branded content.
Page and ad impressions One page impression occurs when a member of the audience views a web page. One ad impression occurs when a person views an adllertisement placed on the web page.
used for the ad placement isn't h1own (hence these are sometimes known as 'blind net- work buys'). Lower CPMs are achievable, a nd in some cases CPC or CPA payment options are available. Site owners sud1 as publishers usc ad networks since it gives them a method of gaining fees from unused ad inventory thar has nor sold at premium rates.
• Dynamic updates to ad campaigns. In compa.rison with traditional media, where media placements have to be bought weeks or months in advance, online ads are more flexible since it is possible to place an ad,·ertisement more rapidly and make changes during the campaign. Experienced online advertisers build in flexibility ro change targeting through rime. Best practice is ro start wide and then narrow ro a focus- allow 20 per cent of the budget for high-performing ad placements (high CTR and conversion) .
In an iMediaConnection (2003) interview with TNG Direct VP of marketi ng, Jurie Pieterse, the capab ility ro revise creative is highlighted:
Another lesson we learnt is the importance of creative. It's critical to invest in developing various creative executions to test them for best performance and constantly introduce new challengers to the top performers. We've also learnt there's no single top creative unit - different creative executions and sizes perform differently from publisher to publisher.
• Accountability. As we will discuss later in the section, it is read il y possible to measure reach, interaction and response to ads. However, it is more difficult ro measure brand impact.
Disadvantages of online advertising
• Rel atively low dick-through rates. When discussing online ads, many web users will state they ignore ads and find them intrusive. Published click-through rates support this, with most compilations showing response rates of around 0.1 to 0.2 per cent, but with rich media formats such as video ads attracting higher click-through rates. Th is phenomenon is known among practitioners as 'ba nner blindness'. The first 468 x 68 pixel banner ad was placed on H otwiredTM in 1995 and rhe call-to-action 'Click here!' generated a click- through of 25 per cent. Since then, the click-through rate (CTR) has fallen dramatically, with manr consumers suffering from banner blindness - rhey ignore anything on a web- site that looks like an ad. Remember, though, rl1at for reasons such as awareness genera- tion and the media -multiplier effec t , digital marketers should not dismiss online advertising as ineffectual based on click-rluough rates alone. It should also be remem - bered that the use of new ad formats such as native a dvertising {which we introduced in C hapter 3) and widget marketing mean that there a rc orher ways to get cut-through.
• Relatively high costs or low efficiency. When the low response rates a re combined \vith relatively high costs of over £10 per thousa nd , thi s makes online ads an inefficient medium.
• Brand reputation. Brands can potentially be damaged in the co nsumers' minds if they are associated with some types of content such as ga mbling, pornography or racism. It is difficult to monitor precisely which content an ad is se rved next to when millions of impressions are bought across man y sires; this is particularly the case when using ad networks.
Best practice in planning and managing display ad campaigns
In this section we wi ll review how measurement, targeting and creat ive can be used ro improve the results from display ad campaigns.
Measurement of display effectiveness
Different terms are used for measuring banner ad effectiveness. Each time an advertisement is viewed it is referred to as an advertisement or ad impress ion - also kn own as page impressions (page views). Since some people may view rhc advertisement more than once,
Reach Reach defines the number of unique indovidlals who view an advertisement.
CPM The cost of placng an ad o;iewed by 1,000 people.
Interaction ra1e (IR) The propor1lon of ad viewers who interact wrth an onhl ad through dlg t::NeK H. Some will be invokJnta-y depending on where the ad is placed on the screen, soH Is higi'Ay dependent on placement.
Website auditors AudHors accurately measure the usage of different sites in terms of the number of ad impressions and cNck· through rates.
Effective frequency The number of exposures of ad impressions (frequency) requirad for an adverusement to become effective.
Click -through A ci:k-ltrough (ad ci:k) oca6S each tme a user ci:ks ao a ba-roer acMlrtisement to <*act lhem to a web page ttet artains fu1her i'bmabon. The ci:k-ltrtiultl rate is expressed as a percentage of total ad~ and re!ers to the proportion of users VIeWing an acMlrtisement who dick on it. It is cab Cited as the nurrber of clock-throughs ctvidect by the runber of ad~.
View-through Indicates when a user views an ad and subsequently visits a websHe.
Interstitial ads Ads that appear between one page and the next.
Overlay Typically an animated ad that moves around the page and is superimposed on the website content.
Chapter 9 Marketing communications using digital media channels 437
marketers are also interested in the reac h , which is the number of unique individuals who view the advertisement. This will naturally be a smaller figure than that for ad impressions. Cost of ads is typically based on CPM or cost-per-thousand (mille) ad impressions, as with other media. However, the popularity of CPC search advertising and C PA affiliate deals
means that these are options too. As with other digital media, direct response to ads is measured through click-through
rate. Inte rac tio n ra te (IR) is a form of measurement that is unique to display ads. h refers to the many ads that encourage the site visitor to interact through a prompt to 'rollover', and another Flash creative will be loaded that may offer a clear brand message rendered in large font, a response form such as an insurance quote or a requcsr to obrain a SIM or a game or
poll. The engagement of the ad campaign for different placements can then be assessed through the interaction rate, which will typically be ten times higher than the click-through
rare if the targeting, offer and creative is right. When payment is made according to the number of viewers of a sire iris important that
the number of viewers be measured accurately. To do this, independent webs ite auditors arc required. The main auditing body in the UK is the Audit Bureau of Circulation E lec-
tronic, ABCelectronic (www.abc.org.uk}. There is much discussion abom how many impressions of an adverrisemem an individual
has ro see for it ro be effective. Novak and Hoffman (1997) note that for traditional media it is thought rhar fewer than three exposures will not give adequate reca ll. For new media, because of the greater intensity of viewing a computer screen, recall seems to be better with a smaller number of advertisements compared with o ld media. The technical term for
adequate recall is effec tive fre quency. When a user clicks on the advertisement, he or she will normally be directed to further
information, viewing of which will result in a marketing outcome. Usually the user will be
directed through ro a specific landing page to encourage interaction and response from the advertisement. When a user clicks on an advertisement immediately this is known as a c lick- through , bm adserving systems (using cookies} also measure view -thro ugh , which indicates when a user views an ad and subsequently visits a website within a defined period, such as
30 days. This increases overall response, but it should be borne in mind that users may have
visited the site in response to other stimuli.
Interactive ad formats
As well as the classic 468 x 60 rotating GIF banner ad, which is decreasing in popularity, media owners now provide a choice of larger, rid1er formats that web users are more likely to notice. Research has shown that message association and awareness building are much higher for flas h-based ads, rich-media ads and larger-format rectangl es (multipurpose units , MPUs) and
skyscrapers. Other online ad terms you will hear include inters titia ls (intermediate adverts before another page appears) and rhe more common ove rla ys (formerly more often known as superstitials or overts) t hat appear above content and, of course, fJop-up windows rhar are now less widely used because of their intrusion. Online advertisers face a constant barde with
users who deploy pop-up blockers, or, less commonly, ad-blocking sofrware, bur they will persist in using rich-media formats where they generate the largest response.
Interactive ad targeting options
We have nored that most display advertising today is programmatic, based on real-rime auctions so the ad can be targeted at an individual who is the best fit for rhe campaign objectives. Traditional approaches for targeting online ads are through placing ads with the
following criteria:
• On a particu lar type of site (or part of site ). TI1is might be a parr that has a specific visi- tor profile or type of comenr. So a car manufacturer of a car preferred by single female
438 Part 3 Digital marketing: implementation and practice
Behaviour al ad targeting Enables an advertiser to target ads at a visitor as they move elsewhere on the Web or visit other sites on an ad network retum to the site, aimed at increasing the frequency or numbe1' of impressions served to an Individual in the target market.
drivers can place ads on a publisher site appealing ro a young female audience. A financial services provider can adverrise in the money section of the sire to target those inrerested in these products. To reach large mass-marker audiences, advertisers can place an ad on a large portal home page such as MSN, which has millions of visitors each day (some- times known as a 'road-block' if they rake all ad im•enrory).
• To target a registered user's profile. A business software provider could advertise on rhe FT to target registrants' profiles such as finance directors or IT managers.
• At a particular time of day or week. • To follow users' behaviour. Behavioural ad targe ting is all about relevance- dynamically
serving relevant comenr, messaging or ads rhar march the inrcresrs of a sire visitor accord- ing to inferences about their characteristics. These inferences are made by anonymously tracking rhe different types of pages vi sired by a sire user during a single visit ro a sire or across multiple sessions. Orher aspects of rhe environment used by the visitor can also be determined, such as rhei.r location, browser and operating system . For example, FT. com (using software from Revenue Science) can identify users in eight segments: Business Education, lnstintrionallnvestor, Information Technology, Luxury and Consumer, Man- agement, Personal Finance, Travel aJ1d Priva te Equiry. The targeting process is shown in Figure 9.11. First, the ad-serving system detects whether the visitor is in the target audi- ence (media optimisation), then creative optimisation occurs to serve the best ad for the VIewer type.
In 2010 behavioural targeting became available through Coogle's Ads platform as 'Remarketing', which made ir available to many more advertisers.
Ad creat ive
As with any form of advertising, certain techniques will result in a more effective advertise- ment. Robinson eta/. (2007) conducted research on the factors that increased click-through response to banner ads. The main variables they (and previous studies they reference) include are:
• banner size; • message length;
Figure 9.11 Behavioural ad targeting process
- Media )o optimisation
Show ad?
I
NO I I I
Viewer
Does viewer match profile
cluster?
-----------------------------------· Impression is passed back to the publisher
Which ad?
Impression is accepted
Best ad for viewer Is picked
Best ad is delivered to viewer
Reporting, analysis and progressive ~--:
optimisation
Creative optimisation
SmartServe or third party
Chapter 9 Marketing communications using digital media channels 439
• promotional incentive; . .
• ammaoon; • action phrase (commonly referred ro as a call-ro-acrion); • company brand/logo.
Their research indicated rhar rhe design elemenrs that made the most effective banner ads included a larger size, longer message, absence of promotional incentives and the presence of information abour casino games. Surprisingly, the inclusion of brand name was not favourable in increasing click-through, although, as we noted, this may be because rhe ad generates a subsequenr search on the brand. Please note rhar this study was restricted ro online gambling ads.
Anecdotal discussions by rhe aurhors with marketers who have advertised onli ne indicate the following are also important and worth considering:
• Appropriate incentives are needed to achieve click-through. Banner advertisemenrs with offers such as prizes or reductions can achieve hi gher click-through rates by perhaps as much as 10 per cent.
• Creative design needs to be tested extensively. Alternat ive designs for the advertisement need to be rested on representatives of a target audience. Anecdocal evidence suggests that the click-th rough rate can vary greatly according to rhe design of rhe advertisement, in much the same way that recall of a television advertisemenr will vary in line wi th irs concept and design.
• Placement of advertisement and timi.ng need to be consi dered carefull y. The different types of placement options available have been discussed earlier in the chapter, bur ir should be remembered that audience volume and composition will vary through rhe day and the week.
Different styles of ad creative can be viewed by visiting the ad gallery of an ad-serving company such as DoubleClick (www.richmediagallery.com/) , or a site that reviews ads such as Digital Buzz Blog (www.digitalbunblog.com).
Opt-in email marketing and mobile messaging
Outbound email marketing Emais are sent to customers and prospects from an organisation.
Inbound email marketing Management of emails from customers by an organisation.
We have grouped email marketing with mobile messaging since these are both 'push media' that share much in terms of their applications for prospect and customer communications. We also explored these techniques in Chapter 6, since they are most important for relation- ship building and nurturing in conjunction with marketing automation . This coverage of email marketing foc uses more on acquisition .
What is email marketing?
When devising plans for email marketing communications, marketers need to p lan for:
• outbound email market ing, where email campaigns are used as a form of direct marketing to encourage trial and purchases and as parr of a CRM dialogue; and
• inbound email marketing , where emails from customers, such as service enquiries, are man- aged (this was discussed in Chapters 3 and 5 and isn't discussed further in this chapter).
The applications of outbound email marketing communications broadly break down into customer acquisition and retention activities. According ro the DMA (2017), marketers in the UK sar email is best for retention (3 1 per cent chose this), followed br conversion (24 per cent), brand promotion (21 per cent), acquisition (14 per cenr) and reactivation (8 per cent). The same report showed rhar rhe average ROI for respondents was £30 revenue for every £1 spent, showing rhe cost-effectiveness of emai l marketing as a technique.
440 Part 3 Digital marketing: implementation and practice
Opt-in An incividual agrees to receiw email communications.
House 6st A list of prospect and customer names, email addresses and profile infoonation owned by an orgarjsation.
Opt-in email options for customer acquisition
For acquiring new visitors and customers ro a sire, there are three main options fo r email marketing. From the point of view of the recipient, these are:
• Cold email campaign. In this case, the recipient receives an opt-in email from an organisa - tion that has rented an email list from a consumer emai l list or trade publisher and event provider. List remal is not practical today under privaq laws since permission hasn't been sought. Lnstead, co-branded emails are used.
• Co-branded emaiL H ere, the recipient receives an email with an offer from a company they have an affinity with and from l\1lom they have agreed to receive ads, for example a publisher or retailer. Digital marketing insight 9.4 gives an example of where email mar- keting is used to increase awareness as part of an integrated campaign combined with display ad vertising.
• Third-party e-newsletter. ln this visitor acquisition option, a company publicises itself in a t hird-p a rry e-news letter. T h is coul d be in the form of an ad, sponso rshi p o r PR (edi toria l) in a publisher newsle tter, which link s through to a desti na tio n sire. These place ments may be set up as pa rt o f an interactive adver tis ing ad buy since ma ny e-news- lette rs also have perm anent version s o n the website. Si nce e-ncwslerre r recip ients rend to engage wi th rhem by sca nning the headl ines or reading them if t hey have rime, e-news - lerrer placements can be rela tively cost effective. Viral marketing, wh ich is discussed in rhe next mai n sec tion, also uses email as the mechanism for transferring messages.
Opt-in email options for prospect conversion and customer retention (house list}
Email is most widely used as a prospect conversion and customer retention tool using an opt-in ho use list of prospects and customers who have given permission to an organisation to contact them. For example, Lastminute.com buih a house list of over 10 million prospects
Digital marketing insight 9.4 SEAT combines email with disp lay advertising to increase awareness
This study analysed the advertising effectiveness of email marketing and display adver- tising , looked at responses from over 1,000 consumers to SEAT's lbiza ST campaigns. It used a classic 'hold out ' approach where different respondents were reached through different combinations of media:
• contact t hrough an email campaign; • contact with display advertising; • contact with both campaign channels.
The main results from the campaign , which showed the integrated benefits of the cam-
paign, were:
1 The combination of display and email advertising improved advertising recall by 13 per cent compared with just display advertising.
2 Email in creased disposition to buy in 47 per cent of cases and is therefore ideal for increasing conversions.
3 Spending power as a target group - by using email you can precisely reach your target group.
4 Email allowed the required reach of advertising to be reached three times more quickly than display advertising.
Chapter 9 Marketing communications using digital media channels 441
and customers across Europe before ir was acquired. Successful email marketers adopt a strategic approach to email and develop a contact or touch strategy that plans the frequency and content of email communicat ions (as explained in Chapters 4 and 6). Some options for in-house email marketing include:
• Conversion email. Someone visits a website and expresses interest in a product or service by registering and providing their email address, although they do not buy. Automated follow-up emails can be sent our to persuade the recipient to trial the service or buy a product. For example, betting company William HiiiTM found that automated follow-up e.-nails converted t"vice as many registrants to place rheir first bet compa.-ed to registrants who did nor receive an email. Similarly, retailers will fo llow-up with 'abandoned basket' emails to encourage purchase where consumers have added a product to a basket and not yet purchased.
• Regular e-newsletter type. Op tions are reviewed for different frequencies such as weekly, monthly or quarterly, with different content for different audiences and segments. These are comm o nl y used to update consum ers o n t he latest products or promot ions, or busi - ness custom ers o n develo pments w ith in a market.
• House- list campaign. These a re perio dic emai ls ro suppo rt different o b jecti ves such as encouragin g trial of a service o r newly launched product, repeat purchases or reactivatio n of custo mers who no longer use a service.
• Event-triggered or behavioural em ails and sequences. The marketing automation services explained in Chapter 6 send our a series of emai ls, with the interval between emaiJs and messages detennined by the marketer. Examples include welcome or onboarding sequences, nurture sequences or reactivation sequences when a subscriber has become less active.
Advantages and disadvantages of email marketing
Advantages of email marketing
We saw in Chapter 6 that permission-based email is an effective tool fo r building relation- ships with customers online. Despite the increase in spam, email can still drive good response levels, particularly for house lists (retention email marketing). Opt-in email communications provide a controlled push message that encourages response.
Owing to t hese advantages, in many coumries the vo lume of email marketing exceeds direct mail volumes. H owever, no one is suggesting direct mail wi ll disappear immediately, since it wi ll typically have a higher impact than ema il marketing and the two work best when integrated .
T he main advantages of emailm arkering are:
• Relatively low cost of fulfilment. Th e ph ysical costs of emai l are substa ntia lly less tha n di rect m ai l.
• Direct -response medium encourages immediate action . Email marketing encourages click-through to a website where the offer can be redeemed immediately - this increases the likelihood of an immedia te, impulsive response. For this reason, it is one of the best methods of attracting existi ng customers ro return ro a sire (it's a push media).
• Faster campaign deployment. Lead rimes for producing creative and the whole campaign lifecycle tend to be shoner than traditional media.
• Ease of personalisation. It is easier and cheaper ro personalise email than for physical media, and also than for a website.
• O pt ions for testing. It is relatively easy and cosr-·effecti\·e to rest diffe rent email creative and messaging.
• Integrat ion . Through combining email marketing with orher direct media that can be personalised, such as direct mail, mobile messaging or web personalisation, campaign response can be increased as the message is reinforced by different media.
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Email servic e providers (ESPs) Provide a -'>based service used by marketer's to manage thai" emal activities inckJding hosing email subscription loons, broadcast and tracking.
Disadvantages of email marketing
Some of the disadvantages of email marketing that marketers need to manage as they run their campaigns, so rhar they are closely related to best practice, are:
• Deliverabil.ity. Difficulty of gening messages delivered through different lnrerner service providers {lSPs), corporate fuewalls and web mail systems.
• Renderability. Difficulty of displaying the creative as intended within the in box of differ- ent email reading sysrems.
• Email response decay. Email recipients are most responsive when they first subscribe to an email bm iris difficult to keep them engaged.
• Commun ications preferences. Recipients will have different preferences for email offers, content a nd frequency that affect engagement and response. These have to be managed through communications preferences.
• Reso urce intensive. Al though email offers great opportunities for targeting, personalisa- rion and more frequent communications, additional people and techno logy resources are requ ired to deliver these.
Best practice in planning and managing email marketing
In this section we will review bow measurement, targeting and creative can be u sed ro improve the results from email marketing.
Email service providers
Emai l service providers {ESPs) , or marketing automation services, are a popular method companies use ro manage their email marketing. ESPs provide a web-based service used by marketers to manage their email acth·ities with less recourse roan agency. Rather than buy- ing sofrware that you host and manage on your server, the sofrware is effectively used on a subscription basis, with a cost based on number of emails sent and runs on another com- pany's server. The ESP manages three key capabilities including hosting of fo rm s for manag- ing email subscriptions and landing pages, the broadcast tools for dispatching the emails and a database containi ng the prospect or customer profiles.
Measuring email marketing
The key measures for email marketing are:
• Delivery rate (h ere indicated by 'non-bounce rare') . Emai ls will bounce if rhe emai l address is no lo nger vali d or a spam fil ter blocks the email.
• Open rate. T his is measured for H TML messages through down loaded images. It is a n indication of how many customers open an ernai l, but is nor accurate since so me users have preview panes in their email readers that load the message even if it is deleted with- our reading, and some email readers such as Outlook Express now block images by default {thi s has resulted in a decline in open rates through time). Open rates for particu- lar types of email address, e.g. Hotmail.com , is also an indication of deliverability problems.
• C lick-through o r click rate. This is the number of people who click-through on rhe email of those delivered {strictly unique clicks rather than roral clicks). You can see rhat response rates are quire high at arow1d 10 per cent.
Additionally, and most important, are rhe marketing outcomes or value events {Chapter 8) such as sales and leads achieved when an email recipient clicks-through ro the website. Retailers will also have addirional methods of comparing email campaigns such as revenue/ profit per email o r thousand ema.ils and a\·erage order value (AOV).
Oeliverabitity Refers to ensuring email messages are delivered and aren't blocked by sparn fitters because the email content or structure falsely identifies a permission-based email as a spammer. or because the sender's IP address has a poor reputation for spam.
Renderability The capabaity of an email to display correctly formatted in different emaa readers on desktop and mobile devices.
Chapter 9 Marketing communications using digital media channels 443
Email marketing success factors
Effective ema il marketing shares much in common with effective direct email copy. Chaffey (2006) uses the mnemonic CR ITICAL for a checklist of questions that can be used to improve the response of email campaigns. It stands for:
• Creative. This assesses the design of the email including its layout, use of co lour and image and the copy (see below).
• Relevance. Does the offer and creat ive of the email meet the needs of the recipients? This is dependent on the list quality and targeting variables used.
• Incentive (or offer). The WIFM factor ('What's iu it for me?') for the recipient. What benefit does the recipient gain from cl ick i.ng on the hyperlink(s) in the email? For exam - ple, a prize draw is a common offer for B2C brands.
• Targeting and timing. Targeting is related to the relevance. Is a single message sent to all prospects or customers on the list or are emails with tailored creative, incentive and copy sent to the different segments on the list? Timing refers to when th e email is received: the time of day, day of the week, point in th e month and even the year; does it relate to any particular events? There is also the relative timing- when it is received compared to other marketing commw1icarions- this depends on the integration .
• Integration. Are the email campaigns part of your integrated marketing communications? Questions to ask include: are th e creative and copy consistent with my brand? Does th e message reinforce other communications? Does the riming of the email campaign fir with offline communications?
• Conversation. This is to remind us dut email shouldn't just be considered as a broadcast medium and opporttmiries should be taken to encourage response, for example duough socia l media.
• Attributes (of the email) . Assess the message characteristics such as the subject line, from address, to address, date/rime of receipt and format (HTML or text). Send out Multipart/ MIME messages that can display HTML or tex't according to the capabili ty of the email reader. Offer choice of HTML or text to match users' preferences.
• Landing page (or microsite). These are terms given to the page(s) reached after the recipi- ent clicks on a link in the email. Typically, on click-rluough the recipient will be presented with an on line form to profile or learn more about them. Designing the page so rhe form is easy to complete can affect the overall success of the campaign.
A relevant incentive, such as free informati on or a discount, is offered in exchange for a prospect providing their email address by filling in an on line form. Careful management of email lists is required since, as the list ages, the addresses of customers and their profiles will change, resulting in many bounced messages and lower response rates. Data protection Jaws also require the facility for customers to update their details.
Practical issues in managing email marketing
Two of the main practical challenges for email marketers or their agencies to manage are deliverability and renderability.
Email marketers have to ensure their emails are delivered, given the increase in efforts by ISPs and web-ema il compan ies to reduce spam into their end users ' in boxes. Email ma.rketers do not want to be identified as a 'false positive', where permission-based emails may be bounced or placed into junk-mail boxes or simply deleted if the receiving system assesses that they are spam.
Web -based email providers sucll as Hotmail and Yahoo! Mai l have introduced standard authentication techniques known as Sender ID and Domain Keys, which email marketers shou ld use to make sure the email broadcaster is who they say they are and doesn't spoof their address as many spammers do. Email providers also assess the reputation of the email broadcasters using services such as SenderScoreTM (www.senderscore.org), based on the number of complaints and quaLty of em ails sent.
444 Part 3 Digijal marketing: implementation and practice
It is also important that email marketers do not usc keywords in their emails that may identify them as spam. For example, email filters such as Spam AssassinTM {www.spamassassin. org) have these types of rules that are used to assess spam:
• SUB_FREE_OFFER • Subject starts with 'Free' • SUBJECT _DRUG_ GAP_ VIA • Subject contains a gappy version o f 'viagra' • TO_ADDRESS_EQ_REAL • To: repeats address as real name • HTML_ll\1AGE_RATI0 _04 • BODY: HTML has a low rario of text to image area • HTML_FONT_BIG • BODY: HTlv1L rag for a big font size
Although the word 'free' in a subject line may cause a problem, this is only one part of the signature of a spam, so it IIL.<t)' still be possible to use this word if the reputation of the sender is good.
RenderabiJiry refers t o how the email appears in different email readers. Often images are blocked by readers in an effort to defeat spammers who use the fact that images are downloaded as rhe user views the e mail to detect that the emai l is a valid address. So e mails that are made up on ly of images with no text are less likely to be effecrive than hybrid mes- sages combining rexr and images. Forrnarring can a lso differ in different readers, so designers of emails have to rest how emails render in common e mail readers such as Hotmail and Yahoo ! Mail.
A further challenge is trying ro achieve ongoing engagement with list members. Some approaches that are commonly used include:
• Develop a welcome programme where over the first three to six months targeted, auto- matically triggered emails educate subscribers about your brand, products and deliver targeted offers.
• Use offers to reactivate list members as they become less responsh·e. • Segment list members by activity {responsiveness) and age on list and treat differently,
either by reducing frequency or using more offline media. • Follow-up on bolll1ces using other media to reduce problems of dropping deliverabiliry. • Best practice when renting lists is to request only cmails where the opt-in is within the
most recent six to nine months when subscribers are most active.
List management
Email marketers need to work hard to improve the quality of their list {as explained in Chapter 6). Respondents believed that the data and its selection accounted for over half of a campaign's success. The creative and offer are still considered significant, wlcile timing is viewed as having the least impact, accmmring for just 10 per cent of the success of an ema il campaign. The report noted d1at the m ajority of respondents gather new email addresses through orga11ic website traffic, with offline (paper-based) activity accounting for 40 per cent and telemarketing for 31 per cent.
Mobile text messaging and mobile push notifications
\Y/e have concentrated our coverage on email marketing in this section since the amolll1t of marketing investment and levels of activity in email marketing is far higher than in mobile text messaging, because it seems that recei ving permission-based emails is more acceptable than receiving what may be perceived as an intrusive text message on a mobile device. Addi- tionally, it enables more complex, visual messages to be dcli,·ered. H owever, where a mobile app is the primary platform for interacting with consumers, mobile push notifications can be more engaging than em ails, particularly for audiences whose smarrphone is their primary device.
Chapter 9 Marketing communications using digital media channels 445
Social media and viral marketing J Social media marketing Monitomg and faciitabng customer ~nleractiOI'I and partqlation througlou1 the web to encoutage posrtive engagement with a company and ~s brands. Interactions may occt.- on a company site, social networks and other thn:l-party sites.
Activity 9.2
Social media marketing is a n important category of digital marketing that, as explained in the social media section at rhe start of Chapter 6, involves encouragi ng customer commu- nica tions on a compa n y's own si re, or social presences such as Facebook or Twiner or in special ist p u blis her si res, blogs and forums. It can be app lied as a t raditional broadcast medium - for exa mple, companies can use Facebook or Twirrer to send messages to custom- ers or partners who have followed them . However, ro rake advantage of the benefits of social media it is imponanr to sta n ro particip ate in customer conversations. T h ese can be related to products, promot ion s o r customer service a nd arc aimed at learning more abo ut custom- ers and providi ng suppo rt , thus imp rovi ng the way a b rand is perceived.
In th is chapter we rev iew the po te ntia l fo r developi ng viral cam paigns, as introduced thro ugh the exa mples in Activity 9 .2. (Chapter 6 foc uses on developing a social media co m- municatio ns strategy.)
The essential ingredients of a viral Facebook campaign
With Facebook having in excess of two billion users, there is good potential for viral marketing for different types of organisations. This activity considers three examples from very different types of business.
Questions
1 Which success factors do the three campaigns share in common? 2 Discuss current campaigns that share similar success factors or use others. 3 What are the risks to different organisations like these that should be considered
when planning and executing these types of campaigns?
The charity- MQ: It's time to give a x:x:xx about mental illness campaign
This campaign from MQ Transforming Mental Health Through Research focuses on mental illness in young people and the wider population.
This campaign has a high-impact creative based on different 'It's time to change the facts' messages, which encourage sharing by showing how this is a neglected illness, with 23 per cent of the population affected but less than 6 per cent of health research spent here, or how four-in-ten people feel that mental illness Is 'an inevitable part of life'. The simple visuals and messages work well, but this campaign is integrated with power- ful videos and commentary from indie bands (https://www.facebook.com/mqmental- health/posts/16564211411 01326).
The brand - KFC Clean Eating Burger
The impact of this video campaign , created primarily for Facebook, was significant. It's a spoof that sends up health-food vloggers, featuring Figgy Poppleton-Rice- a fictional food vlogger who 'would literally marry kale'. She's explaining a video recipe for the 'Clean Eating Burger': a combination of raw cauliflower, pulsed ice, kale and boiled chicken , which is crushed with the not-so-healthy Dirty Louisiana burger that KFC launched in the UK Over 16 million views shows the power of viral videos that poke fun. Branded virals don't always link so well to a product, but this pulls it off (https://www. facebook.com/KFC.uk/videos/1 0154301066572647 /).
446 Part 3 Digital marketing: implementation and practice
Viral marketing Online viral matl<etng, or buzz marketng, is a form of electronic word-of· mouth marketng. Stands and promotions are disaJssed and awareness of them transmitted in two main forms, either as pass-along email or discussion n a sooal network.
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The retailer- AO.com Bloodthirsty Gi n Punch campaign
AO.com is a UK-based online retailer that sells white goods and other home e lectrical equipment. AO gets a lot of engagement through s imple p loys such as asking the audi- ence to get involved, whether it' s counting rubber ducks in a d ishwasher, how many beers are in a fridge-freezer or how many clothes fit into a washing machine. The Blood- thirsty Gin Punch campaign piggybacked on Halloween and nicety integrated with its AO.Life blog. It's been widely shared s ince it's just a bit edgy - the video features an eyeball-bearing punch and spooky sounds, so not for the squeamish (https://www. facebook.com/ AOLetsGo/videos/1 01558941209892921).
Viral marketing
Social media marketing is closely related ro viral marketing since social media naturally involves 'social media amplification', where content is shared. Viral marketing is a specific approach that involves harnessing the network effect of the Internet and can be effective in reaching a large number of people rapidly as a marketing message is quickly transmitted to many people in the same way as a natural virus or a computer virus. It is effectively an online form of word-of-mouth communications, which is sometimes also known as 'buzz market- ing'. When planning integrated campaigns, it is important to note that the online viral affect can be amplified through offline media mentions or advertising either on TV and radio or in print. See Mini case study 9.1 for discussion of viral marketing techniques.
Chapter 9 Marketing communications using digital media channels 44 7
Mini case study 9.1 Research reveals which emotions make content 'go viral'
The 'holy grail' for many marketers today is 'viral content'. Marketers talk about wanting a 'goes viral!'. Academic research into types of emotion has yielded evidence into the types of emotions that content must leverage to create a successful viral campaign. For example, two University of Pennsylvania marketing professors, Jonah Berger and Katherine L. Milkman, published an article 'What makes content viral? ' (2012) describing how they had used a web crawler to analyse three months of articles written on the New York Times news website. Examining results from nearly 7,000 articles, they found that emotional arousal was the single biggest factor in determining whether a campaign 'went viral '. Articles that inspired, caused anger or awe-inspiring emotions, were all far more likely to end up on the 'most emailed list' on the site. Although negative articles actually evoked slightly more email responses than positive ones, both emotional groupings were dependent on the intensity of arousal resulting from the expressed emotions. In other words, those articles that were either reaffy positive or reaffy negative were more likely to evoke email responses than those that were less positive or less negative-
i.e. by extension, less emotive and therefore more aligned to the neutral middle line. Similar findings resulted from a 2013 study led by Associate Professor of Emerging Media and Communica-
tion, Rosanna E. Guadagno (Guadagno eta/., 2013), which looked at the factors that caused YouTube videos to go viral. This research team also conclud ed that a video was far more likely to be shared in cases where it aroused emotions- either positive or negative- in participants. This study also found that videos that resulted in high levels of human emotion had a tendency to be shared. Whether participants viewed them positively or negatively mattered little in this regard; what mattered was that they had an overwhelming emotional attach- ment to the content, one way or the other.
Writing in the Harvard Business Review, Kelsey Ubert and Kristin Tynski of Fractl (2013) explored the emo- tions that make marketing campaigns go viral. To understand the best emotional drivers to use in the content, they reviewed 30 of the top 100 images of the year from imgur.com, as voted on social sharing site Redditcom. They then surveyed 60 viewers to find out which emotions each image activated for them , classified using Robert Plutchik's comprehensive Wheel of Emotion. They found that certain specific emotions were common in highly viral content, while others were less common. Emotions that fit into the surprise and anticipation seg- ments of Plutchik's wheel were overwhelmingly represented.
Word·of· mouth (WOM) marl<eting According to the \M)(d-of- Mouth Mari(eting Association (WOMMA) it is giving people a reason to talk about your products and services, and making it easier for that conversation to take place. it is the art and science of building active. mutually beneficial consumer -to-consumer and consumer-to- marl<eter communications.
Word-of -mouth (WOM) marketing is an establ ished concept closely related to viral mar- keting, bur broader in context. The Word-of-Mouth Marketing Association (https://womma. org) exp lains how WOM can be harnessed:
Word-of-mouth can be encouraged and facilitated. Companies can work hard to make people happier, they can listen to consumers, they can make it easier for them to tell their friends, and they can make certain that influential individuals know about the good qualities of a product or service.
T hey go on to explain rhar all word-of-mouth marketi ng techniques are based on th e con- cept s of customer satisfaction, two-way dialogue and transparcm communications. The basic elements are:
• educating people about your products and services; • identifying people most likely to share their opinions; • providing rools char make it easier ro share information; • studying how, where and when opinions are being shared; • listening and responding to supporter s, detr actors and neutrals.
WOMMA identifies different approaches for facilitating WOM. The ones that ar e most relevant ro online marketing are:
• Buzz marketing. Using high-profile enrertainrnem or news to get people to talk about your br and.
448 Part 3 Digital marketing: implementation and practice
• Vira l marketi ng. Creating entertaining or informative messages that arc designed to be passed along in an exponential fashion, often electronically or by email.
• Community marketing. Forming or supporting niche communities that are likely to share interests about the brand (such as user groups, fan clubs and discussion forums); provid- ing tools, content and information to support those communities.
• InOuencer marketing. Identifying key communities and opinion leaders who are likely to talk about products and have the ability to influence the opinions of others.
• Conver sation creation. Interesting or fun advertising, em ails, catchphrases, entertainment or promot ions designed to start word-of-mouth activit)t
• Brand blogging. Creating blogs and participating in the blogosphere, in the spirit of open, transparent communications; sharing information of value that the blog community may talk about.
• Refer ra l programmes. Creating tools that enable satisfied customers to refer their friends.
Positive WOM is believed to increase purchase intent. For example, Marsden et al. (2005) found that brands such as HSBC, Honda and 0
2 with a greater proport ion of advocates
mea sured through Net Promoter Score (NPS) (see Chapter 6) tended to be more successful. They recommend eight ways to encourage word of mouth , most of which can be faci litated online:
• Implement and optimise referral programmes. Reward customers for referring new cus- tomers, and reward the referee as well as the referrer.
• Set up brand ambassador schemes. Recruit brand fans as ambass:~dors, who receive exclu- sive merchandise/offers to share with their contacts.
• Usc rryverrising. A combination of 'try' or 'trial' and 'advertising', this is a twist on product sampling. The idea is that rather than provide free samples or trials ro anyone in a target marker, rryvertising inYoh·es sampling on a selective and exclusive basis to lead users - ideally with new products or services before they become widely available.
• Use causal marketing. Associate your brand with a good cause that builds on brand values (e.g. Nike anti-racism in sport).
• M easure your Net Promoter Score (NPS). Track your NPS at all brand rouchpoims to find our what you are doing right, and what needs robe improved.
• Starr an influencer outreach programme. Reach our to the 10 per cent who tell the other 90 per cent what to try and buy with special offers and programmes.
• Harness the power of empowered involvement . Create advocacy - let your lead clients, cusromers or consumers call the shots on your innovation and m::1 rkering with VIP votes and polls.
• Focus in novation on doing something worth tallci ng about. Do something new that deliv- e rs an experience that exceeds expectations.
In an online context, word-of-mouth marketing is important since there is great potential for facilitating electronic word of mouth. It is very important for on line marketers to under- stand how WOM can be generated and influenced since research, such as that conducted by Forrester (2007) quoted in the section on online public relations, shows that recommenda- tions from friends, family or even other online consumers are trusted and are a major con- sideration in product and supplier selection.
Social network- related viral marketing
Dee et a/. (2007) note the importance of social networks in influencing perceptions about brands, products and suppliers. Their research shows large differences in gender and age on the types of products discussed, but recommendations on restaurants, computers, movies and vehicles are popular in all categories.
Chapter 9 Marketing communications using digital media channels 449
Advantages and disadvantages of social media and viral marketing
The advantages and disadvantages of vi ral marketing are shared with those of online PR , as covered earlier in the chapter. H owever, ir can be argued that the risk in investment in ,·iral marketing is higher since it is difficult ro predict the success of a p articular viral agent.
Advantages of social media and viral marketing
The main advantage of social media a nd vi ra l marketing is rhat an effective viral agent can reach a large a udience in a cost-effective way. We have also seen how consumers rate the opini ons of their peers, friends and family highly, so they can be highly influential. Kumar eta{. (2007) have discussed the potential value rha r can be generated through customer refer- rals in several case studies. Within social netwo rk s, majo r inAuencers ca n help spread the message more widely.
Since so many consumers and business peopl e use social media, th ey are an effective reach channel that is also effective for advertising. Facebook-spo nso red ads are now a ma jor ad investment channel since they can provide different formats such as video and can also be u sed for retargeting following website vi sirs .
Within Facebook, retargeting is achieved thro ugh defining ::1 Cu srom Audience. You can retarget existing contacts (by uploading a file of prospects o r cusro mers):md website traffic (where yo u install the 'Facebook' pixel onto sectio ns of your sire, e.g. product pages where yo u want visito rs to follow-up on). You can also rerarger if you have app users, or follow-up on people who have interacted with you in Facebook. New prospects ca n be found through interest-based targeting and ·Loo kalike' audie nces, where Facebook ads are displayed ro people who possess similarities ro existing prospects and customers.
Disadvantages of sodal media and viral marketing
The main disadvantage of viral marketing is that this is a high-risk marketing com munica- tions technique, since it requires significant initial investment in the viral agent and seeding. H owe,-er, there is no guarantee that the campaign will 'go viral', in which case the investment will be wasted.
With marketing within social networks ir is challenging ro engage audiences when they are socialising with their contacts and may no r wish to interact with brands. It is also dif- ficult to find the right types of content that will engage audiences and that they will share with their contacts. Seeding ro key influencers can help with distributing content, bm seed- in g is a time-consuming specialist activity.
Of course, a lthough positive vira l marketing ca n sp read rapidly, so can negative se ntiments about a company, which we referred ro in the section on online reputation management.
As w ith Google Ads advertising, Facebook advertising ope rates o n a cost-per-click-based a uction , so it caJl be expensive ro reach sought-a fter audiences.
Now social media is established and we have experienced a lor of ' hype' abou t its benefits for marketing we would expect to see irs impact evaluated and it cri ti cised . This has indeed h appened, with some strong viewpoints on both sides described in Digital marketing insight 9.5 . What do you readers think o f social media?
Best practice in planning and managing viral marketing
To make a ''iral ca mpaign effective, Just in Kirby of viral marketing specialists DMC (www.dmc.co.uk) suggested these three rhings are needed (Kirby, 2003):
• Creative material- the 'viral agent'. This includes the creative message or offer and how it is spread (te-xt, image, video).
450 Part 3 Digital marketing: implementation and practice
Digital marketing insight 9.5 Is social media 'mostly a waste of time' and an 'infantile delusion'?
Here are three examples of social media being criticised in what you could say is a ' backlash '.
First, take a look at Mark Ritson , Associate Professor of Marketing and Branding and columnist on Marketing Week, speaking in this video: www.youtube.com/ watch?v:S2NUayn2vPO. He acknowledges that 'social media is an amazing tool ' but states that it is 'mostly a waste of time' and suggests that marketers' focus is wrong:
Marketers are putting too much emphasis on soc ial media due to the hype in the media, and are forgetting how powerful traditional advertising and marketing can be.
Some marketers and PR professionals, such as Nicola Swankie (2014} from Society felt the need to respond to his video on behalf of social media practitioners. She responded in a long post, reminding him that:
Social media has given us the new power that people have Is vital to consider for any marketer, because it's shifted marketing forever- it's given us the control to person- alise and choose the media we see and it's given us a voice.
She says that great marketing should engage, it shouldn 't be something people want to ignore:
Social is the most honest of any media and so it's where lazy, unengaging marketing is most in evidence. That is not a reason to ignore Social, it should be a challenge to us all to think about how to make our marketing more compelling and relevant.
Well said? Here's another case where a respected marketer criticises social media marketing.
Bob Hoffman, described as ' a traditional ad man', is the publisher of the Ad Contrarian blog. He delivered a withering quote at Advertising Week Europe that featured in AdRants (and you can see it in this video: www.youtube.com/watch?v:EyTn_DgfcFE):
The theory that people want to engage with brands online and share their enthusiasm with their friends, and that their friends will share their enthusiasm with other friends through social media channels, has turned out to be an infantile fantasy.
Of course , these are only opinions from people who can't be considered active market- ing practitioners. The opinion of people who are actively working using digital marketing counts for more, you could argue. When we survey Smart Insights readers we find that social media marketing is usually rated positively as cost-effective, although typically behind search and email market ing (Smart Insights, 2015}. But for definitive proof in a business or across a sector we have to turn to analytics.
Benchmarking data from SimilarWeb, also reported in Smart Insights (2015), presents traffic sources for different sectors and this shows that in the retail sector for the UK and US social is indeed insignificant Oess than 5 per cent of site visits) compared with search, direct and referrals from other sites, although some 'dark social' social media traffic may be masked in direct traffic. A last-click approach to reviewing the impact of social media in sales can be misleading, since often social media updates may generate initial awareness, but conversion occurs in a subsequent visit following a search or direct visit.
If we review media attribution analytics, there is a similar pattern for retailers with a low Impact for social media behind the other main digital marketing channels. This analysis was summarised in a blog post for a report titled ' Facebook and Twitter do almost nothing for Sales?', described in Smart Insights (2014).
Chapter 9 Marketing communications using digital media channels 451
• Seeding. Identifying websires, blogs or people to send email to starr the virus spreading. Seeding can also be completed by email to members of a house list or rcming a list wirh rhe likely audience.
• Tracking. To monitor the effect, to assess rhe rerurn from the cost of developing the viral agent and seeding.
Toda); these factors are srill relevant within online PR campaigns, although we ralk about 'shareable social objects' rather rhan 'viral agent', and 'influencer outreach' rather than 'seeding'.
(~o_ff __ lin_e __ p_ro_m __ o_ti_o_n_t_e _ch_ n_i_q_u_e_s ______________________________________ ~~
Offline promotion Using trad~ional media such as TV, radio and pri1t to ciract \IISIIors to an online pteSenCe.
The importance of offline communicat ions in driving visitors to a website is well known by sire owners, who find rhat greater levels of in vestment in offline advertising using TV, print or radio results in a greater number of direct visitors to websites (Figure 9.1). Multiscreening enhances this effect, since simu ltaneous use of devices such as TV, smartp hone and tablet is so co mmon. If someone sees an ad on TV, they can easi ly search via their mobile device for a brand or the category. The influence of TV can be tracked by web analyt ics, which shows an increase in searches containing rhe brand or campaign name or the web address, or direct visitors who emer rhe sire URL into rhe address bar. Freid (2017) notes that he has seen mature brands receive a 20-30 per cent uplift in search visits when a TV campaign starts. He also explains rhe impact of TV on social media:
Not every TV ad is meant for social media, but in some cases, TV creative can be inspira- tional, funny or bring out other emotions that resonate with your target audience. In these cases, it may make sense for your social profiles to share your TV creative or even promote it through advertising.
Research has idemified rhar rhere is a clear correlation between investment in offline advertising and visits ro a website. For example, Hitwisc (2006) found in a study of brands including BSkyB, Orange and the AA that searches on brand terms and URLs increased when offline media investment was combined with online. For example, when Sky's media campaign included both online and offline advertising (in September to November of 2005) the strongest result was achieved online, wirh searches for the Sky brand increasing +20 per cent and searches for rhe Sky URL more than doubling. When offline ran without rhe inte- gration of online in March 2006, rhesame lift in searches was not evident. This research also shows the need for significant offline spend, with Sky spending around 20 per cent online, with print, TV and radio still remaining significant (sec Figure 9.13).
The linkage between advert ising and search has a lso been investigated by Gral1am and Havlena (2007), who additionally studied rhe ro le of adve rti sing in generating word-of- mouth discussion online . They found 'strong evidence that advertising does st imulate increased vis itation to the websites of advertised brands- an indicator of consumer interest and involvement with a brand ' .
Online website promotion techniques such as search engine marketing and banner advertis- ing often take prominence when discussing methods of traffic building. But we start with using offline communications to generate sire visitors since it is one of the most effective techniques ro generate site traffic and the characteristics of offline media are such that they often have a higher impact and are more creative, which can help explain the online value proposition. Offline promotion refers ro using communications tools such as ad,·ertising and PR delivered by traditional media such as TV, radio and print in order to direct visitors to an online presence.
Despite the range of opportunities for using new online communications tools, tradi - tional communications using offline media such as TV, print and direct mail and others shown in Figure 1.9 remain a significant form of investment in marketing communications
452 Part 3 Digital marketing: Implementation and practice
Figure 9.13 Sky spend by medium compared with market share of UK internet searches, 5 June-6 March
r - 0.02
1\
0 Direct mail 0 3rd party 0 Doordrops 0 Inserts 0 DRTV 0 Online 0 Outdoor 0 Cinema 0 Radio . Press
O TV - Brand searches
- URL searches
Source: The Hilwise UK Media Impact Report. September 2006
for mosr. Even organisations that transact a large proportion of their business o nline con- tinue ro invest heavily in offline communications. Consider rhe travel secror, where both rra,·el suppliers such as BA, Thomson and easy jet and inrermediaries such as Expedia and Opodo transact an increasing proportion of their sales online, bm are still reliant on offline communications ro drive visitors ro the web ro transact.
\'<Then the web analyrics data abour referring visitors are assessed, for most companies that are not online-only businesses we find that over half the visitors are typically marked as 'No referrer'. This means that they visited the site direct by typing the web address inro the address bar in response to awareness of the brand generated through real-world com- munications (others may have bookmarked the site or clicked-through from a search engine) .
Advantages and disadvantages of using offline communications to support e-commerce
Offl ine communications work; they are effective in achi ev in g four criti ca l things:
• Reach: siJlCe newspaper, TV and postal co mmuni cations are used by virtually all consumer s.
• Brand awareness: through using high-impact visuals. • Emotiona l connection: with brand, again through visua ls and sounds. • Explanation: of the onli11e value proposition for a brand.
A further benefit is that for any given objecrive, inregrated marketing communicarions received through differenr media are more effective in achieving that objective. \VIe men- tioned this cumu larive reinforcemenr effect of inregrated marketing communications when referring ro the 4Cs of coherence, consistency, continuity and complementarities earlier in the chapter. Having said this, the disadvanrages of using offline communications to encour- age online channel usage compared ro many online communications rools are obvious. In general, the disadvantages of offline communications are:
• Higher cost. Return on investmenr rends robe higher for online communications such as search engine optimisation, pay-per-dick marketing or affiliate marketing.
Incidental offline advertising Driving traffic lo lhe webs~e is not a primary objective of the advert.
Speciftc offline advertising Driving traffic to the website ()( explaini"lg the onli1e proposition is a primary objective of the advert.
Activity 9.3
Chapter 9 Marketing communications using digital media channels 453
• High er wastage. The well-known expression, 'half my advertising is wasted, but I don't know which half', may be true about offline marketing, bur it isn't true onliJJe if the right tracking processes are in place.
• Poorer t argeting. Targeting by behaviour, location, time, search keyword, sire and site content is readily possible online. This rends to be more targeted compared to most of£1ine media {apart from direct marketing).
• Poorer account ability. Ir is straightforward £O track response online- offline it is expen- sive and error-prone.
• Less detailed information. The derailed information to suppon a decision can only be cost-effectively delivered online.
• Less persona lised . Although direct ma.il can be personalised, personalisation is more straightforward online.
• Less interactive experience. Most offline communications are one-way - interaction is possible online with the right creative.
Incidental and specific advertising of the online presence
Two types of offl ine a dvertisin g ca n be id ent ified: incidenta l and specific. Reference to t he website is inci de ntal offl ine advert ising if the main aim of the advert is to advertise a par- ticu lar product or promotion and the website is available as an anci ll ary source of infor ma- tion if required by the viewer. Traditionally, much promotion of the website in the oflline media by traditional companies has been incidental- simply consisting of highlighri11g the existence of the website by including the URL at the borrom of an advenisement. Reference ro the website is specific offline a d vertising if it is an objective of the advert to explain the proposition of the website in order to drive traffic to the sire to achieve direct response. Here the ad,·err will highlight the offers or services available at the website, such as sales promotions or online customer service. Many stare 'Visit our website!!', bur dearly a more specific strap line can be developed that describes the overall proposition of the site {'derailed information and product guides to help you select the best product for you') or is specific to the campaign {'we will give you an instant quote online, showing how much you save with us'). Complete Activity 9.3 for further e.xamples.
Offline response mechanisms
The different response mechanics such as web response and URL strategy that we discussed in Chap ter 8 in the section on campaign response mechanisms have to be used to maximise response, since this helps to di rect potential customers ro the most appropriate content on the website. D iffere nt URLs are also useful for measuring the response of offline media cam paigns since we can measure the nu m ber of visitors arriving directly a t the URL by enteri ng the dom ain na me.
Selecting the best digital media channel mix techniques
Suggest the best mix of online {and offline) promotio n techniques to build traffic for the fo llowing s ituations:
• Well -established 82C b rand with hig h brand awareness. • Dot.com startup. • Small bus iness aiming to export.
• Common 82C product , e .g. household insurance . • Specialist 828 product.
454 Part 3 Digital marketing: implementation and practice
Public relations
Public relations can be an imporranr rool for driving traffic to rhe website if changes ro online services or online events are significant, or if a viral campaign is discussed online. We have covered the benefits of online PR and influencer relationship management in derail earlier in this chapter. Many newspapers have regular features listing interesting entertain- ment or leisure sires o r guides ro specific topics such as online banking or grocer y shopping. Trade magazines may also give informacion about relevant websires.
Jenkins (1995) argues that one key objective for public relations is irs role in transforming a negative situation into a positive achievement. The public relations transfer process, he suggests, is as follows:
• from ignorance ro knowledge; • from apathy ro imerest; • from prejudice ro acceptance; • from hostility ro sympathy.
Direct marketing
Direct marketing c:.tn be an effective method of driving traffic to rhe website. As mentioned earlier, a web response model can be used where the website is rhe means for fulfilling the response, bur a direct mail campaign is used to drive the response. Many catalogue compa- nies will continue ro use traditional direct mail to mail out a subset of their offering, with the recipient tempted ro visit the site through the fuller offering and incentives such as competitions or web-specific offers.
Other physical reminders
Since we all spend more rime in the real rather than the virtual world, physical reminders explaining why custome rs should visit websites are significant. What is in customers' hands and on their deskrop will act as a prompt to visit a sire and counter the weakness of the web as a pull medium. This is perhaps most important in the B2B context, where a physical reminder in the office ca n be helpful. Examples, usually delivered through direct marketing, include brochures, ca talogues, business cards, point-of-sale material, pens, postcards, inserts in magazines a nd password reminders for extranets.
Word-of-mouth marketing
It is worth remembering that, as we stated in the section on vira l and word-of-mouth mar- keting, word of rnou th plays an important role in promoting sites, particu larly consumer sites where the Internet is currently a novelty. Opinion Research Corporation Internationa l, ORCI (1991), reported on a study among US consumers that showed that the typical internet consumer tells 12 other people about his or her online shopping exper ience. This compares with the average US consumer, who tells 8.6 additional people about a favourite film and another 6.1 people about a favourite restaurant! It has been said rhar if the onlin e experience is favourable then a cusromer will tellll people, bur if it is bad they will tell twice as many, so word of mouth can be negative also. Parry (1998) reported that, for European users, word of mouth through friends, relatives and colleagues was the most important method by which users found om about websires, being slightly more important rhan search engines and directories or Links from other sires.
Summary
Chapter 9 Marketing communications using digital media channels 455
======~ 1 Online promotion techniques include:
• Search engine marketing- search engine optimisation (SEO) a11d content marketing improves position in the narurallistings and pay-per-click ads feature a company in the sponsored listings of a search engine or on the displa)' network.
• Online PR- including techniques such as influencer our reach , link building, blogging and reputation management.
• Online partnerships - including affiliate marketing (commission-based referral), co- branding and sponsorship.
• Online advertising - using a range of formats including banners, skyscrapers and video across publisher and social network sires. Programmatic is the main form of display investmenr. Retargeting is an important racric ro remind people abour brands they have interacted with .
• Email marketing- including co-branded cmails, event-triggered emai ls m1d ads in third-party e-newsletters for acquisition, and c-ncwsletters and campaign emails ro hou se lists.
• Social media marketing - engaging audiences on different social networks and on a co mpany's own site through sharing conrcnt and developing great creative concepts that are transmitted by online word-of-mouth or viral marketing.
2 Offline promotion involves promoting rhe website address, highlighting the value propo- sition of the website and achieving web response through traditional media advertise- ments in print or on television.
3 Interactive marketing communications must be developed as part of integrated market- ing communications for maximum cost-effectiveness.
4 Key characteristics of interactive communications are rhe combination of push and puU media, user-submitted content, personalisarion , flexibility and, of course, interacriviry to create a dialogue with consumers.
5 Objectives for interactive communications include direct sales for transactional sires, bur they also indirectly support brand awareness, favourabiliry and purchase intent.
6 Important decisions in rhe communications mix introduced by digital media include: • the balance between spend on media and creative for digital assets and ad executions; • the balance between spend in traditional and offline communications; • the balm1ee between investment in continuous and campaign-based digital activity; • the balance of investment in different interactive communications tools.
Table 9.5 provides a summary of the st rengrhs and weaknesses of the tools discussed in this chapter.
Table 9.5 Summary of the strengths and weaknesses of different communications tools for promoting an online presence
Promotion technique
Search engine optimisation (SEO)
Pay-per-click (PPC) marketing
Main strengths
Highly targeted, relatively low cost com- pared to PPC. High traffic volumes if high volume of search intent and is SEO effec- tive. Considered credible by searchers
Highly targeted to reach audience when searching for products or solutions. Con- trolled cost of acquisition. Can extend reach and remarket using the display network
Main weaknesses
Requires significant ongoing investment in content marketing and due to intense com- petition , complexity and changes to ranking algorithm. Investment won't necessarily guarantee returns and top-three position in results needed for volume
Relatively cosUy in competitive sectors, par- ticularly where others are paying 'over the odds' lower volumes compared with organic visits
(Continued)
456 Part 3 Digital marketing: implementation and practice
Table 9.5 (Continued)
Promotion technique Main strengths Main weaknesses
Online PR Relatively low cost and good targeting. Identifying online influencers and setting up Can assist with SEQ through creation of partnerships can be time-consuming. Need backlinks to invest in content marketing to encourage
sharing
Affiliate marketing Performance marketing approach of pay- Only relevant for businesses with online ment is by results (e.g. 5 per cent of sale or sales. Costs of payments to affiliate net- leads goes to referring site) works for setup and management fees.
Changes to ranking algorithm have reduced volume from affiliates using search
Online sponsorship Most effective if low-cost, long-term co- May increase awareness, but does not nee- branding arrangement with synergistic site essarily lead directly to sales
Interactive advertising Reach audience through publishers and Response rates have declined historically social networks to gain awareness and because of 'banner blindness' encourage click-through, including through retargeting . But, also has a role in branding through media-multiplier effect. New 'native advertising' formats based on con- tent can be more effective
Email marketing Push medium - can't be ignored in user's Requires opt-in for effectiveness. Better for inbox (compared to social updates). Can customer communications than for acquisi- be used for direct-response link to website tion since can't buy prospect lists. In box
cut-through - message diluted among other emails. Umits on deliverability
Social media marketing, viral With an effective viral agent, possible to Difficult to create powerful viral concepts and word-of-mouth marketing reach a large number at relatively low cost. and control targeting. Reduced organic
lnfluencers in social networks can be reach means that Facebook requires pay- significant and existing customers can be ments to reach audiences. Risks damaging used for advocacy. Paid advertising brand since unsolicited messages may be options may be effective. received
Traditional offline advertising larger reach than most online techniques Targeting arguably less easy than online. (TV, print, etc.)
Exercises
and sometimes more cost-effective. Typical high cost of acquisition, but more Greater creativity possible, leading to cost-effective local options may be greater impact available
Self-assessment exercises
1 Briefly explain and give examples of the main online promotion techniques. 2 Explain the different types of payment model for display and programmatic
advertising. 3 Which factors are important in governin g a successful display advertising
campaign? 4 How can a company promote itself through a search engine? 5 Explain the value of social media marketing to gaining awareness. 6 How can online PR help to promote a new product? 7 How should websites be promoted offline? 8 What do you think the relative importance of these Internet-based advertising tech-
niques would be for an international chemical manufacturer:
a display advertising; b paid search marketing; c affiliate marketing?
I
Chapter 9 Marketing communications using digital media channels 457
Essay and discussion questions
1 How should compan ies evaluate the relevance and effectiveness of the d igital media channels d iscussed in this chapter to their organisation?
2 Discuss the merits of the different models of paying for display advertisements on the Internet for both media owners and companies placing advertisements.
3 Explain the factors that control the position of a company's products and services in the search engine results pages of a search engine such as Google.
4 Compare the effectiveness of different methods of online advertising, including pro- grammatic display advertisements, paid search marketing and affiliate marketing.
Examination questions
1 Give three examples of digit al media channels and briefly explain their commun ica- tions benefits.
2 Describe four d ifferent types of site on which online display advertising for a car manufacturer's site could be placed.
3 Click-through is one measure of the effectiveness of online advertising. a What is 'cl ick-through' ? b Which factors are important in determining the cl ick-through rate of a banner
advertisement? c Is click-through a good measure of the effectiveness of online advertising?
4 What is meant by co-branding? Explain the signfficance of co-branding . 5 What are 'meta tags' ? How important are they in ensuring a website is listed in a
search engine? 6 Name three alternative types of email marketing that can be used for c ustomer
acqu isition. 7 Briefly evaluate the strengths and weaknesses of affiliate marketing for a well-
known retailer. 8 Which techniques can be used to promote a website in offline media?
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General digital media channel-related email newsletters and portals
• ClickZ Experts (www.clickz.com/experts). Has co lumns on email marketing, email mar- keting optimisation and email marketing case studies.
• Econsultancy.com (www.econsultancy.com). Best-practice sections on different e-comrnu - nicarions tools.
• Marketing Sherpa (www.marketingsherpa.com). Articles and links on online marketing communications including examples of email and online advertising.
• Sm art In sights (www.smartinsights.com). Advice on best practice and the latest updates on all digital marketing channels covered in this chaprer, edited by Dave Chaffey.
Email-related advice sites
• Direct Marketing Association UK (www.dmaorg.uk). Best-practice guidelines and bench- marks of response rates.
460 Part 3 Digital marketing: Implementation and practice
• Email Experience Council (www.emailexperience.org). A US organisation with compila- tions of practical rips on email marketing.
Affiliates and aggregator advice sites
• AM Navigator (www.amnavigator.com/blog). Advice on managing affiliate programmes from Geno Prussakov.
• Perfor mance M arketing Association (https://thepma.orgl). An advocacy group for affiliate marketing based in the US.
• Perfo rman ceiN (https://performancein.com). An online magazine and events company focusing on affiliate markering.
Digital advertising
• DoubleCiick (www.google.com/doubleclicklinsights/research.html ). Google-owned ad- serviJlg and tracking provider w ith research about consumer behaviour and optimising ad effectiveness.
• US Intern et AdverrisingBureau (www.iab.net). The widest ronge of stud ies about Internet advertising effectiveness. In UK: www.iabuk.net.
• Wo rld Advertising Research Centre (www.warc.com). Mainly subscription service, bur some free resources.
• Real-time advertising academ y (http://rtaacademy.com/) Free video tutorials explaining the principles of programmatic in detail.
Search-engine-related links
• Google Sear ch Console (www.google.com/webmasters). Provides a useful set of tools for sires verified by their owners indurung index inclusion, linking and ranking for different phrases in different locations.
• Moz (www.moz.com). Formerly focusing exclusively on SEO, bur now broadened to Con- tent Marketing and other inbound marketing techniques. The most popular site globally with SEO specialists. Includes Open Site, Explorer tool and Chrome extension for review- ing backlinks.
• Search Engine Land (www.searchengineland.com ). A blog resource coveri ng the latesr developments in search markering. The sister sire, Marketing Land (www. m arketingland .com), is recommended fo r a broader audience.
• Web masterworld (www.webmasterworld.com). A forum where search practitioners discuss best practice.
Viral marketing/Word-of-mouth research sites
• Mashable (www.mashable.com). Sire focusing on developments and starisrics related to social nenvorks.
• Word-of-mouth marketing association (www.womma.org). A US-orientated community of word-of-mouth marketing specialists.
Evaluation and improvement of digital channel performance
462 Part 3 Digijal marketing: implementation and practice
Questions for marketers
Key questions for marketing managers related to this chapter are:
• How do I measure and improve the effectiveness of digital marketing?
• How much resource do I need to put into managing and improving our website and mobile apps, if relevant?
Links to other chapters
This chapter is related to other chapters as follows:
• Chapter 4 describes the development of a digital marketing strategy. The aim of measurement is to quantify whether the objectives of this strategy have been achieved.
• Chapter 7 describes issues involved in creating an effective digital experience including websites and mobile platforms, and should be read before this chapter to introduce the reader to the concepts of website management
• Chapter 8 describes methods of increasing brand awareness online. It should be read before this chapter since one aspect of measuring the effectiveness of digital marketing is aimed at assessing the different online communications methods.
[~l_n_tr_o_d_u_c_t_io_n _______________________________________________________ J
Web or digital anal ytlcs Techniques used lo assess and improve lhe contribution of digital marketing to a business, incuding reviewing traffic voume, referrals , clid<streams, onine reach data, customer satisfaction SUtveyS, leads and sales.
Companies th at have a successful approach to digi tal marketing often seem to share com- mon char acteri stics. They arrach great importance and devore reso urces to monito rin g the success of th eir online marketing, purring in place. the processes to continu ousl y improve the per fo rman ce of their digital cbaru1els. Thi s approach has bee n fundamental to tbe growth of Am azon- Case srudy 10 in this chapter explains its culrure o f merrics.
T he importance o f defining an appropriate approach to meas urement and improvement is such that th e term web or digital analytics has devel oped to describe thi s key digital mar- keti ng activi ty. A Dig.ital Analyrics A ssociation (www.digitalanalyticsassociation.org) has been developed by vendor s, consultants and resea rchers in rhi s area to manage best p ractice . Their definition of web analy tics is:
Web analytics is the measurement, collection, analysis and reporting of Internet data for the purposes of understanding and optimising web usage.
You can see this is a 'catch-al l' definition. H ow do you thi n k it could be improved? We thin k it coul d reference the com mercial aims of opti misation and the measurement of multi- channel usage.
Chapter 10 Evaluation and improvement of digital channel performance 463
To succeed in a measured approach to improving results from Internet marketing we sug- gest that there are four main o rganisational prerequisites, which arc broken down as shown in Figure 10.1 into the quality of the web analytics processes, including defining the right improvement measures and purchasing the right tools, and the managemem processes - such as putting in p lace a process where staff review results and then modifying their mar keting activities accordingly.
This chapter is Ln tWO parts - IDe first part is about performance management, where We review the approach to improving performance through assessing appropriate measures, tools and the r ight process to apply them, as suggested by Figure 10.1. In the second part, we review some of the issues involved wiro maintaining an online presence, looking a t the tools and processes for im proving different company web presences.
Figure 10.1 Key questions in evaluating process, metrics and tools for improving the contribution of digital marketing within an organisation
Metrics Tools Analysis Ac ti on Have we selected
the right d iagnostic metrics to improve
Can our analytics software collect, aggregate and
visualise metrics?
Are the measures reviewed and
interpreted at the right time?
Are the measures acted upon?
performance?
Quality of web analytics
processes
Improved channel contribution
Essential digital skills Evaluating digital marketing effectiveness
Quality of management
processes
Evaluation skills to review and improve digital marketing using analytics are in high demand since digital marketing has great potential to be data-driven and employers are
looking for data analysis skills. We recommend you develop these skills:
• Analyse digital marketing effectiveness using relevant measures, particularly for digital media, website customer journeys and content effectiveness.
• Understand how to use digital marketing analytics systems such as Google Analytics and Adobe Analytics and data visualisation tool s such as Google Data Studio, Tableau or open source statistical analysis tool ' A'.
• Know how to run structured experiments such as AB Testing to improve site effectiveness.
• Understand how different types of marketing technology can be used for measuring and improving customer engagement.
464 Part 3 Digital marketing: implementation and practice
Practical ideas to boost employability by showcasing your interests and experiences include:
• Access the Google Analytics Demo Account to understand how Google Analytics is structured.
• Show how you have used Google Analytics or AB testing to improve marketing effectiveness.
• Demonstrate that you understand the essential measures needed on a digital market- ing dashboard.
• Set up and run a blog as an example of using a web-hosted content management system, e.g. Wordpress.com. Set up Google Analytics on this blog.
To audit your digital marketing skills across the RACE planning framework, use the Smart Insights Skills Assessment tool available at: http://bit.ly/smartdig iskills.
-
[ Performance management for digital channels
Performance management system A process used to E!llaluate and improve the efficiency and effectiveness ol an organisation and its processes.
Performance measurement system The process by which metrics are dell'led. collected. dssen*lated and actioned.
Digital marketing metrics Measures that incicate the effectiveness of dogrtal markeung activities Integrated across different channels and platforms in mooting customer, business and marketing objectives.
Effectiveness Meeting process objectives. deiMri'lg the reqo..Wed outputs and outcomes, 'doing the right IOOg'.
Efficiency Mnirrising rescxxces or bme needed to COI'Il)lete a process, 'doing the thing riglt'.
To improve results for any aspect of any business, perform ance ma nagemenr is viral. As Bob Napier, chief information officer ar, Hewlerr-Packard, was reponed ro have said back in rhe 1960s, ' You can't manage what you can't measure' . The processes a nd systems intended ro monitor and improve the performance of an organisation are known by business operations researchers as performance management syste ms and are based on the sn.dy of p erformance
measure ment systems . Today, nearly all organisations have some form of online presence, but the questions
highlighted in Figure 10.1 aren't answered adequate!)' So, a good starring point is to under- stand the current improvement process and the organisational barriers that prevent a suitable Improvement process.
In this sectio n , we will review approaches to performance management by examining three key elements of a digital marketing measurement system. These are, first, the process for improvement, second, the measurement framework that specifics groups of releva nt d igit a l market ing metrics and, finally, an assessment of the suitability of tools and tech- niques for collecting, analysing, disseminating and actioning results. We will review three stages of creating and implementiJlg a performance management system.
Stage 1: Creating a performance management system
The essence of performance management is suggested by the definition for performance m easurement used by Andy Neely and co-workers of Cranfield School of Management's Cen- tre for Business Performance. They defined performa nce measurement as (Neely et al., 2002):
the process of quantifying the efficiency and effectiveness of past actions through acquisi- tion, collation, sorting , analys is, interpretation and dissemination of appropriate data.
Performance management extends this definition to the process of analysis and actioning change in o rder to drive business performance and returns. Online marketers ca n apply many of the approaches of business performance management to digital marketing by using digital analytics tools such as Google Analytics o r Adobe Analytics. Yet, a lthough most businesses have set up these services on their websites, in particular the free version of Google Analytics, a process is still needed to utilize the data and tools for perfo rmance management. As you can see from the definition, performance is measured primarily through information on process effe ctiveness and eff icie ncy, as introduced in Chapter 4 in the section on objective selling, where we noted that it is important to include both effec- tiveness and efficiency measures .
Chapter 10 Evaluation and improvement of digital channel performance 465
The need for a structured performance managemenr process is clear when we examine the repercussions if an organisation does not have one. These include: poor linkage of measures with strategic objectives or even absence of objectives; key data not collected; data inaccura- cies; data not disseminated or analysed; or no correcri,·e action. Many of the barriers to improvement of measurement systems reported by respondents in Adams eta/. (2000) also indicate the lack of an effective process. The barriers can be grouped as follows:
• Senior management myopia: performance measurement not seen as a priority, nor wlder- stood or targeted at the wrong area -reducing costs rather than improving performance.
• Unclear responsibilities: for delivering and improving the measuremenr system. • Resourcing issues: lack of time (perhaps suggesting lack of staff motivation), the neces-
sary technology and integrated systems. • Data problems: data overload or of poor quality, limited data for benchmarking.
The Digital Analyrics Association (2017) survey of ana lyrics professionals reports these as the most popular analytics functions:
• reporting and dashboard visua.lisation (82% ); • analysis of past performance (80%); • optimising website functionality and conversion (67%); • optimising campaign performance (67%); • AB and multivariate testing (52%).
You ca.n see that analysts are involved both with reporting and optim isa tion of digital experiences and campaigns. Predictive metrics of future performance were relatively low (35 per cent). Analytics challenges reported by analysts most commonly related ro data integration and accuracy:
• data access/data silos (22%); • incomplete dara (16%); • inaccurate data (16%); • inadequate analytics rools (10%)
To avoid these pirfalls, a coordinated, structured measurement process such as that shown in Figure 10.2 is required. Figure 10.2 indicates four key stages in a measurement process. These were defined as key aspects of annual marketing plan control by Kotler (1997). Stage 1 is a goal-setting stage where the aims of the measuremenr system are defi11ed - this will usually take the strategic digital marketing objectives as an input to the measurement system . The aim of the measuremenr system will be to assess whether these goals are achieved and spec ify corrective marketing actions to reduce variance between target and actual key per- formance indicarors. St age 2, performaJ1ce mea surem ent, invo lves coll ecting data to deter- mine the different metrics that are part of a measurement framework, as discussed in the next section. Stage 3, performance diagnosis, is the analysis of results to understand rhe reasons for variance from objectives and selection of marketing so lutions t o reduce
. vanance.
In a digital marketing context, Stage 4, corrective action, is the implementation of these solutions as updates to content, design, ongoing markt:ring communications and CRO. After rhis smge the continuous cycle repeats, possibly with modified goals.
Stage 2: Defining the performance metrics framework
Measurement for assessing the effectiveness of digital marketing should assess the contribu- tion of digital marketing at different levels:
1 Are business objectives defined in the digital marketing strategy being met? 2 Are marketing objectives plans acllieved? 3 Are marketing communications objectives achieved?
466 Part 3 Digital marketing: implementation and practice
Figure 10.2 A summary of the performance measurement process
Goal setting
Performance measurement
Performance diag nosis
Corrective action
What do we want to achieve? '
... ~- ~
What is happening?
~ 7 ~
Why is it happening?
~ ~ V'
What should we do about it?
¢=J CONTROL Who? ¢=J
MEASURE Who? When? How?
¢=J REVIEW Who? When?
These measures can also be related to the different levels of marketing control specified by Kocler (1997) . These include suategic control (question 1) , profitability control (question 1), annual-plan control (question 2) and effic iency control (question 3).
Efficienqr measures are more concerned with minimising the costs of o nline m arketing whi le maximising the returns for different areas of focus, such as acquiring visitors to a website, converting visitors to outcome or achieving repeat business.
Chaffey (2000) suggested th at organisations define a measurement framework or create a management dashboard that defines groupings of specific metrics used to assess digital marketing performance. He suggested that suit able measurement frameworks w ill fulfi l these criteria:
• Include macro-level effectiveness metrics t hat assess whether strategic goals are achieved and indicate to what ext ent digital marketing co ntributes to the bus iness (revenue con- tribution and return o n investment).
• Include micro-levelmetrics that assess the efficiency of digital marketing t acti cs and implementation. Such measures are often referred to as performance drivers, since achiev- ing targets for these measures w ill assist in achieving stra tegic object ives. Digital market- ing performance drivers help opt imi se online marketing by attracting more sire vis irors and increasing conversion t o desired marketing outcomes. These achieve the marketing efficiency control specified by Kocler (1997) . The research by Agrawal et al. (2001), who assessed companies on metrics defined in three categories of attraction, conversion and retention as part of an e-performance scorecard, uses a combination of macro- and micro-level metrics.
• Assess th e impact of digital marketing on rile sati sfaction, loyalty and contri bution of key stakeholders (customers, investors, employees and partners) as suggested by Adams eta/. (2000) .
• Enable comparison of performance of different digital channels with other ch annels as suggested by Friedman and Furey (1999}.
The fra mework can be used to assess e-maJ·kering performance against compet itors' or out- of-sector best practice.
When identifying metrics it is common practice to app ly the widely used SMART mnemonic and it is also useful to consider th ree levels - business measures , m arketing measures a nd specific digital marketing measures (see the objecti ve-setting secti o n in Chapter 4) .
Channel promotion Measures that assess wt'tf customers visit a si!e - whiCh adllerts they have seen, whch Sites they have been referred from.
Referrer The site that a visitor previously visited before following a link.
Channel buyer behaviour Desaibes which content is visited and the time and duration.
Chapter 10 Evaluation and improvement of digital channel performance 467
Figure 10.3 shows a framework of measures, which can be applied to a range of different companies. The groupings of measures remain relevant; although they are centred on sires or onli ne presence, measures for engagement with social media should also be considered. In Chapter 4, we also reviewed two alternative frameworks (see Tables 4.6 and 4.9) that can also be used for creating a performance dashboard.
Channel promotion
These measures evaluate the volume, qualiry and value of where the website, social presence or mobile sire visitors originate -online or offline - and what are the sires or offline media that prompted their visir. Web analytics can be used to assess which intermediary sites customers are referred from (the referre r) and which keywords they ryped into search engines when trying to locate product information. Similar information on rcferrer is not t ypically available for visits to social media sites. Promotion is successful if traffic meers objectives of volume, qualiry, value and cost (as explained in Chapter 8). Quality will be determined by whether visitors are in the target market and have a propensity for the service offe red (through reviewing conversion (online or offline}, bounce rates a11d cost of acquisition for different referrers).
Key measure
Referral mix. For each referral source such as paid search or display ads it should be possible to calculate:
• percentage of all referrals or sales (a nd influence in achieving sale last click or assist); • cost-per-acquisition (CPA) or cost-per-sale (CPS); • conrribution ro sales or other outcomes.
Channel buyer behaviour
Once customers have been attracted w rhe sire we can monitor content accessed, when they visit and how long they stay, and whether this interaction with content leads to satisfacmry marketing outcomes such as new leads or sales. If visitors are incemivised to register on-site
Figure 10.3 The five diagnostic categories for digital marketing measurement
The Weblnsights"' diagnostics framework includes these key metrics:
1. Business contribution: Online revenue contribution (direct and indirect), category penetration, costs and profitability.
2. Marketing outcomes: Leads, sales, service contacts, conversion and retention efficiencies.
3. Customer satisfaction: Site usability, performance/availability, contact strategies, opinions, attitudes and brand impact.
4. Customer behaviour (web analytics): Profiles, customer orientation (segmentation), usability, clickstreams and site actions.
5. Site promotion: Attraction efficiency, referrer efficiency, cost of acquisition and reach, search engine visibility and link building, email marketing, integration.
1. Business contribution
2. Marketing outcomes
3. Customer satisfaction
4. Customer behaviour
5.Site promotion
468 Part 3 Digijal marketing: implementation and practice
Stickiness An indication of how long a visit()( stays on-site.
Channel satisfaction Evaluation of the customer's opinion of the service quality on the site and supporting services such as email.
Channel outcomes Record of customer actions taken as a ~of a visit to a sita.
Conversion rate Percentage of site visitors who perform a particular action such as making a purchase.
it is possible to build up profiles of behaviour for different segments. Segments can also be created according ro visitor source and conrenr accessed. lt is also important ro recognise return visitors based on cookies set on a previous visit or times of logi11. In Chapter 6 we saw how hurdle rates can be used to assess activiry levels for return visits, e.g. 30 per cent of customers return rouse rhe online service within 90 days.
Key ratios
• Bounce rates for different pages, i.e. proporrion of single page visits. • Home page views/aU page views, e.g. 20 per cent= (2,000/10,000). • Stic kiness: page views/visiror sessions, e.g. 2 = 10,000/5,000. • Repeats: visitor sessions/visitors, e.g. ?O per cent= 1,000/5,000.
Channel sat isf action
Cuswmer satisfaction with the online experience is viral in achi eving rhe desired channel outcomes . Online research mecl10ds such as on line quest ionnai res, focus groups and inter- views can be used to assess custo mers' opinions of the website conrent and customer serv ice and how it has affected overall perception of brand. Benchmarking serv ices such as Foresee (www.foreseeresults.com), based on the American Customer Satisfaction lndex methodol- ogy, are published fo.r some u1dusrries. These assess scores based on the gap between expectations and actual service.
Key measure
Customer satisfaction indices. These are discussed in Chapter 7 and include ease of use, site availability and performance, and email response. To compare customer satisfaction with other sites, benchmarking services can be used.
Channel outcomes
TraditionaJ marketing objectives such as number of sales, number of leads, conversion rates and targets for customer acquisition and retention should be set and then compared to other channels. Dell Computer (www.dell.com) records on-site sales and also orders generated as a result of site visits, but placed by phone. This is achieved by monitoring calls to a specific phone number unique to the site.
Key marketing outcomes mclude:
• registration to site or subscriptions to an emai l newsletter; • req uests for further informat ion such as a brochure or a request for a call- back from a
. . customer serv1ce representative;
• res ponding to a promotion such as an o nlin e competition; • an of£1ine (phone or store) lead or sale influenced by a visit to the sire; • a sale on-site.
Key measure
• Channel contribution (direct and indirect).
A widely used method of assessing channel outcomes is to review the conversion rate, which gives an indication of the percentage of site visitors who rake a particular outcome. For exam pie:
• Conversion rate, visitors to purchase = 2 per cenr (10,000 visitors, of which 200 make purchases).
• Conversion rate, visitors to registration = 5 per cent (I 0,000 visitors, of which 500 register).
Attrition rate Percentage of site visitors lost at each stage in making a purchase.
Channel profitability The profitability of the websrte. taking into account revenue and cost and discoU'Ited cash flow.
Chapter 10 Evaluation and improvement of digital channel performance 469
A rel ated concept is the attrition rate, which describes how m:~ny visirors are lost ar each step of a conversion funnel from landing page to checkout. Figure 10.4 shows that, for a set rime period, o nl y a proportion of site visitors will make their way to product information, a small proportion will add an item to a basket and a smal ler proportion sri II will actually make the purchase. A key fearure of e-commerce sites is that there is a high anririon rate between a customer adcling an item to a basket and subsequently making a purchase. Rea- sons for this may include usability problems, fears about security or because custo mers are browsi ng products with the inremio n of buyi ng them offline or in another channel.
Channel profitability
A conrriburion ro business profitability is always the ultimate aim of e-commerce. To assess this, leading multichannel companies set an o nline contribution target of achieving a certain proportion of sales via rhe channel. Assessing contribution is more difficult for a company that cannot sell products online, bur the role of the Internet in influencing leads and purchase should be assessed. Discounted cash flow techniques are used to assess the rare of return over rime.
Multichannel evaluation
The fra meworks we have presented in this chapter are expla in ed in rhe co ntext of an indi- vid ua l cha nnel , bur with the co ntributi on of the channe l highli ghted as percentage sales or profitability. Bur as Wtlson (2008) has pointed o ut, there is a need to ev:~luare how different cha nnels support each other. Wilson says:
Traditional metrics have been aligned to channels , measuring resource input or leads in at one end and the value of sales generated by the channel at the other end. For companies that have been operating in a single channel environment, this might have been relatively efficient - but it no longer works when the organisation diversifies to a multichannel approach.
Figure 10.4 Potential reasons for causing attrition on an e-commerce site
Wrong audience
100 -I'.. I ......._ Slowpage
load
unL> marketing message
i Clumsy site navigation
Unengaging Awkward look and feel selection
Price "'-~uncompetitive
Card validation No real-ti error
stock information ...._zo......_ No email r -.............. notification
High shipping costs
...... Failed
deliveryf
0~====~========~========~~========~ Acquisition Rrst impressions Product selection Payment and fulfilment
Depth of relationship
470 Part 3 Digital marketing: implementation and practice
Figure 10 .5 Multichannel performance scorecard example for a retailer
Results (6) Customers & stakeholders (5) • Revenue • Overall customer satisfaction • Multichannel contribution • Customer propensity to defect • Degree multichannel sells up • Customer propensity to purchase • Costs per channel • Customer perception of added value • Degree of sweating assets • Integration of customer experience • Multichannel infrastructure costs
Core processes (3) People and knowledge (4) • Productive multichannel usage • Staff satisfaction • Price (relative to competitors/other • Appropriate behaviours 'Uving the brand'
channels) • Willingness to diversify/extend the brand • Quality of integrated customer view • Knowledge of target customer
Source: Wilson (2008)
He suggests the most important aspect of multichannel measurement is to measure 'channel cross-over effects'. This involves asking, for example: 'How can the impact of a paid seard1 campaign be measured if it is as likely to generate traffic to a store, salesforce or call centre as to a website?' and 'How can the impact of a direct mail campaign be tracked if it gene- rates website traffic as well as direct responses?'.
An example of a ba.lanced scorecard-style dashboard developed to assess and compare channel performance for a retailer is presented in Figure 10.5.
Stage 3: Tools and techniques for collecting insight, running processes and summarising results
Organisations need to select the most appropriate tools for collecting and reporting met rics that meet requirements, such as reporting of marketing performance, accuracy, analysis and visualisation tools, integrat ion with other marketing information systems (import, export and integration using XML standards), ease of use, configuration (e.g. creation of custom dashboards and email alerts), support quality, cost of purchase, configuration and ongoing support.
Techniques ro collect metrics include the collection of site-visitor activity data such as that stored in web analytics systems such as Google Analytics and Adobe Analytics and in site log files; and d1e collection of metrics about outcomes such as online sales or email enquiries and traditional marketing research techniques such as questionnaires and focus groups, which collect information on the customer's experience on the website. We start by describing methods for collecting site-visitor activity data and then review more traditional techniques of market research.
Selecting a martech stack for a business
Since the creation of the web, many market ing and digital marketing technology services have been crea ted that provide insight for the marketer on marketing effectiveness and also enable them to run marketing operational processes to deliver more relevant messages to audiences. Collect ively these are now called ' marketing techno logy' (marrecl1 for short). Many of these are now cloud-based software as service tools (SaaS) that don't require
software to be instal led within a business, bur the insight and management controls are accessed via a browser. For example, Google Analytics enables businesses to measure their website effectiveness and also test and personalise experiences with Google Optimize.
Activity 1 0 .1
Chapter 10 Evaluation and improvement of digital channel performance 471
Likewise, content management systems for editing content are now accessed via browsers and contain insight on engagement with content, with options ro personalise experiences.
There are now thousands of poremial marrecl1 rools that businesses can use, as identified by Scott Brinker (Brinker, 2017) . This presents a challenge to businesses that want ro rake advantage of the insight, but only want to select a limited number of tools and integrate the data from them. It can be difficult for newcomers ro digital marketing ro understand which are the best types of solution and whether rhey arc worthwhile beyond the main website analytics systems such as Google Analytics o r Adobe Analyrics, which also include dash- boards. Complete Activiry 10.1 to explore the rypcs of insight tools and operational market- ing technology available to marketers today.
Reviewing the range of martech and digital insight tools
Purpose
To review how different types of insight can be harnessed to improve digital marketing.
Activity
1 Review the Digital Marketing Tools wheel shown in Figure 10.6 and the infographic categorising 5,000 tools created by Brinker (2017) to gain an idea of the range of insight tools available.
Figure 10.6 Thirty categories of martech and insight tools structured across the customer lifecycle
Soun::e: Smart lnsaghts (2017)
4 72 Part 3 Digital marketing: implementation and practice
Martech stack A combination of different software services or tools used to run all marketing operations across mu~iple channels including customer acquisition, conversion, retention. team communcations and to deiYer customer and market insiglt and repo<fug.
Split up your groups so that you select a range of different types of business, e.g. small business, retailer, financial services, travel company, 828 service and con- sumer brand.
3 For your selected business use a tool such as BuiltWith.com, SimilarTech or the Chrome extension Wapalyzer to see the martech installed.
4 Visit the full infographic containing examples of the tools at http://bit.ly/smartdigital tools and discuss and categorise the tools by importance for a small business, choosing one of these options:
A: Essential 8: Useful for optimisation C: Less valuable for smaller businesses.
For example, categories 2 (Digital Analytics), 11 (Content Management systems) and 29 (email service providers) could all be seen as essential for all businesses.
T he concep t of a martech stac k has grow n o ut of rhe catego risatio n o f ma rketing tech no logy based o n Sco t t Brinker's la ndscape and t he Smarr Insigh ts too ls whee l. Busi - nesses have always co nsidered th eir portfolio of different rypes of business IT applicat ions for operations such as fi nance, logist ics and marketing, bur traditional ly rhey have been controlled by IT rea ms who have m anaged a limited number of 'enterprise resource plan- ning' systems such as SAP. With the growth in cloud-based Sa aS, it has become far easier for individual departments, and in particular marketing, who need ro manage many digi - tal marketing channels such as search and social media marketing, to deploy thei r own solutions.
As businesses have deployed more marrech sen·ices, the need to manage and integrate them has been highlighted . Many companies simply select individual marketing technologies ro meet immediate operational needs of managing their marketing. This can quickly lead ro a proliferation of tech within a company that gives these potential ·marrech sins', almost all givi ng rise to a lack of integration. Potential, common problems include:
• No long-ter m plan for martech. A haphazard approach of implementing different tools for different functions, sometim es referred to as ' Random Acts of Technology', RAT
• In su ffi cient rigour wh en evaluating martech . To select the most suitable technology requires the ti me fo r a structured review by so meone who is e..xperienced in IT o r software selection a nd business case devel optuent. If the rime o r sk ills a ren't avai lable fo r rh is, then the strength o f rhe vendo rs cla ims may sway the decision w ithout suffic ient trial o f solu- tions o n o pera tio nal p rocesses.
• Techn ology so lutions fro m different vendo rs aren' t integrated . With mu lti ple too ls, da ta silos ca n develop w here you ca n't extract or combine data from d iffere nt app licatio ns without man ual export processes.
• D ara is inco nsistent. A single customer view or '360 degree view of the customer' is an aspiration for most businesses, bm the reality is often that data in differenr analysis sys- tems will report different values, so there is no 'single version of the truth'.
• C usto mer jo urneys can' t be tracked acro ss channels. Customer journeys a re now more complex than ever before, with a proliferation of digital marketing channels adding to traditional ofHine channels rhat remain important for most businesses. Then there are cross-device journeys as customers consume content on mobile and desktop devices.
• New ma rrech isn 't rolled-o ut with sufficient upd ates to tr aining and p rocess. \'(lhile rhe appeal of cloud-based SaaS is rhar they can often be installed by simply ragging rhe sire with relevant javascripr, the reality is rhat far more is involved. Consider Coogle Analyr- ics. In ou r experience, many have it running on their sire, yet have nor cusromised ir,
Site-visitor activity data Information on content and services accessed by e-commetee site visitors.
H it Recorded for each graphic or text file requested from a web server. It is not a reliable measure for the number of people viewing a page.
Page impres.sion A more reliable measure than a hit, denoting one person viewing one page. Also known as page view.
Unique visitors Individual visitors to a site meast.red through oookies or IP addresses on an incividual computer.
Chapter 10 Evaluation and improvement of digital channel performance 473
run trai ning or pu r in place the ch anges to review and reporting processes needed to get t he most from i r.
• Ret urn on marketing technology is n ' t reviewed. We have mentioned that the business case for adoption isn't sufficiently defined. The other side of d1is is that the loop isn't dosed, so that, post adoption, rhe effectiveness of marrcch in improving marketing opera- tions and resuJrs isn't considered . Often there are er rors in deployment rhar can lead to inaccuracies in data quality, which can hinder the performance of marketing.
Collecting website visitor activity data
Site-vis itor a ctivity data captured in web analytics systems records the number of visitors on the sire and the pa ths or dicksrreams they ra ke through rhe site as they visit different content. The terms used to measme visitor activity are summarised.
In the ea rly days of Internet marketi ng, in rhe mid-1990s, this inform ation was typical ly coll ected usi ng log files. The se rve r-based log file is added to every ti me a user downloads a piece of infor mat ion (a hit) such as a page o r im age w ithin rhe page . These are no lo nger used by most organisations, altho ugh rhey may be u sed fo r techni ca l rev iews o f serve r lo ad a nd search ro bo t crawling.
Desp ite their usage by some poorly in for med commen tators in t he med ia, bi ts are n ot a useful measme of website effecti veness si nce if a page consists of ten graphics, plus text , this is recorded as 11 hits. Page impressions or page views and un ique vi s itors are better measu res of site act ivity. Audi t in g companies such as ABC electronic (www.abc.org. uk), which audit sires for the purpose of proving the number of visitors to a si re to advertisers, use unique visitors and page impression as the main measures.
An example of visitor volume to a website usi ng different measures based on real, repre- sentative data for one monm is presented in Figure 10.7. You can see how hits are much higher than page views and unique visitors and a re quite misleading in terms of the 'opportunities to see' a message. \Y/e can also learn from the ratio between some of these measmes - the figu re indicates:
• Pages per visit (PPV). This is the average number of pages viewed per visitor to a site (this is indicative of engagement with a sire since the longer a visitor stays on a 'sticky si re', the higher this value will be). PPV is a more accurate indication of stickiness than dura- tion on a si te in min utes since this figure is skewed upwards by visitors who arrive o n a site and are inactive before their session rimes out ar 30 minutes.
• Visits per (uniq ue) visitor (VPV). This suggests the frequency of site visits. Readers will realise that th is val ue is dependent on rhe period that dara are collected over. These da ta a re repo rted fo r a mo nth , dming w hich rime o ne would not expect ma ny returning visi- to rs . So it is often mo re rel evant to present th ese data across a q ua rte r o r a year.
Figure 10.7 Examples of different measures of visitor volume to a website
Hits e.g.
Page views e.g.
I Visitor sessions e .g.
Visitors e.g.
= All files downloaded = 4,000,000
= 'Impressions' viewed = 1,200,000
= Visits = 120,000
= Unique visitors = 60,000
I PPV = 10
VPV : 2 I
4 7 4 Part 3 Digital marketing: implementation and practice
Digital marketing insight 1 0.1 Focus on measuring social media marketing
Social media marketing has its own range of specialist measures that can appear con- fusing, but are best understood in the context of a combination of website and PR measures. These show the volume, quality, sentiment and value of interactions. Analyst Altimeter (2010) has created a useful framework (shown in Figure 10.8) that helps map out different social media measures in the context of level of business management.
You can see that there are three levels of KPis:
• Business-level KPis to measure contribution from social m edia. These KPis include contribution to revenue through direct sales attributed to social media. Softer measures include reputation and customer satisfaction (CSAT).
• Reach and influence KPis to review reach, share-of-voice and sentiment. These show the relative comparison of a brand's reach.
• Engagement KPis to manage social media. These are the easiest measures to collect, but the least valuable since they don't directly show contribution to business value. Although easy to collect, data on interaction with social sites is often supplied separately by the owners of the different social presence and tools for managing social interaction.
A new class of social analytics tools have been created to bring this data together. Figure 10.9 shows an example from the social media management tool Hootsuite, where sharing of shortened URLs linking to different social media sites has driven traffic back to a main website. Direct traffic is where visitors click direct through from a social media messaging application such as Hootsuite or Tweetdeck™ to the site.
A common question within social media is how to assess the value of a consumer connecting with a brand, by liking on Facebook or following on Twitter. Since the track- ing of social media can't show what an individual does on the network, specific value is difficult to establish. Instead, what we can assess is the relative purchase rates of visitors from social media sites to websites compared to other channels using measures
such as conversion rate and revenue per visitor.
Figure 1 0.8 A framework for different measures used to evaluate and manage social media marketing
Role
Business executives
Metrics Specific data (examples)
Business Revenue, metrics reputation. CSAT
L) ____ stak_B_~_~_:SS_ders ____ )) ~~~ia ) Share of voice. resonation, WOM. support resportSe, lr\Sights Intake
L) _ ___ eom_and_mun_~_y_manag_·_es_ers ____ ) ) Eng:"ent ) /_---~-~-~_.;,_!:,_s_._~~-10-~--•-·ns_' _ _ ..J
Souw: Altimeter (201 0) with perrnissDl {Crealille Commons)
Design for analysis (DFA) The required measures from a sile an1 considered dumg design to better understand the audoenoe of a site and their decision poi1ts.
Chapter 10 Evaluation and improvement of digital channel performance 475
Figure 10.9 Example of measure from Hootsuite application for measuring social media marketing
- Ow (llct ----------- ... ~ ~-.--·---· -·- ·-----·---...... _, ----
- [\ ~· f!
.... ~ ...... ,. 1)-pc a I leader hen: ... .._. .. ~ ........
-·--·--. .. I :ee -...... -- ··-.. M
-
-· -·-----
....... _...._ .
•
l
-... ... -••• .. -••
Other information giving derailed knowledge of customer behaviour that can be reponed by any web analytics package includes:
• top pages; • entry and exit pages; • path or clickstrearn analysis showing the sequence of pages viewed; • country of visitor origin (actually dependenr on the location of their ISP); • browser and operating system used; • referring URL and domain (where the visitor came from).
Design for analysis
Measurement is often highJighred as a.n issue once the first version of a sire has been 'up and running' for a few months, and em ployees starr ro ask questions such as 'How many custom- ers are visiting our site, how mru1y sales are we achieving as a resu lt of our site and how can we improve the si re ro achjeve a return on investment?' . The co nseq uence of tbis is that performance measurement is something that is often built into nn online presence retrospec- rivel)( Preferable is if a rech11jque known as design for analysis (D FA) is designed into the sire so companies can better understand rhe rypes of audience nnd their decision points. For example, for Dell (www.dell.com), the primary navigation on the home page is by customer type. This is a simple example of DFA since ir enables Dell m estimate the proportion of different auruences to irs site and, ar rhe same time, connecr them with relevant content.
Other examples of DFA include:
• breoong up a long page or form inro different parrs, so you can see which parts people are interesred in;
• a URL policy (see Chapter 8) used to recommend entry pages fo r primed material; • group conrent by auruence rype or buying decision and serring up conrenr groups of
related contenr wirhill web analyrics systems;
476 Part 3 Digital marketing: implementation and practice
AB testing AlB or AB testing refers to testing two different versions of a page or a page element such as a heading , image or button for effectiveness. The alternatives are served alternately w ith the vis~ors to the page randomly split between the two pages. Changes in vis~or behaviour can then be compared using different metrics such as cfick- through rate on page elements like buttons or images, or macro- conversion rates. such as conversion to sale or sign-up.
Control page The page against which subsequent optimisation will be assessed. Typically a current landing page. When a new page performs better than the existing control page. it becomes the control page in subsequent testing. Also known as 'champion-challenger'.
• measuring attrition at different points in a customer journey, e.g. exit points on a five- page buying cycle;
• a single exit page ro linked sires.
Structured experiments using AB and multivariate testing
Often sire owners and marketers review ing rhe effectiveness of a site will disagree and t he on ly method to be certain of the best-performing des ign or creative alternatives is rhrough designing and running experiments to evaluate the best to use. Mart Round, then director of personalisation at Amazon, speaking at the e-metrics summit in 2004, said t he Amazon ph ilosophy (described fur ther in Case study 10} is:
Data trumps intuition.
AB testing and multivariate testing are two measurement reclmiques that are now avai lab le ro any company through free services such as Google Opt imize, which can be used ro review website effectiveness to improve results.
AB testing In its simplest for m, AlB or AB testing refers to testing two different versio ns of a page or a page element such as a heading, image or burto n. Some members of the site are served alterna tely, wit h the visito rs to the page randomly sp lit between the two pages. Hence it is sometimes cal led ' live sp lit testing' . The goal is to increase page or sire effectiveness against key performance indicators including click-th rough rate, conversion rates and revenue per visit. To review the effectiveness o f new variants, kn owledge of st atistical significance con- fidence levels is needed since increases in success indicators could be misleading if they are only small variations or a decision is taken too early. There are special ist services for running AB rests such as Optim izely™ (www.optimizely.com), ConverrTM (www.convert.com) and Unbou nceTM (www.unbounce.com). Alternatively, businesses can use the free Optimize AB testing service available in Google Analyt ics. These services all advise on statistical signifi- cance - for examp le, reporting a wil11ler a t the 95 per cent confidence level.
When completing AB testing, new 'cl1allenger' pages are compared roan existing baseline or control page (or audience sample). Two new alternatives can be compared to a control page, which is known as an ABC rest. Different page elements th at can be varied to improve page effectiveness are shown in Table 10.1.
An examp le of d1e power of AB resting is an experiment Skype performed on irs main top bar navigation, where it found that changi ng the main menu options 'Cal l Phones' to 'Skype Credi t' and 'Shop' to 'Accessories' gave an increase of 18.75 per cent revenue per visit (Skype was speaki ng at the 2007 e-met rics su m mit). That's significant when you have hun - dreds of m illions of visi tors! It also shows the importance of being direct with navigation and simply describing the offer available rather tha n the activity.
Multivariate testing Multivariate testing is a more sophisticated form of AB resting that enables simultaneous testing of pages for different combinations of page elements that are being rested. This ena- bles selection of the most effective combination of design elements to achieve the desired goal.
An example of a multivariate rest is shown in Mini case study 10.1 .
Table 10.1 AB test example
Test A (Control) B (Test page) I Test 1 Original page New headline, existing button, existing body copy
Test2 Original page Existing headline, new button, existing body copy
Test 3 Original page Existing headline, existing button, new body copy
Chapter 10 Evaluation and improvement of d igital channel performance 477
Mini case study 10.1 Multivariate testing at National Express Group increases conversion rates
National Express™ is one of the most recognised transport brands in the UK. The distinctive white coaches are in operation daily, visiting one of the company's 1 ,000 destinations. They are part of the wider National Express Group, which employs 41 ,000 people worldwide with coach services in Spain, Morocco, North Africa, Bahrain and North America and train services in the UK and Genmany.
A significant proportion of ticket bookings are made online through the company's website at www.nation alexpress.com/.
The company used multivariate testing service Maxymiser from Oracle to run an experiment to improve conversion rates of a fare-selection page that was the penultimate step in booking. The analysis team identified a number of subtle alterations to content and calls-to-action on the page with the aim of stimulating visttor engagement and driving a higher percentage of visitors through to successful conversion without changing the structure of the page or the National Express brand identity. In order to aid more effective up-sell to insurance add-ons, changes to this call-to-action were also proposed.
It was decided that a multuvariate test would be the most effective approach to detenmine the best perform- ing combination of content. The variants jointly developed by Maxymiser and the client were tested with all live site visttors and the conversion rate of each combination monitored; 3,500 possible page combinations were tried , and during the live test the underperforming combinations were taken out to maximise conversion rates at every stage.
At the end of the testing period, after reaching statistical validity, results gave the best combination of elements, showing a 14.11 per cent increase in conversion rates for the page- i.e. 14.11 per cent more visitors were sent through to the fourth and final step in the registration process, immediately hitting bottom-line revenue for National Express. (Figure 1 0.1 0).
Figure 10.10 Results of multivariate testing for National Express
COntent MaxyboxA Maxybox B MaxyboxC Maxybox D Maxybox E
Ufton combination control
1 Variant 3 Variant 2 Variant 4 Variant 3 Variant 1 14.11%
2 Variant 3 Variant 3 Variant 4 Default Def ault 14.09%
3 Variant 6 Variant 3 Variant 4 Default Default 11.15%
4 Variant 3 Variant 3 Variant 2 Defau lt Variant 3 10.57%
Default content Variant 3 Variant2 Default Default Default 0.00%
Conversion rate uplift by page com bination:
1 14.11%
2 14.09%
Page 3 11.1 5%
combination 1------------------'
4 10 .57%
Default 0 %
0% 2% 4% 6% 8% 10% 12 % 14% 16%
Source: Oracle Marketing Cloud Customer Success Story, https:J/www.oracle.com/marketingcloud/customerslsuccess-stories/national- express.html (accessed May 2018)
478 Part 3 Digijal marketing: implementation and practice
Running and managing structured tests
Every test should have a hypothesis, for e.xample:
If I do 'X' I think it will improve 'Y'
Often imprm·ements will relate to conversion rates, bur we may measure other merrics on a page such as bounce rare.
Your analysis should lead you to rbe areas of the on-sire customer journey that you think have the greatest issues and scope to deliver the greatest improvements. So, the process of running suuctured tests involves identifying page types and page elements that are most likely to yield improvements.
Click stream analysis and visitor segmentation
Cli ckstrea m analysis refers to detailed analysis of visitor behaviour in order to identify improvements to the site. Each web analyrics tool differs slightly in its reports and termino- logy, but all provide similar reports to help companies assess visitor behaviour and diagnose problems and opportun ities. Ta ble 10.2 gives an indication of the type of practical questio ns asked by web analyst and consultant Dave C haffey (www.smartinsights.com) when reviewing clients' sites.
Table 10.2 A summary of how an analyst will interpret web analytics data. The letters 'GA' represent Google Analytics (www.google.com/analytics), one of the most widely used tools
Analyst question
How successful is the site at achieving engagement and outcomes?
Where are visitors entering the site?
What are the sources of visitors (referrers)?
What is the most popular content?
Typical web analytics report terminology
Conversion goals (GA) Bounce rates (GA) Pages/visits (GA)
Top entry pages Top landing pages (GA)
Referrers Traffic sources Filters set up to segment visitors
Top content (GA)
Diagnosis analyst used to improve performance
Is engagement and conversion consis- tent with other sites in sector? What are maximum engagement and conversion rates from different referrers?
How important is home page compared to other page categories and landing pages? Does page popularity reflect product popularity? Review messaging/conversion paths are effective on these pages? Assess source of traffic, in particular keywords from search engines, and apply elsewhere
Are the full range of digital media chan- nels relevant for a company represented? Is the level of search engine traffic con- sistent with the brand reputation? What are the main link partners driving free traffic (potential for more)?
Is page popularity as expected? Are there problems with findability caused by navigation labelling? Which content is most likely to influence visitors to outcome? Which content is most popular with returning visitors segment?
Analyst question
Chapter 10 Evaluation and improvement of digital channel performance 479
' Typical web analytics report terminology
Diagnosis analyst used to improve performance I
Which are the most popular findability methods?
Site search (GA) How popular are different forms of navi- gation, e.g. top menu, sidebar menus, etc? What are the most popular searches? Where do searches tend to start? Are they successfully finding content or converting to sale?
Where do visitors leave the site? Top exit pages (GA) Are these as expected (home page, About Us page, transaction completion)? Are there error pages (e.g. 404 not found) that cause visitors to leave?
Which clickstreams are taken? Path a na lysis Top paths (GA)
How can attrition in conversion fu nnels be improved?
Forward path analysis Reviews the popularity of subsequent cicl<s that occLX from a page. This form of analysis is most beneficial from Important pages such as the home page, product and directory pages. Use this technique to identify messaging/navigation combinations that work best to yield the most clicks from a page.
Reverse path analysis Reverse path analysis indicates the most popular oombination of pages and/or calls-to- action that lead to a page. This is partlcUlar1y useful for transactional pages such as the first checl<out page on a consuner site: a lead genemtion or contact us page on a business-to-business srte: an email subscnption page or a cal-me-back option.
Path analysis
What does forward path analysis show are the most effective calls-to-action? What does reverse path analysis indi- cate about the pages that influence sales?
Aggregate dickstreams are usually known within web a n a lyrics softwa re as forward or reverse paths. This is a fairly advanced form of analysis, bU£ the principle is straightforward - you seek to learn from the most popular paths.
Viewed at an aggregate level across the sire through 'top paths' type reports, this form of clickstream analysis often doesn't appear that useful. It highlights, typically, paths that are expected and can't really be influenced. The top paths are often:
• H ome page: Exit
• H ome page: Contact Us: Exit
• News page: Exit.
Click stream analysis becomes more actionable when the :malyst reviews clickstreams in th e context of a single page - this is forward path analysis o r reverse path analysis .
On-site search effectiveness On-site search is aJJot ber crucial part of clicks t ream ana l ysis on many sites since it is a key way of finding content, parric ululy in retai l e-commcrce s ites, so a detai led search analysis will pay dividends. Key search met rics to consider arc:
• numbe r of searcl1es; • average number of searches per visitor or sea rch e r;
• percentage of searches returning zero results; • percentage of site exits from search results; • percentage of returned searches clicked; • percentage of returned searches resulting in conversion to sale or other outcome;
• most popular search terms - individual keywords and keyphrases.
Visi tor segmentation Segm entatio n is a fundamental marketing approach, but it is often difficult within web analyrics to relate customer segments to web behaviour because the web analytics data isn't integrated with customer or purchase data.
480 Part 3 Digital marketing: Implementation and practice
Internet-based market research The use of online questiomaims and focus groups to assess rustomer percepbonS of a website or broader markemg issues.
However, all analytics systems have a capability for a different bur valuable form of segmentation where iris possible ro create specific filters or profiles ro help understand one
rype of sire visitor behavioUL Examples of segments include:
• First-rime visitors or returning visitors.
• Visitors from different referrer types, including: • strategic search keyphrases, brand keypbrases, ere.; • display advertising.
• Converters against non-converters. • Geographic segmentation by country or region (based on TP addresses). • Type of content accessed, e.g. are some segments more likely to convert? For example,
speaking ar Ad Tech London '06, My Travel reponed rhar ir segments visitors inro:
• sire flirt (two pages or fewer); • si re browse (two pages or more); • saw search results; • saw quote;
• saw payment derails; • saw booking confirmation detaiJs.
Strategic data
Performance management systems for senior managers will give the big picture presented as scorecards or dashboards showing trends in conrribution of digital channels to the
organisation in terms of sales, revenue and profitability for different products. Figure 10.11 summarises OperarionaJ, Tactical and Strategic options for reviewing performance.
Marketing research using the Internet and digital media
In ternet- based marketing research can help determine the influence of a website and
related communications on customer perception of the company and irs products and
Figure 10.11 Different types of data within a performance management system for Internet marketing
0 ·c;, Q) .. ~
IU 0
- ill ~ C:>, o _
- IV 1; e i IV Q..tl
o I
Referreror campaign
data
Performance management
systems
'Management scorecards
and dashboards'
Audience data (reach, characteristics,
opinions)
Ufetime value models
Site or clickstream
data
Customer response and profile data
Sales transactions
(legacy)
- ~--------------------------------------------------~
Chapter 10 Evaluation and improvement of digital channel performance 481
services. But it also bas wider applications of gaining feedback from customers about a brand and how it could develop in future. Smart Insights (2010) identifies these five different classes of online feedback tools:
1 Website feedback tools. Provide a permanent facility for cusromers to give feedback by prompts on every page. They are run conrinuously ro enable continuous feedback, including ratings on page content and also products and services.
2 Site-user intent-satisfaction surveys. These rools measure rhe gap between what the user had hoped to do on the site and what they actually achieved. We ga,·e the example of 4Qs in Chapter 7 that covers four questions ro assess sire effectiveness.
3 Crowdsourcing product-opinion software. These are broader than web feedback, ena- bling customers to comment abom porenrial new services. This is the approach used by Dell in the ldeaStorm (www.ideastorm .com).
4 Simpl e page o r concept feedback tools. Again, a form of crowdsourcing, these tools give feedback from an online panel abom page layout, messaging or services.
5 General online survey tools. Tools such as Zoomerang® (www.zoomerang.com) and Survey- Monkey™ (www.surveymonkey.com) enable companies ro survey their a udience at a low cost . The fu ll options for conducting survey research include interviews, questionnaires and
focus groups, as summarised in Table 10.3. Each of these techniques can be conducted offline or online.
We will now briefly review the strengths and we::tknesses of the different research tech- niques and some approaches to best practice.
Questionnaires and surveys Malhotr3 (1999) suggested that Internet surveys using questionnaires would increase in popularity since the cost is generally lower, they can be less intrusive and they have the ability to rarget specific populations. Register eta/. (2014) confirmed that lnrernet surveys are fast becoming the preferred mode for survey delivery as they afford researchers com·enienr use of design options such as 'forced answering' (FA) rhar can virtually eliminate item non- response error.
However, a recent review of the technique by Stern eta/. (2014) shows that the Internet has failed to deliver in rerms of response rates and it can be more challenging to get a representative sample. Questionnaires often rake rhe form of pop-up surveys. The key . ISsues are:
A Encouraging participation. Techniques that can be used are: • interruption on entry- a common approach where every 100th customer is prompted; • continuous, for example 'click on a burron ro complete survey'; • o n registration on-sire the customer ca n be profiled; • after an activity such as sa le or customer support, the customer ca n be prompted for
their opinion about the service; • incentives and promotions {this can also be executed on independent sites); • by email (an email prompt to visit a website ro fi ll in a survey or a simp le email survey) .
B Stages in execut ion. It is suggested tha r rh ere arc five stages to a successful questionnaire survey: 1 attract (button, pop-up, email as above); 2 incentivise (prize or offer consisrem with required sample and audience); 3 reassure (why the company is doing it- to learn, nor roo long and that confidentiality
is protected); 4 design and execute (brevity, relevance, position); 5 follow-up (feedback).
C D esign. Grossnickle and Raskin (2001) suggest the following approach ro structuring . .
quesnonnaues: • easy, interesting questions first; • duster questions on same topic;
482 Part 3 Digital marketing: implementation and practice
Table 10.4 A comparison of different online metrics collection and research methods
Technique
Server-based log file analysis of site activity
Browser-based site activity data
AB and multivariate testing
Panel activity and demographic data
Outcome data, e.g. enquiries, customer emails
Online questionnaires (Customers are prompted randomly - every nth cus- tomer or after customer activity or by emaiQ
Online focus groups Synchronous recording
Mystery shoppers Example is customers are recruited to evaluate the site, e.g. www.emystery shopper.com
Strengths
Directly records customer behaviour on site plus where they were referred from Low cost Gives insight on robot crawling for SEO
Greater accuracy than server-based
analysis Counts all users, ct. panel approach
Structured experiments to review influence of on-page variables (e.g. messaging and buttons) to improve conversion from a website
Provides competitor comparisons Gives demographic profiling representative Avoids undercounting and overcounting
Records marketing outcomes
Can record customer satisfaction and profiles Relatively cheap to create and analyse
Relatively cheap to create
Structured tests give detailed feedback Also tests integration with other chan- nels such as email and phone
• flow topic from general to specific;
Weaknesses
Not based around marketing outcomes such as leads or sales Does not directly record channel satisfaction Undercounting/overcounting Misleading unless interpreted carefully Most site analytics tools are now browser based
Similar weaknesses to server-based technique apart from accuracy Umited demographic information
Often requires cost of a separate tool or module from standard web analytics package Content management systems or page templates may not support AS/multi- variate testing
Depends on extrapolation from data-limited sample that may not be representative
Difficulty of integrating data with other methods of data collection when ser- vice collected manually or in other information systems
Difficulty of recruiting respondents who complete accurately Sample bias - tend to be advocates or disgruntled customers who complete
Difficult to moderate and coordinate No visual cues, as from offline focus groups
Relatively expensive Sample must be representative
I
• flow topic from easier behavioural ro more difficult attitudinal questions;
• easy questions last, e.g. demographics or off-purring questions.
Typical questions that can be asked for determining the effectiveness of lnrernet marketing are:
• Who is visiting the site? For example, role in buying decision? Online experience? Access location and speed? Demographics segmem?
• Why are they visiting? How often do they visit? \Vhich information or service? Did they find it? Actions taken? (Can be determined through web anaJyrics).
• What do they think! Overall opinion? Key areas of satisfaction? Specific Likes or dislikes? What was missing that was e.xpecced?
Chapter 10 Evaluation and improvement of digital channel performance 483
Focus groups Malhotra (1999) noted that rhe advantage of online focus groups is rhar they ca n be used ro reach segmenrs that are difficuJr ro access, such as doctors, lawyers and professional people. This author also suggests rhar costs are lower, they can be arranged more rapidly and can bridge the distance gap when recruiting respondenrs. Traditional focus groups can be con- ducted where customers are brought together in a room and assess a website; this will typi- cally occur pre-launch as part of rhe prorotyping acriviry. Testing can take the form of random use of rhe site or, more usefully, the users will be given differenr scenarios to follow. Focus groups tend to be relatively expensive :md time consuming, since rather t han simply viewing an advertisement, rhe customers need ro actually interact with the website. Con- ducting real-world focus groups has the benefit that the reactions of site users can be mmu- rored; the scra tch or slap of the head ca nnot be monitored in the virtual world!
Mystery shoppers Real-world measurement is also important since rhe Inrernet channd does not exist in isola- tion.lt must work in unison with real-world customer service an d fulfilment. C hris Russell of eDigitaiResearch (www.maruedr.com), a company rhat has compl eted online customer service surveys for major UK retailers and travel companies, says:
we also needed to make sure that the bricks-and-mortar customer service support was actually supporting what the clicks-and-mortar side was promising. There is no doubt that an e-commerce site has to be a complete customer service fulfilment picture, it can't just be one bit working online that is not supported offline.
An eMyster yShopper survey involves shoppers nor only commentiJlg on site usability, but also on the service quality of email and phone responses together with product fulfilment. Mystery shoppers rest these areas:
• site usability; • e-commerce fulfilment; • email and phone response (time, accuracy); • impact on brand .
( Content management _p_ro_c_e_s_s _______ _ _] As part of the process of continuous improvement in on line marketing, it is imporranr ro have a clea rl y defined process for making changes to rhe on line presence of a company. If pages rema in static, as is t he case with so me brochureware sires we sti ll see, then the oppor- nmity to engage customers and prospects with a brand is missed. With sea rch engines and soc ial med ia sites featuring real-rime data posted in blogs, companies that have a static sire are miss ing an oppo rtunity to get better visi bility. A static site a lso has a missed opportu- nity to make the si re more effective a r generati ng va lue for a business by increasing conver- sion rates using the AB and multivariate resting approaches we talked abou t in the last secnon.
The key to keeping a website dynamic is ro have a clear content and communications strategy based on a reguJarly updated content or social hub, as we have seen in previous chapters. The site and content update process should be understood by all staff contributing content to the sire, with their responsibilities clearly idenrified in their job descriptions. To understand the process, consider rhe main stages im·olved in publishing a page. A simple model of the work involved in maintenance is shown in Figure 10.12. It is assumed that the needs of the users and design features of the sire have already been defined when the site was originally created (as described in Chapter 7). The model only applies to minor updates
484 Part 3 Digital marketing: implementation and practice
to copy, or perhaps updating producr or company information. The different tasks involved in the m:tinrenance process are as follows:
1 Write. This stage involves writing rhe marketing copy and, if necess:try, designing rhe layout of copy and associated images.
2 Review. An independent review of rhe copy is necessary ro check for errors before a document is published. Depending on the size of organisation, review may be necessary by one person or several people covering different aspects of content quality such as corporate image, copy- editing text ro identify grammatical errors, marketing copy, branding and legality.
3 Correct . This stage is srraighrfonvard and involves upd:ttes necessary as a result of stage 2. 4 Publish (to test environment). The publkation stage involves putting the corrected copy
on a web page that can be checked further. This will be in a rest environment rhar can
only be viewed from inside the company. 5 Test. Before the completed web page is made available over the World Wide Web a final
rest wi ll be required for technical issues, such as whether the page loads successfully on different browsers.
6 Publish (to live environment ). Once the m:tteri:tl ha s been reviewed and tested and is signed off as satisfactory, it will be published to tht: m:tin website and wi ll be accessible by customers.
How often should content be updated?
Website content needs to be up to date, in line with customer expectations. The web is perceived as a dynamic medium and customers are likely to expect new information to be posted to a sire straightaway. If material is inaccurate or 'stale' then the customer may nor
ren.rn to the sire. After a rime, the information on a web page naturally becomes outdated and will need
to be updated or replaced. It is important to have both a comenr calendar for publishing furure conrenr and a mechanism defining what triggers this update process and leads to the cycle of Figure 10.12. The need for material to be updated has several facets. Trigger proce- dures should be developed such that when price ch:tnges or product specifications are updated in promotional leaflets or catalogues, these changes are :tlso reflected on the
Figure 10.12 A web document review and update process
Write
Publish Review
Test Correct
Publish
Editorial calendar A plan for scheduling the creation of new or updated content for different audiences to support business goals for new visitors or Increased conversion as part of content marketing.
Chapter 10 Evaluation and improvement of digital channel performance 485
website. Wi rhour procedures of this type, it is easy for there to be errors on the webs ite. This may soun d obvious, bur the reality is that the people contributing the updates ro the sire will have ma ny orher tasks to complete, and the website can still be a low prior ity.
To ensure sire content remains 'fresh', i.e. relevant for rhe audience and effective for the business, it is useful ro consider different types of content and thei r purpose. Consider, for example, different content types for an online retailer. These will include:
• Product info rm acion: product details on product pages and higher-level groupings of data as category pages. This includes both product descriptions and specifications that are relatively static fo r a given product and product pricing and availability information that is more dynamic.
• Brand content (product brands): content about an individual brand available, as different
products may be grouped together. • Brand content (retailer brand): content about the company, such as irs value propositio n,
trust and his to ry. • Promo tional content: ' promotio n' in this context referring to infor ma tio n abour sales
and discoums. • Support content: info rma tion a bo ur ordering a nd returns, fo r exa mp le. • Community content: user-generated content t hat may be in a com mun ity area o r associ-
ated wi th products as reviews a nd ra t ing. • Blog content: regularly upda ted co ntent ai med at engaging customers and prod ucts, fo r
example showing the la test fashio n trends for a clothing retai ler. This content may also be useful for search engine optimisation.
Now consider which factors will drive updates of different types of content. For product- related informacion, it will be new products and changes to pricing or availability. For pro- motional information, it will be seasonal promotions or other discounts agreed with suppliers. It is a relatively straightforward process to manage these types of coment, bur less clear for content to engage audiences such as blog-related content. For example, should a company publish one blog post a month, week, day or several per day? There is no ' rule-of- rhumb' that helps answer this question for different sizes or types of business. Given the cost of creating content by in-house sraff or external writers , a clear cost- benefit must be estab- lished to determine which update frequency is right and to determine rhe quality of content created . Benefits of a blog, for example, may include new or repeat visitors via social media when content is shared, or new visits from search engine optimisation. Such content may also increase conversion by increasing desire for products by showing how products are used and the benefits they give.
As pa rr of content market in g, which requires th at existing busi nesses rnust act more like publi shers, an editorial calendar can help agree prior it ies and sched ul es fo r d iffe rent coment types.
( Responsibilities for customer experience and site manageme_n_t _______ J Maintenance is relatively easy in a small company with a single person updating rhe website. Although they may be working on many tasks, one person is able to ensure rhar rhe style of rhe whole sire remains consistent . For a large organisation with many different departments and offices in different countries, sire maintenance becomes very difficult, and production of a quality site is only possible when there is strong control to establish a team who all follow the same standards. Srerne (2001 ) suggests that the essence of successful maintenance is to have clearly idenrified responsibilities for different aspects of updating the website. The questions ro ask are:
• Who owns the process? • Who owns the content?
Editorial calendar A plan for scheduling the creation of new or updated content for different audiences to support business goals for new visitors or Increased conversion as part of content marketing.
Chapter 10 Evaluation and improvement of digital channel performance 485
website. Wirhour procedures of this type, it is easy for there to be errors on the website. This may sound obvious, bur the reality is that the people contributing rhe updates ro the sire will have many orher tasks to complete, and the website can still be a low priority.
To ensure sire content remains 'fresh', i.e. relevant for rhe audience and effective for the business, it is useful ro consider different types of content and their purpose. Consider, for example, different content types for an online retailer. These will include:
• Product informacion: product details on product pages and higher-level groupings of data as category pages. This includes both product descriptions and specifications that are relatively static fo r a given product and product pricing and availability information that is more dynamic.
• Brand content (product brands): content about an individual brand available, as different products may be grouped together.
• Brand content (retailer brand): contem about the company, such as irs value proposition, trust and history.
• Promotional content: 'promotion' in this context referring to information abour sales and discoums.
• Support content: information abour ordering and returns, for examp le. • Community content: user-generated content that may be in a community area or associ -
ated with products as reviews and rating. • Blog content: regularly updated content aimed at engaging customers and products, for
example showing the latest fashion trends for a clothing retailer. This content may also be useful for search engine optimisation.
Now consider which factors will drive updates of differem types of content. For product- related informacion, it will be new products and changes to pricing or availability. For pro- motional information, it will be seasonal promotions or other discounts agreed with suppliers. It is a relatively suaighrforward process to manage these types of coment, bur less clear for content ro engage audiences such as blog-related content. For example, should a company publish one blog post a month, week, day or several per day? There is no ' rule-of- rhumb' that helps answer this question for different sizes or types of business. Given the cost of creating content by in-house staff or external writers , a clear cost- benefit must be estab- lished to determine which update frequency is right and to determine the quality of coment created. Benefits of a blog, for example, may include new or repeat visirors via social media when content is shared, or new visits from search engine optimisation. Such content may also increase conversion by increasing desire for products by showing how products are used and the benefits they give.
As parr of content marketing, which requires that existing businesses rnust act more like publishers, an editorial calendar can help agree priorities and schedules for different content types.
( Responsibilities for customer experience and site manageme_n_t _______ J Maintenance is relatively easy in a small company with a single person updating the website. Although they may be working on many tasks, one person is able to ensure that the style of the whole sire remains consistent. For a large organisation with many different departments and offices in different counuies, sire maintenance becomes very difficult, and production of :1 quality sire is only possible when there is strong control to establish a ream who all follow rhe same standards. Sterne (2001 ) suggests that the essence of successful maintenance is ro have clearly identified responsibilities for different aspects of updating the website. The questions ro ask are:
• Who owns the process? • Who owns the content?
486 Part 3 Digital marketing: implementation and practice
• Who owns the format? • Who owns rhe technology?
We will now consider these in more derail, reviewing the standards required ro produce a good-quality website and the different types of responsibilities involved. (Review of new sire functionality is a strategic issue and was covered in Chapter 4.)
Who owns the process?
One of the first areas robe defined should be the overall process for agreeing new sire con- rent and updating the sire. Bur who agrees this process? For the large company, ir will be necessary to bring together all the interested parries, such as those within rhe marketing department and the site developers- which may be an external agency or the IT department. Within these groupings there may be many people with an interest, such as rhe marketing manager, rhe person with responsibility for Imerner or new-med ia marketing, a commwlica- tions manager who places above-the- line advertising and product managers who manage rhe promotion of individual products and services. All of these people should have an input in deciding on rhe process for updating the website. What, then, is this process? The process will speci fy responsibilities for different aspects of site management and derai l rhe sequence in which rasks occur for updating the sire. A typi cal update process is outlined in Figure 10.12. If we rake a specific example we can illustrate the need for a well-defined process. Imagine rhar a large organisation is launching a new product - promorionallirera- ture is robe distribured ro customers, the media are already available and the company wants ro add information about this product to the website. A recently recruited graduate is charged with putting rhe information on rhe sire. How will this process acmally occur? The
following process stages need to be followed:
1 Grnduate reviews promotional literature and rewrites copy on a word processor and modifies graphical elements as appropriate for the website. This is the write stage in Figure 10.1?.
2 Product and/or marketing manager reviews the revised web-based copy. This is part of
the review srage in Figure 10.12. 3 Corporate communications manager reviews the copy for suitability. This is also pan of
the review stage in Figure 10.12. 4 Legal adviser reviews copy. This is also part of the review stage in Figure 10.12. 5 Copy revised and corrected and rhen re-reviewed as necessary. This is the correct stage
in Figure 10.12. 6 Copy converted ro web format and then published. Thi s will be performed by a technical
person such as a sire developer, who will insert a new menu option ro help users navigate ro the new product. This person will add the HTML formatting and then upload the file using FTP to rhe rest websi te. Tlus is the first publish stage in Figure 10.12.
7 The new copy on rhe site will be reviewed by d1e graduate for accuracy, and needs to be rested on differenr web browsers and screen resolutions if it uses a graphical design different from the standard sire template. This type of technical resting will need ro be carried our by the webmasrer. The new version could also be reviewed on rhe sire by the communica- tions manager or legal adviser at this poinr. This is pnrt of the test stage in Figure 10.12.
8 Once all interested parries agree the new copy is suitnble, the pages o n rhe rest website cnn be transferred to the live website and are then available for customers to view: This is rhe second publish stage in Figure 10.12.
Nore rhar in this scenario, review of the copy at stages 2 ro 4 happens before the copy is actually pur onto rhe rest sire ar stage 6. This is efficient in that ir saves the technical person or webmasrer having ro update the page until the copy is agreed. An alternative would be for rhe graduate to write rhe copy ar stage 1 and then the webmasrer publishes the material before it is re,riewed by the various parties. Each approach is equally valid.
Activity 10.2
Chapter 10 Evaluation and improvement of digital channel performance 487
Content management systems with workflow capabilities are now commonly used to help achjeve review of page updates. Revised copy for a page can be automatically emaiJed ro all reviewers and then the comments received by email can be collared.
To conclude this section, refer ro Acriviry 10.2, which shows a rypical website update process and considers possible improvemenrs.
Who owns the content?
For a medjurn-to-large site where rhe content is updated regularly, as it should be, it will soon become impossible for one person to update all the comenr. It is logical and practical to rustribute the responsibility for owning and developing different sections of the site ro
Optimising a content review process
Purpose
To assess how quality control and efficiency can be balanced for revisions to web content.
Activity
The extract below and Rgure 10.13 illustrate a problem of updating encountered by this company. How can they solve this problem?
Problem description
From the moment the brand manager identifies a need to update copy for the product, the update might happen as follows: brand manager writes the copy (half a day); one day later the web manager reviews the copy. Three days later the marketing manager checks the copy, seven days later the legal department checks the copy, two days later the revised copy is implemented on the test site and two days later the brand manager reviews the test site. The next day the web manager reviews the website, followed by updating and final review, before the copy is added to the live site two days later- and over a fortnight from when a relatively minor change to the site was identified!
Figure 10.13 An example of a content upd ate review process
Brand manager writes copy (1)
Legal dept reviews copy (2)
Web manager reviews test site (5)
Web manager reviews copy (2)
Copy implemented on test site (3,4)
Copy updated on test site (6)
Marketing manager reviews copy (2)
Brand manager reviews test site (5)
New copy live (6)
488 Part 3 Digital marketing: implementation and practice
Content developer A person responsible for updating web pages within part of an organisation.
the people in an organisation who have the best sk ills and knowledge to develop that con - tent. For examp le, in a large fina ncial services company, t he pa n of t he business responsible for a certai n p roduct area sho uld update t he copy referri ng ro their products. O ne person will update the copy fo r each of savings accoum s, mortgages, t ravel insurance, healcl1 insur- ance and inv.estments. For a PC supplier, different content developers wil l be required fo r t he product information, fi nancing, deliver y informa tion a.nd custo mer service faci lities. O nce the ow nershi p of content is distribmed thro ugho m an organisation, it becomes crucial ro develop gui delines a nd standards that help ensure that the si te has a coherent ' feel' and appeara nce. T he nature of these guideli nes is described in the sect ions tha t fo ll ow.
As realisation of content as a st rategic asset grows, more sen ior roles are being created ro manage content quality, as shown by Mi ni case study 10.2: Logitech appoints a comem strategtst.
Mini case study 10.2 Logitech TM appoints a content strategist
Computer peripheral provider Logitech advertised for a content strategist. This job description for a content strategist in a large company helps show us the key aspects of content strategy. These requirements summarise the essence of a sound content strategy:
1 Senior management must understand the importance of content strategy to invest in good-quality resources with high-profile roles.
2 Content must be of exceptional quality to be most effective- the job description says: 'useful, compelling and meaningful'.
3 Involves a strategy for syndication - not limited to company's own site. 4 Blends improving customer experience, customer engagement and SEO. 5 Requires an editorial calendar to manage creation of content. 6 Content quality improved through a continuous process applying analytics and customer satisfaction. 7 Integrates copywriting , web p!latform design and implementation, marketing communications, PR and SEO
resources or teams. 8 Supports goals and essence of company brand.
Content strategist responsibilities
• Drive the development and organisation of content that is useful, compelling and meaningful - directly on Logitech.com and indirectly through distributed content.
• Create user flows , information hierarchies, wireframes and content strategy for logitech.com in support of campaigns, product launches and ongoing improvement.
• Determine content requirements for Logitech.com, inventory existing content, identify gaps, evaluate pos- sible sources for additional material and manage the process of getting that content into production.
• Creatively look for opportunities to improve content, consumer experience and SEO performance. • Manage the logitech.com editorial calendar to proactively keep content useful and up to date. • Use analytics, consumer and usability testing and business requirements to help improve the experience
and the content of logitech.com in the long and short term. • Work with the web, writing, PR and marcomm teams to determine the most effective ways to support cam-
paigns and product launches .on the web. • Lead projects that make our web and component communication more intuitive and useful to consumers
and internal partners. • Work with brand architecture and terminology to guide the effective organisation of products and activities
on logitech.com. • Drive the architecture of and improvements to the internal product content management system (worldwide
product database to fit the needs of the organisation). • Occasionally write or edit content- particularly meta-data, titles, a1t text, and edit general content to optimise
natural search.
Chapter 10 Evaluation and improvement of digital channel performance 489
Content strategist requirements
• Four-year college degree in a relevant field required, Master's degree preferred. • Five to seven years of experience in an information architecture rote, with two to three years working on
complex websites. • Two to three years of experience being directly responsible for content strategy on a dynamic, complex or
ever-evolving website. • Experience with web content management systems, component content management systems (DITA or
otherwise) and authoring systems (XML or other). • Strong strategic, analytical skills with a solid ability to articulate information requirements clearly. • A creative and collaborative approach that elevates the creative and communication opportunities - rather
than straight analysis. • Expertise in content strategy- including strong experience in SEO and keyword analysis as welt as planning
flexible approaches to keep content accurate and fresh. • Accomplishments in the effective use of syndication (in and out) and user-generated content, as well as
working collaborativety with writers and designers. • The ability to be measured by hard metrics - views, time on site, consumer feedback - as well as soft
metrics - support of the brand vision and architecture, consumer perception. • Demonstrated ability to visualise and communicate complex information using Microsoft Visio or similar
software. • Deep experience with all levels of UX strategy and testing- but the ability to act quickly on consumer insights
and best practices. • Solid work ethic, ability to perform under pressure, meet deadlines, prioritise and deliver multiple tasks
on time. • Willing to learn and contribute to a strong team environment • Enthusiastic about the products and the possibilities of Logitech.
Other information Logitech knows the value of strategic communication and content and now we' re expanding our team to make the most of it. The global marketing team needs an expert who is ready to add his or her brain, talent and crea- tivity to the cause of making our content work smarter, harder and around the globe. This is an opportunity for an Wcontent strategy professional to put both strategy and executional excellence into practice every day and make an immediate and visible impact on the efficacy of a global organisation.
This role reports directly to the Global Director of Writing and Brand Architecture, with a direct and ongoing
relationship with the Director of Global Web Marketing.
Source: Job description: Information Architect/Content Strategist for Logitech, posted 29 September 2010 (accessed 2010, no longer available)
Site design template(s) A standard page layout format that is appied to each page of a website !Of partictAar page types, e.g. category pages, product or blog pages.
Who owns the format?
The format refers ro different aspects of the des ign and layout o f the sire , commonl y referred ro as irs ' look and feel ' . The key aim is consistency o f form at across the whole website. Fo r a large corporate sire, with different staff wo rking on different p arts of the site, there is a ri sk that the different areas of the site will not be co nsistent. Defining a clear format or site design templates for the different page or co ntent ry pes means that the qualiry of the sire a nd custo mer experience will be better:
• The site will b e easier to use. A customer who ha s beco me fa miliar with u sing one area of the sire wiiJ be able to confidently use anoth er p art of the sire.
490 Part 3 Digital marketing: implementation and practice
• The design elements of the site will be similar. A user will feel more ar ho me with the sire if different pans look similar.
• The corporate image and branding wiU be consistent. It will be borh consistent with real-world branding (if this is an objective) and sim il ar ac ross rhe entire sire. (Sire design rem plates were revie\>o•ed from a site design perspective in Chapter 7) .
To achieve a si re of thi s quality it is necessary for wrirren standards ro be developed. These may include different standards, such as those shown in Table 10.4. The standard s adopted will vary according to the size of the website and company. Typically, larger s ites, wirh more individual content developers, will req uire more derai led standards.
Table 10.4 Website standards
Standard
Site structure
Navigation
Details
Will specify the main areas of the site, for example products, customer service, press releases, how to place content and who is responsible for each area
May specify, for instance, that the main menu must always be on the left of the screen, with nested sub-menus at the foot of the screen. The home button should be accessible from every screen at the top-left comer of the screen. See Lynch and Horton (1 999) for guidelines on navigation and site design
Applies to
Content developers
Website designer/webmaster usually achieves these through site templates
Copy style and page structure General guidelines, for example reminding those Individual content developers writing copy that web copy needs to be briefer than its paper equivalent and ranking factors for SEO (Chapter 9). Brand tone-of-voice guidance is essential when many people are updating content to ensure consistency. Mailchimp™ have published their tone-of-voice guidance for differ- ent channels (https://styleguide.mailchimp.com/ voice-and-tone/). Where detail is required, perhaps with product specifications, it should be broken up into chunks that are digestible on-screen. Copy and page structure should also be written for search engine optimisation to keyphrases (Chapter 8).
Testing standards Check site functions for: Website designer/webmaster
Brand identity
Process
Performance
• d ifferent browser types and versions • plug-ins • invalid links • speed of download of graphics • spellcheck each page
Specifies the appearance of company logos and the colours and typefaces used to convey the brand message design
Web page or updating an existing page. Who is responsible for reviewing and updating?
Availability and download-speed figures
Website designer/ webmaster and graphic design
All
Staff managing the server
Content management system (CMS) A software tool for creating, editing and updating documents accessed by intranet, extranet or Internet.
Chapter 10 Evaluation and improvement of digital channel performance 491
Who owns the technology?
The technology used ro publish a website is imponanr if a company is ro utilise fully rhe power of the Internet. Many standards, such as those in Table 10.5, need robe managed in addition ro the technology.
As well as issues of integrating systems, there are derailed technical issues for which rhe technical staff in rhe company need ro be made responsible. These include:
• availability and performance of the website server; • checking HTML for validity and correcting broken links; • managing differenr versions of web pages in the rest and live environments and content
management.
Content management systems
Content management systems (CMS) refer ro when software rools (usual ly browser-based software running on a server) permit business users t<) contribute web content, while an administrator keeps control of the format and style of the website and the approva l process. These rools are used ro organise, manage, retrieve and archive information content through- out the life of rhe site.
CMSs provide these facilities:
• Structure authoring: rhe design and maintenance of content structure (sub-components, templates, etc.), web page structure and website structure.
• Link management : rhe maintenance of internal and external links through content change and rhe elimination of dead links.
• Search engine visibility: the cement within the search engine must be srored and Linked such that it can be inde.xed by search engine robots ro add it to their index. This was not possible with some first-generation content managemem systems, bur is typical of more recent content management systems.
• Input and syndication: rhe loading (spidering) of cxrernally originared contenr and rhe aggregation and dissemination of content from a variety of sources.
• Versioning: rhe crucial rask of controlling which edition of ::t page, p::tge element or rhe whole si re is published. Typically this will be the most recem, bur previous editions should be ::trchived and it should be possible ro roll back ro a previous version ::tt the page, page element or site level.
• Secu rity and access control: different permissions can be assigned ro different roles of users ::tnd some content may only be available through log-in derails. l11 these cases, the CMS maintains a list of users. This faci lity is usefu l when a company needs to use the sa me CMS for an intraner, extranet or public Internet sire that may have different levels of permission.
• Publi cati on workflow: content destined for a website needs ro pass through a publication process to move it from the managemem environment to the live delivery environment. The process may involve tasks such as format conversion (e.g. ro PDF), rendering to HTML, editorial authorisation a11d the construction of composite documents in real time (personalisation and selective dissemination).
• Tracking and monitoring: providing logs and statistical ::tnalysis of use to provide perfor- mance measures, tune the contenr according ro demand and protect against misuse.
• Navigation and visu alisation: providing an intuitive, clear and attracti,·e representation of rhe nature and location of content using colour, texture, 3D rendering or even virtual reality.
492 Part 3 Digital marketing: implementation and practice
From this list of fea t ures you can see tha t modern CMS are complex ;~nd many CMS are expensive investments. Some open-source CMS are available, without the need to purchase a licence fee, which have many of t he features explained in this section. The most popular open-source CMS are WordPress™, D rupalTM and D jangoTM. While these or iginated mainly for blogging, rhey can now be used to create more complex sires. For e-commerce sites, MagenroTM is the most widely used open-source system.
Initiatives to keep c ontent fresh
It is often said that up-to-dare content is crucial to site 'stickiness', but fresh content will not h;~ppen by accidem, so co mpanies have to consider approaches that can be used to control the qual ity of informa tion . Generic approaches that we have seen that can work well are:
• assign responsibility for particula r content types of site sections; • make the q uality of web content p roduced part of emp loyees' perfo rm ance appraisal; • produce a ta rget schedule for publica ti on of co ntent; • ident ify eve nts tha t trigger the publica tio n o f new content, e.g. a new prod uct la unch ,
price cha nge o r a press release; • identi fy stages and resp onsibilities in updating - who specifies, who crea tes, who reviews,
wh o checks, who publishes; • meas ure the usage o f content through web a nalytics or get feedback fro m sire users; • :IUdit and publish content to show wha t is u p to da te.
Case study 9 Learning from Amazon's culture of metrics
Context Why a case study on Amazon? Surely everyone knows about Amazon and what it does? Yes, well , that's maybe true, but this case goes under the surface to review some of the ' insider secrets' of Amazon's early success and provide a focus on customers, measurement and improvement that remains today.
Like eBay, Amazon.com was launched in 1995. The name reflected the vision of founder and CEO Jeff Bezos, to produce a large-scale phenomenon like the Amazon river. This ambition proved justified since, just eight years later, Amazon passed the $5 billion sales mark- it took WaiMart 20 years to achieve this. At the time of writing, annual turnover was $135 billion reported for full- year of 2016.
Vision and strategy When it first launched, Amazon had a clear and ambi- tious mission:
We seek to be Earth 's most customer-centric com- pany for four primary customer sets: consumers, sell- ers, enterprises, and content creators.
Today, with business users of its Amazon Web Service representing a new type of customer, Amazon says:
this goal continues today, but Amazon 's customers are worldwide now and have grown to include millions of Consumers, Sellers, Content Creators, Developers, and Enterprises. Each of these groups has different needs, and we always work to meet those needs, by innovating new solutions to make things easier, faster, better, and more cost-effective.
This focus on the customer has been there from the start: the 1997 SEC filing said Amazon would 'obsess over t he customer'. Success here is shown by consist- ently high ratings at the American Customer Satisfaction Index (www. theacsi.org/the-american-customer- satisfaction-index#homelogo). In the latest 2017 Annual Report, Jeff Bezos of Amazon explains what he calls 'True Customer Obsession' (Amazon, 2017):
There are many ways to center a business. You can be competitor focused , you can be product focused, you can be technology focused , you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most
Chapt er 10 Evaluation and improvement of digital channel performance 493
important. Even when they don't yet know it, custom- ers want something better, and your desire to delight customers will drive you to invent on their behalf.
In each SEC fil ing Amazon explains how it uses an ana- lytical approach to improve satisfaction and business performance by reiterating a comment in a letter to shareholders from Jeff Bezos when Amazon first became a publicly quoted company:
We will continue to measure our programs and the effectiveness of our investments analytically, to jetti- son those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures.
More recently, this approach has been applied to a range of business model innovations focused on hardware and new services: Kindle e-reader, Fire Tablet, smartphone and 1V, Echo (using the Alexa Artificial Intelligence voice- assistant), grocery delivery, Amazon Fashion and expan- sion to the business-oriented Amazon Web Services (AWS). Amazon Prime is an annual membership pro- gramme that includes unlimited free shipping and then involved diversification to a media service with access to unlimited instant streaming of thousands of movies and 1V episodes.
The latest example of innovation in its business model is the launch of Amazon Go ™ (amazon.com/go), a new kind of store with no checkout required. Boasting a 'Just Walk Out Shopping Experience', the Amazon Go app users enter the store, take the products they want and go, with no lines and no checkout.
Yet Bezos acknowledges that failure will inevitably happen with innovation. In an interview with Business Insider (2014) he says:
I' ve made billions of dollars of failures at Amazon. com. literally billions of dollars of failures. You might remember Pets.com or Kosmo.com. It was like get- ting a root canal with no anaesthesia. None of those things are fun. But they also don't matter.
Of course, achieving customer loyalty and repeat purchases has been key to Amazon's success. Many dot.coms failed because they succeeded in achieving awareness, but not loyalty. Amazon achieved both. In its SEC filing the com- pany stresses how it seeks to achieve this:
We work to earn repeat purchases by providing easy- to-use functionality, fast and reliable fulfilment, timely customer service, feature-rich content, and a trusted transaction environment. Key features of our websites include editorial and customer reviews; manufacturer product information; web pages tailored to individual preferences, such as recommendations and
notifications; 1-Ciick® technology ; secure payment systems; image uploads; searching on our websites as well as the Internet; browsing; and the ability to view selected interior pages and citations, and search the entire contents of many of the books we offer with our 'look Inside the Book' and 'Search Inside the Book' features. Our community of online customers also creates feature-rich content, including product reviews, online recommendation lists, wish lists, buy- ing guides, and wedding and baby registries.
In fact, as is the practice for many online retailers, the lowest prices are for the most popular products, with less popular products commanding higher prices and a greater margin for Amazon. Free shipping offers are used to encourage increase in basket size since customers have to spend over a certain amount to receive free ship- ping. The level at which free shipping Is set is critical to profitability and Amazon has changed it as competition has changed and for promotional reasons.
Amazon communicates the fulfilment promise in sev- eral ways including presentation of latest inventory avail- ability information, delivery date estimates and options for expedited delivery, as well as delivery shipment noti- fications and update facilities.
Competition In its latest SEC filing Amazon describes the environment for its products and services as 'intensely competitive'. It views its main current and potential competitors as: '(1) online, offline, and multichannel retailers, publishers, vendors, distributors, manufacturers, and producers of the products we offer and sell to consumers and busi- nesses; (2) publishers, producers, and distributors of physical, digital, and interactive media of all types and all distribution channels; (3) web search engines, com- parison shopping websites, social networks, web por- tals, and other online and app-based means of discovering, using, or acquiring goods and services, either directly or In collaboration with other retailers; (4) companies that provide e-commerce services, includ- ing website development, advertising, fulfillment, cus- tomer service, and payment processing; (5) companies that provide fulfillment and logistics services for them- selves or for third parties, whether online or offline; (6) companies that provide information technology ser- vices or products, including on premises or cloud-based infrastructure and other services; and (7) companies that design, manufacture, market, or sell consumer electron- ics, telecommunication, and electronic devices' .
Amazon believes the main competitive factors in its market segments include:
selection, price, availability, convenience, information, discovery, brand recognition, personalised services,
494 Part 3 Digital marketing : implementation and practice
accessibility, customer service, reliability, speed of
fulfilment, ease of use, and ability to adapt to chang- ing conditions, as well as our customers' overall expe- rience and trust in transactions with us and facilitated by us on behalf of third-party sellers.
For services offered to bu siness and individual sellers,
additional competitive factors include the quality of ser- vices and tools, the ability to generate sales for third par- ties the company serves and the speed of performance for its services.
From auctions to marketplaces Amazon auctions (known as 'zShops') were launched in March 1999, in large part as a response to the success
of eBay. They were promoted heavily from the home page, category pages and individual product pages. They give an example of how Amazon will stop Initiatives that aren't successful. Today, competitive prices of products
are available through third-party sellers in the 'Amazon Marketplace', which are integrated within the standard product listings. The strategy to offer such an auction facility was initially driven by the need to compete with
eBay, but now the strategy has been adjusted such that Amazon describes it as part of the approach of low pricing. According to a 2014 interview with Jeff Bezos (Business Insider, 2014), Amazon now sells around 40 per
cent of units through sellers, thus enabling it to extend its range of p roducts and improve stock availability.
Although it might be thought that Amazon would lose out on enabling its merchants to sell products at lower
prices, in fact Amazon makes greater margin on these sales since merchants are charged a commission on each sale and it is the merchant who bears the cost of storing inventory and fulfilling the product to customers.
As with eBay, Amazon is just facilitating the exchange of bits and bytes between buyers and sellers without the need to distribute physical products.
Marketing Amazon does not reveal much about its marketing approach in its annual reports, but there seems to be a
focus on online marketing channels. The Amazon 2011 SEC filing states: 'we direct customers to our websites primarily through a number of targeted online marketing channels, such as our Associates program, sponsored
search , portal advertising , email marketing campaigns, and other initiatives'. These 'other initiatives' may include outdoor and TV advertising , but they are not mentioned specifically. In this statement they also highlight the
importance of customer-loyalty tools. They say: 'while costs associated with free shipping are not included in marketing expense, we view free shipping offers and Amazon Prime as effective worldwide marketing tools,
and intend to continue offering them indefinitely'.
How Amazon's 'culture of metrics' started A common theme in Amazon's development is the drive to use a measured approach to all aspects of the busi-
ness, beyond the finance. Marcus (2004) describes an occasion at a corporate 'boot-camp' in January 1997 when Amazon CEO Jeff Bezos 'saw t he light '. 'At Ama- zon, we w ill have a Culture of M etrics', he said whil e
addressing his senior staff. He went on to explain how
web-based business gave Amazon an 'amazing window into human behaviour'. Marcus says:
Gone were the fuzzy approximations of focus groups, the anecdotal fudging and smoke blowing from the mar- keting department. A company like Amazon could (and did) record every move a visitor made, every last click and twitch of the mouse. As the data piled up into virtual heaps, hummocks and m ountain ranges, you could
draw all sorts of conc lusions about their chimerical nature, the consumer. In this sense, Amazon was not merely a store, but an immense repository of facts. All we needed were the right equations to plug into them.
Marcus then goes on to give a fascinating insight into a breakout group d iscussion of how Amazon could better
use measures to improve its performance. Marcus was in the Bezos group, brainstorming customer-centric metrics. Marcus (2004) summarises the dialogue, led by Bezos:
'First, we figure out which things we'd like to measu re on the site', he said. 'For example, let's say we want
a metric for customer enjoyment. How could we cal- culate that?'
There was silence. Then somebody ventured: ' How much time each customer spends on the site? '
' Not specific enough', Jeff said.
' How about the average number of minutes each cus- tomer spends on the site per session ', someone else suggested. ' If that goes up , they're having a blast.'
'But how do we factor in p urchase?' I (M arcus] said, fee ling proud of myself. ' Is that a measure of enjoyment?'
' I think we need to consider frequency of visits, too',
said a dark-haired woman I d idn't recognise. 'Lot of folks are still accessing the web with those creepy- crawly modems. Four short visits from them might be
just as good as one visit from a guy with a T-1. Maybe better.'
'Good point', Jeff said. 'And anyway, enjoyment is just the start. In the end, we should be measuring cus- tomer ecstasy.'
It is interesting that Amazon was having this debate about the elements of RFM analysis (described in Chapter 6) in
Chapter 10 Evaluation and improvement of digital channel performance 495
1997, after already having achieved $16 million of reve- nue in the previous year. Of course, this is a minuscule amount compared with today's billions of dollars turno- ver. The important point was that this was the start of a focus on metrics, which can be seen through the descrip- tion of Matt Round 's work later in this case study.
Applying machine learning and Artificial Intelligence Some of the applications of AI at Amazon are highly visible - for example, the Amazon Echo assistant and technology in the Amazon Go convenience store that uses machine vision to eliminate checkout lines. In Ama- zon 2018, they describe the increased use of machine learning and AI 'behind the scenes' at Amazon:
much of what we do with machine learning happens beneath the surface. Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, mer- chandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type - quietly but meaningfully improving core operations.
From human to software-based recommendations Amazon has developed internal tools to support this 'Culture of Metrics'. Marcus (2004) describes how the 'Creator Metrics' tool shows content creators how well their product listings and product copy are working. For each content editor, such as Marcus, it retrieves all recently posted documents including articles, interviews, booklists and features. For each one it then gives a con- version rate to sale plus the number of page views, adds (added to basket) and repels (content requested, but the back button then used). In time, the work of editorial reviewers, such as Marcus, was marginalised since Amazon found that the majority of visitors used the search too ls rather than read editorial and they responded to the personalised recommendations as the matching technology improved (Marcus likens early rec- ommendations techniques to 'going shopping with the village idiot').
Experimentation and testing at Amazon The 'Culture of Metrics' also led to a test-driven approach to improving results at Amazon. Matt Round, speaking at E-metrics 2004 when he was director of personalisa- tion at Amazon, describes the philosophy as ' data trumps intuitions'. He explained how Amazon used to have a lot of arguments about which content and promo- tion should go on the all-important home page or
category pages. He described how every category VP wanted top-centre and how the Friday meetings about placements for next week were getting 'too long, too loud and lacked perfonmance data'.
But today 'automation replaces intuitions' and real- time experimentation tests are always run to answer these questions, since actual consumer behaviour is the best way to decide upon tactics.
Marcus (2004) also notes that Amazon has a culture of experiments of which NB tests are key components. Examples where NB tests are used include new home page design, moving features around the page, different algorithms for recommendations and changing search relevance rankings. These involve testing a new treat- ment against a previous control for a limited time of a few days or a week. The system will randomly show one or more treatments to visitors and measure a range of parameters such as units sold and revenue by category (and total), session time and session length. The new features will usually be launched if the desired metrics are statistically significantly better. Statistical tests are a challenge though, as distributions are not normal (they have a large mass at zero, for example, of no purchase). There are other challenges, since multiple NB tests are running every day and NB tests may overlap and so conflict. There are also longer-tenm effects where some features are 'cool ' for the first two weeks and the oppo- site effect where changing navigation may degrade per- fonmance temporarily. Amazon also finds that as its users evolve in their online experience, the way they act online has changed. This means that Amazon has to constantly test and evolve its features.
Technology It follows that the Amazon technology infrastructure must readily support this culture of experimentation and this can be difficult to achieve with standardised content management. Amazon has achieved its competitive advantage through developing its technology internally and with a significant investment in this, which may not be available to other organisations without the right focus on the online channels.
As Amazon explains in SEC (2005):
using primarily our own proprietary technologies, as well as technology licensed from third parties, we have implemented numerous features and functional- ity that simplify and improve the customer shopping experience, enable third parties to sell on our plat- fonm, and facilitate our fulfilment and customer ser- vice operations. Our current strategy is to focus our development efforts on continuous innovation by cre- ating and enhancing the specialised, proprietary soft- ware that is unique to our business, and to license or acquire commercially-developed technology for other
496 Part 3 DigijaJ mar1<eting: Implementation and practice
applications where available and appropriate. We continually invest in several areas of technology, including our seller platform A9.com , our wholly- owned subsidiary focussed on search technology on www.A9.com and other Amazon sites; web services; and digital initiatives.
Round (2004) describes the technology approach as 'distributed development and deployment'. Pages such as the home page have a number of content 'pods' or 'slots' that call web services for features. This makes it relatively easy to change the content in these pods and even change the location of the pods on-screen. Ama- zon uses a flowable or fluid page design, unlike many sites, which enables it to make the most of real-estate on-screen.
Technology also supports more standard e-retail facil- ities. SEC (2005) states:
We use a set of applications for accepting and vali- dating customer orders, placing and tracking orders with suppliers, managing and assigning inventory to customer orders, and ensuring proper shipment of products to customers. Our transaction-processing systems handle millions of items, a number of differ- ent status inquiries, multiple shipping addresses, gift-wrapping requests and multiple shipment meth- ods. These systems allow the customer to choose whether to receive single or several shipments based on availability and to track the progress of each order. These applications also manage the pro- cess of accepting, authorising and charging cus- tomer credit cards.
Data-driven automation Round (2004) said that 'Data is king at Amazon'. He gave many examples of data-driven automation including cus- tomer channel preferences, managing the way content is displayed to different user types, such as new releases and top-sellers, merchandising and recommendation (showing related products and promotions) and also advertising through paid search (automatic ad genera- tion and bidding).
The automated search advertising and bidding sys- tem for paid search has had a big impact at Amazon. Sponsored links were initially done by humans, but this was unsustainable due to the range of products at Ama- zon. The automated program generates keywords, writes ad creative, determines best landing page, manages bids, measures conversion rates, profit per converted visitor and updates bids. Again, the problem of volume is there: Matt Round described how the book How to Make Love like a Pom Star by Jenna Jameson received tens of thousands of clicks from pornography-related
searches, but few actually purchased the book. So the update cycle must be quick to avoid large losses.
There is also an automated email measurement and optimisation system. The campaign calendar used to be manually managed with relatively weak measurement and it was costly to schedule and use. A new system:
• automatically optimises content to improve customer experience;
• avoids sending an email campaign that has low click- through or a high unsubscribe rate;
• includes in box management (avoids sending multiple emails/week);
• has a growing library of automated email programs covering new releases and recommendations.
But there are challenges if promotions are too successful and inventory isn't available.
Your recommendations 'Customers Who Bought X ... also bought Y' is Amazon's signature feature. Round (2004) describes how Amazon relies on acquiring and then crunching a massive amount of data. Every purchase, every page viewed and every search is recorded. So there are now two new versions: 'Customers who shopped for X also shopped for ... ', and 'Customers who searched for X also bought .. .'. Amazon also has a system codenamed 'Goldbox', which is a cross-sell and awareness-raising tool. Items are dis- counted to encourage purchases in new categories!
He also describes the challenge of techniques for sift- ing patterns from noise (sensitivity filtering), and clothing and toy catalogues change frequently so recommenda- tions become out of date. The main challenges, though, are the massive data size arising from millions of cus- tomers, millions of items and recommendations made in real time.
Partnership strategy As Amazon grew, its share price growth enabled partner- ship or acquisition with a range of companies in different sectors. Marcus (2004) describes how Amazon part- nered with Drugstore.com (pharmacy), Living.com (fur- niture), Pets.com (pet supplies), Wineshopper.com (wines), HomeGrocer.com (groceries), Sothebys.com (auctions) and Kozmo.com (urban home delivery). In most cases, Amazon purchased an equity stake in these partners, so that it would share in their prosperity. It also charged them fees for placements on the Amazon site to promote and drive traffic to their sites. Similarly, Amazon charged publishers for prime position to promote books on its site, which caused an initial hue-and-cry, but this abated when it was realised that paying for prominent placements was widespread in traditional booksellers
Chapter 10 Evaluation ancl improvement of digital channel performance 497
and supenmarkets. Many of these new online companies failed in 1999 and 2000, but Amazon had covered the potential for growth and was not pulled down by these partners, even though for some, such as Pets.com, it had an investment of 50 per cent.
Analysts sometimes refer to 'Amazoning a sector', meaning that one company becomes so dominant in an online sector such as book retail that it becomes very difficult for others to achieve market share. In addition to developing, communicating and delivering a very strong proposition, Amazon has been able to consolidate its strength in different sectors through its partnership arrangements and through using technology to facilitate product promotion and distribution via these partner- ships. The Amazon retail platfonm enables other retailers to sell products online using the Amazon user interface and infrastructure through its 'Syndicated Stores' pro- gramme. For example, in the UK, Waterstones (www. waterstones.co.uk) is one of the largest traditional book- stores. It found competition with online so expensive and challenging that eventually it entered a partnership arrangement where Amazon markets and distributes its books online in return for a commission online. Similarly, in the US the large book retailer Borders used the Ama- zon merchant platfonm for distributing its products. Such partnerships help Amazon extend its reach into the cus- tomer-base of other suppliers, and, of course, customers who buy in one category such as books can be encour- aged to purchase in other areas such as clothing or electronics.
Another fonm of partnership referred to above is the Amazon Marketplace, which enables Amazon customers and other retailers to sell their new and used books and other goods alongside the regular retail listings. A similar partnership approach is the Amazon ' Merchants@' pro- gramme, which enables third-party merchants (typically larger than those that sell via the Amazon Marketplace) to sell their products via Amazon. Amazon earns money either through fixed fees or sales commissions per unit. This arrangement can help customers, who get a wider choice of products from a range of suppliers with the convenience of purchasing them through a single check- out process.
Finally, Amazon has also facilitated fonmation of part- nerships with smaller companies through its affiliates programme. Internet legend records that Jeff Bezos, the creator of Amazon, was chatting to someone at a cock- tail party who wanted to sell books about divorce via her website. Subsequently, Amazon.com launched its Asso- ciates Program in July 1996 and it is still going strong. Amazon does not use an affiliate network (explained in Chapter 9), which would take commissions from sale, but thanks to the strength of its brand has developed its own affiliate programme. Amazon has created tiered
performance-based incentives to encourage affiliates to sell more Amazon products.
Marketing communications In its SEC filings Amazon states that the aims of its com- munications strategy are (unsurprisingly) to:
• Increase customer traffic to its websites. • Create awareness of its products and services. • Promote repeat purchases. • Develop incremental product and service revenue
opportunities. • Strengthen and broaden the Amazon.com brand name.
Amazon also believes that its most effective marketing communications are a consequence of its focus on con- tinuously improving the customer experience. This then creates word-of-mouth promotion, which is effective in acquiring new customers and may also encourage repeat customer visits.
As well as this, Marcus (2004) describes how Amazon used the personalisation enabled through technology to reach out to a difficult-to-reach market that Bezos origi- nally called ' the hard middle'. Bezos's view was that it was easy to reach ten people (you called them on the phone) or the 1 0 million people who bought the most popular products (you placed a superbowl ad), but more difficult to reach those in between. The search facilities in the search engine and on the Amazon site, together with its product recommendation features, meant that Amazon could connect its products with the interests of these people.
Online advertising techniques include paid search marketing, interactive ads on portals, email campaigns and search engine optimisation. These are automated as far as possible, as described earlier in the case study. As previously mentioned, the affiliate programme is also important in driving visitors to Amazon , and Amazon offers a wide range of methods of linking to its site to help improve conversion. For example, affiliates can use straight text links leading direct to a product page and they also offer a range of dynamic banners that feature different content, such as books about Internet market- ing or a search box.
Amazon also uses cooperative advertising arrange- ments, better known as 'contra-deals', with some ven- dors and other third parties. For example, a print advertisement in 2005 for a particular product such as a wireless router with a free wireless laptop card promotion was to feature a specific Amazon URL in the ad. In prod- uct fulfilment packs, Amazon may include a leaflet for a non-competing online company such as Fig leaves. com (lingerie) or Expedia (travel). In return , Amazon leaflets
498 Part 3 Digital marketing: implementation and practice
may be included in customer communications from the
partner brands. The associates programme directs customers to
Amazon websites by enabling independent websi1es to make millions of products available to their aud iences
w ith fulfilment performed by Amazon or third parties. Amazon pays commission to hundreds of thousands of participants in the associates programme when their customer referrals result in product sales. In addition, Amazon offers everyday free sh ipping options world- wide and launched Amazon .com Prime, its first mem- bership programme in which members receive free two-day shipping and discounted overnight shipping. Although marketing expenses do not include the costs of free sh ipping or promotional offers, Amazon views such offers as effective marketing tools.
Questions 1 By referring to the case study, Amazon 's website
for your country and your experience of Ama- zon's offline communications, evaluate how well Amazon communicates its core proposition and promotional offers.
2 Using the case study, characterise Amazon 's approach to marketing communications.
3 Explain what distinguishes Amazon in its use of technology for competitive advantage.
4 How does the Amazon 'cu lture of metrics' differ from that in other organisations, from your experience?
1 A structtued measurement and improvement programme is necessary to co ll ect meas- ures to assess and improve digital marketing effectiveness. Action can t hen be taken t o adjust rhe website strategy or promot ional efforts. A measurement programme invo lves: • St age 1: Defining a measurement process. • St age 2 : Defining a metrics framework. • St age 3: Selecting of rools for data collection, reporting, optimisation and analysis.
2 Measures of Internet marketing effectiveness can be categorised as assessing: • Level l : Business effecti veness. l11ese measure the impact of rhe website on the whole
business, and look at financial measmes such as revenue and profit and promotion of corporate awareness.
• Levell: Marketing effectiveness. These measure the number of leads and sales achieved via the Internet and effect of the Internet on retention rates and other aspects of the marketing mix such as branding.
• Level 3 : Digital marketing effectiveness. These measures assess how wel l the sire is being promoted, and do so by reviewing the popularity of rhe sire and how good it is at delivering customer needs.
3 l11e measmes of effectiveness referred ro above are collected in two main ways- online and offline- or in combinat ion.
4 On line measures are obtained from a web-server log file or using browser-based tech-
niques. They indicate the number of visitors to a site, which pages they visit and where they originated from. These also provide a breakdown of visitors through time or by country.
5 Offline measures are marketing outcomes such as enquiries or sales t hat are directly att ributable to the website. Other measures of the effectiveness are avai lable through surveying cus tomers using quest ionnaiies, interviews and focus groups.
Exerc ises
Chapter 10 Evaluation and improvement of digital channel performance 499
6 Ma naging website co ntent requires clear responsibi lities ro be identified fo r different roles. These include rhe roles of content owner and sire developer, and rhose ensuring rhar the contem conforms wirh company and legal requiremenrs.
7 To produce a good -quality website, standards are required ro enforce unifor mity in rerms of: • site look and feel; • brand identity and roue-of-voice; • qualiry of content.
Self-assessment exercises
1 Why are standards necessary for controlling website management? What aspects of the site do standards seek to control?
2 Explain the difference between hits and page impressions. How are these measured?
3 How should social media marketing effectiveness be assessed? 4 Why should content development be distributed through a large organisation? 5 Describe the different types of measures that should be used to review and improve
digital marketing. 6 How can focus groups and interviews be used to assess website effectiveness? 7 Explain the principles of effectiveness AB testing. 8 Why is it useful to integrate the collection of online and offline metrics?
Essay and discussion questions
1 'Corporate standards for a website's format and update process are likely to stifle the creative development of a site and reduce its value to customers.' Discuss.
2 ' Most companies collect data about digital marketing activit ies, but few derive much value from it '. Discuss possible reasons for th is assertion.
3 You have been appointed manager of a website for a car manufacturer and have been asked to refine the existing online measurement and improvement pro- gramme. Explain, in detail, the steps you would take to develop this programme.
4 The first version of a website for a financial services company has been live for a year. Originally it was developed by a team of two people, and was effectively 'brochureware'. The second version of the site Is intended to contain more detailed information, and will involve contributions from ten different product areas. You have been asked to define a procedure for controlling updates to the site. Write a document detailing the update procedure, which also explains the reasons for each control.
Examination questions
1 Why are standards necessary to control the process of updating a website? Give three examples of different aspects of a website that need to be controlled .
2 Explain the following terms concerning measurement of website effectiveness:
a unique visitors; b page impressions; c referring pages.
3 Measurement of websites concerns the recording of key events involving custom- ers using a website. Briefly explain five different types of event.
500 Part 3 Digital marketing: implementation and practice
4 Describe and briefly explain the purpose of the different stages involved in updating an existing document on a commercial website.
5 Outline different types of measures for reviewing the effectiveness of social media marketing.
6 Give three reasons explaining why a website may have to integrate with existing marketing information systems and databases within a company.
7 You have been appointed manager of a website and have been asked to develop a metrics programme. Briefly explain the steps you would take to develop this programme.
8 If a customer can be persuaded to register his or her name and email address with a website, how can this information be used for site measurement purposes?
[~R __ e _fe_r_e_n_c_e_s ________________________________________________________ ~~ Adams, C., Kapashi, N . , Neely, A. and Marr, B. (2000) Managing wi th measures: measuring
e-business performance, Accenture wb itep aper, survey conducted in co njw1ct io n with Cranfield Schoo l of Management.
Agrawal, V., Arjona, V. and Lemmens, R . (2001) £ -performance: the pat h t o rational exuber- ance, McKinsey Quarterly, 1, 31--43.
Altimeter (2010) Framework: t he social media ROI pyramid, 13 December, by Jeremiah Owyang, www.web-strate gist.com/blog/201 0/12/13/framework-the-social-media-roi-pyra- mid (accessed May 2018) .
Amazon (2017} Am azon 2016 ful l year report/SEC filing, Amazon Investor Relations site, pu blished 12 Decem ber.
Br inker, S. (2017) Market ing technology landscape supergraphic (2017}: Martech 5,000, by Sco tt Brinker, 10 May, http://chiefmartec.com/2017/05/marketing -techniology-landscape- supergraphic-2017/ (accessed May 2018).
Business Insider (2014} I asked Jeff Bezos the tough quest ions - no profits, t he book contro- versies, the phone flop - and he showed why Amazon is such a h uge success, interview by Henry Blo dget, 13 Decem ber, http:/luk.businessinsider.com/amazons-jeff-b ezos-the- business-insider-interview-2014-12 (accessed May 2018) .
Chaffey, D. (2000) Achieving Internet marketing success, The Marketing Review, 1(1), 35-60. D igit al Analytics Association (2017) State o f d igital analyt ics: research w ith TMl\1 data,
avai lable from: https://content.tmmdata.com/analytics-survey-whitepaper. Friedman, L. a nd Furey, T. (1999) The Channel Advantage, Butterworth-Heineman n ,
Oxford . Grossnickle, J. and Raskin, 0 . (2001} The Handbook of Online Marketing Research: Know-
ing your Customer Using the Net, McGraw-Hill, New York. Kotler, P. (1997) Marketing Management - Analysis, Plannin& Implementation and Control,
Prentice-Ha ll , Englewood C liffs, NJ. Lynch, P. an d Horton , S. (1999) Web Style Guide: Basic Design Principles for Creati11g Web -
sites, Yale University Press, New Haven, CT. Malhotra, N . (1999} Marketing Research: An Applied Orientation, Prent ice-Hall, Upper
SaddJe River, NJ.
Cha pter 10 Evaluation and improvement of digital channel performance 50 1
Marcus,]. (2004) Amazonia: Five Years at the Epicentre of the Dot-com juggernaut, The New Press, New York.
Neely, A., Adams, C. and Kennerley, M. (2002) The Performance Prism: The Scorecard {or Measuring and Managing Business Success, Financial Times/Prentice Hall, Harlow.
Register, C.A., AJbaum, G. and Smith, S.M. (2014) Topic sensitiviry and Internet survey design: a cross-culruraVnarional study, journal of Marketing Theory and Practice, 22(1), 91- 101.
Round, M. (2004) Presentation ro E-metrics, London, May 2005, www.eme trics.org . SEC (2005) United States Securities and Exchange Commission Submission Form 10-K from
Amazon, for the fiscal year ended 31 December 200-t Smarrlnsights (2010) Websi t e feedback tools review, Dave Chaffey, http://bit.ly/
smartfeedback. Smarr Insights (2017) Essential digital Jnarketing tools infographic, blog post by Robert
A lien, 8 May, https:l /www.smartinsights.com/digital-marketing-platforms/essential-digital- marketlng-tools-infographic/ (accessed May 2018).
Stern, M.J., Bilgen, I. and Dill man, D.A . (2014) T he state of survey methodology challenges, di le mmas, a nd new fro ntiers in th e era of the tailored design, Field Methods, 26(3), 284-301.
Stern e,]. (2001) World Wide Web Marketing, 3rd edn , W il ey, New York. We b Ana lyrics Association (2011) Web Analytics Association Outlook: 2011 Survey report,
February, www.webanalyticsassociation.com . Wi lson, H. (2008) The Multichannel Challenge, Butterworth-Heinemann, Oxford, copy-
right Elsevier.
(~w __ eb_l_in_k_s __ ~--------------------~=============-==========~] Web anafytics resources
• ABC (www.abc.org.uk). Audit Bureau of Circulations is standard for magazines in the UK. This is the electronic auditing part. Useful for definitions and examples of traffic for UK organisations.
• E-metri cs (www.emetrics.org). Jim Sterne's site has many resources for online marketing .
merncs. • M a rke ting Expe rime nts (www.marketingexperiments.com). Summarises approaches to
resting ro improve website marketing effectiveness. • Smart Insights Web Analytics Stra tegy (www.smartinsights.com/managing-digital-market-
ing/web-analytics-strategy). This Q u ick G ujde f rom Dave Chaffey's site has al l th e main
resOLuces for s tud ents. • We b A n alytics Association (www.webanalyticsassociation.com). The sire of the trade
associat ion for web a nalyt ics has usefu l definit ions, articles and forums on t his topic. • Web Analytics Demys tified (www.webanalyticsdemys tified .com). A sire to su pport Eric
Petersen's books with a range of content.
Web analytics expertise
• Avinas h Kaus hik's O ccam 's R azor blog (www.kaushik.net). Avinash is an expen in web analytics and his popular blog shows how web anal)'tics s hould be used to control and improve remrn on e- marketing investments.
• Cardinal Path blog (www.cardinalpath.com/blog). Practical discussions of web analytics.
502 Part 3 Digital marketing: implementation and practice
• Justin Cutroni (www.cutroni.com). A specialist web analytics blog giving guidance o n how t o tailor Coogle Analycics.
• LunaMetrics (www.lunametrics.com). One of the best advanced blogs on Coogle Analytics, giving praccical advice.
Social media marketing analytics
T hese a re t he blogs of two of the leading commentato rs o n social media m arketing who discuss how to measure return fro m social media marketing: • Jay Baer (www.convinceandconvert.com) • Bri an Solis (www.briansolis.com).
Glossary
2G Second-generation of mobile phone technology.
4G Fourth-generation wireless, delivering wireless broadband at 20-40 Mbps (about 1 Q-20 times the rates of ADSL broadband service).
AlB testing A/8 or AB testing refers to testing two different versions of a page or a page element such as a heading, image or button. The alternatives are served alternately, with the visitors to the page randomly split between the two pages. Hence, it is sometimes called 'live split testing '. Changes in visitor behaviour can then be compared using different metrics such as click- through rate on page elements like buttons or images, or macro-conversion rates, such as conversion to sale or sign-up. AB testing is aimed at increasing page or site effectiveness against key performance indicators including click-through rate, conversion rate and rev- enue per visit. Since it does not consider combinations of variables tested , for best uplift multivariate testing is increasingly used.
Above the fold A term, derived from printed media, that is used to indicate whether a banner advertise- ment or other content is displayed on a web page without the need to scroll. This is likely to give higher click-through, but note that the location of the 'fold ' within the web browser is dependent on the screen resolution of a user's personal computer.
Accelerated Mobile Pages (AMPs) A standard to increase page download speed on mobile devices, the AMP framework consists of three components: AMP HTML, which is a standard HTML with web components; AMP JavaScript, which manages resource loading; and AMP caches, which can serve and validate AMP pages.
Access platform A method for customers to access digital media.
Accessibility An approach to site design intended to accommodate site usage using different browsers and
settings, particularly required by the visually impaired and visitors with other disabilities including motor con- trol, learning difficulties and deafness. Users whose
first language is not English can also be assisted.
Accessibility legislation Legislation intended to assist users of websites with disabilities, including visual disability.
Acquisition See Customer acquisition.
Activation A prospect or customer takes the first step in actively using an online service after initial registra- tion or purchase.
ActiveX A programming language standard developed by Microsoft that permits complex and graphical cus- tomer applications to be written and then accessed from a web browser. ActiveX components are standard
controls that can be incorporated into websites and are then automatically downloaded for users. Examples are graphics and animation or a calculator form for calculating interest on a loan or a control for graphing stock prices. A competitor to Java.
Adaptive mobile web design Generally a more
sophisticated approach than responsive web design, which involves delivering an experience optimised for
handsets targeted and splits the code and processing to render on different devices between the client and the server.
Ad creative The design and content of an ad.
Ad impression Similar in concept to a page impression; describes one viewing of an advertisement by a single member of its audience. The same as ad view, a term that is less commonly used.
Ad inventory The total number of ad impressions
that a website can sell over time (usually specified per month).
Ad network Ad networks from suppliers such as Blue Lithium or 24-7 Media give advertisers the options of advertising across a network of sites to reach a par- ticular demographic, e.g. female 18-25, but at a lower cost than targeting a single site since the actual site used for the ad placement isn 't known (hence these are sometimes known as 'blind network buys').
Ad r otation When advertisements are changed on a website for different user sessions. This may be in response to ad targeting or simply displaying different advertisements from those on a list.
Ad serving The term for displaying an advertisement on a website. Often the advertisement will be served from a web server different from the site on which it is placed. For example, the server URL for displaying the advertisement might be http:l/ad.doubleclick.net.
504 Glossary
Ad space The area of a web page that is set aside for
banner advertising.
Adaptive web design Also known as progressive
enhancement, this design technique delivers different layouts and features according to what is supported by browser and screen resolution of the device.
Advertisement Advertisements on websites are usu- ally banner advertisements positioned as a masthead on the page.
Advertising networks A collection of independent websites of different companies and media networks,
each of which has an arrangement with a single adver- tising broker (see Media broker) to place banner advertisements.
Affiliate A company promoting a merchant, typically through a commission-based arrangement either direct or through an affiliate network.
Affiliate marketing A commission-based arrangement
where referring sites (publishers) receive a commission on sales or leads by merchants (retailers). Commission is
usually based on a percentage of product sale price or a fixed amount for each sale (CPA or cost-per-acquisition), but may also sometimes be based on a per-click basis, for example when an aggregator refers visits to merchants.
Affiliate networks Third-party brokers, also known as affiliate managers, who manage recruitment of affiliates
and infrastructure to manage a merchant's affiliate pro- gramme in the form of links, tracking and payment of a range of affiliates.
Agents Software programs that can assist people to perform tasks such as finding particular information such as the best price for a product.
Aggregators An alternative term to price comparison sites. Aggregators include product, price and service information, comparing competitors within a sector such
as financial services, retail or travel. Their revenue mod- els commonly include affiliate revenues (CPA), pay-per- click advertising (CPC) and display advertising (CPM).
Agile software development An iterative approach to developing software and website functionality with the emphasis on face-to-face communications to elicit,
define and test requirements. Each iteration or serum is effectively a mini-software project including stages of planning , requirements analysis, design, coding, test- ing and documentation.
Allowable cost-per-acquisition A target maximum cost for generating leads or new customers profitaJbly.
Alt tags Alt tags appear after an image tag and con- tain a phrase associated with that image. For example: <img src="logo.gif" alt="Company name, company
products"/>.
Always-on communications Continuous investment in paid, owned and earned digital media to engage
prospects and customers and meet purchase intent as they research products through search, social media and publisher sites.
Anchor text (also known as link text) The (usually) clickaJble text element representing a hyperlink. Or, more prosaically, the body copy that is hyperlinked.
Animated banner advertisements (an imated GIFs) Early banner advertisements featured only a single advertisement, but today they will typically involve sev-
eral different images, which are displayed in sequence to help attract attention to the banner and build up a theme, often ending with a call-to-action and the injunction to click on the banner. These advertise-
ments are achieved through supplying the ad creative as an animated GIF file with different layers or frames, usually a rectangle of 468 x 60 pixels. Animated ban-
ner advertisements are an example of rich-media
advertisements.
Application programming interfaces Method of exchanging data between systems such as website
services.
Artificial Intelligence Software and services that per- form tasks previously requiring human analysis and
interaction. Marketing applications of AI typically aim to improve business-to-customer communications including targeting media, personalised messaging and customer service interactions.
Asymmetric encryption Both parties use a related but different key to encode and decode messages.
Atomisation Atomisation in a Web 2.0 context refers to
a concept where the content on a site is broken down into smaller fundamental units that can then be distrib- uted via the web through links to other sites. Examples of atomisation include the stories and pages in individual
feeds being syndicated to third-party sites and widgets.
Attrition rate Percentage of site visitors who are lost at each stage in making a purchase.
Audit (external) Consideration of the business and economic environment in which the company oper- ates. This includes the economic, political, fiscal,
legal, social , cultural and technological factors (usually referred to by the acronym STEP or SLEPl).
Audit (internal) A review of website effectiveness.
Auditors See Site auditors.
Augmented reality (AR) In contrast to VA, augmented
reality supports and enhances real-world interactions. For example, retailers can enable consumers to try on new clothing or glasses using AR devices.
Authentication See Security methods.
Autoresponders Software tools or agents running on web servers that automatically send a standard reply to the sender of an email message. This may provide information for a standard request sent to, say, price_ list@company_name.com, or it could simply state that the message or order has been forwarded to the relevant person and will be answered within two days. (Also known as mailbots.)
Availability See Security methods; Site availability.
Avatar A term used in computer-mediated environ- ments to mean a ' virtual person'. Derived from the word's original meaning: 'n. the descendant of a Hindu deity in a visible form; incarnation; supreme glorifica- tion of any principle'.
Average order value (AOV) The average amount spent for a single checkout purchase on a retail site for a particular customer group, e.g. first time purchasers.
Backbones High-speed communication links used to enable Internet communications across a country and internationally.
Backlinks Hyperlinks that link to a particular web page (or website). Also known as inbound links. Google PageRank and Yahoo! WebRank are methods of enumerating this.
Balanced scorecard A framework for setting and monitoring business performance. Metrics are struc- tured according to customer issues, Internal efficiency measures, financial measures and innovation.
Bandwidth Indicates the speed at which data are transferred using a particular network medium. It is measured in bits per second (bps):
• kbps (one kilobit per second or 1,000 bps; a modem operates at up to 56.6 kbps).
• Mbps (one megabit per second or 1,000,000 bps; company networks operate at 10 or more Mbps).
• Gbps (one gigabit per second or 1,000,000,000 bps; fibre-optic or satellite links operate at Gbps).
Banner advertisement A typically rectangular graphic displayed on a web page for purposes of brand build- ing or driving traffic to a site. It is normally possible to perform a click-through to access further information from another website. Banners may be static or ani- mated. See Animated banner advertisements.
Behavioural ad targeting Enables an advertiser to target ads at a visitor as they move elsewhere on the site or return to the site, thus increasing the frequency or number of impressions served to an individual in the target market.
Behavioural loyalty Loyalty to a brand is demonstrated by repeat sales and response to marketing campaigns.
Glossary 505
Bid A commitment by a trader to purchase under cer- tain conditions.
Biddable media Businesses have to bid against other businesses in auctions to achieve visibility for their adverts, for example, when using pay-per-click adver- tising or programmatic advertising.
Big Data applications in marketing Big Data refers to applications to gain value from the increasing Vol- ume, Velocity and Variety of data integrated from dif- ferent sources. These enhance insight to deliver more relevant communications through techniques such as marketing automation and social CAM.
B log Personal online diary, journal or news source compiled by one person, an internal team or external guest authors. Postings are usually in different catego- ries. Typically comments can be added to each blog posting to help create interactivity and feedback.
Bluecasting Bluecasting involves messages being automatically pushed to a consumer's bluetooth- enabled phone, or they can pull or request audio, video or text content to be downloaded from a live advert. In the future, ads will be able to respond to those who view them.
B lueprints Show the relationships between pages and other content components; can be used to portray organisation, navigation and labelling systems.
Bluetooth A standard for wireless transmission of data between devices over short ranges (less than 1Om), e.g. a mobile phone or a PDA.
Botnet Independent computers, connected to the Internet, are used together, typically for malicious purposes through controlling software. For example, they may be used to send out spam or for a denial of service attack where they repeatedly access a server to degrade its software. Computers are often initially infected through a virus when effective anti-virus measures are not in place.
Bounce rate Proportion of visitors to a page or site that exit after visiting a single page only, usually expressed as a percentage.
Brand The sum of the characteristics of a product or service perceived by a user.
Brand advocate A customer who has favourable per- ceptions of a brand who will talk favourably about a brand to their acquaintances to help generate aware- ness of the brand or influence purchase intent.
Brand equity The brand assets (or liabilities) linked to a brand 's name and symbol t hat add to (or subtract from) a service.
Brand experience The frequency and depth of interac- tions with a brand can be enhanced through the Internet.
506 Glossary
Brand identity The totality of brand associations includ- ing name and symbols that must be communicated.
Branding The process of creating and evolving successful brands.
Bricks-and-mortar A traditional organisation with lim- ited online presence.
Broadband technology A term referring to methods of delivering information across the Internet at a higher rate by increasing bandwidth.
Brochureware A website in which a company has simply transferred ('migrated ') its existing paper-based promotional literature onto the Internet without recog- nising the differences required by this medium.
Browser See Web browser.
BundJing Offering complementary services.
Business model A summary of how a company will generate revenue, identifying Its product offering, value-added services, revenue sources and target customers.
Business-to-business (828) Commercial transac- tions between an organisation and other organisations (inter-organisational marketing).
Business-to-business exchanges or marketplaces Virtual intermediaries with facilities to enable trading between buyers and sellers.
Business-to-consumer (B2C) Commercial transac- tions between an organisation and consumers.
Buy-side e-commerce E-commerce transactions between a purchasing organisation and its suppliers.
Call centre A location for inbound and outbound telemarketing.
Call-back service A direct response facility avai l- able on a website to enable a company to contact a customer by phone at a later time, as specified by the customer.
Campaign-based e-communications E-marketlng communications that are executed to support a spe- cific marketing campaign such as a product launch, price promotion or a website launch.
Campaign URL (CURL) A web address specific to a particular campaign.
Capabilities Capabilities are intangible and are devel- oped from the combined and coordinated behaviour and activities of an organisation 's employees, and therefore embedded in the organisation and processes. The definition of a capability is an organisation's ability to 'perform a set of coordinated tasks, utilising organi- sational resources, for the purposes of achieving a particular end result '.
Card sorting The process of setting up a way of organ- ising objects on the website in a consistent manner.
Cascading style sheets (CSS) A simple mechanism for adding style (e.g. fonts, colours, spacing) to web documents. CSS enables different style elements to be controlled across an entire site or section of site. Style elements that are commonly controlled include typog- raphy, background colour and images, and borders and margins.
Catalogue Catalogues provide a structured listing of registered websites in different categories. They are simi- lar to an electronic version of Yellow Pages. Yahoo! and Excite are the best known examples of catalogues. (Also known as directories.) The distinction between search engines and catalogues has become blurred since many sites now include both facilities as part of a portal service.
Certificate A valid copy of a public key of an individual or organisation together with identification information. It is issued by a trusted third party (TTP) or certification authority (CA).
Certification authority (CA) An organisation issuing and managing certificates or public keys and private keys to individuals or organisations together with iden- tification information.
Change management Controls to minimise the risks of project-based and organisational change.
Channel buyer behaviour Describes which content is visited and the time and duration.
Channel conflicts A significant threat arising from the introduction of an Internet channel is that while disin- termediation gives the opportunity for a company to sell direct and increase the profitability of products it can also threaten existing distribution arrangements with existing partners.
Channel marketing strategy Defines how a company should set specific objectives for a channel such as the Internet and vary its proposition and communications for th is channel.
Channel outcomes Record customer actions taken as a consequence of a visit to a site.
Channel profitability The profitability of a website, taking into account revenue and cost and discounted cash flow.
Channel promotion Measures that assess why cus- tomers visit a site - which adverts they have seen, which sites they have been referred from.
Channel satisfaction Evaluation of the customer's opinion of the service quality on the site and support- ing services such as email.
Chum rates The percentage of customers who end their relationship with a company, typically calculated
as the number of customers who left a company during a period divided by total customers at the beginning of the period. It is straightforward to calculate for sub- scription businesses, but requires a definition of active customers for other types of business like a retailer.
Channel structure The configuration of partners in a distribution channel.
Chck ecosystem Describes the customer behaviour or flow of online visitors between search engines, media sites, other intermediaries to an organisation and its competitors.
Clicks-and-mortar A business combining online and offline presence.
Clicks-only or Internet pureplay An organisation with principally an online presence.
Clickstream A record of the path a user takes through a website. Clickstreams enable website designers to assess how their site is being used.
Clickstream analysis Reviewing the online behaviour of site visitors based on the sequence of pages that they visit, the navigation and promotion they respond to, the ultimate outcomes and where they leave the site.
Click-through A click-through (ad click) occurs each time a user clicks on a banner advertisement to direct them to a web page that contains further information.
Click-through rate Expressed as a percentage of total ad impressions, and refers to the proportion of users viewing an advertisement who click on it. It is calcu- lated as the number of click-throughs divided by the number of ad impressions.
Click-tracking Java technology can be used to track movements of individual users to a website.
Client discovery process An initiative to learn what a client or brand needs from a campaign, their strategic initiatives that it must align with, their goals and their marketing outcomes.
Client-server The client-server architecture consists of client computers such as PCs sharing resources such as a database stored on a more powerful server computer.
Cloud Computing A term that is a metaphor for shared computing resourc,es, which require minimal management input and can be accessed via the Inter- net. Relies on sharing of computing resources.
Co-branding An arrangement between two or more companies where they agree to jointly display con- tent and perform joint promotion using brand logos, email marketing or banner advertisements. The aim is that the brands are strengthened if they are seen
Glossary 507
as complementary. Co-branding is often a reciprocal arrangement that can occur without payment as part of a wider agreement between partners.
Co-marketing A partnership agreement reached between different businesses to promote each other, typically based on sharing content (and potentially promotions) principally to the audience of owned
media channels such as social media, blog and email marketing.
Cold list Data about individuals that are rented or sold by a third party.
Collaborative filtering Profiling of customer interest coupled with delivery of specific information and offers, often based on the interests of similar customers.
Commoditisation The process whereby product selection becomes more dependent on price than on differentiating features, benefits and value-added
services.
Competitive intelligence (CI) A process that trans-
forms disaggregated information into relevant, accurate and usable strategic knowledge about competitors, position, performance, capabilities and intentions.
Competitor analysis Review of Internet marketing services offered by existing and new competitors and adoption by their customers.
Competitor benchmarking A structured analysis of the online services, capabilities and performance of an organisation within the areas of customer acquisition,
conversion , retention and growth.
Confidentiality See Security methods.
Consumer-to-business (C28) Consumers approach
the business with an offer.
Consumer-to-consumer (C2C) Informational or
financial transactions between consumers, but usually mediated through a business site.
Consumer behaviour Research Into the motiva- tions, media consumption preferences and selection processes of consumers as they use digital channels together with traditional channels to purchase online products and use other online services.
Consumer behaviour analysis In digital markets,
this type of analysis involves research into the motiva- tions, media consumption preferences and selection processes used by consumers as they use digital channels together with traditional channels to purchase online products and use other online services.
Contact or touch strategy Definition of the sequence and type of outbound communications required at dif-
ferent points in the customer lifecycle.
508 Glossary
Content Content is the design, text and graphical information that forms a web page. Good content is the key to attracting customers to a website and retain- ing their interest or achieving repeat visits.
Content audit A structured review of the effective- ness of different content types and formats to meet the needs of users and businesses using quantitative and qualitative techniques.
Content developer A person responsible for updating web pages within part of an organisation.
Content distribution (or delivery) networks (CONs) A system of servers distributed globally with copies of data stored locally to enable more rapid download of content. Their use has increased with increased use of streaming video and more complex web applications.
Content management Software tools for managing additions and amendments to website content.
Content management system (CMS) A software tool for creating, editing and updating documents accessed by Intranet, extranet or Internet.
Content marketing The management of text, rich media, audio and video content aimed at engaging customers and prospects to meet business goals pub- lished through print and digital media including web and mobile platforms, which is repurposed and syndi- cated to different forms of web presence such as pub- lisher sites, blogs, social media and comparison sites.
Content marketing hub A central, branded location where your audience can access and interact with all your key content marketing assets. In a practical sense, the content hub can be a blog or new section, an online customer magazine or a resource centre.
Content network Sponsored links are displayed by the search engine on third-party sites such as online publishers, aggregators or social networks. Ads can be paid for on a CPC, CPM or CPA basis. There are also options for graphical or video ads in addition to text- based ads.
Content strategy The management of text, rich media, audio and video content aimed at engaging custom- ers and prospects to meet business goals published through print and digital media including web and mobile platforms, which is repurposed and syndicated to different forms of web presence such as publisher sites, blogs, social media and comparison sites.
Contextual ads Ads relevant to page content on third- party sites brokered by search ad networks.
Contextual marketing Relevant communications are delivered consistent with the context of the recipient, which can depend on their location, time or place.
Continuous e- communications activities Long- term use of a-marketing communications intended to generate site visitors for customer acquisition (such as search engine, affiliate marketing and online sponsorship) and retention (for example, a-newsletter marketing).
Conba-deals A reciprocal agreement in the form of an exchange where payment doesn't take place. Instead services or ad space promote another company as part of co-branding.
Control page The page against which subsequent optimisation will be assessed. Typically a current landing page. When a new page performs bet- ter than the existing control page, it becomes the control page in subsequent testing. Also known as 'champion-challenger'.
Convergence A trend in which different hardware devices such as televisions, computers and telephones merge and have similar functions.
Conversion marketing Using marketing communica- tions to maximise conversion of potential customers to actual customers.
Conversion rate Proportion of visitors to a site, or viewers of an advert, who take an action such as reg- istration or checkout. See Visit conversion rate and Visitor conversion rate.
Conversion rate optimisation (CRO) Improving the commercial returns from a transactional site through increasing conversion to key goals such as sales, quotes or bookings or leads. CRO combines customer and competitor research with evaluation of customer behav- iour using web analytics and AB and multivariate testing.
Cookies Cookies are small text files stored on an end user's computer to enable websites to identify the user. They enable a company to identify a previous visitor to a site, and build up a profile of that visitor's behaviour. See Persistent cookies, Session cookies, First-party cookies, Third-party cookies.
Core product The fundamental features of the product that meet the user 's needs.
Cost-per-acquisition (CPA) The cost of acquiring a new customer. Typically limited to the communications cost and refers to cost-per-sale for new customers. May also refer to other outcomes such as cost-per- quote or enquiry.
Cost-per-click (CPC) The cost of each click from a referring site to a destination site, typically from a search engine in pay-per-click search marketing.
Cost-per-targeted thousand (CPTM) Cost-per- targeted thousand (mille) for an advertisement. See Targeting.
Cost per thousand (CPM) Cost per 1 ,000 ad impressions.
Countennediation Creation of a new intermediary by an established company.
Cross-media optimisation studies (XMOS) Studies to determine the optimum spend across different media to produce the best results.
Cross-selling Persuading existing customers to pur- chase products from other categories than their typical purchases.
Customer acquisition Strategies and techniques used to gain new customers.
Customer-centric marketing An approach to market- ing based on detailed knowledge of customer behav- iour within the target audience, which seeks to fulfil the individual needs and wants of customers.
Customer communications channels The range of media used to communicate directly with a customer.
Customer engagement Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.
Customer engagement strategy A strategy to encourage interaction and participation of consumers with a brand through developing content and experi- ences with the aim of meeting commercial objectives. It is closely related to the development of content mar- keting and social media strategy.
Customer experience See Online customer experience.
Customer experience management (CXM) A holistic approach to managing customer experience and customer engagement across digital and non- digital touch-points including web, mobile and social digital platforms, in-store and by call centres.
Customer extension Techniques to encourage custom- ers to increase their involvement with an organisation.
Customer identity and access management (ClAM) A category of application for managing user access and consent to online information and services typi- cally known as social log-in or sign-on.
Customer insight Knowledge about customers' needs, characteristics, preferences and behaviours based on analysis of qualitative and quantitative data. Specific insights can be used to inform marketing tactics directed at groups of customers with shared characteristics.
Customer journey A description of modem multichan- nel buyer behaviour as consumers use different media to select suppliers, make purchases and gain customer support.
Glossary 509
C ustomer lifecycle The stages each customer will
pass through in a long-term relationship, through acquisition, retention and extension.
Customer loyalty The desire on the part of the customer to continue to do business with a given supplier over time. See Behavioural loyalty and Emotional loyalty.
Customer Preference Centre Profile page(s) that enables customers to tailor the type and frequency of communications they receive.
Customer orientation Providing content and services on a website consistent with the different characteris- tics of the audience of the site.
Customer profiling Using the website to find out cus- tomers' specific interests and characteristics.
Customer relationship management (CAM) A mar- keting-led approach to building and sustaining long-
term business with customers.
Customer retention Techniques to maintain relation-
ships with existing customers.
Customer satisfaction The extent to which a cus-
tomer's expectations of product quality, service quality and price are met.
Customer scenarios (online customer journeys) Alternative tasks or outcomes required by a visitor to a website. Typically accomplished in a series of stages of different tasks involving different information needs or experiences.
Customer segments Groups of customers sharing similar characteristics, preferences and behaviours
who are targeted with different propositions as part of target marketing strategy.
Customer selection Identifying key customer segments and targeting them for relationship building.
Customer touchpoints Communications channels through which companies interact directly with pros- pects and customers. Traditional touchpoints include face to face (in-store or with sales representatives),
phone and mail. Digital touchpoints include web ser- vices, email and, potentially, mobile phone.
Cyberspace and cybennarketing These terms were preferred by science-fiction writers and tabloid writers to indicate the futuristic nature of using the Internet, the prefix 'cyber' indicating a b lurring between humans, machines and communications. The terms are not fre-
quently used today since the terms Internet, Intranet and World Wide Web are more specific and widely used.
Data lake A storage repository that holds a diversity of raw data in its native format where it is available for analysis and reporting by people across a company.
51 0 Glossary
This contrasts to a data warehouse, which contains structured data.
Data subject The legal term to refer to the individual whose data are held.
Data m ining Extracting data from legacy systems and other resources; cleaning, scrubbing and prepar- ing data for decision support; maintaining data in appropriate data stores; accessing and analysing data using a variety of end-user tools; and mining data for significant relationships. The primary purpose of these efforts is to provide easy access to specially prepared data that can be used with decision-support applica- tions such as management reports, queries, decision- support systems, executive information systems and data mining.
Database marketing The process of systematically collecting, in electronic or optical form , data about past, current and/or potential customers, maintaining the integrity of the data by continually monitoring cus- tomer purchases, by enquiring about changing status, and by using the data to formulate marketing strategy and foster personalised relationships with customers.
Decryption The process of decoding (unscrambling) a message that has been encrypted using defined math- ematical rules.
Deep linking Jakob Nielsen's term for a user arriv- ing at a site deep within its structure, or where search engines index a mirrored copy of content normally inaccessible by search engine spiders.
Deliverability Deliverability refers to ensuring email messages are delivered and aren't blocked by spam filters because the email content or structure falsely identifies a permission-based email as a spammer, or
because the sender's IP address has a poor reputation for spam.
Demand analysis Quantitative determination of the potential usage and business value achieved from online customers of an organisation. Qualitative analysis of perceptions of online channels is also assessed.
Demand analysis for a-commerce Assessment of the demand fore-commerce services among exist- ing and potential customer segments using the ratio Access:Choose:Buy online.
Demand Side Platforms (DSPs) A service that ena- bles ads to be managed across multiple ad networks and ad exchanges through a single interface designed for managing reporting and performance.
Demographic characteristics Variations in attributes of the population such as age, sex and social class.
Denial of servic e attack Also known as a distributed denial of service (DDOS) attack, this involves a hacker
group taking control of many 'zombie' computers attached to the Internet whose security has been compromised. This 'botnet' is then used to make many requests to a target server, thereby overloading it and preventing access to other visitors.
Design for analysis (DFA) The required measures from a site are considered during design to better under- stand the audience of a site and their decision points.
Design phase (of site construction) The design phase defines how the site will work in the key areas of
website structure, navigation and security.
Destination site Frequently used to refer to the site that is visited following a click-through on a banner advertisement. Could also apply to any site visited fol- lowing a click on a hyperlink.
Destination store A retail store in which the merchan- dise, selection, presentation, pricing or other unique features act as a magnet for the customer.
Development (of site construction) 'Development' is the term used to describe the creation of a web- site by programmers. It involves writing the HTML content, creating graphics, and writing any neces- sary software code such as JavaScript or ActiveX (programming).
DevOps An approach to development of systems which involves a more collaborative and closer rela- tionship between development teams and operations teams with the aim of reducing deployment times and frequency of system updates and improving their stability.
Differential advantage A desirable attribute of a product that is not currently matched by competitor offerings.
Differential pricing Identical products are priced dif- ferently for different types of customers, markets or buying situations.
Digital assets The graphical and interactive material that supports a campaign displayed on third-party sites and on microsites, including display ads, email templates, video, audio and other interactive media such as Flash animations.
Digital brand A digital brand is a brand identity used for a product or company online that differs from the traditional brand. (Also known as an online brand.)
Digital certificates (keys) A method of ensuring privacy on the Internet. Certificates consist of keys made up of large numbers that are used to uniquely identify individuals. See Public key.
Digital customer experience A brand's total digital experience includes a brand's presence on different platforms including desktop website, mobile site and apps, ads on gaming platforms and digital in-store. It is based on the combination of rational and emo- tional factors of using a company 's online services that influences customers ' perceptions of a brand online.
Digital disrupters Innovations in digital media, data and marketing technology that enable a change to a new basis for competition in a market or across markets. Disruptors are also used to refer to startup or existing companies who, through their agility, are good examples of impacting competitors through disruption.
Digital disruption Innovations in digital media, data and marketing technology that enable a change to a new basis for competition in a market or across markets.
Digital marketing This has a similar meaning to 'elec- tronic marketing' - both describe the management and execution of marketing using electronic media such as the web, email, interactive TV, IPTV and wireless media in conjunction with digital data about customers' char- acteristics and behaviour.
Digital marketing metrics Measures that indicate the effectiveness of digital marketing activities integrated across different channels and platforms in meeting customer, business and marketing objectives.
Digital marketing strategy Definition of the approach by which applying digital technology platforms will support marketing and business objectives.
Digital media Communications are facilitated through content and interactive services delivered by differ- ent digital technology platforms including the Internet, web, mobile phone, interactive TV, IPTV and digital sig- nage. See Digital media channels.
Digital media •assists ' A referrer of a visit to a site before the ultimate site is credited with the sale, often
through a weighting system.
Digital media channels Online communications techniques such as search engine marketing, affiliate marketing and display advertising used to engage web users on third-party sites, encouraging them to visit an organisation's site or purchase through traditional channels such as by phone or in store.
Digital media de-duplication A single referrer of a visit leading to sale is credited with the sale based on the last-click method of digital media channel attribution.
Digital rights management (DRM) The use of differ- ent technologies to protect the distribution of digital
Glossary 51 1
services or content such as software, music, movies or other digital data.
Digital signage The use of interactive digital tech- nologies within billboard and point-of-sale ads. For example, videos and bluetooth interaction.
Digital signatures The electronic equivalent of writ- ten signatures, which are used as an online method of identifying individuals or companies using public-key
encryption.
Digital television Information is received and dis- played on a digital television using binary information (Os and 1 s), giving options for better picture and sound quality and providing additional information services based on interactivity. See Interactive digital TV.
Digital transformation A staged programme of busi- ness improvements to People, Process and Tools used for integrated digital marketing to maximise the potential contribution of digital technology and media to business growth.
Direct-to-customer m odel A brand that has previ- ously communicated to its customers via intermediar- ies such as media sites or wholesalers communicates directly via digital media such as social networks, email and websites.
Direct marketing Marketing to customers using one or more advertising media aimed at achieving measurable
response and/or transaction.
Direct response Usually achieved in an Internet mar- keting context by call-back services.
Directories Directory websites provide a structured listing of registered websites in different categories. They are similar to an electronic version of Yellow Pages. Yahoo! and Excite are the best-known exam- ples of directories. (Also known as catalogues.)
Discovery or analysis phase The identification of the requirements of an online service. Techniques to
achieve this may include quantitative analysis of digital analytics data and qualitative analysis involving focus groups, questionnaires sent to existing customers or interviews with key accounts.
Disintermediation The removal of intermediaries such as distributors or brokers that formerly linked a com- pany to its customers.
Display advertising Paid ad placements using graphi- cal or rich media ad units within a web page to achieve goals of delivering brand awareness, familiarity, favour- ability and purchase intent. Many ads encourage interaction through prompting the viewer to interact or rollover to play videos, complete an online form or to
view more details by clicking through to a site.
512 Glossary
Display (or content) network Sponsored links are dis- played by the search engine on third-party sites such as online publishers, aggregators or social networks. Ads can be paid for on a CPC, CPM or a CPA basis. There are also options for graphical or video ads as well as text-based ads.
Disruptive technologies New technologies that prompt businesses to reappraise their strategic approaches.
Distribution channels The mechanism by which prod- ucts are directed to customers, either through interme- diaries or directly.
Domain name The web address that identifies a web server. See Domain name system.
Domain name registration The process of reserving a unique web address that can be used to refer to the company webs,ite.
Domain name system (DNS) The domain name sys- tem (DNS) provides a method of representing Internet Protocol (IP) addresses as text-based names. These are used as web addresses. For example, www.microsoft com is the representation of site 207 .68.156.58. Domain names are divided into the following categories:
• Top-level domain name such as .com or .co.uk. (Also known as Global (or generic) top-level domain names (gLTD).)
• Second-level domain name. This refers to the com- pany name and is sometimes referred to as the 'enterprise name', e.g. novell.com.
• Third-level or sub-enterprise domain name. This may be used to refer to an individual server within an organisation, such as support.novell.com.
Doorway pages Specially constructed pages that feature keywords for particular product searches. These often redirect visitors to a home page.
Download The process of retrieving electronic infor- mation such as a web page or email from another remote location such as a web server.
Duplicate content Different pages that are evaluated by the search engine to be similar and so don't rank highly, even though they may be for distinct products or services.
Dynamic content email Copy, creative and offer in an email is customised based on rules or real-time content to increase its relevance and response.
Dynamic pricing Prices can be updated in real time according to the type of customer or current market conditions.
Dynamic web page A page that is created in real time, often with reference to a database query, in response to a user request.
Early adopters Companies or departments that invest in new marketing techniques and technolo- gies when they first become available in an attempt to gain a competitive advantage despite the higher risk entailed than that involved in a more cautious approach.
Early- (first-) mover advantage An early entrant into the marketplace.
Earned media The audience is reached through edito- rial, comments and sharing online.
Earnings-per-click (EPC) A relative measure of the effectiveness of a site or section of a site in generating revenue for the site owner through affiliate marketing for every 100 outbound clicks generated.
E-business See Electronic business.
E-cash See Digital cash .
E-commerce See Electronic commerce.
Econometric modelling A quantitative technique to evaluate the past influence or predict the future influ- ence on a dependent variable (typically sales in a mar- keting context) of independent variables, which may include Product, Price, Promotions and the level and mix of media investments.
Editorial calendar A plan for scheduling the creation of new or updated content for different audiences to support business goals for new visitors or increased conversion as part of content marketing.
Effective cost-per-thousand (eCPM) A measure of the total revenue a site owner can achieve through adver- tising or other revenue options. eCPM is calculated as advertising revenue achieved for every 1,000 pages that are served for the whole site or a section. See EPC.
Effective frequency The number of exposures or ad impressions (frequency) required for an advertisement to become effective.
Effectiveness Meeting process objectives, delivering the required outputs and outcomes. 'Doing the right thing.'
Efficiency Minimising resources or time needed to complete a process. 'Doing the thing right.'
E-govemment The use of Internet technologies to pro- vide government services to citizens.
Electronic business (e-business) All electronically mediated information exchanges, both within an organ- isation and with external stakeholders, supporting the range of business processes.
Electronic cash See Digital cash.
Electronrc commerce (a-commerce) All financial and informational electronically mediated exchanges between an organisation and its external stakeholders.
See Buy-side e-commerce and Sell-side e-commerce.
Electronic commerce transactions Transactions in the trading of goods and services conducted using the Internet and other digital media.
Electronic customer relationship management (e-CRM) Using digital communications technologies to maximise sales to existing customers and encour- age continued usage of online services. Today, CAM is synonymous with E-CRM.
Electronic mail (email) Sending messages or docu- ments, such as news about a new product or sales promotion, between individuals. A primitive form of push channel. Email may be inbound or outbound.
Electronic mail advertising Advertisements contained within email such as newsletters.
Electronic marketing (a -marketing) Achieving marketing objectives through use of electronic com- munications technology.
Electronic procurement (e-procurement) The elec- tronic integration and management of all procurement activities including purchase request, authorisation, ordering, delivery and payment between a purchaser and a supplier.
Electronic shopping or ES test This test was devel- oped by de Kare-Silver to assess the extent to which consumers are likely to purchase a particular retail product using the Internet.
Email marketing Typically applied to outbound communications from a company to prospects or customers to encourage purchase or branding goals. Email marketing is most commonly used for mail- ing to existing customers on a house list, but can also be used for mailing prospects on a rented or co-branded list. Emails may be sent as part of a one-off campaign or can be automated, event-based triggered emails such as a Welcome strategy, which can be broadcast based on rules about intervals and customer characteristics. See Inbound email and Outbound email.
Email service providers (ESPs) Provide a web-based service used by marketers to manage their email activi- ties including hosting email subscription forms, broad- cast and tracking.
E-marketing See Electronic marketing.
Emergent strategy Strategic analysis, strategic devel- opment and strategy implementation are interrelated and are developed together.
Emotional loyalty Loyalty to a brand is demon- strated by favourable perceptions, opinions and recommendations.
Glossary 5 1 3
Encryption The scrambling of information into a form that cannot be interpreted. Decryption is used to make the information readable.
Entry page The page at which a visitor enters a web- site. It is identified by a log file analyser. See Exit page and Referring site.
Environmental scann•ng and analysis The process of continuously monitoring the environment and analysing events in an organisation's environment(s) that have implications for planning and responding accordingly.
E-retail The sale of goods and services via the Internet or other electronic channels for individual consumers. This definition includes all e-commerce and related activities that ultimately result in transactions.
Ethical standards Practices or behaviours that are morally acceptable to society.
Evaluating a website See Website measurement.
Exchange See Business-to-business exchanges or marketplaces.
Exit page The page from which a visitor exits a web- site. It is identified by web analytics services.
Expert reviews An analysis of an existing site or pro- totype by an experienced usability expert who will identify deficiencies and improvements to a site based on their knowledge of web design principles and best practice.
Extended product Additional features and benefrts beyond the core product.
Extension See Customer extension.
External link building A proactive approach to gain quality links from third-party sites.
Extranet Formed by extending an Intranet beyond a company to customers, suppliers, collaborators or even competitors. This is password-protected to pre- vent access by general Internet users.
Facebook commerce (F-commerce) Retailers create an online store within Facebook, often with a limited range of stock.
Faceted navigation Used to enable users to rapidly filter results from a product search based on different ways of classifying the product by their attributes or features. For example, by brand, by sub-product cat- egory, by price bands.
Feed or ASS feed Blog, news or other content is published by an XML standard and syndicated for other sites or read by users in ASS reader services such as Google Reader, personalised home pages or email systems. ASS stands for really simple syndication.
5 14 Glossary
File Transfer Protocol (FTP} A standard method for moving files across the Internet. FTP is available as a feature of web browsers that is sometimes used for marketing applications such as downloading files like product price lists or specifications. Standalone FTP packages such as WSFTP are commonly used to update HTML files on web servers when uploading revisions to the web server.
Findability An assessment of how easy it is for a web user to locate a single content object or to use browse navigation and search system to find content. Uke usability, it is assessed through efficiency- how long it takes to find the content - and effectiveness - how satisfied the user is with the experience and relevance of the content they find.
Firewall A specialised software application mounted on a server at the point where a company is connected to the Internet. Its purpose is to prevent unauthorised access into the company by outsiders. Firewalls are essential for all companies hosting their own web server.
First-party cookies Served by the site currently in use - typical for e-commerce sites.
Flow Describes a state in which users have a positive experience from readily controlling their navigation and interaction on a website.
Focus groups Online focus groups have been con- ducted by w3focus.com. These follow a bulletin board or discussion group form where different members of the focus group respond to prompts from the focus group leaders.
Form A method on a web page of entering information such as order details.
Forward auctions Item purchased by highest bid made in bidding period.
Forward path analysis Forward path analysis reviews the combinations of clicks that occur from a page. This form of analysis is most beneficial when it is forward from important pages such as the home page, product and directory pages. This technique is used to identify mes- saging/navigation combinations that work best to yield the most clicks from a page. Similar, effective messaging approaches can then be deployed elsewhere on the site.
Frame A technique used to divide a web page into dif- ferent parts, such as a menu and separate content.
Gamification The process of applying game thinking and mechanics to engage an audience by rewarding them for achievements and sharing.
Global (or generic) top-level domain names (gLTD) The part of the domain name that refers to the cat- egory of site. The gLTD is usually the right-most part of the domain name, such as .co.uk or .com.
Globalisation The increase of international trading and shared social and cultural values.
Google Ads enhanced campaigns An approach introduced by Google in 2013 to simplify the manage- ment of ads displayed in different locations, different day parts (times of day) and on different devices.
Google Display Network (GON) Different types of online publishers agree for Google to display contex- tual ads on their sites for a fee, for example as part of the AdSense programme.
Google's Product listing Ads (PLAs) Product infor- mation such as pricing and images are uploaded to Google's servers using a product feed in XML or text formats for display in ads within Google AdWords or Google Shopping.
GPRS This is approximately five times faster than GSM and is an 'always-on' service that is charged according to usage. Display is still largely text-based and based on the WAP protocol.
Graphic design All factors that govern the physical appearance of a web page.
Graphics Interchange Format (GIF) A graphics format used to display images within web pages. An inter· laced GIF is displayed gradually on the screen, building up an image in several passes.
Growth hacking A mindset that focuses marketing activities on increasing the scale and profitability of a business through testing and improving techniques for improving the value of audience touch points across the customer lifecycle of Reach, Interactions, Conversion and Engagement.
GSM The digital transmission technique standard used widely for mobile voice data.
Hacker Someone who enjoys exploring the details of programmable systems and how to stretch their capabilities.
Halo effect The role of one media channel on influenc- ing sale or uplift in brand metrics. Commonly applied to online display advertising, where exposure to dis- play ads may increase click-through rates when the consumer is later exposed to a brand through other media, for example sponsored links or affiliate ads. It may also improve conversion rates on destination sites through higher confidence in the brand or familiarity with the offer. See Media-multiplier.
Hard launch A site is launched once fully complete with full promotional effort.
Hit A hit is recorded for each graphic or page of text requested from a web server. It is not a reliable meas- ure for the number of people viewing a page. A page
impression is a more reliable measure, denoting one person viewing one page.
Home page The index page of a website with menu options or links to other resources on the site. Usually denoted by <web address>/index.html.
House list A list of prospect and customer names, email addresses and profile information owned by an organisation.
HTML (Hypertext Markup Language) A standard for- mat used to define the text and layout of web pages. HTML files usually have the extension. HTML or.HTM.
HTTP (Hypertext Transfer Protocol) A standard that defines the way information is transmitted across the Internet.
Hurdle rate The proportion of customers that fall within a particular level of activity. For example, the percentage of members of an emai l list that click on the email within a 90-day period, or the number of cus- tomers that have made a second purchase.
Hype cycle A graphic representation of the matu- rity, adoption and business application of specific technologies.
Hypertink A method of moving between one website page and another, indicated to the user by text high- lighted by underlining and/or a different colour. Hyper- links can also be achieved by clicking on a graphic image such as a banner advertisement that is linked to another website.
Identity theft The misappropriation of the identity of another person, without their knowledge or consent.
Inbound email Email arriving at a company.
Inbound email marketing Management of emails from customers by an organisation.
Inbound digital communications Customers enquire through web-based form and email. See Web self-service.
Inbound link See Backlink.
Inbound marketing The consumer is proactive in seeking out information for their needs, and interac- tions with brands are attracted through content, search and social media marketing.
Incidental offline advertising Driving traffic to the website is not a primary objective of the advert.
Index inclusion Ensuring that as many of the relevant pages from your domain(s) are included within the search engine indexes you are targeting to be listed in.
Influencer relationship management (IRM) A struc- tured process to continuously manage and measure influencer outreach as a programme of campaigns
Glossary 5 1 5
based on content-assets and 'always-on' activities against defined goals.
Information architecture The combination of organi- sation, labelling and navigation schemes constituting an information system.
Information organ•sation schemes The structure chosen to group and categorise information.
Initiation of the website project This phase of the project should involve a structured review of the costs and benefits of developing a website (or making a major revision to an existing website). A successful outcome to initiation will be a decision to proceed with the site development phase, with an agreed budget and target completion date.
Integrated marketing communications The coordi- nation of communications channels to deliver a clear, consistent message.
Integrity See Security methods.
Intellectual property rights (IPRs) Protect the intan- gible property created by corporations or individuals that is protected under copyright, trade secret and patent laws.
Interactive banner advertisement A banner adver- tisement that enables the user to enter information.
lnteractivity The medium enables a dialogue between company and customer.
Interaction rate (IR) The proportion of ad viewers who interact with an online ad through rolling over it. Some will be involuntary depending on where the ad is placed on screen, so it is highly dependent on placement.
Internal link architecture Structuring and labelling links within a site's navigation to improve the results of SEO.
Intermediaries Online sites that help bring togetiher different parties such as buyers and sellers.
Internet The physical network that links computers across the globe. It consists of the infrastructure of net- work servers and communication links between them that are used to hold and transport the vast amount of information on the Internet.
Internet of Things (loT) A system of devices, soft- ware, objects, people or animals with unique identifiers that can transfer data over a network via machine-to- machine (M2M) interactions without human interaction.
Internet-based market research The use of online questionnaires and focus groups to assess customer perceptions of a website or broader marketing issues.
Internet contribution An assessment of the extent to which the Internet contributes to sales is a key meas- ure of the importance of the Internet to a company.
5 16 Glossary
Internet governance Control of the operation and use of the Internet.
Internet marketing The application of the Internet and related digital technologies in conjunction with traditional communications to achieve marketing objectives.
Internet marketing metrics See Metrics for Internet marketing.
Internet marketing strategy Definition of the approach by which Internet marketing will support marketing and business objectives.
Internet Protocol Television (IPTV) Digital television service delivered using Internet protocol, typically by a broadband connection. IPTV can be streamed for real- time viewing or downloaded before playback.
Internet pureplay An organisation with the majority of its customer-facing operations online, e.g. Egg.
Internet service provider (ISP) Company that pro- vides home or business users with a connection to access the Internet. It can also host websites or pro- vide a link from web servers to allow other companies and consumers access to a corporate website.
Interruption marketing Marketing communications that disrupt customers' activities.
Interstitial ads Ads that appear between one page and the next.
Intranet A network within a single company that ena- bles access to company information using the familiar tools of the Internet such as web browsers and email. Only staff within a company can access the Intranet, which will be password-protected.
Java A programming language standard supported by Sun Microsystems, which permits complex and graphical customer applications to be written and then accessed from a web browser. An example might be a form for calculating interest on a loan. A competitor to ActiveX.
Javascript A form of programming language embed- ded into websites using the <script> tag used to man- age interactions and integrated different marketing technology.
Key online influencers Celebrities, individuals well known in their niche or publishers that an online target audience listens to and interacts with. Online influencer outreach or 'blogger outreach' can help companies reach and engage a wider audience. Recently video bloggers ('vloggers' or 'YouTubers1 have become popular among teenage audiences.
Key performance indicators (KPis) Metrics used to assess the performance of a process and/ or whether goals set are achieved.
Keyphrase (keyword phrase) The combination of words users of search engines type into a search box that form a search query.
Knowledge Graph An infrastructure developed by Google to display related information about people, places and objects.
Lagging performance indicator A metric that indi- cates past performance. Corrective action can then b e applied to improve performance.
Landing page A destination page when a user clicks on an ad or other form of link from a referring site. It can be a home page, but more typically and desirably a landing page is a page with the messaging focused on the offer in the ad. This will maximise conversion rates and brand favourability.
Last-click method of digital media channel attribution The site that referred a visitor immediately before purchase is credited with the sale. Previous referrals influenced by other customer touch points on other sites are ignored.
Latency The average length of time that different cus- tomer types take between different activities, e.g. log- ins, paying bills, first and second purchase.
Lead Details about a potential customer (prospect). See Qualified lead.
Leading performance Indicator A measure that is suggestive of future performance and so can be used to take proactive action to shape future performance.
Lead generation offers Offered in return for custom- ers providing their contact details and characteristics. Commonly used in 828 marketing where free informa- tion such as a report or a seminar will be offered.
Lifetime value (LTV) The total net benefit that a cus- tomer or group of customers will provide a company over their total relationship with a company.
Unk anchor text The text used to form the blue, under-
lined hyperlink viewed in a web browser defined in the HTML source. For example: Visit Dave Chaffey's web log is created by the HTML code: <A HREF="http://www. davechaffey.com">Visit Dave Chaffey's web log<! A>.
Unk building A proactive approach to gain quality links from third-party sites.
Ust broker Will source the appropriate email list(s) from the list owner.
Ust owner Has collected email addresses which are offered for sale.
Live website Current site accessible to customers, as distinct from test website.
Localisation Designing the content of the website in such a way that it is appropriate to different audiences in different countries.
location-based marketing Location or proximity- based marketing is mobile marketing based on the GPS built into phones or based on interaction with other local digital devices.
Log file A file stored on a web server that records every item downloaded by users.
log file analysis Web analytics tool that is used to build a picture of the amount of usage of different parts of a website based on the information contained in the log file.
long-tail concept A frequency distribution suggesting the relative variation in popularity of items selected by consumers.
Loyalty techniques Customers sign up to an incen- tive scheme where they receive points for repeat pur- chases, which can be converted into offers such as discounts, free products or cash. (Also known as online incentive schemes.)
Machine-to-Machine (M2M connections) These include home and office security and automation, smart metering and utilities, maintenance, building automa- tion, automotive, healthcare and consumer electronics.
Machine learning Creating and applying predictive
models and algorithms with the ability to learn without being explicitly programmed. The computer models then make predictions of success based on pat- terns extracted from historical data. These are used to define rules, which are implemented to automate tasks such as targeting media or emails to the most valuable segments with the most relevant creative, offer and t iming.
Macro-environment Broader forces affecting all organisations in the marketplace including social, tech- nological, economic, political and legal aspects.
Mailbots See Autoresponders.
Maintenance process The work involved in running a live website such as updating pages and checking the performance of the site.
Malware Malicious software or tool bars, typically downloaded via the Internet, which act as a 'trojan horse' by executing other unwanted activities such as keylogging of user passwords or viruses that may collect email addresses.
Marketing automation Enables businesses to auto- mate tasks in the marketing and sales process to make the process to deliver more relevant communications, typically delivered as personalised emails and website messages.
Marketing intermediaries Firms that can help a com- pany to promote, sell and distribute its products or services.
Glossary 517
Marketing-led site design Site design elements are developed to achieve customer acquisition, retention and communication of marketing messages.
Marketing mix The series of seven key variables - Product, Price, Place, Promotion, People, Process and Physical evidence -that are varied by marketers as part of the customer offering.
Marketing orchestration Designing customer contact strategies to deliver the most relevant, most responsive messages integrated across different communications channels based on customer context. Customer strate- gies are managed by marketing automation systems using rules or Artificial Intelligence based on Big Data analysis.
Marketing planning A logical sequence and a series of activities leading to the setting of marketing objectives and the formulation of plans for achieving them.
Marketplace See Business-to-business exchanges or marketplaces.
Marketspace A virtual marketplace such as the Inter- net in which no direct contact occurs between buyers and sellers. {Also known as electronic marketspace.)
Markup language See HTMl, XML
Martech stack A combination of different software services or tools used to run all marketing operations across multiple channels including customer acquisition, conversion, retention , team communica- tions and to deliver customer and market insight and reporting.
Mashup Websites, pages or widgets that combine the content or functionality of one website or data source with another to create something offering a different type of value to web users from the separate types of content or functionality.
Mass customisation The ability to create tailored mar- keting messages or products for individual customers or a group of similar customers (a bespoke service), yet retain the economies of scale and the capacity of mass marketing or production.
Mass marketing One-to-many communication between a company and potential customers, with lim- ited tailoring of the message.
Measurement See Website measurement.
Media buyer The person within a company wishing to advertise who places the advertisement, usually via a media broker.
Media buyin g The process of purchasing media to meet the media plan requirements at the lowest costs.
Media fragmentation Describes a trend to increasing choice and consumption of a range of media in terms of different channels such as web and mobile and also
518 Glossary
within channels, for example more lV channels, radio stations, magazines, more websites. Media fragmen- tation implies increased difficulty in reaching target audiences.
Media multiplier or halo effect The role of one media channel on influencing sale or uplift in brand metrics. Commonly applied to online display advertising, where exposure to display ads may increase click-through rates when the consumer is later exposed to a brand through other media, for example sponsored links or affiliate ads. It may also improve conversion rates on destination sites through higher confidence in the brand or familiarity with the offer.
Media owners The owners of websites (or other media such as newspapers) that accept advertisements.
Media planning The process of selecting the best combination of media to achieve marketing campaign objectives. Answers questions such as 'How many of the audience can I reach through different media?', 'On which media (and ad vehicles) should I place ads?', 'Which frequency should I select?', 'How much money should be spent in each medium?'
Media queries A styling approach within cascad- ing style sheets (CSS3) enabling the layout to change based on type of device at its scale.
Media site Typical location where paid-for ads are placed.
Merchandistng See Web merchandising.
Meta -data Literally, data about data- a format describing the structure and content of data.
Memes An idea, theme or trend that engages an audi- ence and spreads through viral communications.
Meta search engines Meta search engines submit keywords typed by users to a range of search engines in order to increase the number of relevant pages since different search engines may have indexed different sites. An example is the meta-crawler search engine or www.mamma.com.
Meta- tags Text within an HTML file summarising the content of the site (content meta-tag) and relevant key- words (keyword meta-tag), which are matched against the keywords typed into search engines.
Metrics for Internet marketing Measures that indi- cate the effectiveness of Internet marketing activities in meeting customer, business and marketing objectives.
Micro-environment The actors (stakeholders) and their interactions that influence how an organisation responds in its marketplace.
Microformats A semantic definition in XMUHTML of a specific information type within a web page such as a
product, event, recipe or review. Schema.org manages some of the most common definitions.
Microsite Specialised content that is part of a web- site that is not necessarily owned by the organisa- tion. If owned by the company it may be as part of an extranet. See Nested ad content_
Mixed-mode buying The process by which a cus- tomer changes between online and offline channels during the buying process.
Mobile-based apps Designed to run on smartphones and tablet computers, apps provide users with rich mobile content by deploying the handset's multiple native capabilities. Apps are available for download from app stores hosted by the mobile operating sys- tems (e.g. iTunes for iOS, Google Play for Android, Microsoft App Store, BlackBerry App World).
Mobile commerce The use of wireless devices such as mobile phones for informational or monetary transactions.
Mobile marketing Marketing to encourage consumer engagement when using mobile phones (particularly smartphones) or tablet devices.
Multichannel marketing and Omnichannel market-
ing Customer communications and product distribu- tion are supported by a combination of digital and traditional channels at different points in the buying cycle. With the range of mobile and loT touchpoints, some have expanded the term to omnichannel marketing.
Multic hannel marketing strategy Defines how differ- ent marketing channels should integrate and support each other in terms of their proposition development and communications based on their relative merits for the customer and the company.
Multichannel prioritisation Assesses the strategic sig- nificance of the Internet relative to other communica- tions channels and then deploys resources to integrate with marketing channels.
Multlscreening A term used to describe simultaneous use of devices such as digitallY and a smartphone or tablet.
Native advertising Online content that is created to promote or enhance a brand, such as a publisher arti- cle or social media update. Such content should be disclosed as advertising by law in many countries, but often it isn't.
Natural or organic listings The pages listing results from a search engine query that are displayed in a sequence according to relevance of match between the keyword phrase typed into a search engine and a
web page according to a ranking algorithm used by the
search engine.
Navigational search Searchers use a search engine such as Google to find information deeper within a company site by appending a qualifier such as a prod- uct name to the brand or site name. Organisations
need to check that relevant pages are available in the search results pages for these situations.
Near-field communications (NFC) Enables data
exchange through wireless connections between two devices in close proximity to each other. Use of NFC-enabled smartphones can facilitate contactless payments.
Nested ad content This refers to the situation when the person undertaking the click-through is not redirected to
a corporate or brand site, but is instead taken to a related page on the same site as that on which the advertise- ment is placed. (Sometimes referred to as microsite.)
Net Promoter Score (NPS) A measure of the number of advocates a company (or website) has who would recommend it compared to the number of detractors.
Nofollow and Dofollow tags A nofollow tag is a basic piece of HTML. Appended to a hyperlink, it allows webmasters to control whether search engines fol- low a link or not. For example, the following URL on a page of another site allows search engines to visit Smart Insights' website and credit the website with the link; each link is scored by the search engines, supporting SEQ: <a href-.. "http://www.smartinsights. comr title="Smart lnsights"<Visit Smart lnsights<la> This normal, natural type of link is sometimes known as 'do-followed'! Here's the same hyperlink, now includ- ing a nofollow tag (highlighted in red): <a href="http:// www.smartinsights.comf' title="Smart Insights" rel="nofollow" Visit Smart lnsights<la>.
News jacking A publisher or other brand seeks to take advantage of current topical interest in a story and then
add to or subvert it to increase their own publicity.
Non- repudiability See Security methods.
Notification The process whereby companies register with the data protection register to inform about their
data holdings.
Offer An incentive in direct marketing or a product offering.
Offline site promotion Traditional techniques such as
print and TV advertising used to generate website traffic.
One-to-one marketing A unique dialogue that occurs
directly between a company and individual customers (or less strictly with groups of customers with similar needs). The dialogue involves a company listening to customer needs and responding with services to meet
these needs.
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Glossary 519
Online brand See Digital brand.
Online branding How online channels are used to sup- port brands that, in essence, are the sum of the charac-
teristics of a product or service as perceived by a user.
Online business model A summary of how a company
will generate a profit identifying its core product or service value proposition, target customers in different markets, position in the competitive online marketplace or value chain and its projections for revenue and costs.
Online company presence Different forms of online media controlled by a company including their web-
site, blogs, email list and social media presences. Also known as 'owned media'.
Online customer experience The combination of rational and emotional factors in using a company's
online services that influences customers' perceptions
of a brand online.
Online tactical marketing segmentation Tactical
segmentation enables targeting based on customer journey behaviour such as search behaviour, content accessed and contribution to social media.
Online incentive schemes See Loyalty techniques.
Online influencer outreach Identifying online influenc- ers such as bloggers, media owners or individuals with a large online following in the social networks and then
approaching them to partner together to communicate with their audience.
Online influencers and Key Opinion Leaders Online influencers can include any type of online person who has a significant following, such as journalists, bloggers or celebrities.
Online intermediary sites Websites that facilitate exchanges between consumer and business suppliers.
Online market ecosystem Interactions between dif-
ferent online systems related to a specific hardware or software technology that may be independent or devel- oped by a particular brand.
Online marketplace Exchanges of information and commercial transactions between consumers, busi- nesses and governments completed through different
forms of online presence such as search engines, social networks, comparison sites and destination sites.
Online promotion contribution An assessment of the proportion of customers (new or retained) who are reached by online communications and are influenced as a result.
Online PR (e·PR) Maximising favourable mentions of your company, brands, products or websites on
third-party websites that are likely to be visited by your target audience. Online PR can extend reach and
520 Glossary
awareness of a brand within an audience and will also generate backlinks vital to SEO. It can also be used to support viral or word-of-mouth marketing activities in other media.
Online reputation management Controlling the reputation of an organisation through monitoring and controlling messages placed about the organisation.
Online revenue contribution An assessment of the direct contribution of the Internet or other digital media to sales, usually expressed as a percentage of overall sales revenue.
Online service-quality gap The mismatch between what is expected and delivered by an online presence.
Online site promotion Internet-based techniques used to generate website traffic.
Online social network A service facilitating the con- nection, collaboration and exchange of Information between individuals.
Online val ue proposition (OVP) A statement of the benefits of online services that reinforce the core prop- osition and differentiate from an organisation's offline offering and that of competitors.
Online voice of customer (VoC) Qualitative assessments of the effectiveness of digital presence based on direct customer feedback. They answer 'who and why' ques- tions about how customers interact with brands online.
On-page optimisation Writing copy and applying markup such as the <title> tag and heading tags <h1> to highlight to search engines relevant keyphrases within a document.
Operational effectiveness Performing similar activities better than rivals. This includes efficiency of processes.
Opt-in A customer proactively agrees to receive further information.
Opt- in email The customer is only contacted when he or she has explicitly asked for information to be sent (usually when filling in an on-screen form).
Opt-out A customer declines the offer to receive fur- ther information.
Opt-out email The customer is not contacted sub- sequently if he or she has explicitly stated that he or she does not want to be contacted in future. Opt-out or unsubscribe options are usually available within the email itself.
Organic social media marketing It's common prac- tice to distinguish between organic and paid social media marketing activities in a similar way to organic and paid search marketing. Organic social involves using social networks and customer communities to develop relationships, share positive opinions through
social media amplification and manage negative social media comments.
Outbound email Email sent from a company.
Outbound email marketing Emails are sent to cus- tomers and prospects from an organisation.
Outbound Internet-based communications The website and email marketing used to send personal- ised communications to customers.
Outsourcing Contracting an outside company to undertake part of the Internet marketing activities.
Over1ay Typically an animated ad that moves around the page and is superimposed on the website content.
Overt Typically an animated ad that moves around the page and is superimposed on the website content.
Owned media Different forms of online media con- trolled by a company including their website, blogs, email list and social media presence.
Page impression One page impression occurs when a member of the audience views a web page. See Ad 1mpress1on and Reach.
PageRank A scale between 0 to 10 used by Google to assess the importance of websites according to the number of inbound links or backlinks.
Page request The process of a user selecting a hyper- link or typing in a uniform resource locator (URL) to retrieve information on a specific web page. Equivalent to page impression.
Page view See Page impression.
Paid media Also known as bought media, a direct pay- ment occurs to a site owner or an ad network when they serve an ad, a sponsorship or pay for a click, lead or sale generated.
Paid search marketing (pay-per-click PPC) A rele- vant text ad with a link to a company page is displayed on the SERPs when the user of a search engine types in a specific phrase. A fee is charged for every click of each link, with the amount bid for the click mainly determining its position. Additionally, PPC may involve advertising through a content network of third-party sites (which may be on a CPC, CPM or CPA basis).
Panda and Penguin algorithm updates Changes to Google's algorithm aimed at reducing the impact at webspam. They caused the ran kings of many sites to fall. Panda targeted low-quality sites with 'thin' content.
Penguin targeted sites using aggressive link building.
Paths-to-purchase The different sites, channels and devices and information sources that consumers use to inform their purchase decision for a product or service. Also known as conversion pathways on a site.
Pay-for-performance communications The wast- age from traditional media buys can be reduced online through advertising models where the advertisers only pay for a response (cost-per-click), as in pay-per-click search marketing or for a lead or sale, as in affiliate marketing.
Pay-per-click PPC refers to when a company pays for text ads to be displayed on the search engine results pages as a sponsored link (typically above, to the right of or below the natural listings) when a specific key- phrase is entered by the search users. It is so called because the marketer pays each time the hypertext link in the ad is clicked on. If a link is clicked repeat- edly, then this will be detected by the search engine as click fraud and the marketer will not be charged .
Payment systems Methods of t ransferring funds from a customer to a merchant.
People variable The element of the marketing mix that involves the delivery of service to customers during interactions with those customers.
Performance drivers Critical success factors that determine whether business and marketing objectives are achieved.
Performance management system A process, used to evaluate and improve the efficiency and effective- ness of an organisation and its processes.
Performance measurement system The process by which metrics are defined, collected, disseminated and actio ned.
Performance marketing Used as an alternative term for affiliate marketing which includes payment for lead, sale, but also click, so it is a broader term including other online paid media such as display advertising and biddable media including pay-per-click and pro- grammatic advertising.
Performance metrics Measures that are used to evaluate and improve the efficiency and effectiveness of business processes.
Performance of website Performance or quality of service is dependent on its availability and speed of access.
Permission marketing Customers agree (opt-in) to be involved in an organisation's marketing activities, usu- ally as a result of an incentive.
Persistent cookies Cookies that remain on a com- puter after a visitor session has ended. Used to recog- nise returning visitors.
Personal data Any information about an individual stored by companies concerning their customers or employees.
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Personalisation Digital experience personalisation involves dynamic serving of customised content, prod- uct or promotional offer recommendations to website visitors or app users based on their characteristics and intent behaviour to support conversion and long-term engagement goals.
Personas A thumbnail summary of the characteristics, needs, motivations and environment of typical website users.
Persuasion marketing Using design elements such as layout, copy and typography together with promotional messages to encourage site users to follow particular paths and specific actions rather than giving them complete choice in their navigation.
Phishing Obtaining personal details online tlhrough sites and emails masquerading as legitimate businesses.
Phone-me A call-back facility available on the website for a company to contact a customer by phone at a later time, as specified by the customer.
Physical evidence variable The element of the mar- keting mix that involves the tangible expression of a product and how it is purchased and used.
Pixel The small dots on a computer screen that are used to represent images and text. Short for 'p ic- ture element'. Used to indicate the size of banner advertisements.
Place variable The element of the marketing mix that involves distributing products to customers in line with demand and minimising cost of inventory, transport and storage.
Plug-in A program that must be downloaded to view particular content , such as an animation.
Podcasts Individuals and organisations post online media (audio and video) that can be viewed in the appropriate players (including the iPod, which first sparked the growth in this technique). The latest pod- cast updates can be automatically delivered by Really Simple Syndication.
Portal A website that acts as a gateway to informa- tion and services available on the Internet by providing search engines, directories and other services such as personalised news or free email.
Portfolio analysis Identification, evaluation and selec- tion of desirable marketing applications.
Positioning Customers' perception of the product and brand offering relative to those of competitors.
Predictive analytics Using data mining and statistical modelling to predict Mure outcomes, for example by scoring customer propensity to respond to a specific offer.
522 Glossary
Prescriptive strategy The three core areas of strategic
analysis, strategic development and strategy imple- mentation are linked together sequentially.
Price comparison sites See Aggregators.
Price dispersion The distribution or range of prices
charged for an item across different retailers.
Price elasticity of demand Measure of consumer behaviour that indicates the change in demand for a product or service in response to changes in price.
Price transparency Customer knowledge about pric- ing increases due to increased availability of pricing information.
Price variable The element of the marketing mix that
involves defining product prices and pricing models.
Pricing level The price set for a specific product or range of products.
Pricing model Describes the form of payment such as o utright purchase, auction, rental, volume purchases
and credit terms.
Primary persona A representation of the typical site user.
Privacy A moral right of individuals to avoid intrusion into their personal affairs. See Security methods.
Privacy and Electronic Communications Regula- tions Act A law intended to control the distribution of email and other online communications including cookies.
Privacy statement Information on a website explaining how and why individuals' data are collected, processed
and stored.
Process variable The element of the marketing mix that involves the methods and procedures companies
use to achieve all marketing functions.
Product variable The element of the marketing mix that involves researching customers' needs and devel- oping appropriate products. See Core product and
Extended product.
Profiling See Customer profiling.
Programmatic ad buying Describes the purchase of
online display advertising that is aggregated, booked, flighted, analysed and optimised via demand-side soft- ware interfaces and algorithms. It includes RTB and also non-RTB methods and buy types such as Face-
book Ads API and the Google Display Network.
Progressive Web Apps (PWA) A website develop- ment technique that combines the benefrts of web and
mobile apps enabling users to install web apps to their home screen, receive push notifications and potentially work offline.
Promotion (online and offline) Online promotion uses
communication via the Internet itself to raise awareness
about a site and drive traffic to it. This promotion may take the form of links from other sites, banner
advertisements or targeted email messages. Offline promotion uses traditional media such as television or newspaper advertising and word of mouth to promote a company's website.
Promotion variable The element of the marketing mix that involves communication with customers and other stakeholders to inform them about the product and the
organisation.
Propensity modelling A name given to the approach of evaluating customer characteristics and behaviour and then making recommendations for future p:roducts.
Prototypes and prototyping A prototype is a prelimi- nary version of part (or a framework of aiQ of a website that can be reviewed by Its target audience, or the
marketing team. Prototyping is an iterative process where website users suggest modifications before fur- ther prototypes are made and the final version of the site is developed.
Proximity marketing Marketing messages are delivered in real time according to customers' presence based on the technology they are carrying, wearing or have embedded. Bluecasting is the best-known example.
Psychographic segmentation A breakdown of cus-
tomers according to different characteristics.
Public key A unique identifier of a buyer or a seller that is
available to other parties to enable secure e-commerce using encryption based on digital certificates.
Public-key encryption An asymmetric form of encryp-
tion in which the keys or digital certificates used by the sender and receiver of information are different. The two keys are related, so only the pair of keys can be
used together to encrypt and decrypt information.
Public-key infrastructure (PKI) The organisations responsible for issuing and maintaining certificates for public-key security together form the PKI.
Public relations The management of the awareness, understanding and reputation of an organisation or brand , primarily achieved through influencing exposure
in the media.
Pull media The consumer is proactive in selection of
the message through actively seeking out a web site.
Push media Communications are broadcast from an advertiser to consumers of the message, who are pas- sive recipients.
Push technology The delivery of web-based content to the user's desktop without the need for the user to visit a site to download information. Email can also be
considered to be a push technology. A particular type of information is a push channel.
Qualified lead Contact and profile information for a customer with an indication of the level of their interest in product categories.
Quality score Aro assessment in paid search by Google Ads (and now other search engines) of an individual ad triggered by a keyword that, in combination with the bid amount, determines the ranking of the ad relative to competitors. The primary factor is the click-through rate for each ad, but quality score also considers the match between the keyword and the occurrence of the keyword in the text, historical click-through rates, the engagement of the searcher when they click through to the site and the speed at which the page loads.
Quick Response (QR) code A QR code is a two- dimensional matrix bar code. QR codes were invented in Japan, where they are a popular type of two-dimen- sional code used for direct response.
Reach The number of unique individuals who view an advertisement.
Real-time bidding (RTB) Bids for buying ads against keywords can be managed in real time in conjunction with a DSP.
Real-time marketing and PR Brands develop an agile, proactive approach to PR, content marketing and advertising to participate in current news and trends to help increase their visibility and influence through positive brand mentions. They also develop a reac- tive approach to respond to negative brand mentions through social media reputation management.
Really Simple Syndication (RSS) Blog, news or other content is published by an XML standard and syndi- cated for other sites or read by users in ASS reader software services.
Reciprocal links Links that are agreed between your- self and another organisation.
Referrer The site that a visitor previously visited before following a link.
Referring sites A log file may indicate which site a user visited immediately before visiting the current site. See Click-through , Destination site and Exit page.
Referrer or referring site The source of a visitor to site delivered via a digital media channel. Typically a specific site, e.g. Google Ads or a media site or an individual ad placement on the site.
Registration (individuals) The process whereby an individual subscribes to a site or requests further infor- mation by filling in contact details and his or her needs using an electronic form.
Registration (of domain name) The process of reserv- ing a unique web address that can be used to refer to the company website.
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Reintermediatlon The creation of new intermediaries between customers and suppliers providing services such as supplier search and product evaluation.
Relationship marketing Consistent application of up- to-date knowledge of individual customers to product and service design, which is communicated interac- tively in order to develop a continuous, mutually benefi- cial and long-term relationship.
Renderability The capability of an email to display cor- rectly formatted in different email readers.
Repeat visits If an organisation can encourage cus- tomers to return to the website then the relationship can be maintained online.
Representation The locations on the Internet where an organisation is located for promoting or selling its
. serv1ces.
Repurposing Developing for a new access platform, such as the web, content that was previously used for a different platform.
Responsive Web Design (RWD) Layout and formatt.ing of website content is modified at the point of render- ing to suit different screen resolutions and capabilities to produce a bett.er experience to users of a range of desktop, tablet and smart phone devices using web development methods like CSS and image scaling.
Resource analysis Review of the technological, finan- cial and human resources of an organisation and how they are utilised in business processes.
Resources Resources are defined as physical assets over which an organisation has control. This narrow definition of resources allows them to be clearly distin- guished from capabilities.
Results-based payment Advertisers pay according to the number of times the ad is clicked on.
Retail channel Retailers' use of the Internet as both a communication and a transactional channel concur- rently in business-to-consumer markets.
Retail format This is the general nature of the retail mix in terms of range of products and services, pric- ing policy, promotional programmes, operating style or store design and visual merchandising; examples include mail-order retailers (non-store-based) and department-store retailers.
Retention See Customer retention.
Return on advertising spend (ROAS) This indicates amount of revenue generated from each referrer. ROAS =Total revenue generated from referrer/ Amount spent on advertising with referrer.
Return on investment (ROI) This indicates the profit- ability of any investment, or in an advertising context for each referring site.
524 Glossary
• ROI = Profit generated from investmenVCost of investment.
• ROI =Profit generated from referrers/Amount spent on advertising with referrer.
Revenue models Describe methods of generating income for an organisation.
Reverse auctions Item purchased from lowest-bidding supplier in bidding period.
Reverse path analysis Indicates the most popular combination of pages and/or calls-to-action that lead to a page. This is particularly useful for transactional pages such as the first checkout page on a consumer site, a lead generation or contact-us page on a busi- ness-to-business site, an email subscription page and a call-me-back option.
Rich media Advertisements that are not static, but pro- vide animation, audio, sound or interactivity as a game or form to be completed. An example of this would be a banner display advertisement for a loan in which a cus- tomer can type in the amount of loan required, and the cost of the loan is calculated immediately.
Rich Internet applications (RIA) Interactive applica- tions that provide options such as product selectors or games. They may incorporate video or sound also. Typically built using technologies such as Adobe Flash, Ajax, Flex, Java or Silverlight.
Robot A tool, also known as a spider, that is employed by search engines to index web pages of registered sites on a regular basis. See Spider.
Run-of-site A situation where a company pays for banner advertisements to promote its services across a website.
Sales generation offers Offers that encourage prod- uct trial. A coupon redeemed against a purchase is a classic example.
Sales promotions The Internet offers tremendous potential for sales promotions of different types since it is more immediate than any other medium - it is always available for communication, and tactical variations in the details of the promotion can be made at short notice.
Satisficing behaviour Consumers do not behave entirely rationally in product or supplier selection. They will compare alternatives, but then may make their choice given imperfect information.
Scannability and Skimmability Scannability is the use of writing and formatting techniques that compensate for the fact that most people don't fully read content on the web. These help give online readers and overview to navigate the page. Skimmability is using shorter copy and formatting techniques to make it easier to read text once the reader has found context through scanning.
Scenario-based analysis Models of the future envi- ronment are developed from different starting points.
Scripts Scripts can run either on the user's browser (client-side scripts) (see Web browser) or on the web server (server-side scripts).
Serum A methodology that supports agile software development based on 15-30-day sprints to implement features from a product backlog. 'Serum' refers to a daily project status meeting during the sprint.
Search engme Specialised website that uses automatic tools known as spiders or robots to index
web pages of registered sites. Users can search the index by typing in keywords to specify their interest. Pages containing these keywords will be listed, and by clicking on a hyperlink the user will be taken to the site.
Search engine listing The list of sites and descrip- tions returned by a search engine after a user types in keywords.
Search engine marketing (SEM) Promoting an organi- sation through search engines to meet its objectives by delivering relevant content in the search listings for searchers and encouraging them to click-through to a destination site. The two key techniques of SEM are search engine optimisation (SEO) to improve results from the natural listings, and paid-search marketing to deliver results from the sponsored listings within the search engines through pay-per-click (PPC) paid- search engine marketing and through content-network paid-search marketing (which may be on a PPC basis or on a CPM basis). SEM is about connecting the searchers with information that will help them find what they are looking for and will help site owners generate revenue or disseminate information.
Search engine optimisation (SEO) A structured approach used to increase the position of a company or its products in search engine natural or organic results listings (the main body of the search results page) for selected keywords or phrases.
Search engine ranking The position of a site on a par- ticular search engine.
Search engine results pages (SERPs) The page(s) containing the results after a user types in a keyphrase into a search engine. SERPs contain both natural or organic listings and paid or sponsored listings.
Search engine submission The process of informing search engines that a site should be indexed for listing in the search engine results pages.
Secure HTTP Encrypted HTTP.
Secure Sockets Layer (SSL) A commonly used encryption technique for scrambling data such as
credit card numbers as they are passed across the Internet from a web browser to a web server.
Security methods When systems for electronic com- merce are devised, or when existing solutions are selected, the following attributes must be present:
• Authentication - are parties to the transaction who they claim to be? This is achieved through the use of digital certificates.
• Privacy and confidentiality- are transaction data protected? The consumer may want to make an anonymous purchase. Are all non-essential traces of a transaction removed from the public network and all intermediary records eliminated?
• Integrity - checks that the message sent is complete, i.e. that it is not corrupted.
• Non-repudiability - ensures sender cannot deny sending message.
• Availability- how can threats to the continuity and performance of the system be eliminated?
Seeding The viral campaign is started by sending an email to a targeted group that are likely to propagate the virus.
Segmentation Identification of different groups within a target market in order to develop different offerings for each group.
Sell -s1de e-commerce E-commerce transactions between a supplier organisation and its customers.
Sense and respond communications Delivering timely, relevant communications to customers as part of a contact strategy based on assessment of their posi- tion in the customer lifecycle and monitoring specific interactions with a company's website, emails and staff.
Server log file See Online web metrics.
Service quality The level of service received on a website. Dependent on reliability, responsiveness and availability of staff and the website service.
Serving Used to describe the process of displaying an advertisement on a website (ad serving) or delivering a web page to a user's web browser. See Web server.
Session See Visitor session.
Session cookie A cookie used to manage a single visi- tor session.
Share of search The audience share of Internet searchers achieved by a particular audience in a par- ticular market.
Share of vo1ce The relative advertising spend of the different competitive brands within the product cat- egory. Share of voice (SOV) is calculated by dividing a particular brand's advertising spend by the total cat- egory spend.
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Short code Five-digit numbers combined with text that can be used by advertisers or broadcasters to encourage consumers to register their interest. They are typically followed up by an automated text mes- sage from the advertiser with the option to opt in to further information by email or to link through to a WAP site.
Short Message Service (SM S) The formal name for text messaging.
Single customer view Customer profile information is kept consistent across systems to maintain customer data quality.
Site See Website.
Site announcements Usually used to describe the dissemination of information about a new or revised website.
Site auditors Auditors accurately measure the usage for different sites as the number of ad impressions and click-through rates. Auditors include ABC (Audit Bureau of Circulation) and BPA (Business Publication Auditor) International.
Site availability An indication of how easy it is to con- nect to a website as a user. In theory this figure should be 100 per cent, but for technical reasons such as failures in the server hardware or upgrades to software, sometimes users cannot access the site and the figure falls below 90 per cent.
Site design page template(s) A standard page layout format that is applied to each page of a website. Typi- cally defined for different page categories (e.g. cat- egory page, product page, search page).
Site map A graphical or text depiction of the relation- ship between different groups of content on a website.
Site measurement See Website measurement.
Sit e navigation scheme Tools provided to the user to move between different information on a website.
Site re-launch Where a website is replaced with a new version with a new 'look and feel '.
Site statistics Collected by log file analysers, these are used to monitor the effectiveness of a website.
Site 'stickiness' An indication of how long a visi- tor stays on a site. Log file analysers can be used to assess average visit times.
Site visit One site visit records one customer visiting the site. Not equivalent to user session.
Site-vis itor activity data Information on content and services accessed by e-commerce site visitors.
Sitemapping tools These tools diagram the layout of the website, which is useful for site management and can be used to assist users.
526 Glossary
Situation analysis Collection and review of informa- tion about an organisation's external environment and internal processes and resources in order to inform its strategies.
Skunkworks A loosely structured group of people who research and develop innovative opportunities and business benefits.
SMART metrics SMART metrics must be:
• Specific • Measurable • Actionable • Relevant • Timely.
Social bookmarking Web users keep a shared version of favourite sites ('Favourites') online. This enables the most popular sites in a category to be identified.
Social co mmerce Social commerce is a subset of a-commerce that encourages participation and interaction of customers in rating, selecting and buying products through group buying. This par- ticipation can occur on an a-commerce site or on third-party sites.
Social CRM The process of managing customer-to- customer conversations to engage existing customers, prospects and other stakeholders with a brand and so enhance customer-relationship management.
Social exclusion Part of society is excluded from the facilities available to the remainder.
Social graph A term popularised by Facebook in 2007 when describing its Facebook platform. The social graph describes the relationship between individuals linked through social networks and other connections such as email or personal contact.
Social location-based marketing Where social media tools give users the option of sharing their location, and hence give businesses the opportunity to use proximity or location-based marketing to deliver targeted offers and messages to consumers and collect data about their preferences and behaviour. Businesses can offer consumers benefits to check-in, for example, to gain points, be the most regular visitor to that location, to gain rewards and prizes from advertisers, to share their location with friends and, in the case of events, to meet like-minded people. Of course the privacy implica- tions of this relatively new technology must be carefully reviewed.
Social media amplification A method of increasing awareness of a brand through organic and paid sharing of social media updates via social networks as organic social posts and adverts .
Social media governance A definition of how compa- nies should respond to social mentions that may give rise to leads or reputational damage.
Social media listening The process of using moni- toring tools to review mentions of a brand and related keywords within social networks and other online sites.
Social media marketing Monitoring and facilitat- ing customer-customer interaction and participation throughout the web to encourage positive engagement with a company and its brands. Interactions may occur on a company site, social networks and other third- party sites.
Social media optimisation (SMO) A process to review and improve the effectiveness of social media marketing through reviewing approaches to enhance content and communications quality to generate more business value.
Social media strategy A definition of the marketing communications used to achieve interaction with social network users to meet business goals. The scope of social media optimisation also includes incorporation of social features such as status updates and sharing widgets into company websites.
Social network A site that facilitates peer-to-peer communications within a group or between individuals through providing facilities to develop user-generated content (UGC) and to exchange messages and com- ments between different users.
Social sign-on A user logs in to a site using a social network service user name and password. This can enable connection between social memberships and company profile information.
Social selling A proactive approach to using social media to generate leads and sales, particularly applied to B2B marketing in Unkedln where it's possible to identify prospects and connect with them.
Soft launch A trial version of a site launched with lim- ited publicity.
Soft lock-in Electronic linkages between supplier and customer increase switching costs.
Software agents See Agents.
Software as a service (SaaS) Business applications and software services are provided through Internet and web protocols with the application managed on a separate server, from where it is accessed through a web browser on an end-user's computer with data stored within 'The Cloud '.
Sparn Unsolicited email (usually bulk mailed and untargeted).
Spamming Bulk emailing of unsolicited mail.
Specific offline advertising Driving traffic to the web- site or explaining the online proposition is a primary objective of the advert.
Spiders Software processes, technically known as robots, employed by search engines to index web pages of registered sites on a regular basis. They fol- low links be1ween pages and record the reference URL of a page for future analysis.
Splash page A preliminary page that precedes the nor- mal home page of a website. Site users can either wait to be redirected to the home page or can follow a link to do this. Splash pages are not now commonly used since they slow down the process of customers finding the information they need.
Sponsorship Sponsorship involves a company pay- ing money to advertise on a website. The arrangement may involve more than advertising. Sponsorship is a similar arrangement to co-branding.
Stage models Models for the development of different levels of Internet marketing services.
Stages in website development The standard stages of creation of a website are initiation, feasibility, analy- sis, design, development (content creation), testing and maintenance.
Static (fixed) web page A page on the web server that is invariant.
Stickiness An indication of how long a visitor stays on-site.
Storyboarding Using static drawings or screenshots of the different parts of a website to review the design concept with customers or clients.
Strateg1c agility The capability to innovate and so gain competitive advantage within a marketplace by moni- toring changes within an organisation's marketplace to efficiently evaluate alternative strategies and then select, review and implement appropriate candidate strategies.
Strategic analysis Coll ection and review of informa- tion about an organisation's internal processes and resources and external marketplace factors in order to inform strategy definition.
Strategic market segmentation Selection of key audi- ences to target with value propositions developed for these audiences.
Strategic positioning Performing different activities from rivals or performing similar activities in different ways.
Strategy fonnulation Generation, review and selection of strategies to achieve strategic objectives.
Strategy process model A framework for approaching strategy development.
Glossary 527
Streaming media Sound and video that can be expe- rienced within a web browser before the whole clip is downloaded.
Streaming media server A specialist server used to broadcast audio (e.g. podcasts) or video (e.g. IPTV or webcast presentations). Served streams can be unicast (a separate copy of stream is served for each recipient), multicast (recipients share streams) or peer-to-peer where the media is shared between different recipient's computers using a Bitorrent or Kontiki approach.
Style guide A definition of site structure, page design, typography and copy defined within a company. See Graphic design.
Subject access request A request by a data subject to view personal data from an organisation.
Superstitials Pop-up adverts that require interaction to remove them.
Surfer An undirected information seeker who is often looking for an experience rather than information.
Symmetric encryption Both parties to a transaction use the same key to encode and decode messages.
Syndication Content or product information is distrib- uted to third parties. Online this is commonly achieved through standard XML formats such as ASS.
Tagging Tracking of the origin or referring site or of vis- itors to a site and their spending patterns. Also tagging refers to where users or web page creators categorise content on a site through adding descriptive terms. A common approach in blog posts.
Target marketing strategy Evaluation and selection of appropriate segments and the development of appro- priate offers.
Targeting (through banner advertisers) Advertis- ing networks such as DoubleCiick offer advertisers the ability to target advertisements dynamically on the World Wide Web through their 'DART' targeting technology. This gives advertisers a means of reaching specific audiences.
Technology convergence A trend in which different hardware devices such as TVs, computers and phones merge and have similar functions.
Telemarketing Mainly used for inbound telemarketing, including sales lines, carelines for goods and services and response handling for direct response campaigns.
Template See Site design page template.
Test website A parallel version of the site to use before the site is made available to customers as a live website.
528 Glossary
Testing Testing involves different aspects of the con- tent such as spelling, validity of links, formatting on different web browsers and dynamic features such as form filling or database queries.
Testing content Testing should be conducted for plug-ins; for interactive facilities and integration with company databases; for spelling and grammar; for adherence to corporate image standards; for imple- mentation of HTML in different web browsers; and to ensure that links to external sites are valid.
Third-party cookies Served by another site to the one being viewed -typical for portals where an ad network will track remotely or where the web analytics software places a cookie.
Tipping point Using the science of social epidemics explains principles that underpin the rapid spread of ideas, products and behaviours through a population.
Trademark A trademark is a unique word or phrase that distinguishes your company. The mark can be reg- istered as plain or designed text, artwork or a combina- tion. In theory, colours, smells and sounds can also be trademarks.
Transactional e-commerce sites Sites that support online sales.
Transaction log file A web server file that records all page requests.
Transfer Control ProtocoVIntemet Protocol (TCPIIP) The passing of data packets around the Internet occurs via TCP/IP. For a PC to be able to receive web pages or for a server to host web pages it must be configured to support this protocol.
Trialogue The interaction between company, customer and other customers facilitated through online commu- nity, social networks, reviews and comments.
Trusted feed A trusted feed is an automated method of putting content into a search engine index or an aggregator database.
Trusted third parties {TTPs) Companies with which an agreement has been reached to share information.
Undirected information seeker A person who does not know what information they are looking for- a surfer.
Uniform (universal) resource locator (URL) Text that indicates the web address of a site. A specific domain name is typed into a web browser window and the browser will then locate and load the website. It is in the form of: http://www.domain-name.extensionlfile- name.html.
Unique visitors Individual visitors to a site measured through cookies or IP addresses on an individual computer.
Universal search The natura/listings incorporate other relevant results from vertical searches related to a query, such as video, books, scholar, news, sitelinks and images.
Unsubscribe An option to opt-out from an email news- letter or discussion group.
Upload The transfer of files from a local computer to a server. Usually achieved using FTP. Email or website pages can be uploaded to update a remote server.
Up-selling Persuading existing customers to purchase more expensive products (typically related to existing purchase categories).
URL strategy A defined approach to how content is labelled through placing it in different directories or folders with distinct web addresses.
Usability An approach to website design intended to enable the completion of user tasks.
Usability/user testing Representative users are observed performing representative tasks using a system.
User-centred design Design based on optimising the user experience according to all factors, including the user interface, that affect this.
User journey See Customer scenarios.
User session Used to specify the frequency of visits to a site. Not equivalent to site visit.
Validation Validation services test for errors in HTML code, which may cause a web page to be displayed incorrectly or for links to other pages that do not work.
Value chain A model that considers how supply chain activities can add value to products and services deliv- ered to the customer.
Value event scoring Value events are outcomes that occur on the site as indicated by visits to different page or content types that suggest marketing communica- tions are effective. Examples include leads, sales, newsletter registrations and product page views. They can be tagged and scored using many web analytics systems, for example Google refers to them as conver- sion goals.
Value network The links between an organisation and its strategic and non-strategic partners that form its external value chain.
Value proposition The benefits or value a brand offers to customers in its products and services.
Value proposition of site The benefits or value of a website that are evident to its users.
Video marketing The use of video to gain visibility in search marketing, video hosting sites and to engage site visitors.
View See Page impression.
View-through A view-through indicates when a user views an ad and subsequently visits a website.
Viral marketing A marketing message is communi- cated from one person to another, facilitated by differ- ent media, such as word of mouth, email or websites.
Implies rapid transmission of messages is intended.
Viral referral An 'email a friend or colleague' compo- nent to an email campaign or part of website design.
Virtual cash See Digital cash.
Virtual community An Internet-based forum for spe- cial-interest groups to communicate using a bulletin board to post messages.
Virtual organisati on An organisation that uses infor- mation and communications technology to allow it to operate without clearly defined physical boundaries between different functions. It provides customised services by outsourcing production and other functions to third parties.
Virtual reality (VR) Virtual reality headset and software technology create immersive three-dimensional spaces that simulate a user's physical presence in a virtual or imaginary environment.
Virtualisation The process whereby a company develops more of the characteristics of a virtual organisation.
Visitor conversion rate An indication of the capabil- ity of a site in converting visitors to defined outcomes such as registration. Calculated by dividing the number of conversion events by the number of unique visitors with in a defined time period.
Visitor session (visit) A series of one or more page impressions, served to one user, which ends when there is a gap of 30 minutes or more between succes- sive page impressions for that user.
Walled garden A limited range of e-commerce ser- vices on iDTV (compared to the Internet).
WAP WAP is a technical standard for transferring infor-
mation to wireless devices, such as mobile phones.
Web 2.0 concept A collection of web services that facilitate interaction of web users with a site to cre- ate user-generated content and encouraging certain behaviours online such as community or social net- work participation and user-generated content, mash- ups, content rating , use of widgets and tagging.
Web accessibility An approach to site design intended to accommodate site usage using different brows- ers and settings - particularly required by the visually impaired and visitors with other disabilities including motor control, learning difficulties and deaf users.
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Users whose first language is not English can also be assisted.
Web addresses Web addresses refer to particular pages on a web server, which is hosted by a company or organisation. The technical name for web addresses is uniform or universal resource locators (U RLs).
Web analytics Techniques used to assess and improve the contribution of e-marketing to a business, including reviewing traffic volume, referrals , click- streams, online reach data, customer satisfaction sur- veys, leads and sales.
Web APPlication Protocol (WAP) A standard that ena- bles mobile phones to access text from websites.
Web browsers Browsers such as Mozilla Firefox and Microsoft Internet Explorer provide an easy method of accessing and viewing information stored as HTML web documents on d ifferent web servers.
Webmaster A webmaster is responsible for ensuring the quality of a website. This means achieving suitable availability, speed, working links between pages and con- nections to company databases. In small companies the webmaster may be responsible for graphic design and content development.
Web merchandising The aims of web merchandising are to maximise sales potential of an online store for each visitor. This means connecting the right products with the right offer to the right visitor, and remembering that the online store is part of a broader experience including online and offline advertising, in-store visits, customer service and delivery.
Web response model The website is used as a response mechanism for offline campaign elements such as direct mail or advertising.
Web self-service Content and services provided by an organisation to replace or complement in-store or phone customer enquiries in order to reduce costs and increase customer convenience.
Web servers Web servers are used to store the web pages accessed by web browsers. They may also con- tain databases of customer or product information, which can be queried and retrieved using a browser.
Website auditors Auditors accurately measure the usage of different sites in terms of the number of ad impressions and click-through rates.
Website content Accessible on the World Wide Web that is created by a particular organisation or individual. The location and identity of a website is indicated by its web address (URL) or domain name. It may be stored on a
single server in a single location, or a cluster of servers.
Website measurement The process whereby metrics such as page impressions are collected and evaluated to
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assess the effectiveness of Internet marketing activities in
meeting customers, business and marketing objectives.
Widget A badge or button incorporated into a site or social network space by its owner, with content or ser- vices typically served from another site, making widgets effectively a mini-software application or web service. Content can be updated in real time since the widget interacts with the server each time it loads.
Wi-Fi ('wireless fidelity') A high-speed wireless local- area network enabling wireless access to the Internet for mobile, office and home users.
Wireframe A simplified outline of a single-page tem- plate used to define new layout or functionality for part of a website for discussion, iteration and then a brief for
implementation.
Word-of-mouth marketing According to the Word- of-Mouth Marketing Association It is giving people a
reason to talk about your products and services, and making it easier for that conversation to take place. It is
the art and science of building active, mutually benefi- cial consumer-to-consumer and consumer-to-marketer communications.
Wor1d Wide Web A medium for publishing information on
the Internet. It is accessed through web browsers, which display web pages and can now be used to run busi- ness applications. Company information is stored on web servers, which are usually referred to as websites.
XML An advanced markup language giving better control than HTML over format for structured information on web pages.
XMOS (cross-media optimisation studies) XMOS research is designed to help marketers and their agencies answer the question 'What is the optimal mix of advertis-
ing vehicles across different media, In terms of frequency, reach and budget allocation, for a given campaign to achieve its marketing goals?' The mix between online and offline spend is varied to maximise campaign metrics
such as reach, brand awareness and purchase intent.
