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Learning Objectives

Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

Identify and discuss the major forms of direct and digital marketing.

Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

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This chapter defines direct and digital marketing and discusses their rapid growth and benefits to customers and companies. It identifies and discusses the major forms of direct and digital marketing, and also explains how companies have responded to the Internet and the digital age with various online marketing strategies.

Learning Objectives

Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

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This chapter discusses how companies use social media and mobile marketing to engage consumers and create brand community. Finally, the chapter identifies and discusses the traditional direct marketing forms and overviews the public policy and ethical issues presented by direct marketing.

First Stop: Facebook

Deep impact and influence on the lives of millions of users
Can become one of the world’s most powerful and profitable online marketers
Realized it must make its own marketing and moneymaking moves

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Facebook has tremendous impact and influence, not just as a sharing community but also as an Internet and mobile gateway. By wielding all of that influence, Facebook has the potential to become one of the world’s most powerful and profitable online marketers.

Although Facebook’s membership exploded from the very start, CEO Mark Zuckerberg and the network’s other idealistic young co-founders gave little thought to making money. They actually opposed running ads or other marketing, worried that marketing might damage Facebook’s free (and commercial-free) sharing culture. As the company has matured, however, Facebook has come to realize it must make its own marketing and moneymaking moves. If it doesn’t make money, it can’t continue to serve its members. Facebook’s ads are engagement ads that are designed to harness the power of social connections and move people to action.

But advertising is only one potential moneymaking venture for Facebook. As a global gathering place where people spend time with friends, Facebook is also a natural for selling entertainment. Facebook hopes to duplicate its gaming successes with other forms of entertainment.

In line with its goal to keep everything within the community, Facebook has even entered the banking business. Facebook Payments, which is an official Facebook subsidiary, lets businesses and customers make purchase transactions by exchanging various world currencies.

13 Days

Direct and Digital Marketing

Engaging directly with targeted individual consumers and customer communities to:

Obtain an immediate response (speed)

Build lasting customer relationships (content)

Build customer engagement, brand community, and sales

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Direct and digital marketing involve engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships. Companies use direct marketing to tailor their offers and content to the needs and interests of narrowly defined segments or individual buyers. In this way, they build customer engagement, brand community, and sales.

New Direct-Marketing Model

Used as a supplementary channel or medium
Constitutes a complete model for doing business today

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Most companies use direct marketing as a supplementary channel or medium. For example, Sears or Macy’s, sell the majority of their merchandise off their store shelves, but they also sell through direct mail, online catalogs, and social media pages.

For many companies today, direct and digital marketing are more than just supplementary channels or advertising media. They constitute a complete model for doing business. Firms employing this direct model use it as the only approach. For example, companies such as GEICO have built their entire approach to the marketplace around direct and digital marketing.

Rapid Growth of Direct and
Digital Marketing

Fastest-growing form of marketing
Direct marketing becoming more Internet-based
Claims a surging share of marketing spending and sales

Online display and search advertising, video, social media, mobile, e-mail

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Direct and digital marketing have become the fastest-growing form of marketing. Direct marketing continues to become more Internet-based, and digital direct marketing is claiming a surging share of marketing spending and sales. Total digital marketing spending—including online display and search advertising, video, social media, mobile, e-mail, and other—now accounts for the second-largest share of media spending, behind only television.

Benefits of Direct and
Digital Marketing to Buyers

Buyers

Convenient, easy, and private

Easy buyer-seller interaction

Quick access to products and relevant information

Brand engagement and community

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Sellers
Low-cost, efficient, and speedy
Build close, personalized, interactive, one-to-one customer relationships
Offer greater flexibility

For buyers, direct and digital marketing are convenient, easy, and private. They give buyers anywhere, anytime access to an almost unlimited assortment of goods and a wealth of products and buying information. Through direct marketing, buyers can interact with sellers by phone or on the seller’s Web site or app to create exactly the configuration of information, products, or services they want and then order them on the spot. Finally, for consumers who want it, digital marketing through online, mobile, and social media provides a sense of brand engagement and community.

For sellers, direct marketing often provides a low-cost, efficient, speedy alternative for reaching their markets. Because of the one-to-one nature of direct marketing, companies can interact with customers by phone or online, learn more about their needs, and personalize products and services to specific customer tastes. Direct and digital marketing also offer sellers greater flexibility. They let marketers make ongoing adjustments to prices and programs, or make immediate, timely, and personal announcements and offers.

Amazon Now

https://www.youtube.com/watch?v=ODLp4ZGQwzk

Figure 14.1 - Forms of Direct
and Digital Marketing

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This figure shows the major forms of direct and digital marketing.

Traditional direct marketing tools include face-to-face selling, direct-mail marketing, catalog marketing, telemarketing, direct-response television marketing, and kiosk marketing.

A dazzling new set of direct digital marketing tools has burst onto the marketing scene, including social media marketing, mobile marketing, and online marketing in the form of Web sites, online ads, e-mail, online videos, and blogs.

Marketing, the Internet, and
the Digital Age

Digital and social media marketing: Using digital marketing tools to engage consumers anywhere, anytime via their digital devices
Changed customers’ notions of:

Convenience, speed, price, product information, service, and brand interactions

Multichannel marketing: Using both traditional and digital marketing channels

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Digital and social media marketing is the fastest-growing form of direct marketing. It uses digital marketing tools such as Web sites, online video, e-mail, blogs, social media, mobile ads and apps, and other digital platforms to directly engage consumers anywhere, anytime via their digital devices.

The digital age has fundamentally changed customers’ notions of convenience, speed, price, product information, service, and brand interactions. As a result, it has given marketers a whole new way to create customer value, engage customers, and build customer relationships. Some companies operate only online. They include a wide array of firms, from e-tailers to search engines and portals, transaction sites, content sites, and online social media

Multichannel marketing refers to marketing both through stores and other traditional offline channels and through digital, online, social media, and mobile channels. These companies have more online success than their online-only competitors.

Direct digital and social media marketing takes any of the several forms that include online marketing, social media marketing, and mobile marketing. We discuss each in turn, starting with online marketing.

Buying Things On The Internet

Search Terms
Commerce/Information
Types of Products

Online Marketing

Marketing via the Internet using company Web sites, online ads and promotions, e-mail, online video, and blogs
Marketing Web sites: Interact with consumers to move them closer to a direct purchase or other marketing outcome
Branded community Web sites: Present brand content that engages consumers and creates customer community around a brand

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Online marketing refers to marketing via the Internet using company Web sites, online ads and promotions, e-mail, online video, and blogs.

For most companies, the first step in conducting online marketing is to create a Web site. Marketing Web sites are designed to interact with customers to move them closer to a direct purchase or other marketing outcome. In contrast, a branded community Web site does not try to sell anything but presents brand content that engages consumers and creates customer community around a brand.

A Web site should be easy to use and visually appealing. Ultimately, Web sites must be useful. When it comes to Web browsing and shopping, most people prefer substance over style and function over flash.

Online Advertising and
E-Mail Marketing

Online advertising: Appears while consumers are browsing online
E-mail marketing: Sending highly targeted, highly personalized, relationship-building marketing messages via e-mail

Spam: Unsolicited, unwanted commercial e-mail messages

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Online advertising refers to advertising that appears while consumers are browsing online, including display ads, search-related ads, online classifieds, and other forms. The main forms of online advertising are display ads and search-related ads. Online display ads might appear anywhere on an Internet user’s screen and are often related to the information being viewed.

Today’s rich media ads incorporate animation, video, sound, and interactivity. The largest form of online advertising is search-related ads or contextual advertising. In this form of advertising, text-based ads and links appear alongside search engine results on sites such as Google, Yahoo!, and Bing.

E-mail marketing refers to sending highly targeted, highly personalized, relationship-building marketing messages via e-mail. When used properly, e-mail can be the ultimate direct marketing medium. But there is a drawback of the growing use of e-mail marketing—the explosion of spam, unsolicited, unwanted commercial e-mail messages that clog up our e-mail boxes. Spam has produced consumer irritation and frustration. To address these concerns, most legitimate marketers now practice permission-based e-mail marketing, sending e-mail pitches only to customers who opt in.

Online Videos

Can engage millions of consumers
Viral marketing: Videos, ads, and other marketing content that customers seek out or pass along to friends
Charlie Bit My Finger

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Another form of online marketing involves posting digital video content on brand Web sites or social media sites such as YouTube, Facebook, and others. Some videos are made for the Web and social media. Other videos are ads that a company makes primarily for TV and other media but posts online before or after an advertising campaign to extend reach and impact.

Viral marketing is the digital version of word-of-mouth marketing. All kinds of videos can go viral, producing engagement and positive exposure for a brand. Marketers have little control over where their viral messages end up. They can seed content online, but that does little good unless the message itself strikes a chord with consumers. For example, Kmart’s TV ad-like video featuring shoppers of all ages exclaiming “ship my pants” pulled in nearly 8 million YouTube views and 38,000 Facebook likes in only one week.

Blogs and Other Online Forums

Online journals of narrowly defined topics where people and companies post their thoughts and other content

Benefit - Offers a fresh, original, personal, and inexpensive way to enter into consumer online conversations

Limitation - Consumer-controlled medium

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Blogs, or Web logs, are online journals where people and companies post their thoughts and other content related to narrowly defined topics. Blogs can be about anything—politics, baseball, haiku, car repair, or the latest television series.

Most marketers are now tapping into the blogosphere as a medium for reaching their customer communities. Marketers can use insights from consumer online conversations to improve their marketing programs.

As a marketing tool, blogs offer some advantages. They can offer a fresh, original, personal, and economical way to enter into consumer online conversations.

However, blogs offer disadvantages too. The blogosphere is cluttered and difficult to control. And although companies can sometimes leverage blogs to engage customers in meaningful relationships, blogs remain largely a consumer-controlled medium.

Social Media Marketing

Social media: Independent and commercial online communities where people congregate, socialize, and exchange views and information
Marketers engage in social media by:

Using the existing ones

Setting up their own

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Social media are independent and commercial online communities where people congregate, socialize, and exchange views and information.

Marketers can engage in social media in two ways: They can use existing social media or they can set up their own. Using existing social media seems the easiest. Thus, most brands, large and small, have set up shop on a host of social media sites. Such social media can create substantial brand communities. Countless niche social media have also emerged that cater to the needs of smaller communities of like-minded people, making them ideal vehicles for marketers who want to target special interest groups.

Beyond the independent social media, many companies have created their own online brand communities. For example, in Nike’s Nike+ running community, members join together online to upload, track, and compare their performances.

Social Media Marketing
Advantages and Challenges

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Using social media presents both advantages and challenges.

On the plus side, social media are targeted and personal, so they allow marketers to create and share tailored brand content with individual consumers and customer communities. Social media are interactive, making them ideal for starting and participating in customer conversations and listening to customer feedback. Social media are also immediate and timely. They can be used to reach customers anytime, anywhere with timely and relevant content regarding brand happenings and activities. Social media can be very cost effective. Although creating and administering social media content can be costly, many social media are free or inexpensive to use. The biggest advantages of social media are the engagement and social sharing capabilities. Social media are especially well suited to creating customer engagement and community.

Social media marketing also present challenges. Most companies are still experimenting with how to use them effectively, and results are hard to measure. Social networks are largely user controlled. Marketers cannot simply barge into consumers’ digital interactions; they need to earn the right to be there. Rather than intruding, marketers must learn to become a valued part of the online experience.

Integrated Social Media Marketing

Large companies design social media efforts that blend with and support other elements of a brand’s marketing strategy and tactics.
Firms that use social media effectively create brand-related social sharing, engagement, and customer community.

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Most large companies are now designing full-scale social media efforts that blend with and support other elements of a brand’s marketing strategy and tactics. More than making scattered efforts and chasing likes and tweets, companies that use social media successfully are integrating a broad range of diverse media to create brand-related social sharing, engagement, and customer community.

Mobile Marketing

Promotional content delivered to consumers through their mobile devices
Engage customers anywhere, anytime during the buying and relationship-building processes

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Mobile marketing features marketing messages, promotions, and other content delivered to on-the-go consumers through their mobile devices. Marketers use mobile marketing to engage customers anywhere, anytime during the buying and relationship-building processes. The widespread adoption of mobile devices and the surge in mobile Web traffic have made mobile marketing a must for most brands. Retailers can use mobile marketing to enrich the customer’s shopping experience at the same time they stimulate buying.

For example, Macy’s built its recent “Brasil: A Magical Journey” promotion around a popular and imaginative smartphone app. The campaign featured apparel from Brazilian designers and in-store experiences celebrating Brazilian culture. By using their smartphones to scan Quick Response (QR) codes throughout the store, shoppers could learn about featured fashions and experience Brazilian culture through virtual tours

Direct Mail Marketing

Sending an offer, announcement, reminder, or other item directly to a person at a particular address

Tangible and creates emotional connection with customers

Effective component of a broader integrated marketing campaign

Direct and personalized

Sent to consumers who want to receive it

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Although the fast-growing digital marketing tools are in much focus lately, traditional direct marketing tools are very much alive and still heavily used.

Direct-mail marketing occurs by sending an offer, announcement, reminder, or other item directly to a person at a particular address. Direct mail is well suited to direct, one-to-one communication. It permits high-target market selectivity, can be personalized, is flexible, and allows the easy measurement of results. Although direct mail costs more per thousand people reached than mass media such as television or magazines, the people it reaches are much better prospects.

Direct mail marketing offers some distinct advantages over digital forms. It provides something tangible for people to hold and keep, and it can be used to send samples. It creates an emotional connection with customers that digital cannot. It can be an effective component of a broader integrated marketing campaign. It may be perceived as junk mail if sent to people who have no interest in it. For this reason, smart marketers are targeting their direct mail carefully so as not to waste their money and recipients’ time. They are designing permission-based programs that send direct mail only to those who want to receive it.

Catalog Marketing

Print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online

Eliminates printing and mailing costs

No space constraints

Broader assortment of presentation formats

Real-time merchandising capabilities

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Advances in technology, along with the trend of personalized, one-to-one marketing, have resulted in exciting changes in catalog marketing. Catalog marketing is a form of direct marketing through print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online.

Internet and digital marketing have created the need for digital catalogs. They eliminate printing and mailing costs. They can offer an almost unlimited amount of merchandise. They offer a broader assortment of presentation formats, including search and video. They allow real-time merchandising; products and features can be added or removed as needed, and prices can be adjusted instantly to match demand.

Telemarketing and Direct-Response Television (DRTV) Marketing

Telemarketing: Selling directly to customers using the telephone

Outbound and inbound telephone marketing

Rise of do-not-call legislation resulted in opt-in calling systems

Direct-response television (DRTV) marketing

Direct-response television advertising

Interactive TV (iTV) advertising

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Telemarketing involves using the telephone to sell directly to consumers and business customers. Marketers use outbound telephone marketing to sell directly to consumers and businesses and inbound toll-free numbers to receive orders from television and print ads, direct mail, or catalogs.

In 2003, U.S. lawmakers established the National Do Not Call Registry, which is managed by the Federal Trade Commission (FTC). Do-not-call legislation has helped marketers to develop opt-in calling systems, in which they provide useful information and offers to customers who have invited the company to contact them by phone or e-mail.

Direct-response television (DRTV) marketing refers to direct marketing via television, including direct-response television advertising or infomercials and interactive television or iTV advertising. DRTV ads are often associated with somewhat loud or questionable pitches for cleaners, stain removers, kitchen gadgets, and nifty ways to stay in shape without working very hard at it. A more recent form of direct-response television marketing is interactive TV (iTV), which lets viewers interact with television programming and advertising.

As the lines continue to blur between TV screens and other video screens, interactive ads and infomercials are appearing not just on TV, but also on mobile, online, and social media platforms, adding even more TV-like interactive direct marketing venues.

Kiosk Marketing

Product or service information and ordering machines placed by companies
Advancements

Wireless-enabled

Face recognition

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As consumers become more and more comfortable with digital and touchscreen technologies, many companies are placing information and ordering machines called kiosks in stores, airports, hotels, college campuses, and other locations.

Many modern smart kiosks are now wireless-enabled. And some machines even use facial recognition software that lets them guess gender and age and make product recommendations based on that data. For example, 100 Best Buy Express ZoomShop kiosks across the country, conveniently located in airports, busy malls, military bases, and resorts, automatically dispense an assortment of portable media players, digital cameras, gaming consoles, headphones, phone chargers, travel gadgets, and other popular products.

Public Policy Issues in Direct and Digital Marketing

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Direct and digital marketing have a dark side due to the aggressive and sometimes shady tactics of a few direct marketers. Abuses range from simple excesses that irritate consumers to instances of unfair practices or even outright deception and fraud. The direct marketing industry has also faced growing privacy concerns, and online marketers must deal with Internet security issues.

Public Policy Issues in Direct and Digital Marketing

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CHEATING

REGULATION

Irritation, Unfairness, Deception, and Fraud

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Direct marketing excesses sometimes annoy or offend consumers. For example, many customers dislike direct-response TV commercials that are too loud, long, and insistent. Their mailboxes fill up with unwanted junk mail, and their computer, phone, and tablet screens flash with unwanted online or mobile display ads, pop-ups, or pop-unders.

Some direct marketers have been accused of taking unfair advantage of impulsive or less-sophisticated buyers through television shopping channels, enticing Web sites, and program-long infomercials targeting television-addicted shoppers. They feature smooth-talking hosts, elaborately staged demonstrations, claims of drastic price reductions, time limitations, and unequaled ease of purchase to inflame buyers who have low sales resistance.

Fraudulent schemes, such as investment scams or phony collections for charity, have also multiplied in recent years. Internet fraud, including identity theft and financial scams, has become a serious problem. One common form of Internet fraud is phishing, a type of identity theft that uses deceptive e-mails and fraudulent online sites to fool users into divulging their personal data. Many consumers worry about online and digital security. They fear that unscrupulous snoopers will eavesdrop on their online transactions and social media postings, picking up personal information or intercepting credit and debit card numbers. Another Internet marketing concern is that of access by vulnerable or unauthorized groups. For example, marketers of adult-oriented materials and sites have found it difficult to restrict access by minors.

Consumer Privacy

Fear of invasion of privacy
Ready availability of information leaves consumers open to abuse
Personal Information used to cost money

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Invasion of privacy is perhaps the toughest public policy issue now confronting the direct marketing industry. Consumers benefit from database marketing. However, too much knowledge about consumers’ lives may lead to marketers taking unfair advantage of consumers. Some consumers and policy makers worry that the ready availability of information about the consumers may leave them open to abuse.

Need for Action

Government actions

Do-not-call, Do-not-mail, Do-not-track lists

Can Spam legislation

Congressional legislation – Give more control to consumers over use of online information

Federal Trade Commission (FTC) - Policing online privacy

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To curb direct marketing excesses, various government agencies are investigating not only do-not-call lists but also do-not-mail lists, do-not-track online lists, and Can Spam legislation. In response to online privacy and security concerns, the federal government has considered numerous legislative actions to regulate how online, social media, and mobile operators obtain and use consumer information. For example, Congress is drafting legislation that would give consumers more control over how online information is used. In addition, the FTC is taking a more active role in policing online privacy.

Learning Objectives

Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

Identify and discuss the major forms of direct and digital marketing.

Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

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Learning Objectives

Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

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