Marketing on the Web – Part 1

MGMT 230WEEK 8

This class will cover…

• The impact of the Internet on the marketing mix

• The internet marketing toolbox– Pay-per-click advertising on search engines– Social media marketing overview

General aims of Web marketing: Acquisition, Conversion, and Retention of Customers

• The first step in doing business on the Web is to ACQUIRE or draw visitors to the site itself – driving traffic

• The second step is CONVERTING those first time visitors into customers by persuading them to make a purchase or register with the site, etc.

• Customers who return to the site one or more times after making their first purchases are RETAINED customers (site stickiness is important).

The 4Ps of the marketing mix in transition

The impact of the Internet on the traditional marketing mix framework

• Product – new products, the rise of the “prosumer”

• Price – dynamic pricing, comparison pricing, bidding……..FREE!

• Place – direct distribution of digital products, supply chain management, channel integration

• Promotion – new social and communications media, measurable advertising

• Strong trend towards personalization and away from the mass (undifferentiated) market affecting all the elements of this framework

• The Six “I”s Framework– Interactivity– Intelligence (market)– Individualization– Integration– Industry restructuring– Independence of

location

MacDonald and Wilson. The New Marketing, 2002

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Interactivity• The internet is not TV

• Conversation, not broadcast

• Pull, not push

• Active rather than passive (lean-forward medium)

• Social Networking / User Generated Content / Web 2.0

Source: eMarketing eXcellence. 2012. Smith &Chaffey

[Market] Intelligence

• By the very act of using the internet, we are “telling” marketers what we want:• Passively

• Clickstream data• Web analytics

• Actively• Social network updates, photos, videos, reviews, forum

postings etc

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Individualization

• The market of one: based on the information about customers that we provide, and that is collected automatically and monitored constantly

• Amazon for example

Traditional media

Same message to all customers or segments

New

media

Message tailored to each customer or micro-segment

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Integration

• Online marketing is very readily integrated into a marketing communications strategy

• Web channels complement and integrate with offline marketing channels– EXAMPLES?

• Call a customer service rep for assistance• Movie trailers on YouTube

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Industry restructuring and Independence of location

INDUSTRY RESTRUCTURING• Disintermediation –

traditional intermediaries used by marketers disappearing

• Re-intermediation new intermediaries (eg. PayPal)

• Business models challenged

LOCATION INDEPENDENCE

• Increased reach to global markets

• Increased exposure

• Increased competition

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Product trends online

• Digital value – adding value to products through online means

• Digitization – product or place?

• Personalization – individualized products and the “prosumer”

Product

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Digital goods distribution

• Any product that can be digitized can be delivered over the Internet

• Online distribution costs are significantly lower– No inventory problems– No product depletion

• Completely new business models based on digital distribution methods

• Internet becomes a direct substitute for an offline distribution channel eg. online banking

Place

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Some industries that are undergoing rapid change due to Internet forces affecting

product and place

• Recorded Music industry• Video/DVD rental industry• Newspaper and magazine publishing• Banking• Book publishing / Textbook publishing

• Forces for change:– Digitizable product– Self service – Direct to consumer shift– Personalization

Place

Product

Pricing

• Internet influences – buyer and seller perspectives of price

• Moving from free to fee (and freemium)• Price comparisons / transparency• Choice!• Dynamic pricing

Price

Source: eMarketing eXcellence. 2012. Smith &Chaffey

Online promotion

• There are many new techniques available to marketers to promote goods and services online

• Permission marketing• The big value of internet marketing for

promotion – ability to measure results and therefore performance based

Promotion

Source: eMarketing eXcellence. 2012. Smith &Chaffey

THE INTERNET MARKETING TOOLBOX – OWNED, EARNED, AND PAID MEDIA

Own Website

Analytics, Datamanagement

Law, Regulation,ethics

Planning and management

Demographics Market research

Being found

Domains, usernames,

hashtags

Content & technologiesText, video,

images, AR, VR

Social media

(owned &

earned)

Advertising

Email / messaging

The big picture of internet marketing

The internet marketing

toolbox

Blogging

Mobile

General social

networks

Niche social networks

Search engine optimization

AR, VReMail

Search advertising

Twitter

Interactive display

advertising

Video

The internet marketing toolbox

Owned, earned, and paid media

• Owned media: “media owned by the brand. Online this includes a company’s own websites, blogs, mobile apps or their social presence on Facebook, LinkedIn or Twitter [etc]” Dave Chaffey

• Earned media: “Earned media also includes word-of-mouth that can be stimulated through viral and social media marketing and includes conversations in social networks, blogs and other communities.” Dave Chaffey

• Paid media: “media where there is investment to pay for visitors, reach or conversions” Dave Chaffey

Owned, earned and paid media: role, benefits & challenges

http://www.smartinsights.com/digital-marketing-strategy/customer-acquisition-strategy/new-media-options/

SEARCH ENGINE ADVERTISING (PAY PER CLICK) – “PAID MEDIA”

Search engine marketing – 2 major methods

Search engine marketing is the umbrella conceptOBJECTIVE IS TO BE IN THE TOP FEW SEARCH RESULTS

1. Search engine optimization (SEO) – relies on the content of web pages plus inbound link quality – called organic positioning (we looked at this in Week 4)

2. Search engine advertising: Pay-Per-Click (Today’s class)

BOTH RELY ON THE CONCEPT OF KEYWORDS / PHRASES

Paid listings (advertisements)

Organic listings

Internet advertising formats (IAB report for 2014)

Search engine advertising – why is it so popular with marketers?

• Search engines allow marketers to bid on specific key words - ie. buy their way to the top

• Performance model is attractive (no clicks on the ad, no payment for the ad)

• Less consumer resistance that other forms of advertising (but remember that the click-through-rate is still quite low – around 2%)

• Print directory versus search advertising for SME?– Effectiveness can be directly measured– Speed of execution and “tweaking” of advertising copy– Speed of consumer response– Usually more cost-effective

The importance of keywords / key phrases in PPC advertising

• Keywords are the search terms people type into search engines

– in search engine advertising the keywords / key phrases are the terms that “trigger” the advertising when someone types them into the search box (the page must be relevant to the keywords or Google will regard it as deceptive advertising)

• The concept of the “landing page”

Bidding on keywords: how search engine advertising works

• The position of the ad on the page is not just related to the bid price, and is not decided in advance

• At the moment a person types in a search query and presses enter a real-time auction takes place to decide the position of the ad– Google uses a combination of the bid price or cost

per click (CPC) and the ad relevancy or click-through rate (CTR) - the “Quality Score”• CPC x CTR = Google AdRank

Understanding Ad Rank • Geo-targeting (language and location)• Setting a daily budget

Not just search results pages

• PPC advertisements purchased from search engines also appear across their advertising networks – These ads are triggered in a different way

• Google Adsense is for publishers

One of the problems with PPC advertising? Click fraud

• Two main types of click fraud:– Search engine click fraud: artificially raising a competitor’s marketing

costs or exhausting their budget to remove them from their position in the listings (usually on very high cost or competitive key terms)

– Publisher click fraud: artificially raising a publisher’s income from AdSense

• Estimated 10% to 15% of ad clicks are fake, representing roughly $1 billion in annual billings (Business Week, 2006).

• Search firms have put tools in place to detect and prevent click fraud (but have still been sued by advertisers)

• Where are we now with click fraud? • Mobile clicks in error are now an increasing problem• Display advertising is now the target of massive ad fraud (we will talk about this

next week)

Paid search versus SEO

Paid search• Results can be seen immediately

through increased traffic.

• But : no spending = no results

• Greater control over which keywords are most associated with their company, brands, products or services.

• Additional metrics are available, which means more detailed Web analytics that yield sophisticated knowledge from the data.

SEO• Results are gradual – can take months• But the results can persist –

maintaining position over time• Searchers find it more acceptable

than advertising• Can be complex and may require

external expertise• One process – many results (tends to

bring results across many search engines, not just one)

http://www.iab.net/insights_research/947883/1675/708987

DO BOTH!

Google local business listings (not SEO)

• Very important for local businesses to keep their information updated with Google via Google My Business

• This impacts the business listings that appear when someone does a local search– Relate to reviews and distance from searcher

(especially important on mobile)

SOCIAL MEDIA MARKETING “OWNED AND EARNED MEDIA”

The growth of the participative web• The First Generation Web (1989 – 2003-ish)

– Publishing medium; predominantly one-way / asymmetrical

• The Next Generation: Web 2.0 – What is Web 2.0? (Tim O’Reilly). • The Machine is Us/ing Us - the classic viral video by Mike Wesch from

2007 – The participative web– Publishing tools in the hands of users – communication now 2-way. The web is “us”– User-generated content– Focus on the user/participant

• Media becomes gradually more “social” in the early to mid 2000s– 2002: Friendster – 2003: MySpace– 2004: Facebook– 2005: YouTube, Reddit– 2006: Twitter

Social media

• "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content.“ Andreas Kaplan and Michael Haenlein

• Also sometimes called “consumer-generated media”

“Social” media includes…

• “The online tools and platforms that people use to share opinions, insights, experiences and perspectives with each other.”

Catherine Seda

• Includes– Social networking sites (many types)– Blogs and microblogs– Wikis– Podcasts and vodcasts– Forums– User Generated Content of all kinds

Type of social network Some examples

Business/professional networking LinkedIn

Social Q&A Quora, Yahoo Answers

General social communities Facebook, Google+, My Space, Pinterest, Reddit

Blogs & microblogs WordPress, Twitter, Plurk, Tumblr, LiveJournal

News sharing / creation NewsVine, NowPublic, Slashdot

Social bookmarking / curation Delicious, Pinboard, StumbleUpon, Flipboard

Video / photo sharing YouTube, Vine, Vimeo, UStream, Livestream, Flickr, Instagram, SnapChat, Twitch

Virtual / social gaming worlds SecondLife, WoW, Minecraft, LBP

Subject specialist / niche communities Nature Network, Goodreads, Jamendo, Flixter, Soundcloud,

Document sharing / collaboration Slideshare, Google Docs, Prezi

Product-based communities Amazon, eBay, Dell

Location-based (check-in) services Foursquare, Gowalla

Reviews and ratings Yelp, TripAdvisor, Amazon reviews

Messaging WhatsApp, Skype, Viber, WeChat, SnapChat

Frequency of social media site use

• Facebook, Instagram, and Twitter have highest engagement levels, with multiple daily usage.

Pew Research Internet Project. Social Media Update 2013

Demographics

• Facebook popular across a diverse mix of demographic groups

• Pinterest - women are four times as likely as men to be Pinterest users

• LinkedIn - especially popular among college graduates and higher income households.

• Twitter and Instagram - younger adults, urban dwellers, and non-whites.

• Substantial overlap between Twitter and Instagram user bases

• Demographics of key social networking platformsPew Research Internet Project. Social Media Update 2013

Marketing using social networking sites: still experimenting

• We are in an “attention economy”– People’s attention is the scarce resource today

• Marketers should go where the people are, not expect the people to come to them– Behavioural and contextual advertising– Brand presence eg. Facebook, Twitter, Google + Viral

marketing – spreading memes– Earning trust – by using an “authentic voice”– Generating traffic / interest– Enhancing reputation– Customer support

Owned and earned in social media

• Owned media– An organization’s own Facebook page, Twitter

account, Pinterest account etc• Earned media

• Likes, comments, shares on Facebook• Retweets, mentions, favourites on Twitter• Repins, favourites, comments on Pinterest

• Big problems for marketers with decreasing “organic” reach – especially on Facebook

The Edgerank algorithm tweaked to reduce organic reach

• Analysis of more than 100 brand pages - organic reach was around 6 percent, a decline of 49 percent from October 2013

• For large pages with more than 500,000 Likes, organic reach hit 2 percent in February 2014

• “Organic reach of the content brands publish in Facebook is destined to hit zero. It’s only a matter of time.”

• Marketers being pushed to paid media

http://social.ogilvy.com/facebook-zero-considering-life-after-the-demise-of-organic-reach/