Chapter 6

Digital Marketing

Compile By : Er Santosh Panth

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

 Class Discussion

Video Ads: Shoot, Click, Buy

◼ What advantages do video ads have over
traditional banner ads?
◼ Where do sites such as YouTube fit in to a
marketing strategy featuring video ads?
◼ What are some of the challenges and risks of
placing video ads online?
◼ Do you think Internet users will ever develop
“blindness” toward video ads as well?
 Consumers Online: The Internet
Audience and Consumer Behavior
◼ Around 70% (85 million) U.S. households have
broadband Internet access in 2013
◼ Growth rate has slowed
◼ Intensity and scope of use both increasing
◼ Some demographic groups have much higher
percentages of online usage than others
❖ Income, education, age, ethnic dimensions

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-3
 Consumers Online (cont.)
◼ Broadband vs. dial-up audiences
❖ 50% of Hispanic and African-American homes have
broadband
❖ 40% of households with less than $20k in annual
income have broadband
◼ Neighborhood effects
❖ Role of social emulation in consumption decisions
❖ Social emulation is the idea where whenever individuals buy cultural
products conspicuously, they do it in order to emulate or ‘imitate’ their
superiors or those in the higher-class sections of the social hierarchy.
❖ There is a connection between being a member of a social group
and buying decisions
◼ If you are part of a group that buys a particular type of product
online you are 50% more likely to buy it.
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-4
 Consumers Online (cont.)
❖ Recommender systems or recommendation systems
are a subclass of information filtering systems that seek
to predict the 'rating' or 'preference' that users would
give to an item

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-5
 Consumer Behavior
◼ Study of consumer behavior
❖ Attempts to explain what consumers purchase and
where, when, how much, and why they buy
◼ Consumer behavior models
❖ Attempt to predict or explain wide range of consumer
behaviors or decisions
❖ Based on background demographic factors, marketing
stimuli, social network factors, and community factors
◼ Profiles of Online Consumers (See Table 6.2)
❖ Consumers shop online primarily for convenience

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-6
 The Consumer Decision Process and
Supporting Communications

Figure 6.2, Page 334

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A General Model of Consumer Behavior
 The Online Purchasing Decision
◼ Five stages in consumer decision
process
❖ Awareness of need
❖ Search for more information
❖ Evaluation of alternatives
❖ Actual purchase decision
❖ Post-purchase contact with firm
 The Online Purchasing Decision (cont.)

◼ Decision process similar for online and offline

behavior
◼ General online behavior model includes
❖ Web site features (delay, usability, and security)
❖ Consumer skills regarding online purchasing
❖ Product characteristics (prod desc, ability to be shipped
over the internet)
❖ Attitudes toward online purchasing
❖ Perceptions about control over Web environment
 The Online Purchasing Decision (cont.)

◼ Clickstream behavior refers to the transaction

log that consumers establish as they move
about the web from search engine to
websites, to pages, to the decision to buy

Slide 6-11
 A Model of Online Consumer Behavior

Figure 6.3, Page 335

Slide 6-12
 Shoppers: Browsers and Buyers
◼ Shoppers: 89% of Internet users
❖ 73% buyers
❖ 16% browsers (purchase offline)
◼ One-third of offline retail purchases influenced by
online activities
◼ Online traffic also influenced by offline brands
and shopping
◼ E-commerce and traditional commerce are
coupled: Part of a continuum of consumer
behavior

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-13
 How Consumers Shop
◼ How shoppers find online vendors
❖ Search engines
❖ Marketplaces (Amazon, eBay)
❖ Specific retail site

◼ 27% of Internet users don’t shop online

❖ Trust factor
❖ Hassle factors (shipping costs, returns, etc.)

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-14
 Trust, Utility, and Opportunism
in Online Markets
◼ Two most important factors shaping
decision to purchase online:
❖ Utility:
◼ Better prices, convenience, speed

❖ Trust:
◼ Most important factors: Perception of credibility,
ease of use, perceived risk
◼ Sellers can develop trust by building strong
reputations for honesty, fairness, delivery

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-15
 Digital Commerce Marketing and Advertising:
Strategies and Tools
◼ Internet marketing (vs. traditional)
❖ More personalized
❖ More participatory
❖ More peer-to-peer (P2P encourages customers to engage other
customers by advocating a product or service to friends or associates)
❖ More communal (A company directs its communal marketing
efforts to a small sub-set of its customers who then spreads the word to
potential new customers)

◼ The most effective Internet marketing has all

four features
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 Multi-Channel Marketing Plan
1. Web site
2. Traditional online marketing
❖ Search engine, display, e-mail, affiliate
3. Social marketing
❖ Social networks, blogs, video, game
4. Mobile marketing
❖ Mobile/tablet sites, apps
5. Offline marketing
❖ Television, radio, newspapers
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-17
 Strategic Issues and Questions
◼ Which part of the marketing plan should
you focus on first?
◼ How do you integrate the different
platforms for a coherent message?
◼ How do you allocate resources?
❖ How do you measure and compare metrics from
different platforms?
❖ How do you link each to sales revenues?

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-18
 Establishing the Customer
Relationship
◼ Web site functions to:
❖ Establish brand identity and customer expectations
◼ Differentiating product
❖ Inform and educate customer
❖ Shape customer experience
❖ Anchor the brand online using various marketing
messages using email, web, social media
◼ The web site is the central point for anchoring the brand

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-19
 Digital Marketing
◼ Digital Marketing – The name itself has the meaning:
Marketing the products and services on digital
platforms

◼ Digital marketing is a combination of two words i.e.

digital and marketing. In simple words, Digital means
anything that you can see or hear from an electronics
device such as TV, mobile phone, radio. Marketing
means to understand the needs of the consumer and
provide the products or services accordingly.
 Digital Marketing
◼ At a high level, digital marketing refers to advertising
delivered through digital channels such as search engines,
websites, social media, email, and mobile apps. Using these
online media channels, digital marketing is the method by
which companies endorse goods, services, and brands

◼ The term digital marketing refers to the use of digital

channels to market products and services in order to reach
consumers. This type of marketing involves the use of
websites, mobile devices, social media, search engines, and
other similar channels. Digital marketing became popular
with the advent of the internet in the 1990s.
Digital Marketing
Digital Marketing
 Online Advertising
Question
❖ Digital marketing Vs Online Advertising ?

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-24
 Online Advertising
Question
❖ Digital marketing Vs Online Advertising ?

❖ Digital marketing is an umbrella term that includes anything that requires

the use of an electronic device, including online marketing. Examples of
this include broadcasting, digital OOH advertisements, podcasts and e-
books. Digital marketing has been growing with the dominance of digital
platforms in the 21st century, replacing traditional marketing.

❖ Online marketing is a subset of digital marketing. Any marketing that

requires the internet to perform is considered online marketing. Websites,
blogs, social media and emails are all methods of online marketing. Online
marketing focuses on attracting customers and building an online
presence.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-25
 Online Advertising
Question
❖ Digital marketing Vs Online Advertising ?
◼ Here are a few services that only fall under digital marketing:
• TV ads
• Digital billboards
• Radio spots
• SMS texts
◼ Strategies that fall under both digital marketing and online marketing are:
• Content marketing
• Web design
• Email marketing
• Advertising
• SEO
 Online Advertising
◼ Online advertising
❖ Display (banners, videos), search engine marketing,
mobile messaging, sponsorships, classifieds, lead
generation (generation of consumer interest or inquiry
into products or services of a business), e-mail, affiliate,
and viral marketing
❖ Online ads are the fastest growing form of advertising
❖ Advantages:
◼ 18–34 audience is online
◼ Ad targeting (sending messages to specific groups)
◼ Price discrimination
◼ Personalization
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-27
 Traditional Online Marketing and
Advertising Tools
◼ Search engine marketing and advertising
◼ Display ad marketing
◼ E-mail marketing
◼ Affiliate marketing
◼ Viral marketing
◼ Lead generation marketing
◼ Social, mobile, and local marketing and
advertising
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-28
 Search Engine Marketing and Advertising
◼ Search engine marketing (SEM)
❖ Use of search engines for branding
◼ http://searchengineland.com/top-5-ways-to-use-search-for-branding-66332

◼ Search engine advertising

❖ Use of search engines to support direct sales
◼ Types of search engine advertising
❖ Sponsored links or paid inclusion(A paid advertisement in the form
of a hypertext link that shows up on search results pages)
❖ Keyword advertising (purchase key words by bidding at search sites)
❖ Network keyword advertising (publisher accepts ads placed on its
site and receive a fee for any click-throughs from the ad)
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-29
 Search Engine Marketing (cont.)
◼ Search engine optimization (SEO) process of improving
ranking of web pages with search engines
◼ Social search
❖ Utilizes social graph (friend’s recommendations, past Web visits, Facebook
Likes, Google +1’s) to provide fewer and more relevant results
◼ If you find the search result useful or enjoy the linked site, you hit the +1 icon
◼ Search engine issues
❖ Paid inclusion (company charges fees related to the inclusion
of websites in their search index)
❖ Link farms (group of web sites all hyperlink to each other in the group)
❖ Content farms (large amounts of textual content which is specifically designed
to satisfy algorithms for maximal retrieval by automated search engines)
❖ Click fraud (using script file to click on website that get paid by how many
visitors to the sites click on the ads)

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-30
 Search Engine Marketing (cont.)
◼ Search engine issues
❖ Link farms are websites that link to one another
◼ https://www.google.com/search?q=link+farms+examples&tbm=isch&imgil=vbcRvSQ63bdUhM%253A%253BBhKoN_l7IZZ3yM%253B
https%25253A%25252F%25252Fwww.searchenginegenie.com%25252F101-articles%25252FLink-
farms.html&source=iu&pf=m&fir=vbcRvSQ63bdUhM%253A%252CBhKoN_l7IZZ3yM%252C_&usg=__P3YrI3Mfm7MLDjD7A86l4GIz8K
Q%3D&biw=1600&bih=751&dpr=1&ved=0ahUKEwjNouy4vM3MAhVEWx4KHRwACtwQyjcIPw&ei=tsIwV83vNcS2eZyAqOAN#imgrc=v
bcRvSQ63bdUhM%3A

❖ Content farms are companies that generate volumes of

textual content for multiple websites to attract viewers and
search engines
◼ They profit by attracting large numbers of readers and exposing
them to ads
❖ Click fraud occurs on the Internet in pay-per-click (PPC)
online advertising when a competitor clicks on a search
engine ads forcing the advertiser to pay for the click even
when it is not legitimate.
◼ The process could be automated costing advertisers lots of money
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-31
 Display Ad Marketing
◼ Banner ads take customers to advertiser web site
◼ Rich media ads employ animation & sound
◼ Video ads
◼ Sponsorships ads (sponsoring an event)
◼ Advertising networks help companies take
advantage of internet marketing/advertising
◼ Advertising exchanges and real-time bidding
(check this out!!)
❖ http://digiday.com/platforms/what-is-real-time-bidding/

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-32
 How an Advertising Network
Such as DoubleClick Works

Figure 6.7, Page 352

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-33
 E-mail Marketing
◼ Direct e-mail marketing
❖ Messages sent directly to interested users
❖ Benefits include
◼ Inexpensive
◼ Average more than 7% click-throughs for in-house lists
◼ Measuring and tracking responses
◼ Personalization of messages and offers
◼ Three main challenges
❖ Users hate Spam
❖ Anti-spam software prevent spam email from getting
through
❖ Poorly targeted purchased e-mail lists

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-34
 Spam
◼ Unsolicited commercial e-mail
◼ 65–70% of all e-mail
◼ Most originates from bot networks
◼ Efforts to control spam have largely failed:
❖ Government regulation (CAN-SPAM)
❖ State laws
❖ Voluntary self-regulation by industries (DMA )

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-35
 Other Types of Traditional Online Marketing
◼ Affiliate marketing
❖ Commission fee paid to other Web sites for sending
customers to their Web site
◼ Viral marketing
❖ Marketing designed to inspire customers to pass
message to others
◼ Lead generation marketing
❖ Services and tools for collecting, managing, and
converting leads into purchases

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-36
 Social Marketing and Advertising
◼ Involves the use of social networks to build brands
and drive revenue
◼ Fastest growing type of online marketing
◼ Targets the enormous audiences of social networks
◼ Four features driving growth
◼ Social sign-on (Facebook & twitter links to login to site)
◼ Collaborative shopping (friends chat online about prods)
◼ Network notification (consumers share their
approval/disapproval of prods)
◼ Social search (recommendations advice from friends and family)

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-37
 Social Marketing and Advertising (cont.)
◼ Blog marketing (reaching business' prospects
through the use of blogs)
❖ Educated, higher-income audience
❖ Ideal platform to start viral campaign

◼ Game marketing
❖ Large audiences for social games (FarmVille,
Words with Friends)
❖ Used for branding and driving customers to
purchase at restaurants and retail stores

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-38
 Mobile Marketing and Advertising
◼ 7% of online marketing, growing rapidly
◼ Major formats:
❖ Display, rich media, video
❖ Games
❖ E-mail
❖ Text messaging (SMS)
❖ In-store messaging
❖ Quick Response (QR) codes
❖ Couponing
◼ Mobile app marketing
❖ Using App Store Optimization to create an App Store listing that
draws new users in and makes your app findable
❖ Aims to drive more revenue and engagement from the people who
already use your app
Cright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-39
 Local Marketing
◼ Geared to user’s geographic location
❖ Local search and purchasing
◼ Local searches:
❖ 25% of all searches
❖ 50% of mobile searches
◼ Most common local marketing tools
❖ Geo-targeting with Google Maps
◼ Geo-targeting refers to the practice of delivering different content
to a website user based on his or her geographic location.
❖ Hyperlocal Display ads (next slide)
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-40
 Hyperlocal Display Ads

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-41
 Multi-Channel Marketing
◼ Average American spends more than
40% of media time on digital media
channels
◼ Consumers also multitask, using several
media
◼ Internet campaigns strengthened by
using other channels
❖ Most effective are campaigns using consistent
imagery throughout channels
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-42
 Other Online Marketing Strategies
◼ In addition to traditional online
advertising and marketing strategies
(search engine, display, etc.), several
other strategies are more focused than
“traditional” online strategies
❖ Customer retention
❖ Pricing
❖ The “long tail” (next slide)

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-43
 Other Online Marketing Strategies

◼ Customer retention strategies

❖ Personalization and one-to-one marketing
◼ Retargeting showing same ads across multiple
websites
◼ Behavioral targeting (interest-based
advertising)
❖ uses data from search engine queries,
clickstream history, social network, and
integration of offline personal data to target
customers
❖ Privacy issues are a concern

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-44
 Other Online Marketing Strategies (cont.)
◼ Customization: Changing the product not just the
message based on user preference
◼ Customer co-production: Customers help create
or customize the product
◼ Customer service
❖ FAQs
❖ Real-time customer chat systems
❖ Automated response systems

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-45
 Pricing Strategies
◼ Pricing
❖ Integral part of marketing strategy
❖ Traditionally based on:
◼ Fixed cost
◼ Variable costs
◼ Demand curve

◼ Price discrimination
❖ Selling products to different people and groups
based on willingness to pay

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-46
 Pricing Strategies (cont.)
◼ Free and freemium
❖ Can be used to build market awareness
❖ Freemium is where you get a free basic service and the premium
version is not
◼ Versioning
❖ Creating multiple versions of product and selling essentially same
product to different market segments at different prices
◼ Bundling
❖ Offers consumers two or more goods for one price
◼ Dynamic pricing:
❖ Auctions
❖ Yield management (selling excess capacity)
❖ Flash marketing (flash sale)
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-47
 Internet Marketing Technologies
◼ Internet’s main impacts on marketing:
❖ Increase in scope of marketing communications
❖ Increase in the richness of marketing
communications
❖ Expand information intensity of marketplace
❖ Always-on mobile environment expands
marketing opportunities

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-48
 Online Marketing Metrics:
◼ Digital Marketing Metrics are values that marketing
teams use to measure and track the performance of a
digital marketing campaign.

◼ Digital marketing teams use a number of platforms and

tools to promote their product or service offering, and
tracking the results can be time-consuming and
challenging.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-49
 Online Marketing Metrics:
◼ Audience size or ◼ Conversion to
market share customer
❖ Impressions (# of times Ad is served) ❖ Acquisition rate (visiting pgs)
❖ Click-through rate (CTR) ❖ Conversion rate
❖ View-through rate (VTR) ❖ Browse-to-buy ratio
❖ Hits ❖ View-to-cart ratio
❖ Page views ❖ Cart conversion rate
❖ Stickiness (duration) ❖ Checkout conversion
❖ Unique visitors rate
❖ Loyalty ❖ Abandonment rate
❖ Reach ❖ Retention rate
❖ Recency ❖ Attrition rate

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-50
 Online Marketing Metrics (cont.)
◼ Social marketing ◼ E-mail metrics
❖ Conversation ratio ❖ Open rate
❖ Applause ratio (# likes/post) ❖ Delivery rate
❖ Amplification (retweets/post) ❖ Click-through rate
❖ Sentiment ratio (ratio of (e-mail)
positive to total comments) ❖ Bounce-back rate
❖ Often times, consumers just
view the ad and do not click on
the ad but later on go to the
website and take the action –
this has been termed as Post-
Impression activities.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-51
 How Well Does Online
Advertising Work?
◼ Use ROI to measure ad campaign
◼ Highest click-through rates: Search engine
ads, permission e-mail campaigns
◼ Rich media, video interaction rates high
◼ Online channels compare favorably with
traditional
◼ Most powerful marketing campaigns use
multiple channels, including online, catalog,
TV, radio, newspapers, stores
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-52
 The Costs of Online Advertising
◼ Pricing models
❖ Barter (exchange ad space for something of similar value)
❖ Cost per thousand (CPM)
❖ Cost per click (CPC)
❖ Cost per action (CPA)
◼ Online revenues only
❖ Sales can be directly correlated
◼ Both online/offline revenues
❖ Offline purchases cannot always be directly related to online
campaign
◼ In general, online marketing is more expensive on
CPM basis, but more effective

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-53
Pricing models
 Pricing Model
Cost per thousand (CPM)
◼ Cost per thousand (CPM), also called cost per mille, is a
marketing term used to denote the price of 1,000
advertisement impressions on one web page.

◼ If a website publisher charges $2.00 CPM, that means an

advertiser must pay $2.00 for every 1,000 impressions of
its ad. The "M" in CPM represents the word "mille,"
which is Latin for "thousands."

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-55
 Pricing Model
Cost Per Click (CPC)
◼ Cost Per Click (CPC) refers to the actual price you pay for
each click in your pay-per-click (PPC) marketing
campaigns

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-56
 Pricing Model
Cost Per Action (CPA)
◼ CPA refers to a type of pricing model where marketers
pay ad networks or media sources for certain
conversions (such as a purchase or registration) that
happen inside of an app after engagement with an ad.

◼ Formulas used to calculate cost per action can get quite

complex, but the most basic approach is:
◼ CPA = Total marketing spend (month/year) divided of
Total number of customers acquired

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-57
 Pricing Model
Cost Per Lead (CPL)
Cost Per Lead (CPL) is defined as the amount of money you
spend to generate a single new lead for your business.

In marketing lead is a person who shows interest in a

brand's products or services, which makes the
person a potential customer.
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 6-58