MARKETING IN THE

DIGITAL ERA
What business Context Competitors Company
are we in? Customers Collaborators

How does the Market Target Product

business create
value for its
Segmentation Market Positioning
customers? Selection

How does it Product Place - Channels Promotion

capture its
share of that
value? Pricing

How does it
sustain its claim Customer Customer
on that value? acquisition retention

The Logic of Marketing Profits

Review Questions: Role of Digital in Changing Marketing

• What is the consumer decision journey (CDJ)? How have digital

technologies impacted the consumer decision journey?

• Describe the implications of growth of online shopping (vs. bricks-

and-mortar) for marketing strategy?

• How have methods of communication changed in recent years?

• What are the implications of the increase in number and variety of

communication options, for marketing strategy?

• Describe how the availability of data has provided new

opportunities for marketers to appeal to consumers.
Describe the process you followed in purchasing a
large electronics product in the past one year
Consumers’ decision journey (CDJ) is used to describe the consumers’
path to purchase (called purchase funnel). The rise of digital technologies
has made the consumer decision journey more complex (many stages)
and non-linear. Post-purchase behaviors are now more important.

Consumer Decision Journey Stages

Felt a need or Knows about Learns about

Considers it
want for it it it

Is willing to Chooses to try

Likes it Consumes it
pay for it it

Is satisfied Is loyal buyer Is engaged Is active

with it of it with it advocate for it

Source: Batra, R. and Keller, K.L., 2016. Integrating Marketing Communications: New Findings,
New Lessons, and New Ideas. Journal of Marketing, 80(6), pp.122-145.
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/digitizing-the-co
nsumer-decision-journey
A dramatic shift has taken place in advertising,
promotions spends and communication channels

One-to-Many One-to-One Many-to-Many

Communications Communications Communications
Reliance on mass media Reliance on personalized Reliance on personalized
advertising offers, and interactive offers, and interactive
marketing marketing in the context of
consumer-to-consumer
communications
Online shopping has grown in importance and
bricks-and mortar has declined

• Value of ecommerce sales will reach $414 billion in 2018.

• 60% of adult Americans are happy to not shop in a crowded mall
or store.
• 71% of shoppers believe they will get a better deal online than in
stores.
• 40% of men and 33% of women aged 18-34 say they would ideally
“buy everything online.”

Vs.
Increase in availability of data, creates opportunities
for targeting and personalization

Digital Personalization

Retargeting

Mobile Apps

Source: “How Digital Personalization drives Better Business Decisions in Retail and Finance” February 7, 2017
https://centricdigital.com/blog/digital-strategy/
how-digital-personalization-drives-better-business-decisions-in-retail-and-finance/.
Digital personalization means serving unique content to a user based on
something you know about them, from their geographic location to how many
times they visited your website or interacted with your app.

A/B testing showed that personalization led to a 1.5% increase in overall homepage engagement
113% increase in conversions.
Source: https://clearbit.com/books/data-driven-marketing/website-personalization
 Participation marketing or engagement marketing may replace the
permission marketing era, as marketers and consumers increasingly
try to work together to find how firms can best satisfy consumer goals.

Vizio (the SMART television manufacturer) has been under scrutiny by the Federal Trade
Commission (US regulatory agency) since a 2015 revelation that it was collecting data on
its customers, without their explicit permission.
ONLINE MARKETING STRATEGY:
PAID, OWNED AND EARNED
CHANNELS
Paid, Owned and Earned are three digital options by
which consumers learn about products and brands.

Paid Owned Earned

Search Advertising
Company Websites
Display Advertising Review Websites (e.g.,
Amazon Reviews; Yelp)
Social Media Advertising
Social Media (e.g., Brand
Email Marketing Facebook Pages, Twitter
Handles)
Video
Sponsored Blogs/Influencer Public Relations
Marketing Mobile Apps
Mobile In-App Advertising
US Total Paid Media Spending shows that digital ad spends exceed TV ad spends

US TV vs. Digital Advertising Spending

(in $ billions)

93.2 103.4
82.9

72.7 74.5 76.0

2017 2018 2019

TV Advertising Spending Digital Advertising Spending

Source: https://www.emarketer.com/Chart/US-TV-vs-Digital-Ad-Spending-2015-2020-billions/196603
Display and Search advertising are the biggest
sources of digital ad spend
Search advertising leverages online searches
conducted by consumers for relevant terms, and
serves up ads relevant to the search

Adwords overview:
https://www.youtube.com/embed/h9PeMTVw
Szc
Four key decisions involved in launching and
managing a search engine advertising campaign

1. Which keywords?
2. How much to bid per keyword?
3. Total available budget for search advertising
4. Which search ads should appear for searches, and how to
improve ad quality?
5. Which landing pages should the ads point to and how should
these be designed to maximize relevancy?

This image shows the

places most looked at on
a Google search results
page

Source:http://
miratech.com/blog/eye-
tracking-google1.html
Bidding on Keywords, Quality Score and Ad Rank
Page
Ad rank is a value which determines an ad’s position or
whether the ads will be shown following a search.
It is determined based on:
1. Bid amount for a given keyword
2. Quality score
• expected clickthrough rate
• ad relevance
• landing page experience
• expected impact of extensions & other ad formats

Source: https://support.google.com/adwords/answer/1752122?hl=en
Digital and Social Media Metrics: Search Advertising

– Click Through Rate:Number of clicks an ad receives divided by

the number of impressions
– Conversion: when a user completes an action such as buying
something or requesting more information (client provided
information; no way to track this in Google Adwords)
– Impression : the number of times an ad is displayed on Google
or within the Google network
– Quality Score: Basis for measuring quality and relevance of an
ad in relation to a specific keyword
• Based on keyword’s click-through rate
• Ad text relevance (does the ad text contain the keyword)
• Overall historical keyword performance with Google
• User experience on the landing page or site
Benefits of Digital Personalization and Search
Advertising : Red Roof Inn Case Study

• https://vimeo.com/107335362
Display Advertising involves placement of banner
ads on related websites; is a fragmented industry
consisting of advertisers (content creators), content
publishers and exchanges
Email Marketing is among the most effective
channels for reaching consumers (one estimate
suggested four times higher ROI than other
social/digital channels).

JetBlue’s Email marketing

campaign was quirky
and attention-grabbing
Social Media Advertising offers unparalleled access
to communities of users with specific interests

Overview of Facebook Advertising

– https://www.youtube.com/embed/lATE0n10j34

Tough Mudder (an obstacle race) spent its entire ad budget on Facebook,
In 2013, 700,000 people participated and also raised over five million for the
Wounded Warrior Project.
Source:https://smbp.uwaterloo.ca/2013/07/
the-tough-mudder-facebook-marketing-campaign/
Mobile Marketing leverages timing to increase value, e.g., Red Roof Inn turned flight cancellations into bookings

The “brand fused real-time data (flight cancellations) with geodata and a specific set of search queries (such as ’hotels near O-Hare Airport’)” and sent targeted advertisements to stranded travelers with as much precision as possible,”

Source: http://www.mmaglobal.com/case-study-hub/case_studies/view/31739
 Red Roof Inn (Campaign Results)
• 266% increase in non-brand mobile booking
• 650% increase in share-of-voice for key travel search queries
• 375% increase in conversion rate
• 60% bookings lift across non-brand campaigns
• 98% increase in clickthrough rates across non-brand
campaigns(Video summary of the campaign)
Mobile Ad spends expected to grow at a tremendous
Pace, with display ads and in-app ads
growing in importance
Mobile Ad $50 billion in 2017 (US)
Spending

24% of total media spending

23% growth in 2017

Source: www.emarketer.com
Walmart developed a mobile app that allows
customers to search, browse, buy, view rollbacks
and locate their nearest store (and for Walmart to
send push notifications).
Video advertising blends sight, sound and story-telling.
Augmented reality features can make advertising real. E.g., Nivea,
Gatorade
Video Advertising for Nivea’s Second Skin

Gatorade: Bryce Harper Virtual Reality Experience

https://www.youtube.com/watch?v=AFKZ3zFsbS8
https://www.youtube.com/watch?v=w4Hy_FANo9E

Source:https://blogs.wsj.com/cmo/2015/09/16/
gatorade-creates-virtual-reality-experience-
that-lets-fans-hit-like-nationals-star-bryce-harper/
Integrated campaigns often involve multiple
channels. Attribution Analysis is done to
understand which channels are producing the
greatest return on the advertising dollar
expenditures.
• Coca Cola in Hong Kong (Chok! Chok! Chok!

• https://www.youtube.com/watch?v=pEDsERv-rFA
BRANDS AS CULTURAL SYMBOLS
REI’s # OptOutside Campaign blended online and
offline elements with brand’s core message for an
effective campaign
Brands are now cultural symbols & authenticity is
important,e.g., REI # OptOutside
• http://www.adweek.com/brand-marketing/how-on
e-brave-idea-drove-reis-award-winning-optoutside
-campaign-172273/#/
• https://www.youtube.com/watch?v=lMsxrJeJ8lU
• https://www.youtube.com/watch?v=QlVZdnuNiJY
• http://www.slate.com/articles/health_and_science/
science/2017/11/rei_s_optoutside_campaign_is_sti
ll_consumerist.html
REI Case Study: Campaign Outcomes

• Mentions on Facebook, Instagram and Twitter

– Increased by an astounding 7000%.
• Over 170 organizations also closed down for Black
Friday
• Hundreds of parks opened without charging any fees.
• Around 1.4 million people spent their day outdoors.
• Due in part to this online campaign, the REI received
a record of 1 million new memberships for 2015.
• In-store sales increased by 7 percent and digital sales
grew by almost 23 percent.
• Given the initial success of this campaign, REI has
made this campaign (#optoutside) an annual event.
Review Questions

• What is the relative advertising spend on TV vs. digital

advertising? What are the main formats towards which digital ad
spends are being allocated?
• Describe how search advertising works. Define each of the
following concepts: (1) cost-per-click; (2) clickthrough rate; (3)
impressions.
• Describe how brands can be viewed as cultural symbols in social
media.
• Assess the role of mobile marketing as a way of appealing to
customers? Outline one successful ad campaign using effective
mobile marketing methods.
Discussion Question

Can you name brands whose online campaigns have caught your
attention? What was special about these campaigns?
EARNED SOCIAL MEDIA
Earned social media is gaining in relevance and impact

Number of Users Across Selected Social Media Venues (December 2019)

Facebook 2.37 billion

Twitter 330 million
Instagram 1 billion
Snapchat 210 million
Pinterest 291 million

https://www.statista.com/statistics/
Social media can amplify positive and negative
information about brands

United breaks guitars

Lack of control over online brand sentiment, e.g., parodies of

brands on Youtube, reputation crises
Need for proactive strategies for managing brand sentiment rather
than reactive strategies
According to Intuit co-founder Scott
Cook, “A brand is no longer what we
tell the consumer it is—it is what
consumers tell each other it is.”
Volkswagen faced a major reputational crisis
beginning in 2015

Timeline Key Events

News of Emissions scandal affecting 1.2 million vehicles
September-15
Governments of Germany, US, France and Spain Investigating Scandals; EPA
October-15 orders recall and VW recalls 8.5 M cars
November-15 VW offers apology, accepts blame and recalls cars

December-15 VW limits damage to certain cars and models

January-16 US government Investigating Scandal
February-16 Plan to Fix and Recall Vehicles

Latter half of 2016 US Justice announces VW compensation and settlements

VW Impact Extent of Impact
Loss of Shareholder value $ 41.5 billion
Total Penalties in US $ 25 billion
Recall 11 million cars
Rectification/Compensation Fines $ 10 billion

Number of Personnel Affected 1 Million

TOTAL PRICE OF RECALL $ 77 billion

Source: Swaminathan, Vanitha and Suyun Mah (2016), “What 100000 Tweets
About The Volkswagen Scandal Tells Us About Angry Customers, Harvard Business Review
Volume of conversations on Twitter spiked at certain
times based on unfolding scandal

Source: Swaminathan, Vanitha and Suyun Mah (2016), “What 100000 Tweets
About The Volkswagen Scandal Tells Us About Angry Customers, Harvard Business Review
Volkswagen brand sentiment became extremely
negative & began slow recovery

Source: Swaminathan, Vanitha and Suyun Mah (2016), “What 100000 Tweets
About The Volkswagen Scandal Tells Us About Angry Customers, Harvard Business Review
Volkswagen reputation crisis saw shifts in topics
over time

Source: Swaminathan, Vanitha and Suyun Mah (2016), “What 100000 Tweets
About The Volkswagen Scandal Tells Us About Angry Customers, Harvard Business Review
Reputational crisis management requires careful
monitoring of sentiment and topics

• Change the focus of conversation

– Limit damage to specific models or products
• Sincere efforts to recover brand trust
– Offer sincere apology and come clean in addition to monetary
incentives
• Unify/integrate all digital and social media channels around the
same message
– United Breaks Guitars example
In Summary…

• Marketing in the digital era presents many challenges

• Shifts in consumer behavior (e.g., changes in consumer decision
journey) pose particular issues for marketers in devising strategies
• There are a wide variety of tactical options to advertise and
promote
• Determine your goals
• Identify appropriate media
• Budget allocations should focus on opportunities with best ROI
• Use A/B testing and attribution models to examine what’s working
versus not.
• Invest in social listening to monitor conversations online
• Have a plan to handle public relations crises
Glossary of Key Terms

Consumers’ decision journey (CDJ) is used to describe the

consumers’ path to purchase (called purchase funnel).

Digital personalization means serving unique content to a user

based on something you know about them, from their geographic
location to how many times they visited your website or interacted
with your app.

Search advertising leverages online searches conducted by

consumers for relevant terms, and serves up ads relevant to the
search
Glossary (cont..)
Ad rank is a value which determines an ad’s position or
whether the ads will be shown following a search. It is determined
based on:
1. Bid amount for a given keyword
2. Quality score
– expected clickthrough rate
– ad relevance
– landing page experience
– expected impact of extensions & other ad formats
Glossary (cont…)

Click Through Rate (CTR): Number of clicks an ad receives divided

by the number of impressions
Cost per Click (CPC): The average cost of the advertising campaign
divided by the number of clicks
Cost Per Thousand (CPM): The cost of the campaign divided by
the number of impressions delivered (expressed in thousands)
Conversion: when a user completes an action such as buying
something or requesting more information (client provided
information; no way to track this in Google Adwords)
Impression : the number of times an ad is displayed. Social media
impressions could pertain to displays on Google, Facebook (or any
social network)