digital marketing foundations
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3 Mar 2008Kate Carruthers Copyright 2008 1
Digital Marketing & StrategicFoundations
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Agenda
Changing nature of consumer mediaconsumption
Creating an ecosystem that supports yourbrand
Synthesising different media
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Marketing Ecosystems
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New framework for strategymanagement
Away from view of brand asprimary unit for strategy
To aggregated view of
competitive strategy & action
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Marketing Ecosystems
As John Singer has mentioned Marketing ecosystems area new framework for strategy management. They shiftthe view of brand as the primary unit for strategy-making to an aggregated view of competitive strategy
and action at the system level. Advantage goes to thosemarketers that do the better job of designing ecosystemswith mutually-reinforcing effects from internal andexternal assets, and managing the ecosystems forgrowth, innovation, and continual improvement.(Singer, 2006)
We are at a stage where new technologies are becomingpervasive and marketers are changing their businessmodels to leverage these new technologies. Thechallenge is for us to learn how to use these technologiesas effectively as we have come to use the old ones.
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3 Mar 2008Kate Carruthers Copyright 2008 5
Source: Jeremiah Owyang, http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/
http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/ -
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Marketing Ecosystem
Business Strategy
People
Process
Marketing Strategy
Mix
Comms
Digital Strategy
Technology Capability
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Marketing Ecosystem
This is the foundation of the marketing ecosystem.With a sound business strategy supported by a wellthought out marketing strategy the digital strategyshould unfold fairly obviously. The digital strategy is
perhaps the smallest part of the strategic planning,but it is critical as it has the capacity to become themost capital intensive piece. The mix needs to beright from a business and customer perspective.
A key learning for me has been that unless each ofthese three are in place and interlinked effectively itcan be hard to execute with success. It can also behard to know how successful you have been withoutsome metrics defined and monitored.
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Effect on Traditional Marketing
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Effect on Traditional Marketing
This diagram is familiar to most marketers, theextended marketing mix, which is based onvarious extensions of Bordens original idea ofthe marketing mix (Borden, 1964). The
question we need to address is how does digitaltechnology change the way we approachmarketing?
Some good definitions of internet marketinghave been developed: Internet marketing is
achieving marketing objectives throughapplying digital technologies. (Chaffey 2006)and eMarketing is achieving marketingobjectives through use of electroniccommunications technology. (Chaffey 2006)
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Digital Marketing
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Internet marketing isachieving marketingobjectives through applying
digital technologies.
eMarketing is achievingmarketing objectives
through use of electroniccommunicationstechnology.
Source: Chaffey (2006)
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Digital Marketing Based on this and experience of marketing campaigns using the internet, I
would argue that the internet is simply another medium and should betreated accordingly. Although, it can also be a channel as well. Manymarketers get confused when confronting internet as part of theirmarketing plans and get bamboozled by the technology. It is not about thetechnology. It all comes back to the business strategy and the marketingstrategy that must be executed. Judicious selection of media is just part of
normal marketing planning. Thus it is necessary to use familiar marketingplanning tools:
A Audit: An audit of internal strengths and weaknesses, an externalopportunities and threats.
O Objectives: SMART eMarketing objectives.
S Strategy: eMarketing strategies.
T Tactics: an eMarketing mix. C Controls: measuring the performance of our eMarketing plan.
But this has been all about us so far. What about our customers? Has theinternet changed them and what they expect? Do our old ways ofcommunication still hold true?
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Customers
Are our customersdifferent now?
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Source: Kevin Roberts, The Story Behind Lovemarks 19 October, 2006,http://www.saatchikevin.com/The_Story_Behind_Lovemarks/
http://www.saatchikevin.com/The_Story_Behind_Lovemarks/http://www.saatchikevin.com/The_Story_Behind_Lovemarks/ -
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Technology
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Are they really using this?
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Technology
The real problem for us to address is the changing way our customers are using technology and the media.In the not too distant past we could just broadcast our messages and they would get through. This wasbecause there were limited media channels competing for peoples attention. Now this is changing, Mark
Pesce sums it up nicely Attention is the limiting factor for the audience; we are cashed up but time-poor.Yet, even as weve become so time-poor, the number of options for how we can spend that timeentertaining ourselves has grown so grotesquely large as to be almost unfathomable. This is the real lessonof YouTube, the one I want you to consider in your deliberations today. In just the past three years wehave gone from an essential scarcity of filmic media presented through limited and highly regulateddistribution channels to a hyperabundance of viewing options. (Pesce, 2008)
It was reported in the UKs Guardian that younger people are turning away from email as a means of
communication Outside of work, SMS and instant messaging are fast becoming the writing tools ofchoice. Indeed, South Korea - that crystal ball of all our digital tomorrows - has even seen a report thatmany teenagers have stopped using it altogether. "It's for old people," they say. (Fitzpatrick, Dec 2007)
This phenomenon would horrify a number of older folk who are addicted to email as a communicationchannel. Not to mention the vast army of electronic direct marketers. However, this is in contrast tobusiness where the supremacy of email continues unchallenged.
This is one small example of different B2C and B2B uses of the same technology. It is also an example of
the niches growing up around particular generations and usage patterns. Again it means that our medialandscape is becoming more fluid and more complex to navigate as a business.
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New Media, Old Habits
The rulesare changing
Were not incontrol anymore
This bringsopportunities
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New Media, Old Habits The rules really are changing, companies can no longer control their own images and data. The
proliferation of sites like You Tube and Flickr mean that the old ways of ruling, like ownershipand copyright, are being challenged so fast that legislation cannot keep pace. New ways forordinary people to co-opt your content and turn it into something else pop up daily. The musicindustry is a classic example of this phenomenon, they tried very hard to control online music,but their efforts have not put the genie back into the bottle.
Continued development of home based convergent technologies, such as personal DVRs likeTiVo and IQ, have ensured that sampling of content by users will escalate. Also broadcast
media strategies will, while still having specific application, no longer be broadly relevant togetting your message across.
Further, changes in the way we use mobile phones will drive what is possible for consumption.One of the key features we are seeing now in the way that younger people interact with mediais that they are not always sitting at home. They will be consuming media while they are outand via their phones. This means we need to start to understand how to craft messages in thisslightly different medium you cannot just stick your existing web message on a mobile web
page and expect to deliver a good customer experience. Another key development is the growth of video as a medium for mobile delivery. This will
require a rethink of traditional video delivery, this is because people on the go are likely toseek to consume snack sized video content. For example, they are unlikely to want to watch
Gone With the Windon their phone.
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Social Networking
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Source:
http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919
Source: XCD http://xkcd.com/256/
http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919http://xkcd.com/256/http://xkcd.com/256/http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919 -
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Social Networking There is a lot of talk these days about social networking and much jockeying for positions of
ownership of those media (e.g. Murdochs acquisition of MySpace). But I think that this map humorous though it is intent sums up the nature of these social networking communities. Theare multiplicitous, the are mutable, and they have mostly yet to be monetised effectively. Inthis we see the technology creating new ways of interacting and all of us trying to catch up andwork out how to benefit from it.
What does all this mean from a marketing point of view? Again it all comes back to the strategyand understanding the medium. There are rules we follow for placement of advertisements inprint media (e.g. where on a page, or where inside the publication) that have grown up overmany years of experience. However, it is only relatively recent that studies of eye tracking andsimilar have measured how people read computer screens and web pages. We are still at a veryprimitive level of understanding how people consume information from the web on their PC.Now we are adding into the mix mobile technology as well. We have a lot of research yet to bedone until we reach the same level of understanding as for traditional media channels.
The big thing now a lot of organisations are focusing on is building their own online communities.The success of this will relate directly to how relevant their offering is to the consumer.
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What About the Buzzwords?
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EDM Electronic Direct Mail
SEM
Search Engine Marketing
SEO
Search Engine Optimisation
Viral Viral Marketing
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Buzzwords
All of these are just tools, there are expertswho already understand them if you dont.These all rely on different types ofoptimization strategies (e.g. multivariate
testing, behavioural targeting). But thefoundation is always the same to listen toyour customers and deliver content that is
relevant to their interests. And it all comesback to the business and marketingstrategies.
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Media
NOTES: By largest reported circulation, as of March 31, 2006.Source: US Audit Bureau Circulation. By the largest reported circulation, as reported to the Audit Bureau of Circulation.
Rank Newspaper Circulation
1. USA Today (Arlington, Va.) 2,528,437
2. Wall Street Journal (New York, N.Y.) 2,058,342
3. Times (New York, N.Y.) 1,683,855
4. Times (Los Angeles) 1,231,318
5. Post (Washington, DC) 960,684
6. Tribune (Chicago) 957,212
7. Daily News (New York, N.Y.) 795,153
8. Inquirer (Philadelphia) 705,965
9. Post/Rocky Mountain News (Denver) 704,806
10. Chronicle (Houston) 692,557Top10
USNewspapersbyCirculation200
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Media
Lets have a quick look at some statistics about useof different media. Here are the top 10 USnewspapers by circulation. Outside of the top twocirculation drops off quite quickly.
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Media
NOTES: Based on ABC audit reports for nationalconsumer magazines for the following periods:October to December 2007 for weeklymagazines with AANPS 25,000+,.
Source: Source: ABC (Australian Average NetPaid Sales)
RANK AANPS CIRCULATION1
Australian Women's Weekly
570,228
2 Woman's Day 465,5653 New Idea 388,2574 Reader's Digest 352,0005 Better Homes & Gardens 350,0006 That's Life! 321,0767 Super Food Ideas 301,0008 Take 5 251,2409 TV Week 240,02910 Cosmopolitan 175,45511 NW 170,04612 Australian Good Taste 166,26513 Cleo 160,137 To
p26OzCo
nsumerMagazinebyCirculation2
007
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Media Australia continues to have an active magazine culture with Magazine Publishers Australia
reporting recently:
In the 12 months to June 2007, gross copy sales of ABC-audited consumer magazines werearound 223 million. The retail value of consumer magazine sales is estimated to be more than$1.06 billion. Twenty-three of Australias top 100 audited consumer magazines have net paidsales in excess of 100,000. Six of the top 10 weekly magazines have sales in excess of 200,000.
Around 90% of magazine sales in Australia are via retail outlets, such as newsagencies,
supermarkets, convenience stores and auto service stations. Approximately 10% are sold via
subscriptions. But the fact is the way people access and use media is changing. A great example of this is a
friend of mine how reported that his children do not know what radio is. Cameron Reilly, of ThePodcast Network (http://gdayworld.thepodcastnetwork.com) blogged:
Rushing around this morning, driving my kids to piano practice. In a hurry, so the ubiquitous
iPod wasnt jacked into the car stereo. Instead I turned on the radio for the five minute trip to
piano. After a minute, Hunter (age 7) asks me from the back seat Hey Dad - wheres your
iPod? I explain its in my bag, I havent bothered to plug it in. But wheres the music comingfrom? he asks. The radio, I explain. Is that like TV? asks his brother Taylor (also age 7). I
look at their faces in the rearview mirror and realize they have no idea what radio is. They havenever heard me listen to radio. They are amazed that music is playing without the iPod pluggedin. If you have any shares in Austereo - welcome to your future marketplace. It doesnt evenknow you exist. (Reilly, 2008)
There is much research showing how younger people are not reading newspapers like previous
generations. That means we must use different channels. This is why we are all interested inthe social networking phenomenon and are trying to find out how people read this.3 Mar 2008Kate Carruthers Copyright 2008 24
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Media
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Source: Digital Economy Factbook 2007 , p. 9
TopWebProperties200
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Media Pew research from Jan 2008 reports that 48% of internet users said they had ever visited
a video-sharing site such as YouTube. A year ago, in December 2006, 33% of internet users
said they had ever visited such sites. That represents growth of more than 45% year-to-year.
15% of respondents said they had used a video-sharing site yesterday -- the day beforethey were contacted for our survey. A year ago, 8% had visited such a site yesterday.
Thus, on an average day, the number of users of video sites nearly doubled from the endof 2006 to the end of 2007. This represents a significant shift in internet usage
patterns, and I suspect that this is only the beginning of the next evolution of theinternet.
Past usage of the internet related to static sites that delivered information, but thisgrowth of interactive sites, where even if users do not produce the material themselvesthey do distribute it to others, often with commentary and adaptation.
This list of top sites is very interesting, especially when you delve into precisely which
websites are represented in these results. For example, Fox Interactive Media actuallycomprises the following websites:
http://www.myspace.com http://www.photobucket.com http://www.flektor.com
http://www.springwidgets.com http://www.ign.com http://www.gamespy.com
http://www.direct2drive.com http://www.foxsports.com http://www.scout.com
http://www.whatifsports.com http://www.rottentomatoes.com3 Mar 2008Kate Carruthers Copyright 2008 26
http://www.myspace.com/http://www.photobucket.com/http://www.flektor.com/http://www.springwidgets.com/http://www.ign.com/http://www.gamespy.com/http://www.direct2drive.com/http://www.foxsports.com/http://www.scout.com/http://www.whatifsports.com/http://www.rottentomatoes.com/http://www.rottentomatoes.com/http://www.whatifsports.com/http://www.askmen.com/http://www.rottentomatoes.com/http://www.whatifsports.com/http://www.scout.com/http://www.foxsports.com/http://www.direct2drive.com/http://www.gamespy.com/http://www.ign.com/http://www.springwidgets.com/http://www.flektor.com/http://www.photobucket.com/http://www.myspace.com/ -
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Media
Source: Facebook suffers drop in users, TVNZ Feb 22, 2008 http://tvnz.co.nz/view/page/1318360/1596328
5% drop in the numberof UK Facebook usersbetween December
and January
MySpace fall inshare from
23.14% to 22.58%
Facebook's market sharedropped from 18.36% in
December to 17.95% in January
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Media According to TVNZ recently market shares for popular social networking sites declined:
Figures from Nielsen Online in the United Kingdom show a 5% drop in the number ofFacebook users between December and January, with a similar fall for social networkingwebsites MySpace and Bebo.
MySpace experienced a similar fall with its share going from 23.14% to 22.58% in the same
period.
Hitwise Australia's social networking and forums subcategory shows Facebook's marketshare dropped from 18.36% in December to 17.95% in January.
This type of reporting about fluctuations in numbers of users, while correct as a numericalstatement, fails to grasp the essential changes that these websites have driven in the wayspeople consume media and interact with each other. The most important fact to realise in thisstory on TVNZ is that, anecdotally, kids are leaving Facebook because their parents are joiningit. Also they do not take into account the switching costs. For example, a friend wanted tostop using Facebook (it was his New Year resolution) but I noticed him logged onto Facebook afew days later. Why? Because most of his contacts are stored in there. He has since decided to
remain a judicious Facebook user so as to avoid trying to transfer all his contacts. Thus mainstream media reports of the death of social networking are probably premature.
What is more likely happening is that users have gotten over the honeymoon and are starting toassess how to best use these tools in their lives. Similarly the providers of these sites areworking out how to successfully monetize them. This means we need to grapple with bothsides of this equation to obtain value for our businesses.
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Synthesis
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Trad
Media
Online
Physical
ConsumerExperience
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Synthesis The death of the traditional media has been over-hyped.
It is like the long prophesied death of the mainframe inIT circles, or the paperless office. Much prophesied butnot eventuating to date.
This means that we need to go back to basics to decidehow to allocate our media budgets. Identify where your target audience is spending time
online/offline. Determine your target audience's online/offline behavior. Determine your target audience's motivations, likes and
dislikes and key influencers online/offline. Uncover what your competition is doing online/offline to
gain a competitive advantage. The central question to understand is the consumer
experience and how we can connect with that, bywhatever channel works. The trick is understanding howthe various channels work.
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Whats important?
1. Trust & listen to your customers
2. Build on the foundation of good strategy
3. Understand the medium4. Master the medium
5. Find experts
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Technology
Strategy
Customer
Process
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Whats Important? The foundation in business strategy mentioned at the beginning of this session is
critical, without this any success is merely accidental. Upon that foundation asound marketing strategy and supporting processes. At the centre is thecustomer, from whose perspective all that we deliver must make sense. Thento enable our marketing activities capability in technology and to understandthe possibilities and limitations inherent in it we need skilled people. Thosepeople need to understand not only business, but also marketing, and also beskilled in understanding web technology.
What is really important is to establish trust with our customers, to listen to
their needs and to understand the media we use to communicate with them soas to achieve maximum benefit. Dont be afraid to ask experts to assist. Thebody of knowledge required to deliver effective marketing in the world of web2.0 any beyond is a combination of business, marketing and technology. The 5points to remember are:
1. Trust & listen to your customers - respect the messages you receive
2. Build on the foundation of good strategy
3. Understand the medium
4. Master the medium
5. Find experts
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References
Facebook suffers drop in users, TVNZ Feb 22, 2008 http://tvnz.co.nz/view/page/1318360/1596328
Borden, N. H. (1964), The Concept of the Marketing Mix, Journal of Advertising Research, June, Vol. 4, pp. 2-7.
Britton, Daniel B. , McGonegal, Stephen, et al. (2007) The Digital Economy Factbook, The Progress & Freedom FoundationWashington, D.C.
Chaffey, David, et al. (2006) Internet Marketing: Strategy, Implementation and Practice, Prentice Hall UK
Fitzpatrick, Michael , "Digital generation dismisses email as 'for old people, The Guardian, December 6 2007,http://www.guardian.co.uk/technology/2007/dec/06/digitalcommunication
Owyang, Jeremiah (2008) http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/
Pesce, Mark (2008) Unevenly Distributed: Production Models for the 21st Century , 31 Jan 2008,
http://blog.futurestreetconsulting.com/?p=42
Rainie, L. "Online Video Audience Surges", Pew Internet Project, 9 Jan 2008, http://pewresearch.org/pubs/682/online-video-audience-surges
Reilly, Cameron, My Kids Dont Know What Radio Is, 1 Mar 2008,
http://gdayworld.thepodcastnetwork.com/2008/03/01/my-kids-dont-know-what-radio-is/
Singer, John (2006) Marketing Ecosystems: Framing Brand Management for Business Ecosystems athttp://www.bluespoonconsulting.com/whitepapersandnews.htm
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