Some Comments on Digital/E marketing

Introduction

Several years ago, Australians have changed their reading and viewing habits. They are spending more time online than watching TV and are embracing the "always on" factor, ie consumers are using Internet day and night. This increases the potential of digital/e-marketing with interactive campaigns and means that there is a need to understand

- the way the Internet works

- the way consumers use the Internet

- how the technology works

- how to handle infringement laws, ie what is a real or fake site?

NB Is there a direct link between users of the Internet and sales? Fortunately everything online is traceable. Sales before and after social media campaigns can be compared.

With the increasing popularity of on-line/digital marketing, such as emails, on-line directories, social networking, mobile phone marketing, on-line videos, paid search and display, the main challenges are

- tracking its effectiveness

- increased costs in paid search ads

- increased competition for premium ad space

E-marketing is linked with the Internet, eg My Space, web sites, YouTube, Twitter, Google (AdWords), permission marketing, viral techniques, etc. Furthermore, it requires a reinvention of whole organisations and the products/services created. It is more than an add-on to the current marketing strategies, and has resulted in fast results at a minimal cost.

The Internet has taught us

"... to read paragraphs, not chapters, to look for quick hits for insights and then to surf on it..."

Seth Godin, 2007

Until e-marketing appeared, traditional marketing tactics required large investments in media advertising/promotions/PR, etc tactics, such as TV, newspapers, radio, tele-marketing, cold calling, etc plus efficient factories to produce consistent products. The traditional approach was based upon scarcity of choice and large resources, with limited customer power.

Comparing traditional marketing vs. e-marketing

Traditional marketing

E-marketing

limited number of media outlets

unlimited number of media outlets

focus on horizontal success

focus on vertical success

market-to-consumer communications

consumer-to-consumer communications

barrier between customers and makers

permeability between customers and makers

product line limited by factory

product line limited by imagination

long product cycles

fads

market share

fashion

features

stories

advertising a major expense

innovation a major expense

large overheads = stability

small overheads = low risk

consumer support

community support

focus groups

launch and learn

Traditional marketers will use the Internet to advance their old agenda, while the new marketers' mantra is "of and by and for the Internet". The former's performance is focused on market share, ie getting big by controlling the conversation, while the latter's is to fashion and create stories that spread because people want to spread them.

"...don't use the tactics of one paradigm and the strategies of another and hope that you'll get the best of both worlds. You won't..."

Seth Godin, 2007

Remember: aided by technology, the world now acts smaller and works faster. Successful organisations of the past built structures that were big, slow and centralized, but as the world becomes more digitized, the older, slow systems are getting in the way.

To be successful, the organisational and revenue model need to match the preferred marketing approach. Too often e-marketing is just an extension of current business and used to support those businesses. This trade-off can reduce the effectiveness of e-marketing.

On the other hand, e-marketing

"...leverages scarce attention and creates interactions among communities with similar interests......treats every interaction, product, service, and side effect as a form of media......by telling stories, creating remarkable products, and gaining permission to deliver the messages directly to interested people..."

Seth Godin, 2007

Furthermore, e-marketing fits in with what marketers do, ie

"... we spread ideas. We tell stories that people want to hear and believe. We translate emotion into action. We close the sale. We make things people want to buy. We use the best available medium to reach the right people at the right time..."

Seth Godin, 2007

"...International conversion rate for buying online is 1.17% whilst the average bricks and mortar conversion across goods is around 20%. In other words, despite the fact we are spending more time online researching what we might like, the majority of buying still takes place in stores. Rather than viewing online sales as eating into off-line sales, the goal should be to use digital tools to best influence purchase conversions..."
Rachel Botsman, 2014b

The fundamental questions customers ask are around
- am I getting the best deal?
- what is on sale?
- Is the item in stock? If not, when can I get the item?

All these questions can be answered via apps. People are using apps to write their shopping lists and to navigate the fastest way to find the products in store.
Need to focus on how to make the digital and physical work together to improve the customer's experience.

· An integral part of e-marketing is permission marketing. It stresses the consumer's point of view, ie

- permission exists to help the consumer and not the marketer. Marketing messages need to be personal, relevant and expected, otherwise the consumer is not interested

- the consumer's permission is non-transferable

- the consumer doesn't care about the marketer; he/she is only interested in their own situation/imperatives/circumstances, etc. Marketing messages need to be tailored to this understanding

- privacy policies and fine print are meaningless to consumers. The marketer needs to realize that he is making a deal and promise to the consumer, and not the other way around

- the customer demand is for complete loyalty, trust and respect from the marketer. If the marketer does not realize this, they are in the history books!!!!!!

Some examples of successful businesses in e-marketing include

- Threadless - the two entrepreneurs who built a T-shirt business that does more than $20 million a year in revenue - and doesn't even have an artist on staff. Customers design their own T-shirts!

- the lawyer who built Techcrunch - a blog that generates $1 million dollars a year in revenue

- the car dealership in Syracuse that happily sells cars to people who live hundreds of miles away in New York City

- Kiva - the non-profit organisation that raises money in Kansas and funds craftspeople in India -. without an office in either place.

- Etsy ‐ an on-line web site where people are able to buy and sell all things home-made. For a small fee anyone can be part of a virtual craft fare 24/7. Members are encouraged to post their profiles alongside their wares. In 2009 gross sales reached $US 180 million; with monthly on-line visits exceeding 670 million and over 250,000 stall holders.

It is of interest to note that GM (after exiting bankrupt protection in 2009) is experimenting by partnering with eBay to sell on-line new Chevrolets, Buick, Pontiac and GMCs.

Some other examples of increasing focus on e-marketing/digital world include the fashion /luxury goods industries (e.g. Louis Vuitton, Chanel, Burberry, Marie Claire, Myer, Sportsgirl, etc.). Some of the techniques being used to interact with the community are blogs (which include videos), polls, style snaps, interviews, music reviews, free downloads, on-line stores, tweets, FaceBook, YouTube, Twitter, etc. Some bloggers are now getting preferential treatment, such as being invited to fashion parades, etc. The fashion industry hopes that these techniques will encourage people to visit their websites and increase sales. Furthermore, luxury goods traditionally regarded themselves as different from mass brands with buyers wanting the "store experience" with luxury goods, ie human touch and experience of walking into a luxury store, seeking expert advice, etc. Generally customers of luxury goods, like perfumes, come into stores to "smell the scent" and, after the initial purchase, re-buy on-line.

Recently the convenience of the Internet/mobile phones has become more important with the growing significance of Asia and youth in the luxury goods markets, eg

"...in China alone, 60% to 70% of luxury consumers are 20 to 27 years old..."

Melinda O'Rourke as quoted by Hannah Tattersall, 2010

Technology is allowing marketers to gather more information about customers than ever before. Every time you click on the Internet, more information is available, ie

"...Professional data miners used electronic data to create a detailed picture of what you have bought in the past ("history sniffing") and how you bought it ("behavioural sniffing"). They can then draw your attention to products you may want to buy..."

The Economist, 2011

Use of peer group pressure with technology, ie

"...What is new is that the data revolution and social media has greatly increased the ability to start "social epidemics" ..."

The Economist, 2011

Other evidence

- that piped music in American department stores increases people's spending by around 20%

- nagging children have a powerful effect on their parents' (wallet carriers) purchasing habits

- the average American three-year-old can recognise 100 brands; recites advertising jingles more readily than the times table

- the younger you can hook your customers, the better

- men are shopping more like women, ie for themselves and buying female-like products: such as male grooming has grown from 0 to $US 27 billion industry.

In summary,

"...the combination of technology and competition has led to a world where many people get what they want, when they want it. A world where people have control over the attention they give to marketers. A world where we have so much income, so many assets, that we can demand just about anything we can imagine.......The most important thing that has changed is the ability of consumers to finally have what they wanted all along......to be treated with respect and to be connected to other people..."

Seth Godin, 2007

This reverses the way you normally do business, ie instead of finding customers for your products/services, you are finding products/services for your customer. An example of this is a difference between a book publisher (who is seeking new readers for his new writers) and a magazine publisher (who commissions articles for his existing readers). The latter makes more money!!!

The key to success with the Internet is to

"...make something worth talking about; and make it easy to talk about. These attributes of success have nothing to do with budget or scale or corporate will and everything to do with bottom-up strategy of making good stuff for the right people...... far more realistic (and profitable) is to ignite your networks. To create a story that spreads from person-to-person, from blog to blog, that moves through a community and leaves an impact as it does ..." Seth Godin, 2007

Furthermore, it is important e-marketers start to ask questions and listen to the answers, rather than just spread information. They need to find out what people are saying about products, services, brands, industry, etc. Then they can determine the opportunities that exist.

 

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