MARK 430
INTRODUCTION
The impact of the internet on
marketing
Week 1
What is internet marketing?
• Online marketing/ eMarketing / digital marketing
/ web marketing / internet marketing?
• The application of the internet and related digital
technologies in conjunction with traditional
communications to achieve marketing objectives
……Dave Chaffey
http://www.smartinsights.com/digital-marketing-strategy/online-marketing-mix/definitions-of-emarketing-vs-internet-vs-digital-marketing/
Why study internet marketing?
• Over the past 20+ years traditional marketing practices have
been transformed
– October 27, 1994 – first banner ad
– Digital marketing continues to grow and attract marketing dollars
– The influence of “Web 2.0” in the late 90s and early 2000s, product
digitization, and now the impact of mobile computing
– Continuing strong growth in business-to-consumer and business-tobusiness eCommerce
• New skills, knowledge and strategies in high demand in the
business world – very strong demand in this area
• Marketers need to understand technology and collaborate
with IT colleagues
TECHNOLOGIES
Some technologies used in marketing
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Web (HTML 5 / CSS 3)
Instant messaging
SMS (Text messaging)
“over-the-top” messaging via data (eg. Viber, WhatsApp)
Voice and Video over IP (VOIP)
eMail
P2P file exchange / streaming technologies
Location-awareness / location based services (LBS)
Mobile Apps (native to mobile operating systems)
Augmented Reality (AR)
Near-field communication (NFC)
iBeacon and Bluetooth Low Energy
Virtual reality (VR)
Voice and image recognition
Consumer Devices
• Mobile
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Cell phones and smart phones
eReaders
Tablets
Wearables (glasses, watches, rings, bands, tattoos etc)
• Desktop
– Personal computers (desktop and laptop)
– Gaming consoles
– VR/AR headsets and motion detectors
• Internet of Things (IoT)
OWNED, EARNED, AND PAID MEDIA
Owned, earned and paid media
• Definitions from Dave Chaffey
– Paid media: “media where there is investment to pay for visitors,
reach or conversions through search, display ad networks or affiliate
marketing.” (online and offline)
– Earned media: “publicity generated through PR invested in targeting
influencers to increase awareness about a brand. Of course, it’s still an
investment. 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.”
– 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. Offline owned media may include
brochures or retails stores.”
http://www.smartinsights.com/digitalmarketing-strategy/customer-acquisitionstrategy/new-media-options/
“Owned” media
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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
One of Dell’s
twitter
accounts
Starbucks on
Pinterest
“Earned” media
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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
Comments posted to the
Skyrim Reddit pages (not
owned by Bethesda)
Liking, sharing,
and commenting
on a Starbucks’
Facebook post
Instagram
sponsored
post
“Paid” media
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Paid media: “media
where there is
investment to pay for
visitors, reach or
conversions” Dave
Chaffey
Twitter
promoted
account
Google
Adwords
PPC
advertising
Owned, earned & paid media
(Chaffey)
http://www.smartinsights.com/digitalmarketing-strategy/customer-acquisitionstrategy/new-media-options/
Owned, earned and paid media:
role, benefits & challenges
http://www.smartinsights.com/digitalmarketing-strategy/customer-acquisitionstrategy/new-media-options/
The bigger
picture of
internet
marketing
Planning and
management
Email /
messaging
Domains,
usernames,
hashtags
Being
found
Owned:
Website
Demographics
Market research
Advertising
Social
media
(owned
&
earned)
Content &
technologies
Text, video,
images, AR, VR
Analytics,
Data
management
Law,
Regulation,
ethics
THE 4PS 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
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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 rather than broadcast
• Pull (inbound marketing) rather than push (outbound
marketing)
• Active rather than passive (lean-forward medium)
• Social Networking / User Generated Content
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
Same message to all customers or
segments
Traditional
media
Message tailored to each customer or micro-segment
New
media
• The market of
one: based on
the information
about customers
that we provide,
and that is
collected
automatically
and monitored
constantly
• Amazon for
example
Source: eMarketing eXcellence. 2012.
Smith &Chaffey
Integration
• Online marketing is very readily integrated
into a marketing communications strategy
• Internet channels complement and integrate
with offline marketing channels
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 (eg. Uber)
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”
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
– Reduction of friction in transactions
• Completely new business models based on digital
distribution methods
• Internet becomes a direct substitute for an offline
distribution channel eg. online banking
Source: eMarketing eXcellence. 2012.
Smith &Chaffey
Some industries that are undergoing rapid
change due to Internet forces affecting
product and place
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Recorded Music industry
Video/DVD rental industry
Newspaper and magazine publishing
Banking
Book publishing
“Sharing economy” industries (Taxis, hotels)
• Forces for change:
– Digitizable product
– Self service
– Direct to consumer shift
– Personalization
Pricing
• Internet influences – buyer and seller
perspectives of price
• Moving from free to fee (and freemium)
• LinkedIn
• Shockwave.com (casual games)
• Newspaper “paywalls”
• Price comparisons / transparency
• Dynamic pricing
Source: eMarketing eXcellence. 2012.
Smith &Chaffey
Online promotion
• We will look at the many new techniques
available to marketers to promote goods and
services online
• The big value of internet marketing
– Ability to measure results (performance based)
– Ability to use unmediated data about customer
behaviour and preferences
Source: eMarketing eXcellence. 2012.
Smith &Chaffey
COMMUNICATION AND
PERMISSION IN THE MARKET SPACE
(LAW, ETHICS, AND PRIVACY)
Overview:
• Establishing trust and confidence in the online
world
– Privacy
• Gaining trust through “permission marketing”
• The relationship marketing model
How concerned are people about
online privacy?
• Survey of Canadians on Privacy-Related Issues (Stats Can
2013) – scroll down for graphs
– 66% are very concerned about privacy
– Top privacy concerns relate to finances, online security and
identity theft
– Growing sense that protection of personal information is
diminishing
– Most not confident about knowledge of privacy
implications of new technologies
– Growing sense of increased importance of protecting
privacy in future
– Canadians reluctant to share personal information with
organizations
2013 survey data re privacy from Pew
• Anonymity, Privacy, and Security Online – Pew
Internet (September 2013)
• Security concerns continue to rise
• 86% of internet users have taken steps online
to remove or mask their digital footprints
• 55% of internet users have taken steps to
avoid observation by specific people,
organizations, or the government.
Other current concerns about privacy
• There is a big tension between what marketers
want to know about people, and how
comfortable people are in providing that data
• Marketers need to find the right balance
• Some examples
– Canadian Privacy Commission video on social
networking
– What Facebook is for (#funny)
– The evolution of Facebook Privacy (2005 – 2010)
– Facebook privacy – 6 years of controversy
– Google Street View (Neck Point Park)
What is the current legal
framework in Canada
with respect to online
privacy?
Legal Protection of Internet Privacy
• A major concern of Internet users is that their
personal data is used only for the purpose it was
provided
• Legislation in Canada
– PIPEDA (Personal Information Protection and
Electronic Documents Act)
– All businesses and other organizations had to comply
by Jan 1, 2004
• Note this is federal legislation – there is also
provincial-level privacy legislation
Privacy requirements
• Information about an identifiable individual
– Name, address, gender, age, ID numbers
– Sensitive information (religion, union affiliations, sexual
orientation, medical records etc)
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Identify purpose for which info is being collected
Knowledge and consent of individual is required
Use only for the purpose for which it was collected
Keep it secure
Make public your policies and practices about how
private information is deal with
Privacy Policies
• Organizations carry out this legal requirement by
providing information in privacy policies
• Policy must address information collected automatically
from log files and cookies, as well as personal
information actively provided by the user
– Example: FutureShop
– Example: Microsoft Canada
• Trust can also be increased by the use of “trustmarks”
from 3rd party providers such as Truste
Privacy and cookies
• Cookies are a boon to marketers – just a few of the uses
(video explanation from Google):
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Personalization
Advertising and ad networks
Shopping carts
Recognizing returning visitors
Tracking click-through from advertising to purchase
• They also offer big advantages to web site users
• However – they are also the cause of many privacy
concerns
Types of cookies
• There are several types of cookie
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Persistent cookies
Single session cookies
First-party cookies
Third-party cookies – these are the ones that cause concern
• No one-to-one correspondence between computer
(cookie) and user
• Issue for marketers
– In Canada we must disclose how cookies are used in Privacy
Policy
– EU policy now requires web sites to get users permission to
capture data using cookies
– Creeping out the customers by “going too far”
• Behavioural re-targeting (based on previous actions, not demographics) is
being called “stalking”
New legal framework for Canada
• “In order to build consumer trust and confidence in conducting e-business
in Canada the Government of Canada is committed to establishing clear
rules to protect the privacy of personal information in the new 'virtual'
marketplace. This is being done through the implementation of Federal
privacy legislation, and implementation of the new anti-spam legislation.”
Industry Canada
• Summary of the new anti-spam legislation (CASL)
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Very strict consent framework is one of the most notable points
Applied to all “electronic communication” not just email
Best practices in marketing is now the law
We will look at the requirements in more detail when we look at email
marketing
We can also build trust and
confidence by using
“permission marketing”
techniques
Permission marketing
• Term coined by Seth Godin (1999)
• Underpins the notion of relationship
marketing
• The antithesis of “interruption marketing”
and the answer to the problem of clutter
– Permission marketing is…..
anticipated, relevant and personal
• Often begins with some sort of incentive that
customers “opt-in” (remember that opt-in is
now required by law)
Permission as a basic principle on the
web
• Don’t ask for personal information too early in a process
• Don’t ask for it until it is needed
• Remember, once you have customer information, all
contact should be “anticipated, relevant, and personal”
(and used only for the purpose(s) that they explicitly gave
consent for)
Framework of relationship marketing
• Aim is to build long-term relationship with individual
customer – built on loyalty – one to one marketing
• Measured by Return on Marketing Investment (ROMI) and
Customer Lifetime Value (CLTV) metric rather than simply
sales transactions
• Rationale is that customer acquisition costs much more than
customer maintenance
• Strategy built using “sense and respond” communications
– Both timely and relevant to the customer – based on
previous interactions with the company
– Amazon.com and “sense and respond”
• Loyalty happens only with “permission” and by instilling trust