Focus on marketing communications for customer acquisition in E-commerce

1. The characteristics of interactive marketing communications

To best exploit the characteristics of digital media, it is important to understand the differ­ent communications characteristics of traditional and new media. In this section, we look at eight key differences:

  1. From push to pull.
  2. From monologue to dialogue.
  3. From one-to-many to one-to-some and one-to-one.
  4. From one-to-many to many-to-many communications.
  5. From ‘lean-back’ to ‘lean-forward’.
  6. The medium changes the nature of standard marketing communications tools such as advertising.
  7. Increase in communications intermediaries.
  8. Integration remains important.
  9. From push to pull

Traditional media such as print, TV and radio are push media, a one-way street where information is mainly unidirectional, from company to customer unless direct-response ele­ments are built in. In contrast, the web is an example of pull media. This is its biggest strength and its biggest weakness. It is a strength since pull means that prospects and cus­tomers only visit a web site when it enters their head to do so – when they have a defined need – they are proactive and self-selecting. But this is a weakness in that online pull means marketers have less control than in traditional communications where the message is pushed out to a defined audience. What are the e-marketing implications of the pull
medium? First, we need to provide the physical stimuli to encourage visits to web sites. This may mean traditional ads, direct mail or physical reminders. Second, we need to ensure our site is optimized for search engines – it is registered and is ranked highly on relevant key­word searches. Third, e-mail is important – this is an online push medium, it should be a priority objective of web site design to capture customers’ e-mail addresses in order that opt-in e-mail can be used to push relevant and timely messages to customers.

1.1. From monologue to dialogue

Creating a dialogue through interactivity is the next important feature of the web and new media. Since the Internet is a digital medium and communications are mediated by software on the web server that hosts the web content, this provides the opportunity for two-way interaction with the customer. This is a distinguishing feature of the medium (Peters, 1998). For example, if a registered customer requests information, or orders a particular product, it will be possible for the supplier to contact them in future using e-mail with details of new offers related to their specific interest. Deighton (1996) proclaimed the interactive benefits of the Internet as a means of developing long-term relationships with customers.

1.2. From monologue to dialogue

Creating a dialogue through interactivity is the next important feature of the web and new media. Since the Internet is a digital medium and communications are mediated by software on the web server that hosts the web content, this provides the opportunity for two-way interaction with the customer. This is a distinguishing feature of the medium (Peters, 1998). For example, if a registered customer requests information, or orders a particular product, it will be possible for the supplier to contact them in future using e-mail with details of new offers related to their specific interest. Deighton (1996) proclaimed the interactive benefits
of the Internet as a means of developing long-term relationships with customers.

A web site, interactive digital TV and mobile phones all enable marketers to enter dia­logue with customers. But digital dialogues have a less obvious benefit also – intelligence. Interactive tools for customer self-help can help collect intelligence – clickstream analysis recorded in web analytics can help us build up valuable pictures of customer preferences and help marketers ‘sense and respond’.

1.3. From one-to-many to one-to-some and one-to-one

Traditional push communications such as TV and print are one-to-many: from one com­pany to many customers, often the same message to different segments and often poorly targeted (although media fragmentation means that reasonably accurate targeting is poss­ible). With new media ‘one-to-some’ – reaching a niche or micro-segment becomes more practical – e-marketers can afford to tailor and target their message to different segments through providing different site content or e-mail for different audiences through mass cus­tomization. We can even move to one-to-one communications where personalized messages can be delivered.

1.4. From one-to-many to many-to-many communications

New media also enable many-to-many communications. Hoffman and Novak (1996) noted that new media are many-to-many media. Here customers can interact with other cus­tomers via your web site or in independent communities. The success of online auctions such as eBay also shows the power of many-to-many communications.

1.5. From ‘lean-back’ to ‘lean-forward’

New media are also intense media – they are lean-forward media in which the web site usu­ally has the visitor’s undivided attention. This intensity means that the customer wants to be in control and wants to experience flow and responsiveness to their needs. First impressions are important.

This contrasts with TV which is more lean-back – the TV may be on, but its audience is not necessarily watching it. An article in the Guardian (2003) entitled ‘TV ads “a waste of money”’ summarizes new research observing the reaction of consumers to ads. It supports those who argue that many consumers do not regularly watch TV ads. The study found people who watched television with family or friends were far more likely to talk to each other during the commercial breaks than to focus on the ads. Others spent the commercial break doing housework, reading or channel hopping.

1.6. The medium changes the nature of standard marketing communications tools such as advertising

In addition to offering the opportunity for one-to-one marketing, the Internet can be, and still is, widely used for one-to-many advertising. On the Internet the overall message from the advertiser becomes less important, and typically it is detailed information the user is seeking. The web site itself can be considered as similar in function to an advertisement (since it can inform, persuade and remind customers about the offering, although it is not paid for in the same way as a traditional advertisement). Berthon et al. (1996) consider a web site as a mix between advertising and direct selling since it can also be used to engage the visitor in a dialogue. Constraints on advertising in traditional mass media such as paying for time or space become less important.

Peters (1998) suggests that communication via the new media is differentiated from com­munication using traditional media in four different ways. First, communication style is changed, with immediate, or synchronous transfer of information through online customer service being possible. Asynchronous communication, where there is a time delay between sending and receiving information as through e-mail, also occurs. Second, social presence or the feeling that a communications exchange is sociable, warm, personal and active may be lower if a standard web page is delivered, but can be enhanced, perhaps by personalization. Third, the consumer has more control of contact, and finally the user has control of content, through selection or through personalization facilities.

1.7. Increase in communications intermediaries

If we consider advertising and PR, with traditional media this occurs through a potentially large number of media owners for TV, radio and print publications. In the Internet era there is a vastly increased range of media owners or publishers through which marketers can pro­mote their services and specifically gain links to their web site. Traditional radio channels, newspapers and print titles have migrated online, but in addition there are a vast number of online-only publishers including horizontal portals (Chapter 2) such as search engines and vertical portals such as industry-specific sites. The online marketer needs to select the most appropriate of this plethora of sites which customers visit to drive traffic to their web site.

1.8. Integration remains important

Although new media have distinct characteristics compared to traditional media, this does not mean we should necessarily concentrate our communications solely on new media. Rather we should combine and integrate new and traditional media according to their strengths. We can then achieve synergy – the sum is greater than its parts. Most of us still spend most of our time in the real world rather than the virtual world, so offline promotion of the proposition of a web site is important. It is also important to support mixed-mode buying. For example, a cus­tomer wanting to buy a computer may see a TV ad for a certain brand which raises awareness of the brand and then see a print ad that directs them across to the web site for further infor­mation. However, the customer does not want to buy online, preferring the phone, but the site allows for this by prompting with a phone number at the right time. Here all the different communications channels are mutually supporting each other.

Similarly, inbound communications to a company need to be managed. Consider what happens if the customer needs support for an error with their system. They may start by using the onsite diagnostics but these do not solve the problem. They then ring customer support. This process will be much more effective if support staff can access the details of the problem as previously typed in by the customer to the diagnostics package.

2. Assessing marketing communications effectiveness

A campaign will not be successful if it meets its objectives of acquiring site visitors and cus­tomers but the cost of achieving this is too high. This constraint is usually imposed simply by having a campaign budget – a necessary component of all campaigns. However, in ad­dition it is also essential to have specific objectives for the cost of getting the visitor to the site using different referrers such as search engine marketing combined with the cost of achieving the outcomes during their visit. This is stated as the cost per acquisition (CPA) (sometimes cost per action). Depending on context and market of a site, CPA may refer to different outcomes. Typical cost targets include:

  • cost per acquisition – of a visitor
  • cost per acquisition – of a lead
  • cost per acquisition – of a sale.

To control costs, it is important for managers to define a target allowable cost per acquisition such as £30 for generating a business lead or £50 for achieving sign-up to a credit card.

Figure 9.7 shows the full range of measures used by digital marketers to control com­munications expenditure from least sophisticated to more sophisticated as follows:

  • Volume or number of visitors. This is usually measured as thousands of unique visitors. It is preferable to using page views or hits (see Chapter 12) as a measure of effectiveness, since it is opportunities to communicate with individuals. A more sophisticated measure is reach (%) or online audience share. This is only possible using panel data or audience data tools such as or

Example: An online bank has one million unique visitors per month.

  • Quality or conversion rates to action. This shows what proportion of visitors from different sources take specific marketing outcomes on the web such as lead, sale or subscription. Bounce rates can also be used to assess the relevance and appeal of the page that visitor arrives on.

Example: Of these visitors 10% convert to an outcome such as logging in to their account or asking for a quote for a product.

  • Cost (costper click). The cost of visitor acquisition is usually measured specific to a partic­ular online marketing tool such as paid search engine marketing since it is difficult to esti­mate for an entire site with many visitors referred from different sources.

Example: £2 CPC.

  • Cost (cost per action or acquisition). When cost of visitor acquisition is combined with conversion to outcomes this is the cost of (customer) acquisition.

Example: £20 CPA (since only one in ten visitors take an action).

  • Return on investment (ROI). Return on investment is used to assess the profitability of any marketing activity or indeed any investment. You will also know that there are different forms of ROI, depending on how profitability is calculated. Here we will assume it is just based on sales value or profitability based on the cost per click and conversion rate.

A related measure, which does not take profitability into account is return on advertising spend (ROAS) which is calculated as follows:

  • Branding metrics. These tend to be only relevant to interactive advertising or sponsorship. They are the equivalent of offline advertising metrics, i.e. brand awareness (aided and unaided), ad recall, brand favourability and purchase intent. Recorded using tools such as Dynamic Logic (
  • Lifetime-value-based ROI. Here the value of gaining the customer is not just based on the initial purchase, but the lifetime value (and costs) associated with the customer. This requires more sophisticated models which can be most readily developed for online retailers and online financial services providers.

Example: A bank uses a net present value model for insurance products which looks at the value over 10 years but the main focus is on a 5-year result and takes into account:

    • acquisition cost
    • retention rates
    • claims
    • expenses.

This is valuable since it helps give them a realistic ‘allowable cost per sale’ from different communications tools which is needed to get return over 5 years.

Figure 9.8 shows an example of effectiveness measures for an online ad campaign for an insurance product. Here an opportunity or lead is when a quote is requested. Note that the cost of acquisition is high, but this does not take into account the synergies of online adver­tising with offline campaigns, i.e. those who are influenced by the ad, but do not click through immediately.

3. Online marketing communications

In this section we will review approaches to online promotion using the different tools of Figure 9.6 from 1 to 6, including search engine marketing, online advertisements, e-mail and other methods of generating visitors to a web site. These techniques are often combined in what is known as a ‘traffic-building campaign’; this is a method of increasing the audience of a site using different online (and offline) techniques.

A company’s investment in the techniques in Figure 9.6 for customer acquisition should be based on the metrics discussed in the previous section. Most important is minimizing the cost of acquisition against volume required.

3.1. Search engine marketing (SEM)

As explained in Chapter 2, search engines and directories are the primary method of find­ing information about a company and its products. It follows that if an organization is not prominent in the search engines, then many potential sales could be lost since a company is dependent on the strength of its brand and offline communications to drive visitors to the web site.

Consequently, Chaffey and Smith (2008) stress the importance of timing for traffic build­ing. They say:

Some e-marketers may consider traffic building to be a continuous process, but others may view it as a specific campaign, perhaps to launch a site or a major enhancement. Some methods tend to work best continuously; others are short term. Short-term campaigns will be for a site launch or an event such as an online trade show.

A similar sentiment is expressed in the mini case study for Alliance and Leicester which refers to use of‘drip’ as against ‘burst’ communications.

How does Google work?

It can help managers of search marketing campaigns to understand the technology behind Google which it discloses in many patents and in its Webmaster guidelines ( webmasters). Figure 9.10 shows that search technology involves these main processes:

  • Crawling. The purpose of the crawl is to identify relevant pages for indexing and assess whether they have changed. Crawling is performed by robots (bots), which are also known as spiders. These access web pages and retrieve a reference URL of the page for later analysis and indexing.

Although the terms ‘bot’ and ‘spider’ give the impression of something physical visiting a site, the bots are simply software processes running on a search engine’s server which request pages, follow the links contained on that page and so create a series of page refer­ences with associated URLs. This is a recursive process, so each link followed will find additional links which then need to be crawled.

  • Indexing. An index is created to enable the search engine to rapidly find the most relevant pages containing the query typed by the searcher. Rather than searching each page for a query phrase, a search engine ‘inverts’ the index to produce a lookup table of documents containing particular words.

The index information consists of phases stored within a document and also other infor­mation characterizing a page such as the document’s title, meta description, page rank, trust or authority, spam rating. For the keywords in the document additional attributes will be stored such as semantic markup (<h1>, <h2> headings denoted within HTML), occur­rence in link anchor text, proximity, frequency or density and position in document.

  • Ranking or scoring. The indexing process has produced a lookup of all the pages that contain particular words in a query, but they are not sorted in terms of relevance. Ranking of the document to assess the most relevant set of documents to return in the SERPs (search engine results pages, Figure 9.9) occurs in real time for the search query entered. First, relevant documents will be retrieved from a run-time version of the index at a partic­ular data centre, then a rank in the SERPs for each document will be computed based on many ranking factors of which we highlight the main ones in later sections.
  • Query request and results serving. The familiar search engine interface accepts the searcher’s query. The user’s location is assessed through their IP address and the query is then passed to a relevant data centre for processing. Ranking then occurs in real time for a particular query to return a sorted list of relevant documents and these are then displayed on the search results page.

Google has stated that it uses more than 200 factors or signals within its search ranking algo­rithms. These include positive ranking factors which help boost position and negative factors or filters which are used to remove search engine spam from the index where SEO companies have used unethical approaches such as automatically creating links to mislead the Google algorithms. Further details (on ranking factors) can be found in Box 12.2, p. 688.

Keyphrase analysis

The starting point to successful search engine marketing is target the right keyphrases. Notice that I say‘keyphrase’ (short for ‘keyword phrase’) rather than ‘keyword’ since search engines such as Google attribute more relevance when there is a phrase match between the keywords that the user types and a phrase on a page. Companies should complete a ‘gap analysis’ which will identify keyphrases to target by showing for each phrase, the number of visitors they could potentially attract compared to the actual positions or number of visitors they are receiving.

Key sources for identifying the keyphrases customers are likely to type when searching for products include your market knowledge, competitors’ sites, keyphrases from visitors who arrive at the site (from web analytics), the internal site search tool and the keyphrase analysis tools listed at

Search-engine optimization (SEO)

Search-engine optimization (SEO) involves a structured approach used to increase the position of a company or its products in search-engine natural or organic results listings (shown in Figure 9.9) for selected key phrases. It also involves controlling index inclusion or ensuring that as many pages of a site as possible are included within the search engine. There may be technical difficulties with this with some content management or e-commerce sys­tems which need to be corrected.

Although each search engine has its own evolving algorithm with hundreds of weighting factors truly only known to the search engineers they employ, fortunately there are common factors that influence search engine rankings. These are, in approximate order of importance:

  • Frequency of occurrence in body copy. The number of times the key phrase is repeated in the text of the web page is a key factor in determining the position for a key phrase. Copy can be written to increase the number of times a word or phrase is used (technically, its ‘key phrase density’) and ultimately boost position in the search engine. Note though, that search engines make checks that a phrase is not repeated too many times such as ‘cheap flights … cheap flights … cheap flights … cheap flights … cheap flights … cheap flights … cheap flights … cheap flights …’ or the keyword is hidden using the same colour text and background and will not list the page if this key phrase density is too high or it believes the page creator has tried to mislead the search engine (‘search engine spamming’). Relevance is also increased by a gamut of legitimate ‘tricks’ such as including the key phrase in headings (<H1>, <H2>), linking anchor text in hyperlinks and using a higher density towards the start of the document.
  • Number of inbound links (page rank). The more links you have from good-quality sites, the better your ranking will be. Evaluation of inbound links or backlinks to determine ranking is one of the key reasons Google became popular. Google uses an assessment called ‘page rank’ to deliver relevant results since it counts each link from another site as a vote. However, not all votes are equal – Google gives greater weight to links from pages which themselves have high page rank and which have the same context or topical content as the page they link to. Weighting is also given where hyperlink anchor text or adjacent text contains text relevant to the keyphrase, i.e. the linking page must have context.

Inclusion in directories such as Yahoo! or (for which a fee is payable) or the Open Directory (, which is currently free) is important since it can assist in boosting page rank. Another key aspect of linking is the architecture of internal links within the site. Keyphrases that occur within the hypertext of different forms of navi­gation are important to Google in indicating the context of a page.

  • Title HTML tag. The keywords in the title tag of a web page that appears at the top of a browser window are indicated in the HTML code by the <TITLE> keyword. For example, for my site (<title>E-business and Internet marketing articles –</title>). This is significant in search engine listings since if a keyphrase appears in a title it is more likely to be listed high than if it is only in the body text of a page. It follows that each page on a site should have a specific title giving the name of a company and the product, service or offer featured on a page. Greater weighting is given to keyphrases at the left of the title tag and those with a higher keyphrase density. The Title HTML tag is also vital in search marketing since this is typically the text underlined within the search results page which forms a hyperlink through to your web site. If the Title tag appearing on the search results page is a relevant call-to-action that demonstrates relevance you will receive more clicks, which equals more visits (incidentally, Google will monitor clickthroughs to a site and will determine that your content is relevant too and boost position accordingly).
  • Meta-tags.Meta-tags are part of the HTML source file, typed in by web page creators, which is read by the search engine spider or robot. They are effectively hidden from users, but are used by some search engines when robots or spiders compile their index. In the past, search engines assigned more relevance to a site containing keyphrases in its meta­tags than one that didn’t. Search engine spamming of meta-tags resulted in this being an inaccurate method of assessing relevance and Google has reported that it assigns no rele­vance to meta-tags. However, other search engines such as ‘Yahoo! Search’ do assign some relevance to meta-tags, so it is best practice to incorporate these and to change them for each page with distinct content. There are two important meta-tags which are specified at the top of an HTML page using the <meta name=“’’> HTML keyword:
    • The ‘keywords’ meta-tag highlights the key topics covered on a web page. Example: meta name=“keywords” content=“E-business, E-commerce, E-marketing”>
    • The ‘description’ meta-tag denotes the information which will be displayed in the search results page so is very important to describe what the web site offers to encourage searchers to click through to the site.

Example: <meta name=“description” content=“Your guide to E-business and Internet marketing –”>.

  • Alternative graphic text. A site that uses a lot of graphical material and/or plug-ins, is less likely to be listed highly. The only text on which the page will be indexed will be the <TITLE> keyword. To improve on this, graphical images can have hidden text associated with them that is not seen by the user (unless graphical images are turned off), but will be
    seen and indexed by the search engine. For example, text about a company name and products can be assigned to a company logo using the ‘ALT’ tag as follows: <IMG NAME= ‘Logo’ SRC= ‘logo.gif’ ALT=“Internet marketing links and articles –”>.

Again, due to search engine spamming this factor is assigned less relevance than previ­ously (unless the image is also a link), but it is best practice to use this since it is also required by accessibility law (screen-readers used by the blind and visually impaired read out the text assigned through ALT tags).

Paid search marketing

Paid search marketing or paid listings are similar to conventional advertising; here a relevant text ad with a link to a company page is displayed when the user of a search engine types in a specific phrase. A series of text ads usually labelled as ‘sponsored links’ are displayed on the right and/or above and below the natural search engine listings. Unlike conventional adver­tising, the advertiser doesn’t pay when the ad is displayed, but only when the ad is clicked on which then leads to a visit to the advertiser’s web site – hence this is often known as ‘pay-per- click marketing’! The relative ranking of these ‘paid performance placements’ is typically based on the highest bid cost-per-click value for each keyphrase. The variation in bid amounts for clients of one search bid management tool are shown in Table 9.1.

But it is not a simple case that the company which is prepared to pay the most per click gets top spot as many think. The search engines also take the relative clickthrough rates of the ads dependent on their position (lower positions naturally have lower clickthrough rates) into account when ranking the sponsored links, so ads which do not appear relevant, because fewer people are clicking on them, will drop down or may even disappear off the listing. The analysis of CTR to determine position is part of the quality score, a concept originally developed by Google, but now integrated as part of the Microsoft Live and Yahoo! search networks.

Google, Yahoo! and Microsoft Live also take the relative clickthrough rates of the ads into account when ranking the sponsored links, so ads which do not appear relevant, because fewer people are clicking on them, will drop down or may even disappear off the listing.

As well as paid search ads within the search engines, text ads are also displayed on third- party sites (for example, the ads on which form a‘content network’ such as Google Adsense ( or Content Match on Yahoo! Search where ‘contextual ads’ are displayed automatically according to the type of content. These are typically paid for on a cost-per-click (CPC) basis but ads can also be paid for on a CPM basis. The search networks and publishers share the fees. They account for around 30% of Google’s revenue. They enable marketers to reach a wider audience on selectable third-party sites, but they need to decide how to use these to deliver different messages.

Beware of the fake clicks!

Whenever the principle of PPC marketing is described to marketers, very soon a light bulb comes on and they ask, ‘So we can click on competitors and bankrupt them?’ Well, actually no. The PPC ad networks detect multiple clicks from the same computer (IP address) and say they filter them out. However, there are techniques to mimic multiple clicks from differ­ent locations such as software tools to fake clicks and even services where you can pay a team of people across the world to click on these links. It is estimated that in competitive markets one in five of the clicks may be fake. While fake clicks can be monitored for and refunds obtained if proved, ultimately this could destroy PPC advertising.

In Mini Case Study 5.2 we saw how Arena Flowers defines KPIs to control its marketing spend. In Mini Case Study 9.2 Arena provides insights into its communications strategy and in particular the role of search engine and social marketing.

3.2. Online PR

The UK Institute of PR (IPR) defines PR as:

the management of reputation – the planned and sustained effort to establish and main­tain goodwill and mutual understanding between an organisation and its publics.

Online PR or e-PR leverages the network effect of the Internet. Remember, Internet is a con­traction of ‘interconnected networks’! Mentions of a brand or site on other sites are powerful in shaping opinions and driving visitors to your site. The main element of online PR is maximizing favourable mentions of an organization, its brands, products or web sites on third-party web sites which are likely to be visited by its target audience. Furthermore, as we noted in the topic on search engine optimization, the more links there are from other sites to your site, the higher your site will be ranked in the natural or organic listings of the search engines. Minimizing unfavourable mentions through online reputation management is also an aspect of online PR.

Activities which can be considered to be online PR include the following.

(a) Communicating with media (journalists) online

Communicating with media (journalists) online uses the Internet as a new conduit to dis­seminate press releases (SEO-optimized) through e-mail and on-site and on third-party sites. Options to consider for a company include: setting up a press-release area on the web site; creating e-mail alerts about news that journalists and other third parties can sign up to; submitting your news stories or releases to online news feeds.

(b) Link building

Link building is a key activity for search engine optimization. It can be considered to be an element of online PR since it is about getting your brand visible on third-party sites. Link building needs to be a structured effort to achieve as many links into a web site as possible from referring web sites (these commonly include reciprocal links). We have also seen that your position in the search engine results pages will be higher if you have quality links into relevant content on your site (not necessarily the home page).

McGaffin (2004) provides a great introduction to implementing a structured link-build­ing programme. The main principle of link-building is as follows. He says: ‘Create great content, link to great content and great content will link to you. He describes how you should review existing links to your site, links to competitors, set targets and then proactively enquire to suitable site owners for links.

You can use the syntax ‘link:site’ in Google to see the number of quality links into a page on your site as judged by Google. e.g. ‘’.

Note that this also includes internal links. To exclude internal links and include pages with lower page rank or that do not have a true hyperlink, but contain the URL, Google this: ‘’.

For example,‘’

(c) Blogs, podcasting and RSS

Weblogs or ‘blogs’ give an easy method of regularly publishing web pages which are best described as online journals, diaries or news or events listings. They may include feedback (traceback) comments from other sites or contributors to the site. Frequency can be hourly, daily, weekly or less frequently, but daily updates are typical.

An example of a useful blog which can keep marketing professionals up-to-date about Internet marketing developments is which is coupled with daily e-mail digests of stories posted. Another example, with news items and articles structured according to the chapters of a book is ( Business blogs are created by people within the organization. They can be useful in showing the expertise of those within the organization, but need to be carefully controlled to avoid releas­ing damaging information. An example of a business blog used to showcase the expertise of its analysts is the Jupiter Research Analyst Weblogs, ( Technology companies such as Microsoft, Oracle and Sun Microsystems may have several hundreds of bloggers and have a policy to control them to make positive comments.

There are many free services which enable anyone to blog (for example which was purchased by Google in 2003). Blogs were traditionally accessed through online tools (e.g., – try this to see the popularity trends of discus­sion about products such as iPods through time) or software readers (, but were incorporated into mainstream software in 2006. However, many companies still seem resistant to blogging because of the potential damage that can be caused.

Podcasts are related to blogs since they can potentially be generated by individuals or organizations to voice an opinion either as audio (typically MP3) or less commonly currently as video. They have been successfully used by media organizations such as the BBC which has used them for popular programmes such as film reviews or discussions and for live recording such as the Beethoven symphonies that received over 600,000 downloads in June 2005 alone. Virgin Radio has also used podcasting, but cannot at the time of writing broadcast music due to copyright resrictions, only the presenters! A big challenge for achieving visibility for podcasts is that contents can only currently be recognized by tags and it is difficult to assess quality with­out listening to the start of a podcast. All the main search engines are working on techniques to make searching of voice and video content practical. In the meantime, some start-ups such as Odeo ( and Blinkx ( are developing solutions.

(d) Online communities and social networks

The human wish to socialize and share experiences is the real reason behind the popularity of Web 2.0 sites such as the social networks. So it is important for organizations to deter­mine how their audiences use social networks and that the opportunities are to reach and interact with them. Dee et al. (2007) also note the importance of social networks in influ­encing perceptions about brands, products and suppliers. Their research shows large differences in gender and age on the types of products discussed, but recommendations on restaurants, computers, movies and vehicles being popular in all categories.

While many Facebook Applications have been developed (, the majority of well-known Apps were not created by brands. Companies can also set up brand pages within Facebook, but these tend not to reach large numbers. Box 9.3 describes further advice on the use of social networks for marketing.

Members of a community or social network will differ in the extent to which they are con­nected with others. The most influential network members will be highly connected and will discuss issues of interests with a wider range of contacts than those who are less connected It is generally believed by PR professionals seeking to influence marketplace perceptions that it is important to target the highly connected individuals since they are typically trusted individuals who other members of the community may turn to for advice. But there is much discussion about the influence of the influencers online. Researchers of community inter­actions believe that is the collective interaction between typical network members (known as the ‘moderately connected majority) that are equally important. For example, Watts and Dodds (2007), argue that the ‘influentials hypothesis’ is based on untested assumptions and in most cases does not match how diffusion operates in the real world. They comment that ‘most social change is driven not by influentials, but by easily influenced individuals influencing other easily influenced individuals’.

Although there is a clear wish to socialize online, site owners need to remember that it is not straightforward to engage an online audience as they move between different sites. Only a relatively small proportion will engage. Mini Case Study 9.3 shows that only a relatively small number of site visitors will actively participate.

Really Simple Syndication (RSS)

Really Simple Syndication (RSS) (Chapter 3) is an extension of blogging where blog, news or any type of content is received by subscribers using the systems mentioned above. It offers a method of receiving news that uses a different broadcast method to e-mail, so is not subject to the same conflicts with spam or spam filters. Many journalists now subscribe to RSS feeds to find sources. There are options such as Pheedo ( for companies to advertise in feeds.

(e) Managing how your brand is presented on third-party sites

As part of online PR it is useful to set up monitoring services. It is also necessary to have the resources to deal with negative PR as part of online reputation management. Microsoft’s PR agency reputedly has a ‘rapid response unit’ that can respond to online PR. Examples of alerting service include Googlealert ( and the other tools listed at

(f) Creating a buzz – online viral marketing

From a functional point of view, online viral marketing often involves generating word-of- mouth and links through to a web site as outlined in Chapter 4, so it can be considered part of online PR.

To summarize the section on online PR see Figure 9.11. This highlights the importance of activities involving participation and how all online PR activities feed back into SEO through the links generated.

3.3. Online partnerships

Partnerships are an important part of today’s marketing mix. Smith and Chaffey (2005) say that they are the eighth ‘P’ (Chapter 8). The same is true online. There are three key types of online partnerships which need to be managed: link building (covered in the previous sec­tion, this can also be considered to be part of online PR), affiliate marketing and online sponsorship. All should involve a structured approach to managing links through to a site. The important types of partner arrangement are as follows.

a) Affiliate marketing

Affiliate marketing has become very popular with e-retailers since many achieve over 20% of their online sales through affiliates (also known as ‘aggregators’ since they aggregate offers from different providers). The great thing about affiliate marketing for the e-retailer, is that they, the advertiser, do not pay until the product has been purchased or a lead generated. It is sometimes referred to as‘zero-risk advertising’ (Figure 9.12).

Amazon was one of the earliest adopters of affiliate marketing and it now has hundreds of thousands of affiliates that drive visitors to Amazon through links in return for commission on products sold. Internet legend records that Jeff Bezos, the creator of Amazon, was chatting at a cocktail party to someone who wanted to sell books about divorce via her web site. Sub­sequently, launched its Associates Program in July 1996 and it is still going strong. To manage the process of finding affiliates, updating product information, tracking clicks and making payments, many companies use an affiliate network or affiliate manager such as Commission Junction ( or Trade Doubler (

Some of the issues with balancing spend between affiliate marketing and other online com­munications techniques and offline communications techniques are illustrated by Mini Case Study 9.4.

b) Online sponsorship

Online sponsorship is not straightforward. It’s not just a case of mirroring existing ‘real- world’ sponsorship arrangements in the ‘virtual world’ although this is a valid option. There are many additional opportunities for sponsorship online which can be sought out, even if you don’t have a big budget at your disposal.

Ryan and Whiteman (2000) define online sponsorship as

the linking of a brand with related content or context for the purpose of creating brand awareness and strengthening brand appeal in a form that is clearly distinguishable from a banner, button, or other standardized ad unit.

For the advertiser, online sponsorship has the benefit that their name is associated with an online brand that the site visitor is already familiar with. So, for users of the ISP Orange with which they are familiar, sponsorship builds on this existing relationship and trust. Closely related is online ‘co-branding’ where there is an association between two brands.

Paid-for sponsorship of another site, or part of it, especially a portal for an extended period, is another way to develop permanent links. Co-branding is a lower-cost method of sponsorship and can exploit synergies between different companies.

3.4. Interactive advertising

How positively do you view interactive advertising as a communications tool? Even today, there are relatively few advertisers who have used interactive advertising, partly because of myths promoted about interactive advertising and possibly because of bad experiences. The first 468 by 68 pixels banner ad was placed on Hotwired in 1995 and the call-to-action ‘Click here!’ generated a clickthough of 25%. Since then, the clickthrough rate (CTR) has fallen dramatically as many consumers like you suffer from ‘banner blindness’ – they ignore any­thing on a web site that looks like an ad. The Doubleclick compilation of ad response ( shows that today the average CTR is typically less than 0.1%, although video ads can receive a higher response rate. This low response rate, combined with relatively high costs of over £20 per thousands of ads served, has seemingly made some marketers prejudiced against interactive advertising. But we will see that there are many innovative approaches to interactive advertising which are proved to increase brand aware­ness and purchase intent. For example, there are now many other ad formats such as skyscrapers and MPUs (multi-purpose advertising units) and rich-media ads with ani­mation, audio or video or data capture and interaction. Given these limitations to banner ads, most media owners, digital marketing agencies and industry bodies now refer to ‘inter­active or display advertising’, which is more suggestive of the range of options for rich-media ads, data-capture ads and large-format ads such as skyscrapers.

Online ads also seem to provide a media multiplier or halo effect of buying online ads which can help increase the response rates from other online media. For example, if a web user has been exposed to banner ads, this may increase their response to paid search ads and may also increase their likelihood of converting on a site since brand awareness and trust may be higher.

This effect is suggested by research reported by MAD (2007) in the travel market which involved asking respondents what their response to an online ad that appealed to them would be. Surely it would be a click? In fact, the results broke down as follows:

  • Search for a general term relating to the advertisement (31 per cent)
  • Go straight to advertiser’s site (29 per cent)
  • Search for the advertiser’s name (26 per cent)
  • Click on banner to respond (26 per cent)
  • Visit a retail store (4 per cent).

Of course, this methodology shows us reported behaviour rather than actual behaviour, but it is still significant that more than twice as many people are being driven to a search engine by banner advertising than by clicking directly on the banner! The research concludes that paid-search marketing needs to be optimized to work with banner advertising, by anticipat­ing searches that are likely to be prompted by the banner and ensure a higher rank for search results. For example, a brand featuring a Cyprus holiday offer will generate generic search terms like ‘package holiday Cyprus’ rather than brand searches.

Abraham (2008) has also shown that online ads can stimulate offline sales. For one retailer with a turnover of $15 billion, their research showed that over a three-month period, sales increased (compared to a control group) by 40% online and by 50% offline among people exposed to an online search marketing and display-ad campaign promoting the entire com­pany. Because its baseline sales volumes are greater in physical stores than on the Internet, this retailer derived a great deal more revenue benefit offline than the percentages suggest.

Fundamentals of online advertising

Advertising on the web takes place when an advertiser pays to place advertising content on another web site. The process usually involves ad serving from a different server from that on which the page is hosted (ads can be served on destination sites in a similar way).

Advertising is possible on a range of sites in order to drive traffic to an organization’s destination site or alternatively a micro-site or nested ad-content on the media owner’s site or on the destination site.

The purpose of interactive advertising

Robinson et al. (2007) have noted that the two primary goals of online display advertising are, first, using display adverts as a form of marketing communication used to raise brand awareness and, second, as a direct response medium focused on generating a response. Cartellieri etal. (1997) identify the following objectives:

  • Delivering content. This is the typical case where a clickthrough on a banner advertisement leads through to a destination site giving more detailed information on an offer. This is where a direct response is sought.
  • Enabling transaction. If a clickthrough leads through to a merchant such as a travel site or an online bookstore this may lead directly to a sale. A direct response is also sought here.
  • Shaping attitudes. An advertisment that is consistent with a company brand can help build brand awareness. Building awareness is a key aspect of online advertising. The linkage between advertising and search has been investigated by Graham and Havlena (2007) who studied the role of advertising in generating word-of-mouth discussion online. They found ‘strong evidence that advertising does stimulate increased visitation to the websites of advertised brands – an indicator of consumer interest and involvement with a brand’.
  • Soliciting response. An advertisement may be intended to identify new leads or as a start for two-way communication. In these cases an interactive advertisement may encourage a user to type in an e-mail address or other information.
  • Encouraging retention. The advertisement maybe placed as a reminder about the company and its service and may link through to on-site sales promotions such as a prize draw.

Interactive ad targeting options

Online ads can be targeted through placing ads:

  • On a particular type of site (or part of site) which has a specific visitor profile or type of content. So a car manufacturer can place ads on the home page of to appeal to a young female audience. A financial services provider can place an ad in the money section of the site to target those interested in these products. To reach large mass-market audiences, place an ad on a large portal home page such as MSN which has millions of visi­tors each day (sometimes known as a ‘road-block’ or ‘takeover’ if they take all ad inventory).
  • To target a registered user’s profile. A business software provider could advertise on the to target registrants’ profiles such as finance directors or IT managers.
  • At a particular time of day or week.
  • Online behaviour.Behavioural ad targeting is all about relevance – dynamically serving relevant content, messaging or an ad which matches the interests of a site visitor according to inferences about their characteristics. These inferences are made by anonymously tracking the different types of pages visited by a site user during a single visit to a site or across multiple sessions. Other aspects of the environment used by the visitor can also be
    determined, such as their location, browser and operating system. For example,, using software from Revenue Science, can identify users in eight segments: Business Education, Institutional Investor, Information Technology, Luxury and Consumer, Management, Personal Finance, Travel and Private Equity. First, the ad serving system detects whether the visitor is in the target audience (media optimization), then creative optimization occurs to serve the best ad for the viewer type.

Interactive ad formats

As well as the classic 468 by 60 pixel rotating GIF banner ad which is decreasing in popular­ity, media owners now provide a choice of larger, richer formats which web users are more likely to notice. Research has shown that message association and awareness building are much higher for flash-based ads, rich-media ads and larger-format rectangles (multi­purpose units, MPUs) and skyscrapers. View the rich-media ads at or and you will agree that they definitely can’t be ignored.

Other online ad terms you will hear include ‘interstitials’ (intermediate adverts before another page appears); the more common ‘overlays’ which appear above content; and of course pop-up windows that are now less widely used because of their intrusion. Online advertisers face a constant battle with users who deploy pop-up blockers or less commonly ad-blocking software, but they will persist in using rich-media formats where they generate the largest response.

Robinson et al. (2007) conducted research on the factors which increased clickthrough response to banner ads. The main variables they (and previous studies they reference) include:

  • Banner size
  • Message length
  • Promotional incentive
  • Animation
  • Action phrase (commonly referred to as a call-to-action)
  • Company brand/logo.

Media planning – deciding on the online/offline mix for advertising

This decision is typically taken by the media planner. The mix between online and offline spend should reflect consumers’ media consumption and the cost-response effectiveness of each medium. But, depending on the agency used, they may play it safe by putting the ad spend into what they are familiar with and what may be most rewarding in terms of com­mission – offline media. Many cross-media optimization studies (XMOS) have shown that the optimal online spend for low-involvement products is surprisingly high at 10-15% of total spend. Although this is not a large amount, it compares to previous spend levels below 1% for many organizations.

XMOS research is designed to help marketers and their agencies answer the (rather involved) question ‘What is the optimal mix of advertising vehicles across different media, in terms of frequency, reach and budget allocation, for a given campaign to achieve its market­ing goals?’

The mix between online and offline spend is varied to maximize campaign metrics such as reach, brand awareness and purchase intent. Table 9.2 summarizes the optimal mix iden­tified for four famous brands. For example, Dove found that increasing the level of interactive advertising to 15% would have resulted in an increase in overall branding metrics of 8%. The proportion of online is small, but remember that many companies are spending less than 1% of their ad budgets online, meaning that offline frequency is too high and they may not be reaching many consumers.

The reasons for using and increasing the significance of online in the media mix are similar to those for using any media mix as described by Sissors and Baron (2002):

  • Extend reach (adding prospects not exposed by a single medium or other media)
  • Flatten frequency distribution (if audience viewing TV ads is exposed too many times, there is a law of diminishing returns and it maybe better to reallocate that budget to other media)
  • To reach different kinds of audiences
  • To provide unique advantages in stressing different benefits based on the different charac­teristics of each medium
  • To allow different creative executions to be implemented
  • To add gross impressions if the other media are cost-efficient
  • Reinforce message by using different creative stimuli.

All of these factors, and the first three in particular, provide the explanation of why XMOS shows it is worthwhile to put double-digit percentages into online media.

3.5. E-mail marketing

When devising plans for e-mail marketing communications, marketers need to plan for:

  • outbound e-mail marketing, where e-mail campaigns are used as a form of direct marketing to encourage trial and purchases and as part of a CRM dialogue;
  • inbound e-mail marketing, where e-mails from customers such as support enquiries are managed. These are often managed today in conjunction with chat and co-browsing sessions.

Despite the increase in spam such that the vast majority of e-mails are spam or viruses (most estimates exceed 80%), e-mail can still drive good response levels, as indicated by Figure 9.13. This is particularly the case with in-house lists on which the data in Figure 9.13 are based, so e-mail communications to customers through e-newsletters or periodic e-mail blasts are today a vital communications technique for companies.

Figure 9.13 shows that the key measures for e-mail marketing are:

  • Delivery rate (this excludes e-mail ‘bounces’ – e-mails will bounce if the e-mail address is no longer valid or a spam filter blocks the e-mail. So, online marketers check their ‘deliver- ability’ to make sure their messages are not identified as ‘false positives’ by spam prevention software. Web-based e-mail providers such as Hotmail and Yahoo! Mail have introduced standard authentication techniques known as Sender ID and Domain Keys which make sure the e-mail broadcaster is who they say they are and doesn’t spoof their address as many spammers do.
  • Open rate – this is measured for HTML messages through downloaded images. It is an indication of how many customers open an e-mail, but is not accurate since some users have preview panes in their e-mail readers which load the message even if it is deleted without reading and some e-mail readers such as Outlook Express now block images by default (this has resulted in a decline in open rates through time).
  • Clickthrough rate – this is the number of people who click through on the e-mail of those delivered (strictly unique clicks rather than total clicks). You can see that response rates are quite high at around 10%.

Opt-in e-mail options for customer acquisition

For acquiring new visitors and customers to a site, there are three main options for e-mail marketing. From the point of view of the recipient, these are:

  • Cold e-mail campaign. In this case, the recipient receives an opt-in e-mail from an organ­ization that has rented an e-mail list from a consumer e-mail list provider such as Experian (, Claritas ( or IPT Limited ( or a business e-mail list provider such as Mardev (, Corpdata ( or trade publishers and event providers such as VNU. Although they have agreed to receive offers by e-mail, the e-mail is effectively cold.
  • Co-branded e-mail. Here, the recipient receives an e-mail with an offer from a company they have a reasonably strong affinity with. For example, the same credit card company could partner with a mobile service provider such as Vodafone and send out the offer to their customer (who has opted in to receive e-mails from third parties). Although this can be considered a form of cold e-mail, it is warmer since there is a stronger relationship with one of the brands and the subject line and creative will refer to both brands. Co-branded e-mails tend to be more responsive than cold e-mails to rented lists since the relationship exists and fewer offers tend to be given.
  • Third-party e-newsletter. In this visitor acquisition option, a company publicizes itself in a third-party e-newsletter. This could be in the form of an ad, sponsorship or PR (editorial) which links through to a destination site. These placements may be set up as part of an interactive advertising ad buy since many e-newsletters also have permanent versions on the web site. Since e-newsletter recipients tend to engage with them by scanning the headlines or reading them if they have time, e-newsletter placements can be relatively cost-effective.

Viral marketing, which is discussed in the next section, also uses e-mail as the mechanism for transferring messages. E-mail is most widely used as a prospect conversion and customer retention tool using an opt-in, or house list of prospects and customers who have given per­mission to an organization to contact them. For example, has built a house list of over 10 million prospects and customers across Europe. Successful e-mail marketers adopt a strategic approach to e-mail and develop a contact or touch strategy which plans the frequency and content of e-mail communications as explained in Chapters 4 and 6. For customer reten­tion, a house list is built where e-mail is used to communicate to existing customers.

3.5. Viral marketing

Viral marketing harnesses the network effect of the Internet and can be effective in reaching a large number of people rapidly in the same way as a natural virus or a computer virus. It is effectively an online form of word-of-mouth communications. Although the best known examples of viral activity are of compromising pictures or jokes being passed around offices worldwide, viral marketing is increasingly being used for commercial purposes. Smith and Chaffey (2005) say ideally viral marketing is a clever idea, a game, a shocking idea, or a highly informative idea which makes compulsive viewing. It can be a video clip, TV ad, car­toon, funny picture, poem, song, political message, or news item. It is so amazing, it makes people want to pass it on. This is a challenge for commercial companies since to be success­ful, it will need to challenge convention and this may not fit well with the brand.

To make a viral campaign effective, Justin Kirby of viral marketing specialists DMC ( suggests that three things are needed (Kirby, 2003):

  • Creative material – the ‘viral agent’. This includes the creative message or offer and how it is spread (text, image, video).
  • Seeding. Identifying web sites, blogs or people to send e-mail to start the virus spreading.
  • Tracking. To monitor the effect, to assess the return from the cost of developing the viral agent and seeding.

With the widespread adoption of high-speed broadband in many countries, rich media experiences are increasingly used to engage customers with the hope they will have a ‘viral effect’, i.e. they will be discussed online or offline and more people will become aware of or interact with the brand campaign. Mini Case Study 1.1 on gives one suc­cessful example which fulfils Kirby’s criteria of an effective viral and it translated to increased product sales.

Offline marketing communications

Offline communications will never disappear – they are effective at reaching an audience to encourage them to visit a site, but are also useful as a way of having an impact or explaining a complex proposition.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).

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