Online Marketing

As described in Chapter 1, marketers distinguish paid and owned media from earned (or free) media. Paid media includes company-generated advertising, publicity, and other promotional efforts. Earned media is all the PR and word-of-mouth benefits a firm receives without having directly paid for anything—all the news stories, blogs, and social network conversations that deal with a brand.2 Social media play a key role in earned media. A large part of owned media consists of online marketing communications, which we review next.

1. ADVANTAGES AND DISADVANTAGES OF ONLINE MARKETING COMMUNICATIONS

Four of the main categories of online marketing communications, which we discuss here, are: (1) Web sites, (2) search ads, (3) display ads, and (4) e-mail. The variety of online communication options means companies can offer or send tailored information or messages that en­gage consumers by reflecting their special interests and behavior.

Online marketing communications have other advantages. Marketers can easily trace their effects by noting how many unique visitors or “UVs” click on a page or ad, how long they spend with it, what they do on it, and where they go afterward.3 The Internet also offers the advan­tage of contextual placement, which means marketers can buy ads on sites related to their own offerings. They can also place advertising based on keywords customers type into search engines to reach people when they’ve actually started the buying process.

Going online has disadvantages too. Consumers can effectively screen out most messages. Marketers may think their ads are more effective than they really are if bogus clicks are generated by software- powered Web sites.4 Advertisers also lose some control over their online messages, which can be hacked or vandalized.

But the pros clearly can outweigh the cons, and the Internet is attracting marketers of all kinds. Beauty pioneer Estee Lauder, who, in a reflection of times gone by, famously said she relied on three means of communication to build her multimillion-dollar cosmetics business— “telephone, telegraph, and tell a woman”—would now have to add the Internet, where the company’s official site describes new and old prod­ucts, announces special offers and promotions, and helps customers locate stores where they can buy Estee Lauder products.

Marketers must go where the customers are, and increasingly that’s Estee Lauder has always relied on word of mouth to build its brands but online. Of the time U.S. consumers spend with all media, almost half is now has added a sizab|e digita| component.           spent online (see Figure 21.1).5 Customers define the rules of engage­ ment, however, and insulate themselves with the help of agents and intermediaries if they so choose. They define what information they need, what offerings they’re interested in, and what they’re willing to pay.6

Digital advertising continues to show much more rapid growth than traditional media. In fact, total digital ad spending in 2013 was estimated to have grown to $42.8 billion, which meant it surpassed TV advertising (at $40.1 billion) for the first time. Search ads made up 43 percent of the total at $18.4 billion; display-related advertising was 30 percent with $12.8 billion; mobile 17 percent with $7.1 billion; and digital video 7 percent with $2.8 billion.7 More brands are being built by online means. Consider Tough Mudder.8

TOUGH MUDDER Tough Mudder is a challenging obstacle race for teams, designed in the spirit of British Special Forces, that features 29 different obstacles with such creative names as the Devil’s Beard, Shocks on the Rocks, and Funky Monkey. Competitors encounter hazards such as walls, 15-foot planks, ice baths, nightmare monkey bars, greased halfpipes, and electrified army crawls. Funded with $20,000 in seed capital in 2010, Tough Mudder spent its entire $8,000 communication budget at launch on Facebook advertising, which generated plenty of word of mouth. The first race was a hit, and word quickly spread. By 2013, more than 750,000 competitors were participating in 53 scheduled events. With entry fees of about $155 per person, the company’s margin is about 48 percent.

2. ONLINE MARKETING COMMUNICATION OPTIONS

A company chooses which forms of online marketing will be most cost-effective in achieving communication and sales objectives.9 The options include Web sites, search ads, display ads, and e-mail.

WEB SITES Companies must design Web sites that embody or express their purpose, history, products, and vision and that are attractive on first viewing and interesting enough to encourage repeat visits.10 Jeffrey Rayport and Bernard Jaworski propose that effective sites feature seven design elements they call the 7Cs (see Figure 21.2).11 To encourage repeat visits, companies must pay special attention to context and content factors and embrace another “C”—constant change.12

Visitors will judge a site’s performance on ease of use and physical attractiveness.13 Ease of use means: (1) The site downloads quickly, (2) the first page is easy to understand, and (3) it is easy to navigate to other pages that open quickly. Physical attractiveness is ensured when: (1) Individual pages are clean and not crammed with content, (2) typefaces and font sizes are very readable, and (3) the site makes good use of color (and sound). J. D. Power found that consumers who were “delighted” with an automotive manufacturer’s Web site were more likely to test drive one of its vehicles as a result.14

As we describe in more detail below, firms such as comScore and Nielsen Online track where consumers go online through measures like number of page views, number of unique visitors, length of visit, and so on.15

Companies must also be sensitive to online security and privacy-protection issues. One set of researchers recom­mends transforming various “touch points” related to privacy on the Web site into a positive customer experience by: (1) developing user-centric privacy controls to give customer control, (2) avoiding multiple intrusions, and (3) preventing human intrusion by using automation whenever possible.16

Besides their Web sites, companies may employ microsites, individual Web pages or clusters of pages that func­tion as supplements to a primary site. They’re particularly relevant for companies selling low-interest products. People rarely visit an insurance company’s Web site, for example, but the company can create a microsite on used- car sites that offers advice for buyers of used cars and a good insurance deal at the same time.

SEARCH ADS An important component of online marketing is paid search or pay-per-click ads. Thirty-five percent of all searches are reportedly for products or services.

In paid search, marketers bid in a continuous auction on search terms that serve as a proxy for the consumer’s product or consumption interests. When a consumer searches for any of the words with Google, Yahoo!, or Bing, the marketer’s ad may appear above or next to the results, depending on the amount the company bids and an algo­rithm the search engines use to determine an ad’s relevance to a particular search.17

Advertisers pay only if people click on the links, but marketers believe consumers who have already expressed interest by engaging in search are prime prospects. Average click-through in terms of the percentage of consumers who click on a link is about 2 percent, much more than for comparable online display ads, which range from .08 for standard banner ads with graphics and images to .14 for rich media (expandable banners) ads that incorporate audio and/or video.18

The cost per click depends on how highly the link is ranked on the page and the popularity of the keyword. The ever-increasing popularity of paid search has increased competition among keyword bidders, significantly raising search ad prices and putting a premium on choosing the best possible keywords, bidding on them strategically, and monitoring the results for effectiveness and efficiency.

Search engine optimization (SEO) describes activities designed to improve the likelihood that a link for a brand is as high as possible in the rank order of all nonpaid links when consumers search for relevant terms. SEO is a cru­cial part of marketing given the large amount of money marketers are spending on search. A number of guidelines have been suggested as part of SEO as well as paid search.19

  • Broader search terms (“MP3 player” or “iPod”) are useful for general brand building; more specific ones identifying a particular product model or service (“Apple iPod classic 160GB”) are useful for generating and converting sales leads.
  • Search terms need to be spotlighted on the appropriate pages of the marketer’s Web site so search engines can easily identify them.
  • Any one product can usually be identified by means of multiple keywords, but marketers must bid on each keyword according to its likely return on revenue. It also helps to have popular sites link back to the marketer’s Web site.
  • Data can be collected to track the effects of paid search.

Any size business can benefit from a well-executed search strategy. The owner of River Pools and Spas in Virginia and Maryland turned around his floundering business by posting question-and-answer articles that were picked up easily by search engines and drove traffic to the company’s Web site.20

Consumers are also influenced by the online opinions and recommendations of other consumers. The informal social networks that arise among consumers complement the product networks set up by the company.21 Online “influentials” who are one of a few or maybe even the only person to influence certain consumers are particularly important and valuable to companies.22

DISPLAY ADS Display ads or banner ads are small, rectangular boxes containing text and perhaps a picture that companies pay to place on relevant Web sites.23 The larger the audience, the higher the cost. In the early days of the Internet, viewers clicked on 2 percent to 3 percent of the banner ads they saw, but as noted previously, that percentage has quickly plummeted, and advertisers have explored other forms of communication.

Given that Internet users spend only 5 percent of their time online actually searching for information, display ads still hold great promise compared to popular search ads. But ads need to be more attention-getting and influ­ential, better targeted, and more closely tracked.24

Interstitials are advertisements, often with video or animation, that pop up between page changes within a Web site or across Web sites. For example, ads for Johnson & Johnson’s Tylenol headache reliever would pop up on brokers’ Web sites whenever the stock market fell by 100 points or more. Because consumers find such pop-up ads intrusive and distracting, many use software to block them.

E-MAIL E-mail allows marketers to inform and communicate with customers at a fraction of the cost of a d-mail, or direct mail, campaign. E-mails can be very productive selling tools. The rate at which they prompt purchase has been estimated to be at least three times that of social media ads, and the average order value is thought to be 17 percent higher.25 Firms such as Kellogg, Whirlpool, and Nissan are emphasizing both e-mail and search marketing.26

Consumers are besieged by e-mails, though, and many employ spam filters to halt the flow. Privacy concerns are also growing—almost half of British survey respondents said they would refuse to share any personal details with brands even if doing so would bring them better-targeted offers and discounts.27 Some firms are asking con­sumers to say whether and when they would like to receive e-mails. FTD, the flower retailer, allows customers to choose whether to receive e-mail reminders to send flowers for virtually any holiday as well as specific birthdays and anniversaries.28

E-mails must be timely, targeted, and relevant. The Gilt Groupe sends more than 3,000 variations of its daily e-mail for its flash-sale site based on recipient’s past click-throughs, browsing history, and purchase history.29 “Marketing Memo: How to Maximize the Marketing Value of E-mails” provides some important guidelines for launching productive e-mail campaigns.

3. MARKETING MEMO How to Maximize the Marketing Value of E-mails

  • Give the customer a reason to respond. Offer powerful incentives for reading e-mail pitches and online ads, such as trivia games, scavenger hunts, and instant-win sweepstakes.
  • Personalize the content of your e-mails. Williams-Sonoma reported a tenfold increase in response rates when it adopted personalized e-mail offerings based on individuals’ on-site and catalog shopping behavior. An engaging subject line is especially critical. One expert notes, “You really have about five seconds to grab them or they are clicking out.”
  • Offer something the customer can’t get via direct mail. Because e-mail campaigns can be carried out quickly, they can offer time-sensitive information. Travelocity sends frequent e-mails pitching last-minute cheap airfares, and Club Med pitches unsold vacation packages at a discount.
  • Make it easy for customers to opt in as well as unsubscribe. Run controlled split tests to explore how location, color, and other factors affect “Sign Up Now” messages. Controlled split tests assemble online matched samples of consumers with one sample given a test message that manipulates one factor and the other being a status quo control. Online customers also demand a positive exit experience. Dissatisfied customers leaving on a sour note are more likely to spread their displeasure to others.
  • Combine e-mail with other communications such as social media. Southwest Airlines found the highest number of reservations occurred after an e-mail campaign followed by a social media campaign. Papa John’s was able to add 45,000 fans to its Facebook page through an e-mail campaign inviting customers to participate in a “March Madness” NCAA basketball tournament contest.

To increase the effectiveness of e-mails, some researchers are employing “heat mapping,” which tracks eye movements with cameras to measure what people read on a computer screen. One study showed that clickable graphic icons and buttons that linked to more details of a marketing offer increased click-through rates by 60 percent over links that used just an Internet address.

Sources: Nora Aurfreiter, Julien Boudet, and Vivien Weng, “Why Marketers Keep Sending You E-Mails,” McKinseyQuarterly, January 2014; “Email Marketing Central for U.S. Retailers,” www.warc.com, December 20, 2012; Richard Westlund, “Success Stories in eMail Marketing,” Adweek Special Advertising Section, February 16, 2010; Suzanne Vranica, “Marketers Give E-mail Another Look,” Wall Street Journal, July 17, 2006.

Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.

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