Digital Marketing & Strategic Foundations

Kate Carruthers Copyright 2008

3 Mar 2008

Agenda
Changing nature of consumer media consumption
Creating an ecosystem that supports your

brand Synthesising different media

Kate Carruthers Copyright 2008

3 Mar 2008

Marketing Ecosystems
New framework for strategy management
Away from view of brand as primary unit for strategy To aggregated view of competitive strategy & action

Kate Carruthers Copyright 2008

3 Mar 2008

Marketing Ecosystems
As John Singer has mentioned Marketing ecosystems are a new framework for strategy management. They shift the view of brand as the primary unit for strategymaking to an aggregated view of competitive strategy and action at the system level. Advantage goes to those marketers that do the better job of designing ecosystems with mutually-reinforcing effects from internal and external assets, and managing the ecosystems for growth, innovation, and continual improvement. (Singer, 2006)
We are at a stage where new technologies are becoming pervasive and marketers are changing their business models to leverage these new technologies. The challenge is for us to learn how to use these technologies as effectively as we have come to use the old ones.
Kate Carruthers Copyright 2008 3 Mar 2008

Source: Jeremiah Owyang, http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/

Kate Carruthers Copyright 2008

3 Mar 2008

Marketing Ecosystem

Business Strategy
People

Marketing Strategy
Mix

Digital Strategy
Technology Capability

Process

Comms

Kate Carruthers Copyright 2008

3 Mar 2008

Marketing Ecosystem
This is the foundation of the marketing ecosystem.

With a sound business strategy supported by a well thought out marketing strategy the digital strategy should unfold fairly obviously. The digital strategy is perhaps the smallest part of the strategic planning, but it is critical as it has the capacity to become the most capital intensive piece. The mix needs to be right from a business and customer perspective. these three are in place and interlinked effectively it can be hard to execute with success. It can also be hard to know how successful you have been without some metrics defined and monitored.
3 Mar 2008

A key learning for me has been that unless each of

Kate Carruthers Copyright 2008

Effect on Traditional Marketing

Kate Carruthers Copyright 2008

3 Mar 2008

Effect on Traditional Marketing

This diagram is familiar to most marketers, the

extended marketing mix, which is based on various extensions of Bordens original idea of the marketing mix (Borden, 1964). The question we need to address is how does digital technology change the way we approach marketing? Some good definitions of internet marketing have been developed: Internet marketing is achieving marketing objectives through applying digital technologies. (Chaffey 2006) and eMarketing is achieving marketing objectives through use of electronic communications technology. (Chaffey 2006)
Kate Carruthers Copyright 2008 3 Mar 2008

Digital Marketing
Internet marketing is achieving marketing objectives through applying digital technologies.
eMarketing is achieving marketing objectives through use of electronic communications technology.
Source: Chaffey (2006)

Kate Carruthers Copyright 2008

3 Mar 2008

10

Digital Marketing

Based on this and experience of marketing campaigns using the internet, I would argue that the internet is simply another medium and should be treated accordingly. Although, it can also be a channel as well. Many marketers get confused when confronting internet as part of their marketing plans and get bamboozled by the technology. It is not about the technology. It all comes back to the business strategy and the marketing strategy that must be executed. Judicious selection of media is just part of normal marketing planning. Thus it is necessary to use familiar marketing planning tools:

A Audit: An audit of internal strengths and weaknesses, an external opportunities and threats. O Objectives: SMART eMarketing objectives. S Strategy: eMarketing strategies. T Tactics: an eMarketing mix. C Controls: measuring the performance of our eMarketing plan.

But this has been all about us so far. What about our customers? Has the internet changed them and what they expect? Do our old ways of communication still hold true?
Kate Carruthers Copyright 2008 3 Mar 2008

11

Customers
Are our customers different now?

Source: Kevin Roberts, The Story Behind Lovemarks 19 October, 2006, http://www.saatchikevin.com/The_Story_Behind_Lovemarks/

Kate Carruthers Copyright 2008

3 Mar 2008

12

Technology
Are they really using this?

Kate Carruthers Copyright 2008

3 Mar 2008

13

Technology

The real problem for us to address is the changing way our customers are using technology and the media. In the not too distant past we could just broadcast our messages and they would get through. This was because there were limited media channels competing for peoples attention. Now this is changing, Mark Pesce sums it up nicely Attention is the limiting factor for the audience; we are cashed up but time-poor. Yet, even as weve become so time-poor, the number of options for how we can spend that time entertaining ourselves has grown so grotesquely large as to be almost unfathomable. This is the real lesson of YouTube, the one I want you to consider in your deliberations today. In just the past three years we have gone from an essential scarcity of filmic media presented through limited and highly regulated distribution channels to a hyperabundance of viewing options. (Pesce, 2008) It was reported in the UKs Guardian that younger people are turning away from email as a means of communication Outside of work, SMS and instant messaging are fast becoming the writing tools of choice. Indeed, South Korea - that crystal ball of all our digital tomorrows - has even seen a report that many teenagers have stopped using it altogether. "It's for old people," they say. (Fitzpatrick, Dec 2007) This phenomenon would horrify a number of older folk who are addicted to email as a communication channel. Not to mention the vast army of electronic direct marketers. However, this is in contrast to business where the supremacy of email continues unchallenged. This is one small example of different B2C and B2B uses of the same technology. It is also an example of the niches growing up around particular generations and usage patterns. Again it means that our media landscape is becoming more fluid and more complex to navigate as a business.

Kate Carruthers Copyright 2008

3 Mar 2008

14

New Media, Old Habits

The rules are changing Were not in control any more
This brings opportunities

Kate Carruthers Copyright 2008

3 Mar 2008

15

New Media, Old Habits

The rules really are changing, companies can no longer control their own images and data. The proliferation of sites like You Tube and Flickr mean that the old ways of ruling, like ownership and copyright, are being challenged so fast that legislation cannot keep pace. New ways for ordinary people to co-opt your content and turn it into something else pop up daily. The music industry is a classic example of this phenomenon, they tried very hard to control online music, but their efforts have not put the genie back into the bottle. Continued development of home based convergent technologies, such as personal DVRs like TiVo and IQ, have ensured that sampling of content by users will escalate. Also broadcast media strategies will, while still having specific application, no longer be broadly relevant to getting your message across. Further, changes in the way we use mobile phones will drive what is possible for consumption. One of the key features we are seeing now in the way that younger people interact with media is that they are not always sitting at home. They will be consuming media while they are out and via their phones. This means we need to start to understand how to craft messages in this slightly different medium you cannot just stick your existing web message on a mobile web page and expect to deliver a good customer experience. Another key development is the growth of video as a medium for mobile delivery. This will require a rethink of traditional video delivery, this is because people on the go are likely to seek to consume snack sized video content. For example, they are unlikely to want to watch Gone With the Wind on their phone.

Kate Carruthers Copyright 2008

3 Mar 2008

16

Social Networking
Source: http://www.ndtv.com/convergence/ ndtv/web2.0story.asp?id=ARTEN20 070009919

Source: XCD http://xkcd.com/256/

Kate Carruthers Copyright 2008

3 Mar 2008

17

Social Networking

There is a lot of talk these days about social networking and much jockeying for positions of ownership of those media (e.g. Murdochs acquisition of MySpace). But I think that this map humorous though it is intent sums up the nature of these social networking communities. The are multiplicitous, the are mutable, and they have mostly yet to be monetised effectively. In this we see the technology creating new ways of interacting and all of us trying to catch up and work out how to benefit from it. What does all this mean from a marketing point of view? Again it all comes back to the strategy and understanding the medium. There are rules we follow for placement of advertisements in print media (e.g. where on a page, or where inside the publication) that have grown up over many years of experience. However, it is only relatively recent that studies of eye tracking and similar have measured how people read computer screens and web pages. We are still at a very primitive level of understanding how people consume information from the web on their PC. Now we are adding into the mix mobile technology as well. We have a lot of research yet to be done until we reach the same level of understanding as for traditional media channels. The big thing now a lot of organisations are focusing on is building their own online communities. The success of this will relate directly to how relevant their offering is to the consumer.

Kate Carruthers Copyright 2008

3 Mar 2008

18

What About the Buzzwords?

EDM
Electronic Direct Mail

SEM
Search Engine Marketing

SEO
Search Engine Optimisation

Viral
Viral Marketing

Kate Carruthers Copyright 2008

3 Mar 2008

19

Buzzwords
All of these are just tools, there are experts

who already understand them if you dont. These all rely on different types of optimization strategies (e.g. multivariate testing, behavioural targeting). But the foundation is always the same to listen to your customers and deliver content that is relevant to their interests. And it all comes back to the business and marketing strategies.
Kate Carruthers Copyright 2008 3 Mar 2008

20

Media
Rank 1. 2. 3. 4. 5. 6. 7. 8. 9. Newspaper USA Today (Arlington, Va.) Wall Street Journal (New York, N.Y.) Times (New York, N.Y.) Times (Los Angeles) Post (Washington, DC) Tribune (Chicago) Daily News (New York, N.Y.) Inquirer (Philadelphia) Post/Rocky Mountain News (Denver) Circulation 2,528,437 2,058,342 1,683,855 1,231,318 960,684 957,212 795,153 705,965 704,806

10.

Chronicle (Houston)

692,557

NOTES: By largest reported circulation, as of March 31, 2006. Source: US Audit Bureau Circulation. By the largest reported circulation, as reported to the Audit Bureau of Circulation.

Kate Carruthers Copyright 2008

3 Mar 2008

Top 10 US Newspapers by Circulation 2006

21

Media
Lets have a quick look at some statistics about use

of different media. Here are the top 10 US newspapers by circulation. Outside of the top two circulation drops off quite quickly.

Kate Carruthers Copyright 2008

3 Mar 2008

22

Media
1 2 3 4 5 6 7
NOTES: Based on ABC audit reports for national consumer magazines for the following periods: October to December 2007 for weekly magazines with AANPS 25,000+,. Source: Source: ABC (Australian Average Net Paid Sales)

Australian Women's Weekly Woman's Day New Idea Reader's Digest Better Homes & Gardens That's Life! Super Food Ideas Take 5 TV Week Cosmopolitan NW Australian Good Taste Cleo

570,228 465,565 388,257 352,000 350,000 321,076 301,000 251,240 240,029 175,455 170,046 166,265 160,137
3 Mar 2008

8 9 10 11 12 13

Top 26 Oz Consumer Magazine by Circulation 2007

23

RANK

AANPS

CIRCULATION

Kate Carruthers Copyright 2008

Media

Australia continues to have an active magazine culture with Magazine Publishers Australia reporting recently: In the 12 months to June 2007, gross copy sales of ABC-audited consumer magazines were around 223 million. The retail value of consumer magazine sales is estimated to be more than $1.06 billion. Twenty-three of Australias top 100 audited consumer magazines have net paid sales in excess of 100,000. Six of the top 10 weekly magazines have sales in excess of 200,000. Around 90% of magazine sales in Australia are via retail outlets, such as newsagencies, supermarkets, convenience stores and auto service stations. Approximately 10% are sold via subscriptions. But the fact is the way people access and use media is changing. A great example of this is a friend of mine how reported that his children do not know what radio is. Cameron Reilly, of The Podcast Network (http://gdayworld.thepodcastnetwork.com) blogged: Rushing around this morning, driving my kids to piano practice. In a hurry, so the ubiquitous iPod wasnt jacked into the car stereo. Instead I turned on the radio for the five minute trip to piano. After a minute, Hunter (age 7) asks me from the back seat Hey Dad - wheres your iPod? I explain its in my bag, I havent bothered to plug it in. But wheres the music coming from? he asks. The radio, I explain. Is that like TV? asks his brother Taylor (also age 7). I look at their faces in the rearview mirror and realize they have no idea what radio is. They have never heard me listen to radio. They are amazed that music is playing without the iPod plugged in. If you have any shares in Austereo - welcome to your future marketplace. It doesnt even know you exist. (Reilly, 2008) There is much research showing how younger people are not reading newspapers like previous generations. That means we must use different channels. This is why we are all interested in Kate Carruthers Copyright 2008 3 read this. the social networking phenomenon and are trying to find out how peopleMar 2008

24

Media

Source: Digital Economy Factbook 2007 , p. 9

Kate Carruthers Copyright 2008

3 Mar 2008

Top Web Properties 2007

25

Media

Pew research from Jan 2008 reports that 48% of internet users said they had ever visited a video-sharing site such as YouTube. A year ago, in December 2006, 33% of internet users said they had ever visited such sites. That represents growth of more than 45% year-toyear. 15% of respondents said they had used a video-sharing site yesterday -- the day before they were contacted for our survey. A year ago, 8% had visited such a site yesterday. Thus, on an average day, the number of users of video sites nearly doubled from the end of 2006 to the end of 2007. This represents a significant shift in internet usage patterns, and I suspect that this is only the beginning of the next evolution of the internet. Past usage of the internet related to static sites that delivered information, but this growth of interactive sites, where even if users do not produce the material themselves they do distribute it to others, often with commentary and adaptation. This list of top sites is very interesting, especially when you delve into precisely which websites are represented in these results. For example, Fox Interactive Media actually comprises the following websites:

http://www.myspace.com

http://www.photobucket.com
http://www.ign.com http://www.foxsports.com

http://www.flektor.com

http://www.springwidgets.com http://www.gamespy.com http://www.direct2drive.com http://www.whatifsports.com Kate Carruthers Copyright 2008

http://www.scout.com
26

http://www.rottentomatoes.com 2008 3 Mar

Media 5% drop in the number of UK Facebook users between December and January MySpace fall in share from 23.14% to 22.58%

Facebook's market share dropped from 18.36% in December to 17.95% in January

Source: Facebook suffers drop in users, TVNZ Feb 22, 2008 http://tvnz.co.nz/view/page/1318360/1596328

Kate Carruthers Copyright 2008

3 Mar 2008

27

Media

According to TVNZ recently market shares for popular social networking sites declined: Figures from Nielsen Online in the United Kingdom show a 5% drop in the number of Facebook users between December and January, with a similar fall for social networking websites MySpace and Bebo. MySpace experienced a similar fall with its share going from 23.14% to 22.58% in the same period. Hitwise Australia's social networking and forums subcategory shows Facebook's market share dropped from 18.36% in December to 17.95% in January. This type of reporting about fluctuations in numbers of users, while correct as a numerical statement, fails to grasp the essential changes that these websites have driven in the ways people consume media and interact with each other. The most important fact to realise in this story on TVNZ is that, anecdotally, kids are leaving Facebook because their parents are joining it. Also they do not take into account the switching costs. For example, a friend wanted to stop using Facebook (it was his New Year resolution) but I noticed him logged onto Facebook a few days later. Why? Because most of his contacts are stored in there. He has since decided to remain a judicious Facebook user so as to avoid trying to transfer all his contacts. Thus mainstream media reports of the death of social networking are probably premature. What is more likely happening is that users have gotten over the honeymoon and are starting to assess how to best use these tools in their lives. Similarly the providers of these sites are working out how to successfully monetize them. This means we need to grapple with both sides of this equation to obtain value for our businesses.

Kate Carruthers Copyright 2008

3 Mar 2008

28

Synthesis

Physical
Consumer Experience

Trad Media

Online
Kate Carruthers Copyright 2008 3 Mar 2008

29

Synthesis
The death of the traditional media has been over-hyped.

It is like the long prophesied death of the mainframe in IT circles, or the paperless office. Much prophesied but not eventuating to date. This means that we need to go back to basics to decide how to allocate our media budgets.
Identify where your target audience is spending time online/offline. Determine your target audience's online/offline behavior. Determine your target audience's motivations, likes and dislikes and key influencers online/offline. Uncover what your competition is doing online/offline to gain a competitive advantage. The central question to understand is the consumer experience and how we can connect with that, by whatever channel works. The trick is understanding how the various channels work.

Kate Carruthers Copyright 2008 3 Mar 2008

30

Whats important?
1. Trust & listen to your customers
2. Build on the foundation of good strategy 3. Understand the medium 4. Master the medium 5. Find experts
Technology

Customer

Strategy

Process

Kate Carruthers Copyright 2008

3 Mar 2008

31

Whats Important?

1. 2. 3. 4. 5.

The foundation in business strategy mentioned at the beginning of this session is critical, without this any success is merely accidental. Upon that foundation a sound marketing strategy and supporting processes. At the centre is the customer, from whose perspective all that we deliver must make sense. Then to enable our marketing activities capability in technology and to understand the possibilities and limitations inherent in it we need skilled people. Those people need to understand not only business, but also marketing, and also be skilled in understanding web technology. What is really important is to establish trust with our customers, to listen to their needs and to understand the media we use to communicate with them so as to achieve maximum benefit. Dont be afraid to ask experts to assist. The body of knowledge required to deliver effective marketing in the world of web 2.0 any beyond is a combination of business, marketing and technology. The 5 points to remember are: Trust & listen to your customers - respect the messages you receive Build on the foundation of good strategy Understand the medium Master the medium Find experts

Kate Carruthers Copyright 2008

3 Mar 2008

32

References

Facebook suffers drop in users, TVNZ Feb 22, 2008 http://tvnz.co.nz/view/page/1318360/1596328

Borden, N. H. (1964), The Concept of the Marketing Mix, Journal of Advertising Research, June, Vol. 4, pp. 2-7. Britton, Daniel B. , McGonegal, Stephen, et al. (2007) The Digital Economy Factbook, The Progress & Freedom Foundation Washington, D.C. Chaffey, David, et al. (2006) Internet Marketing: Strategy, Implementation and Practice, Prentice Hall UK Fitzpatrick, Michael , "Digital generation dismisses email as 'for old people, The Guardian, December 6 2007, http://www.guardian.co.uk/technology/2007/dec/06/digitalcommunication Owyang, Jeremiah (2008) http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/ Pesce, Mark (2008) Unevenly Distributed: Production Models for the 21st Century , 31 Jan 2008, http://blog.futurestreetconsulting.com/?p=42 Rainie, L. "Online Video Audience Surges", Pew Internet Project, 9 Jan 2008, http://pewresearch.org/pubs/682/onlinevideo-audience-surges Reilly, Cameron, My Kids Dont Know What Radio Is, 1 Mar 2008, http://gdayworld.thepodcastnetwork.com/2008/03/01/my-kids-dont-know-what-radio-is/ Singer, John (2006) Marketing Ecosystems: Framing Brand Management for Business Ecosystems at http://www.bluespoonconsulting.com/whitepapersandnews.htm

Kate Carruthers Copyright 2008

3 Mar 2008

33