Digital Marketing Introduction PDF

Chapter 1 Introducing digital marketing 11 Definitions – what are digital marketing and multichannel marketing? Digital media The use of the Internet and other digital media and technology to support ‘modern Communications are facilitated through...

Chapter 1 Introducing digital marketing 11 Definitions – what are digital marketing and multichannel marketing? Digital media The use of the Internet and other digital media and technology to support ‘modern Communications are facilitated through marketing’ has given rise to a bewildering range of labels and jargon created by both content and interactive academics and professionals. It has been called digital marketing, Internet marketing, services delivered by e-marketing and web marketing. For the fifth edition we changed the title of this text from different digital technology platforms including the Internet Marketing to Digital Marketing since it shows the use of a range of digital plat- Internet, web, mobile forms to interact with audiences and for other reasons explained in the preface. Of course, phone, interactive TV, IPTV and digital signage. what is important within a company is not the term, but the activities that comprise digital marketing, which must be prioritised according to their relevance. So in this chapter we Digital marketing The application of the focus on introducing these different digital marketing activities. Internet and related Digital marketing can be simply defined as: digital technologies in conjunction Achieving marketing objectives through applying digital technologies and media. with traditional communications to achieve marketing This succinct definition helps remind us that it is the results delivered by technology objectives. that should determine investment in Internet marketing, not the adoption of the technol- Online company ogy! These digital technologies include the desktop, mobile, tablet and other digital plat- presence forms introduced later in the chapter. Different forms of online media controlled by a In practice, digital marketing includes managing different forms of online company company including their presence, such as company websites and social media company pages in conjunction with website, blogs, email list and social media online communications techniques introduced later in this chapter, including search engine presences. Also known as marketing, social media marketing, online advertising, email marketing and partnership ‘owned media’. arrangements with other websites. These techniques are used to support the objectives of Electronic customer acquiring new customers and providing services to existing customers that help develop relationship management (E-CRM) the customer relationship through E-CRM. However, for digital marketing to be successful Using digital there is still a necessity for integration of these techniques with traditional media such as communications print, TV and direct mail as part of multichannel marketing communications. technologies to maximise sales to existing The role of digital platforms in supporting integrated multichannel marketing is another customers and encourage recurring theme in this text and in Chapter 2 we explore its role in supporting different continued usage of online services through customer journeys through alternative communications and distribution channels. Online techniques including channels can also be managed to support the whole buying process from pre-sale to sale to database, personalised web messages, customer post-sale and further development of customer relationships. services, email and social media marketing. Multichannel marketing Customer communi- cations and product Paid, owned and earned media distribution are supported by a combination of digital To develop a sound digital strategy today involves understanding a more complex, more and traditional channels at different points in the competitive buying environment than ever before, with customer journeys involving many buying cycle. different forms of online presence. To help develop a strategy to reach and influence Customer journeys potential customers online, it’s commonplace to refer to three main types of media chan- The sequence of online nels marketers need to consider today (Figure 1.2): and offline touchpoints a customer takes during a 1 Paid media. These are bought media where there is investment to pay for visitors, reach buying process or broader customer experience. or conversions through search, display ad networks or affiliate marketing. Offline, Online this may include a traditional media like print and TV advertising and direct mail remain important, range of digital platforms, communications media, accounting for the majority of paid media spend. websites, pages and 2 Owned media. This is media owned by the brand. Online this includes a company’s own engagement devices. websites, blogs, email list, mobile apps or their social presence on Facebook, LinkedIn or Twitter. Offline owned media may include brochures or retail stores. It’s useful to think of a company’s own presence as media in the sense that they are an alternative investment to other media and they offer opportunities to promote products using simi- lar ad or editorial formats to other media. It emphasises the need for all organisations to become multichannel publishers. 12 Part 1 Digital marketing fundamentals Advertising Paid search Display ads Affiliate marketing Digital signage Paid Atomisation Paid media of content placements into ads Digital properties Partner networks Website(s) Publisher editorial Blogs Owned Earned Influencer outreach Mobile apps media media Word-of-mouth Social presence Social networks Atomisation of conversations through shared APIs and social widgets Figure 1.2 The intersection of the three key online media types Paid media 3 Earned media. Traditionally, earned media has been the name given to publicity generated Also known as bought through PR invested in targeting influencers to increase awareness about a brand. Now media, a direct payment occurs to a site owner earned media also includes word-of-mouth that can be stimulated through viral and social or an ad network when media marketing, and conversations in social networks, blogs and other communities. It’s they serve an ad, a sponsorship or pay useful to think of earned media as the sharing of engaging content developed through for a click, lead or sale different types of partners such as publishers, bloggers and other influencers including cus- generated. tomer advocates. Another way of thinking about earned media is as different forms of Owned media conversations between consumers and businesses occurring both online and offline. Different forms of online media controlled by a company including their We will see at the end of this chapter that content marketing has become a core inte- website, blogs, email grated modern marketing approach which involves communications across paid, owned list and social media and earned media. presence. You can see in Figure 1.2 that there is overlap between the three different types of media. Earned media The audience is reached It is important to note this since achieving this overlap requires integration of campaigns, through editorial, resources and infrastructure. Content on a content hub or site can be broken down (some- comments and sharing online. times described as microcontent) and shared between other media types through widgets powered by program and data exchange APIs (Application Programming Interfaces) such Application Programming as the Facebook API. Interfaces Method of exchanging data between systems such as website services. The growing range of digital marketing platforms If you think of the options to reach and interact with audiences when they are online, we have traditionally used digital media channels like search, social media or display ads on media sites accessed via desktop or laptop-based hardware platforms. The desktop access platform has been dominant for years and remains so for now, but the number of mobile smartphone and tablet visitor sessions now exceed desktop Internet sessions for many ­consumer busi- nesses. Combining with these hardware platforms, there are also different software platforms which marketers can use to reach and interact with their audience through content ­marketing or advertising, so let’s look at the range of options that are available:  Chapter 1 Introducing digital marketing 13 Desktop, laptop and notebook platforms 1 Desktop browser-based platform. This is traditional web access through the c­ onsumer’s browser of choice, whether Internet Explorer, Google Chrome or Safari. 2 Desktop apps. We don’t hear this platform talked about much; increasingly users are accessing paid and free apps from their desktop via the Apple App Store or the ­Microsoft equivalent, like Gadgets. This gives opportunities for brands to engage via these platforms. 3 Email platforms. While email isn’t traditionally considered a platform, it does offer an opportunity separate from browser and app-based options to communicate with pros- pects or clients, whether through editorial or advertising, and email is still widely used for marketing. 4 Feed-based and API data exchange platforms. Many users still consume data through RSS feeds, and Twitter and Facebook status updates can be considered a form of feed or stream where ads can be inserted. 5 Video-marketing platforms. Streamed video is often delivered through the other plat- forms mentioned above, particularly through browsers and plug-ins, but it represents a separate platform. Television channels delivered through streaming over the Internet (known as IPTV) are related to this platform. It could be argued that the major social networks Facebook, LinkedIn and Twitter also provide a form of platform, but these really exist across all of these technology platforms so they haven’t been identified separately. Mobile marketing Marketing to encourage Mobile phone and tablet platforms consumer engagement when using mobile The options on mobile hardware platforms are similar in many ways to the desktop. Since phones (particularly smartphones) or tablet they can be used in different locations there are many new opportunities to engage con- devices. sumers through mobile marketing and location-based marketing. The main platforms are: Location-based marketing 1 Mobile operating system and browser. There are mobile browsers which are closely Location or proximity- ­integrated with the operating system. based marketing is mobile 2 Mobile-based apps. Apps are proprietary to the mobile operating system, whether marketing based on the GPS built into phones or Apple iOS, Google Android, RIM or Windows. A big decision is whether to deliver based on interaction with content and experience through a browser and/or a specific app which provides an im- other local digital devices. proved experience. If you check the latest research you will see that the majority of Mobile-based apps Designed to run on mobile media time is app-based. smartphones and tablet computers, apps provide users with rich mobile Other hardware platforms content by deploying the handset’s multiple native Apart from desktop and mobile access, there are a host of other and growing platforms capabilities. Apps are through which to communicate with customers. For example: available for download from app stores hosted 1 Gaming platforms. Whether it’s a PlayStation, Nintendo or Xbox, there are increasing by the mobile operating systems (e.g. iTunes for ­options to reach gamers through ads or placements within games, for example in-game ads. iOS, Google Play for 2 Indoor and outdoor kiosk-type apps. For example, interactive kiosks and augmented Android, Microsoft App Store, BlackBerry App reality options to communicate with consumers. World). 3 Interactive signage. The modern version of signage is closely related to kiosk apps and Software as a may incorporate different methods such as touchscreen, Bluetooth or QR codes to Service (SaaS) ­encourage interactive. Mini Case Study 1.1 gives a futuristic example. Business applications and software services are 4 Wearables. Smart watches such as the Apple Watch and smart glasses such as Google Glass. provided through Internet and web protocols with the application managed Software platforms for managing modern marketing on a separate server from where it is accessed There is a bewildering range of software, services and systems available today for manag- through a web browser on ing marketing. Many are now available as SaaS platforms which have made services to an end user’s computer with data stored within manage marketing more affordable for smaller businesses and easier to manage for all ‘The Cloud’. since no installation is required. 14 Part 1 Digital marketing fundamentals The range of options have been ably summarised by Scott Brinker, who publishes a summary of the marketing technology landscape each year. The six main categories of system he recommends marketers review for the range of technologies available are: 1 Marketing experiences. More specialised technologies that directly affect prospects and customers across their lifecycle, such as advertising, email, social media, search e­ ngine optimisation, content marketing, A/B testing, marketing apps – the ‘front-­office’ of modern marketing. 2 Marketing operations. The tools and data for managing the ‘back-office’ of marketing, such as analytics, Marketing Resource Management (MRM), Digital Asset M ­ anagement (DAM) and agile marketing management. Activity 1.2 The latest marketing technology landscape Purpose To illustrate the range of systems available to support marketers and to explain the main categories of service available. Activity 1 Search for Scott Brinker’s latest technology roadmap for the current year on his ChiefMartec.com site. For each of the six categories of service summarised in ­Figure 1.3, write a layman’s description of how they can support digital marketing activities by reviewing the proposition as described on the websites of the most popular services in the category (the most popular are listed first). 2 Make a note to understand the different types of service defined in each category. 3 Choose one or two vendor systems and visit their website to see how they explain the proposition and explain it to others in your group(s). Alternatively identify the most popular service(s) in each category. Marketing Marketing experiences operations (Customer experience, digital media channel, voice of (Digital analytics, customer, personalisation, chat, sales enable, testing and attribution and dashboards optimisation) asset management, audience and market data) Marketing middleware (APIs, data management, tag management, identity) Marketing backbone platforms (CRM, marketing automation, content management, Ecommerce) Infrastructure Internet (Databases, big data, cloud, mobile and web development) (Digital platforms) Figure 1.3 Scott Brinker’s categorisation of modern marketing technology options. Digital Platforms include Facebook, Google, LinkedIn and Twitter Source: With permission – Chiefmartec.com  ‫تعريفات توضيحية للشكل أعاله‬ 1. Marketing experiences. More specialised technologies that directly affect prospects and customers across their lifecycle, such as advertising, email, social media, search engine optimisation, content marketing, A/B testing, marketing apps – the ‘front- office’ of modern marketing. 2. Marketing operations. The tools and data for managing the ‘back-office’ of marketing, such as analytics, Marketing Resource Management (MRM), Digital Asset Management (DAM) and agile marketing management. 3. Marketing middleware such as Data Management Platforms (DMPs), tag management, cloud connectors, user management and API services. 4. Marketing backbone platforms such as customer relationship management, marketing automation, content management and e- commerce engines. (These are quite different in their application, so need to be reviewed separately.) 5. Infrastructure services such as databases, big data management, cloud computing and software development tools. 6. Internet services such as Facebook, Google and Twitter that underlie today’s marketing environment. (How you integrate with these key platforms.) Complete Activity 1.2 to review the latest technologies.  Chapter 1 Introducing digital marketing 21 Business and consumer business models A basic aspect of the types of online business model explored in Chapter 2 is whether the proposition offered appeals to consumers or business. So digital marketing opportunities are often described in terms of the extent to which an organisation is transacting with con- Business-to-consumer sumers (business-to-consumer – B2C) or other businesses (business-to-business – B2B). (B2C) Reference to the well-known online companies in Table 1.1 initially suggests these Commercial transactions between an organisation companies are mainly focussed on B2C markets. However, B2B communications are still and consumers. important for many of these companies since business transactions may occur, as for Business-to-business ­example with eBay Business (http://business.ebay.com/), or the B2C service may need to (B2B) Commercial transactions be sustained through advertising provided through B2B transactions, for example Google’s between an organisation revenue is largely based on its B2B AdWords (http://adwords.google.com/). Advertising ser- and other organisations vice and advertising-based revenue is also vital to social network sites such as YouTube, (inter-organisational marketing). Facebook and Twitter. Digital media and technologies offer new opportunities for direct-to-customer strate- gies where brands can communicate directly to their consumers. For example, a publisher and authors can interact with their readers, or food brands can interact directly with their purchasers via their websites or social media. Figure 1.6 gives examples of different companies operating in the business-to-consumer (B2C) and business-to-business (B2B) spheres. Often companies such as easyJet and BP will have products that appeal to both consumers and businesses, so will have different parts of their site to appeal to these audiences. Figure 1.6 also presents two additional types of From: Supplier of content/service Consumer or citizen Business (organisation) Government Consumer or citizen Consumer-to-consumer (C2C) Business-to-consumer (B2C) Government-to-consumer (G2C) eBay Transactional: Amazon National government Peer-to-peer (Skype) Relationship-building: BP transactional: Tax – HM Blogs and communities Brand-building: Unilever Revenue & Customs Product recommendations Media owner – News Corp National government Social network (Bebo, Comparison intermediary: information Facebook Google+) Kelkoo, Pricerunner Local government information Local government services To: Consumer of content/service Business (organisation) Consumer-to-business (C2B) Business-to-business (B2B) Government-to-business (B2B) Priceline Transactional: Euroffice Government services and Consumer-feedback, Relationship-building: BP transactions: tax communities or campaigns Media owned: Emap Legal regulations business productions B2B marketplaces: EC21 Social network (Linked-In, Plaxo) Consumer-to-government (C2G) Business-to-government (B2G) Government-to-government (G2G) Feedback to government Feedback to government Inter-government services Government through pressure group or businesses and non- Exchange of information individual sites governmental organisations Figure 1.6 Summary and examples of transaction alternatives between businesses, consumers and governmental organisations 56 Part 1 Digital marketing fundamentals Introduction Path to purchase The demands on marketers who are responsible for planning digital marketing strategies The different sites, channels and devices and are growing significantly as they work out how to manage commercial contributions, the information sources that complexities of the competitive marketplace, social communities and innovations in tech- consumers use to inform nology. The growth in use of digital media and technology has led to a customer path to their purchase decision for a product or service. purchase that is now much more complex since purchase decisions are influenced by many Also known as conversion more online touchpoints, which we introduced in Chapter 1. In the online marketplace, pathways on a site. consumer purchase decisions are influenced by many sources of information, such as Online marketplace search results, customer reviews, social media conversations, and company websites. Addi- Exchanges of information and commercial tionally, potential customers are using multiple devices (sometimes simultaneously) to gar- transactions between ner information that will inform their purchase decisions. For example, using smartphones consumers, businesses and governments or tablets while watching TV. This process is known as multiscreening. The digital influ- completed through ences are also supplemented by exposure to traditional communications such as TV, print different forms of online presence such as search or radio advertising. engines, social networks, In the next two chapters we look at how organisations might assess the digital envi- comparison sites and ronment and in doing so identify implications for digital marketing strategy. We begin by destination sites. looking at online consumer behaviour, focussing on the main forces that influence pur- Multiscreening A term used to describe chasing and the competitive environment. Then we consider how existing companies and simultaneous use of startups can create business and revenue models which take advantage of online market- devices such as digital TV and tablet. place opportunities. Situation analysis for digital marketing The online marketplace is complex and dynamic; organisations should carefully analyse the market context in which they operate, identify opportunities and then plan how they can compete effectively. Understanding an organisation’s environment is a key part of Situation analysis situation analysis, and forms a solid foundation for all types of marketing planning but Collection and review of information about an especially when devising a digital marketing strategy as shown in Figure 1.9. organisation’s external What should be reviewed in situation analysis? From the perspective of a business creat- environment and internal ing a digital marketing plan, situation analysis should review these factors which we cover resources and processes in order to refine its in this chapter: strategy. A Customers. Digital proposition and communications should be based around the cus- tomer: their characteristics, behaviours, needs and wants. So our view is that marketers should start with the customer when analysing the situation. B Marketplace analysis including intermediaries, influencers and potential partners. This is a summary of the main online influences on purchase during the customer journey or path to purchase. We will see that there is a wide range of influences including search engines, publisher media sites, blogs, review sites and social networks which should all be considered. Marketplace analysis also involves reviewing opportunities and threats from digital media and technology including new business and revenue models. C Competitors. Benchmarking customer propositions and communications activities against competitors can identify opportunities for new approaches and digital market- ing activities that need to be improved. D Wider macro-environment. These are the broader strategic influences we cover in Chapter 3, including social, legal, environment, political and technology influences. Another major part of situation analysis involves an inward-looking, internal review of the effectiveness of existing digital marketing approaches. This will include reviewing  Chapter 2 Online marketplace analysis: micro-environment 57 current results from digital marketing by review of key performance indicators (KPIs) and ­dashboards and the organisational capabilities and processes used to manage digital mar- keting summarised as strengths and weaknesses. We explain how to review performance by selecting relevant goals and key performance indicators in Chapter 4, covering digital strategy, and Chapter 10, covering digital analytics. To be successful in online trading environments it is important to respond effectively to changes in the marketplace, as the interview with Michael Welch of online startup Black circles.com shows. Digital marketing in practice The Smart Insights interview Michael Welch of Blackcircles.com on creating a new online business Overview and concepts covered Michael Welch created Blackcircles.com (Figure 2.1) as a new way for consumers to buy tyres at competitive prices either over the Internet or on the telephone. From the site, consumers can find the best deal from a network of over 1000 local dealerships. Blackcircles.com now has a turnover of £18 million and is growing rapidly, so we thought it would be interesting to learn the approaches its founder, Michael Welch has used to grow and sustain the business. The interview Q. Which factors were important to the initial success of Blackcircles.com? Michael Welch: At the very beginning it was mainly about hard work, determination and not ‘taking no for an answer’. If I’m honest, there was no real difference between me and the next guy walking down the street – I just wanted it more. A key factor in the company getting to where it is today though was also having a strong USP (unique selling point). There were a couple of other companies around at the same time with a similar USP and there are now countless smaller operations that seem to have modelled their USP on ours. Providing a culture of excellent customer service is an obvious way to go, back when you are a new company – at times – it is all you have. When brand awareness is zero to slim, you have to work as hard as possible to show the customers that first use you – and in reality are taking a gamble – that you give a damn and that their gamble has paid off. I worked hard to make sure customers came first. Q. Which marketing activities are important to your continued growth? Michael Welch: The base of our continued growth actually hasn’t altered much from those early days. Customer satisfaction is still very much key, the desire to make the company a success is there and our USP is just as strong as it was back at the start of the last decade. I suppose there has been a shift in that we were once the underdogs and now we are leading the pack. Implementing new ideas and technologies has played a major part in helping us to stay on top, i.e. making sure we are up to date with the best SEO techniques, embracing the world of social media and continually trying to offer more attractive services to our customers – the launch of car servicing being one such evo- lution on the original ‘tyre retailer’ tag that Blackcircles.com started with. Underneath all that, though, the company is supported by a foundation of ‘getting the basics right’.  Chapter 2 Online marketplace analysis: micro-environment 59 Q. How do you review the success of your site? Which approaches do you use? Michael Welch: As far as I’m concerned, if you don’t include web analytics in your marketing plan, then quite simply, you don’t have a marketing plan. Gone are the days when all website owners ever worried about was visitor numbers – good riddance too as it means we don’t have to put up with those horrible ‘visitor counters’ that you used to see bandied about everywhere. Understanding not just how many visitors you have, but also how they are using your site is invaluable. We actively check out this information on a regular basis. A quick example would be: what percentage of our visitors search for tyres? From this, what percentage then adds a set of tyres to their basket and then how many actually end up on the payment confirmation page? Looking at these stats we can see at what point in an order process people exit our site. Then we ask ourselves what content is on each page, are there enough calls to action? Is there enough information? Is it easy to navigate? Could we add in new con- tent to encourage people to buy? If we come up with a potential change that we believe will help a page perform better, we then track to see the difference. If conversions go up, great – but how can we improve it further? If they drop – back to the drawing board. Not only do we see the importance on an ‘order process’ based analysis, but also using it for certain technical aspects. For instance, customers with one browser end up buying in greater percentages than those with a different browser. OK, so is there a piece of code on a page that is affecting the customers’ experience? Or is it even a demographic thing? All this is just scratching the surface. Web analytics can answer so many questions you didn’t even know you needed to ask. The trick is not getting overawed – it is too easy to get lost in an ocean of statistics. Q. Which new approaches in the marketplace are you reviewing currently? Michael Welch: The use of video is an interesting avenue that we are keenly pursuing at the moment. Audio and visual are right up there in terms of brand development; and with the sheer number of opportunities available on the web, online videos have never been more exciting. We’re still testing the water at the moment with a new ‘Blackcircles.com TV’ channel on YouTube, but I’m pleased with the results so far. In a bit of a more traditions sense we are also enhancing our email campaigns. However, I’m very wary of over-saturating our customers with information that they will just mark as spam. The key goal for us at the moment is engaging our customers with the brand. Social media is playing a large role in this as well, as you would expect. The digital marketing environment Micro-environment The digital marketing environment refers to the contexts in which firms operate, including The players (stakeholders) how they relate to customers and other businesses participating in their markets. Each firm and their interactions which influence how an has its own unique space within the marketing environment, which is shaped by how they organisation responds in interact with internal aspects of their own business, competing businesses and the wider its marketplace. marketing environment. Macro-environment The digital marketing environment involves two major elements: (1) micro-environment Broad forces affecting all organisations in the and (2) macro-environment (Figure 2.2). The micro-environment is known as ‘the operating marketplace, including environment’, and focuses on the players which shape the immediate trading environment. social, technological, economic, political, legal These players include the customers whose needs and wants are to be satisfied, along with and ecological influences. the competitors, intermediaries and suppliers. These groups of actors shape the online 60 Part 1 Digital marketing fundamentals Figure 2.2 The digital marketing environment marketplace and a digital marketer needs to understand their behaviour and the implica- tion of changes if an organisation is to develop an effective digital marketing strategy. The macro-environment is sometimes known as ‘the remote environment’ and con- sists of external forces which can significantly affect organisational success. These forces originate from the marketplace, which is largely beyond the immediate control of an organisation – e.g. economic conditions, changes to international trade legislation, technological developments and innovations, social change and political interventions. Environmental We study the parts of the macro-environment at are significant to developing digital scanning ­strategy in Chapter 3. The process of continuously monitoring The trading environment can have a profound impact on performance; consequently and analysing events an organisation should continually monitor the environment (micro and macro). This in an organisation’s process is often referred to as environmental scanning. Online marketplace analysis environment(s) which have implications for planning. helps to define the nature of the competitive market or click ecosystem. In Chapter Click ecosystem 1 we saw that there are a range of digital technology platforms within the mobile and Describes the customer desktop hardware platforms. Major online players such as Facebook, Google and Sales- behaviour or flow of online force have developed their own infrastructure or online market ecosystem which con- visitors between search engines, media sites, nects websites through data exchange, giving opportunities to enhance the customer other intermediaries to experience and extend their reach and influence. For example, Facebook has developed an organisation and its competitors. an API system known as the Facebook platform to enable exchange of data between Online market websites and applications including mobile apps. This enables other site owners to ecosystem incorporate information about consumer Facebook interactions into their own websites Interactions between and apps and share social objects across the Facebook ecosystem to extend their reach. different online systems related to a specific Google has developed its own ecosystem related to search marketing and mobile – the hardware or software Android ecosystem. As part of marketplace analysis, companies have to evaluate the technology which may be independent or developed relative importance of these ecosystems and the resources they need to put into inte- by a particular brand. grating their online services with them, to create a plan. 120 Part 1 Digital marketing fundamentals Introduction In Chapter 2, we reviewed the influences on customers which shape the online marketplace or trading environment. In this chapter, we review how broader, macro-economic forces can influence digital marketing. These are forces which affect the trading environment but companies operating have limited direct influence over. An indication of the challenge of assessing the macro-environment factors is pre- sented in Figure 3.1. This figure of the ‘waves of change’ shows how fluctuations in the characteristics of different aspects of the environment vary at different rates through time. The manager has to constantly scan the environment and assess which changes are relevant to their sphere of influence. Changes in social culture, and particularly pop cul- ture (what’s hot and what’s not), tend to be very rapid. Introduction of new technologies and changes in their popularity tend to be frequent too and need to be assessed. Govern- mental and legal changes tend to happen over longer timescales, although, since this is only a generalisation, new laws can be introduced relatively fast. The trick for managers is to identify those factors which are important in the context of e-commerce which are critical to competitiveness and service delivery and monitor these. We believe it is the technological and legal factors which are most important to managing e-commerce, so we focus on these. In the marketing literature, there are widely used mnemonics, which aim to act as an aide-memoire for the macro-environmental forces, e.g. PEST, SLEPT and PESTLE, where each letter represents a slightly different arrangement of the following macro forces: Political forces Economic forces Social forces Technological forces Legal forces Environmental forces For the digital marketer, the most important to task is to carry out a thorough assessment of the forces that are shaping the online marketing environment and identify which forces Figure 3.1 The waves of change  Chapter 3 The online macro-environment 121 have implications for their own marketing planning and strategic initiatives. The chapter proceeds by exploring each of the macro-environmental forces in the following order: Technological forces: changes in technology which influence marketing opportuni- ties; create new product development opportunities; introduce new ways to access target markets through channel integration; create new forms of access platforms and applications. Economic forces: cause variation in economic conditions; affect trading opportunities; influence consumer spending and business performance; have significant implications for digital marketing planning. Political forces: national governments and transnational organisations have an impor- tant role in determining the future adoption and control of the Internet and the rules by which it is governed. Legal forces: determine the methods by which products can be promoted and sold ­online. Laws and ethical guidelines that seek to safeguard individuals’ rights to privacy and businesses’ to free trade. Social forces: cultural diversity among digital communities, which influences use of the Internet and the services businesses provide online. The main reason for keeping track of changes in the macro-environment is to be aware of how changes in social behaviour, new laws and technological innovation can cre- ate opportunities or threats. Organisations that monitor and respond effectively to their macro-environment can create differentiation and competitive advantages which enable the business to survive and prosper. Given the significance of technology, we begin with this force as it is arguably a top priority for digital marketing planning. Digital marketing in practice The Smart Insights interview Fred Bassett of Blue Latitude on online marketplace analysis Overview and main concepts This interview with Fred Bassett of digital strategy consulting strategy firm Blue L ­ atitude outlines a structured approach to online marketplace analysis in order to ­inform digital marketing strategy. The interview Q. Fred, you say there is an increasing demand for online marketplace analysis ­today. Why do you think this is? Surely most companies already understand their marketplace Fred Bassett: The main driver is simply competitive pressure. Many companies have now optimised essential processes such as search marketing, email marketing and site conversion. This has led to many online markets becoming highly competitive ­environments in which improving performance is increasingly challenging. Marketplace analysis helps identify opportunities for growth from discovering gaps in the market that competitors aren’t exploiting. In strategic terms, situation analysis helps identify gaps where customer segments aren’t well served by existing propositions. At a more tactical level, we also identify quick wins in terms of online media alloca- tion, PR and partnership opportunities – where media investments such as paid search or display ads could be better spent. 140 Part 1 Digital marketing fundamentals The diffusion–adoption curve can be used in two main ways as an analytical tool to help managers: 1 to understand the stage at which customers are in adoption of a technology, or any product. For example, the Internet is now a well-established tool and in many devel- oped countries we are into the late majority phase of adoption, with large numbers of users of services. This suggests it is essential to use this medium for marketing pur- poses. But if we look at WAP technology (see below) it can be seen that we are in the innovator phase, so investment now may be wasted since it is not clear how many will adopt the product. 2 to look at adoption of a new technique by other businesses – from an organisational perspective. For example, an online supermarket could look at how many other e-tailers have adopted personalisation to evaluate whether it is worthwhile adopting the technique. A commercial application of the diffusion of innovation curve was developed by tech- nology analyst Gartner (2011) and has been applied to different technologies since 1995. Hype cycle They describe a hype cycle as a graphic representation of the maturity, adoption and busi- A graphic representation ness application of specific technologies. of the maturity, adoption and business application Gartner (2011) recognises the following stages within the hype cycle (Figure 3.8): of specific technologies. 1 Technology trigger. The first phase of a hype cycle is the ‘technology trigger’ or break- through, product launch or other event that generates significant press and interest. On the At the Sliding into Climbing the slope Entering the rise peak the trough plateau Activity beyond Supplier early adopters proliferation Negative press begins Mass media High-growth adoption hype begins Supplier consolidation phase starts: 20 per cent and failures to 30 per cent of the Early adopters potential audience has investigate Second/third adopted the innovation rounds of Expectations First-generation venture capital Methodologies and best products, high price, funding practices developing lots of customisation needed Less than 5 per cent of the potential audience Start-up companies, Third-generation products, has adopted fully first round of venture out of the box, product capital funding suites Second-generation products, some services R&D Peak of Technology Trough of Plateau of inflated Slope of enlightenment trigger disillusionment productivity expectations Time Figure 3.8 Different stages of a Gartner hype cycle Source: Gartner Group