E-Commerce and Internet Marketing E406.pdf

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E-COMMERCE AND INTERNET MARKETING 01000101 00101101 01000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 01101110 01100100 00100000 01001001 01101110 01110100 01100101 01110010 01101110 01100101 01110100 00100000 01001101 01100001 01110010 01101011 01100101 01110100 01101001 01101110 01100111 00101110 01000101 00101101 01000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 01101110 01100100 00100000 01001001 01101110 01110100 01100101 01110010 01101110 01100101 01110100 00100000 01001101 01100001 01110010 01101011 01100101 01110100 01101001 01101110 01100111 00101110 01000101 00101101 01000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 01101110 01100100 00100000 01001001 01101110 01110100 01100101 01110010 01101110 01100101 01110100 00100000 01001101 01100001 01110010 01101011 01100101 01110100 01101001 01101110 01100111 00101110 01000101 00101101 01000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 01101110 01100100 00100000 01001001 01101110 01110100 01100101 01110010 01101110 01100101 01110100 00100000 01001101 01100001 01110010 01101011 01100101 01110100 01101001 01101110 01100111 00101110 01000101 00101101 01000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 01101110 01100100 00100000 01001001 01101110 01110100 01100101 01110010 01101110 01100101 01110100 00100000 01001101 01100001 01110010 01101011 01100101 01110100 01101001 01101110 01100111 00101110 01000101 00101101 01000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 01101110 01100100 00100000 01001001 01101110 01110100 01100101 01110010 01101110 01100101 01110100 00100000 01001101 01100001 01110010 01101011 01100101 01110100 01101001 01101110 01100111 00101110 01000101 00101101 1000011 01101111 01101101 01101101 01100101 01110010 01100011 01100101 00100000 01100001 1  E-COMMERCE AND INTERNET MARKETING MARKETING E 406 -E-COMMERCE AND INTERNET MARKETING COURSE OUTLINE Part I: Internet Marketing CHAPTER 1: MARKETING AND THE INTERNET  WHY THE INTERNET IS A VALUABLE TOOL IN MARKETING?  THE MULTIFACETED POTENTIAL MARKETING ROLES FOR THE INTERNET  HOW THE INTERNET IS BEING APPLIED IN MARKETING STRATEGIES?  THE CHALLENGES OF USING THE INTERNET IN MARKETING  SEGMENTATION CHAPTER 2: DIGITAL MARKETING STRATEGY  WHAT IS MARKETING?  WHAT IS DIGITAL MARKETING?  WHAT IS DIGITAL MARKETING STRATEGY?  THE INTERNET IN THE TRADITIONAL MARKETING MIX  CRAFTING A DIGITAL MARKETING STRATEGY CHAPTER 3: CROWDSOURCING  WHAT IS CROWDSOURCING?  HOW IT WORKS?  HOW IT WORKS IN BUSINESS?  HOW A CROWDSOURCING CAMPAIGN IS MANAGED?  THE PRO’S AND CON’S OF CROWDSOURCING CHAPTER 4: SOCIAL MEDIA STRATEGY  USING SOCIAL MEDIA TO SOLVE BUSINESS CHALLENGES  CREATING A SOCIAL MEDIA STRATEGY  DOCUMENTS AND PROCESSES CHAPTER 5: ONLINE ADVERTISING  WHAT IS ONLINE ADVERTISING?  HOW IT WORKS?  TYPES OF PAYMENT ON ONLINE ADS 2  E-COMMERCE AND INTERNET MARKETING MIDTERM EXAMS Part II: E-Commerce CHAPTER 6: INTRODUCTION TO E-COMMERCE  WHY YOU SHOULD STUDY E-COMMERCE  WHAT IS E-COMMERCE?  THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS  TECHNOLOGICAL BUILDING BLOCKS UNDERLYING E-COMMERCE: THE INTERNET, WEB, AND MOBILE PLATFORM  MAJOR TRENDS IN E-COMMERCE  UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY  UBIQUITY  GLOBAL REACH  UNIVERSAL STANDARDS  RICHNESS  INTERACTIVITY  INFORMATION DENSITY  PERSONALIZATION AND CUSTOMIZATION  SOCIAL TECHNOLOGY: USER-GENERATED CONTENT AND SOCIAL NETWORKS  E-COMMERCE ADVANTAGES and DISADVANTAGES o Advantages to Organizations o Advantages to Consumers o Advantages to Society o Technical disadvantages o Non-technical disadvantages CHAPTER 7: TYPES OF E-COMMERCE o Business - to - Business (B2B) o Business - to - Consumer (B2C) o Consumer - to - Consumer (C2C) o Consumer - to - Business (C2B) o Business - to - Government (B2G) o Government - to - Business (G2B) o Government - to - Citizen (G2C)  OTHER TYPES OF E-COMMERCE  MOBILE E-COMMERCE (M-COMMERCE)  SOCIAL E-COMMERCE 3  E-COMMERCE AND INTERNET MARKETING  LOCAL E-COMMERCE  FUNDAMENTAL SALES PROCESS  UNDERSTANDING E-COMMERCE: ORGANIZING THEMES  TECHNOLOGY: INFRASTRUCTURE  BUSINESS: BASIC CONCEPTS  SOCIETY: TAMING THE JUGGERNAUT CHAPTER 8: E-COMMERCE BUSINESS MODELS  EIGHT KEY ELEMENTS OF A BUSINESS MODEL o Value Proposition o Revenue Model o advertising revenue model o subscription revenue model, o transaction fee revenue model, o sales revenue model, o affiliate revenue model, o Market Opportunity  COMPETITIVE ENVIRONMENT  COMPETITIVE ADVANTAGE  MARKET STRATEGY  ORGANIZATIONAL DEVELOPMENT  MANAGEMENT TEAM  RAISING CAPITAL o Incubators o Angel investors o Venture capital investors o Crowdfunding  E-COMMERCE ENABLER  MAJOR BUSINESS-TO-CONSUMER (B2C) BUSINESS MODELS  E-TAILER  COMMUNITY PROVIDER  CONTENT PROVIDER  PORTAL  TRANSACTION BROKER  MARKET CREATOR 4  E-COMMERCE AND INTERNET MARKETING  SERVICE PROVIDER  MAJOR BUSINESS-TO-BUSINESS (B2B) BUSINESS MODELS  E-DISTRIBUTOR  E-PROCUREMENT  EXCHANGES  INDUSTRY CONSORTIA  PRIVATE INDUSTRIAL NETWORKS Chapter 9: E-COMMERCE BUSINESS: STRATEGY, STRUCTURE, AND PROCESS  INDUSTRY STRUCTURE  INDUSTRY VALUE CHAINS  FIRM VALUE CHAINS  FIRM VALUE WEBS  BUSINESS STRATEGY  E-COMMERCE TECHNOLOGY AND BUSINESS MODEL DISRUPTION 5  E-COMMERCE AND INTERNET MARKETING PART I INTERNET MARKETING 6  E-COMMERCE AND INTERNET MARKETING Chapter 1 MARKETING AND THE INTERNET 7  E-COMMERCE AND INTERNET MARKETING TITLE: Chapter 1 Marketing and the Internet DESCRTION: This chapter explains the connection of marketing and the internet, the different types of marketing organization, the challenges they can encounter in using the internet in marketing and the different behavior users have. LEARNING OBJECTIVES:  To demonstrate why the Internet is a valuable marketing tool  To explore the multifaceted potential marketing roles for the Internet  To show how to develop an Internet marketing strategy  To illustrate how the Internet being utilized to enhance marketing strategies  To consider the challenges of using the Internet in marketing and to forecast the future of E-marketing LESSON PROPER: TYPES OF E-MARKETING ORGANIZATION A. Bricks-and-mortar firms are traditional companies not involved with the Internet. They are likely to be small in size and scope. B. Clicks-only firms do business just online. They don’t have traditional facilities. Many entered the marketplace in the 1990s and often expanded too fast, resulting in going out of business. Still, there are thousands of these firms. C. Bricks-and-clicks firms operate in both a traditional setting and on the Internet. Virtually all large retailers, as well as manufacturers, wholesalers, government organizations, nonprofit organizations, and others, have a Web presence. Market Segmentation- divides the pool of potential customers into groups, or segments. 1. Geographic Segmentation 2. Demographic Segmentation 3. Psychographic Segmentation 4. Behavioral Segmentation- web companies can cater most of their customers’ behavioral needs. Market segmentation on the web 8  E-COMMERCE AND INTERNET MARKETING In the physical world, retail stores have limited floor and display space, these limitations often force physical stores to decide on one particular message to convey. On the web, retailers can provide separate virtual spaces for different market segment. For example, Dell’s home page includes links to separate sections of its site for home users, small and medium businesses, public sector organization and large enterprises. Beyond Traditional Marketing Segmentation Usage Based Segmentation – web site usage behavioral pattern.  Browser – they just surf the web. Web sites who intend to appeal to potential customers in this mode must offer them something that piques their interest. The site should include words that are likely to jog the memories of visitors and remind them of something they want to buy on the site. These are called trigger words.  Buyers- site visitors who are ready to make a purchase right away. The best thing a site can offer a buyer is a direct route into the purchase transaction. A shopping cart is part of the web site that keeps track of selected items for purchase and automates the purchasing process. The shopping cart should offer a link that takes the visitor back into the shopping area of the site, but the primary goal os to get the buyer to the shopping cart as quickly as possible.  Shoppers- Some customers arrive at a web site knowing that it offers items they are interested in buying. These visitors are motivated to buy, but they are looking for more information before they make a purchase decision. For visitors who are in Shoppers mode the site should provide product review, and list of features. Understanding marketing strategy Business and brand strategy before you can delve into marketing strategy, take a step back and consider the business and brand with which you are working. The end goal of any business is to make money in one way or another. Business strategy asks the questions, “What is the business challenge we are facing that prevents us from making more revenue?” and, “What business objective should we strive for in order to increase the money in the bank?” 9  E-COMMERCE AND INTERNET MARKETING The brand is the vessel of value in this equation. The brand justifies why the business matters, what the business’ purpose is and what value the business adds to people’s lives. The AMA defines a brand as, “A name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The usual expression of a brand is its trademark. A brand may identify one item, a family of items or all items of that seller” (N.A., 2011). To quote Cheryl Burgess, a brand presents, “a reason to choose” one product or service over another. The value of the brand is measured in terms of its brand equity. How aware are people of the brand? Does it hold positive associations and perceived value? How loyal are people to the brand? When you have the answers to these questions, you can formulate a marketing strategy to address the challenge or objective you’ve discovered. Marketing strategy The purpose of a marketing strategy is to determine what the business is about and to then address the business or brand challenge, or objective that has been revealed. An effective strategy involves making a series of well-informed decisions about how the brand, product or service should be promoted. The brand that attempts to be all things to all people risks becoming unfocused or losing the clarity of its value proposition. For example, a new airline would need to think about how it is going to add value to the market and differentiate itself from competitors. It will need to consider whether their product is a domestic or international service; whether its target market is budget travellers or international and business travellers; and whether the channel is through primary airports or smaller, more cost-effective airports. Each of these choices will result in a vastly different strategic direction. To make these decisions, a strategist must understand the context in which the brand operates, asking, “What are the factors that affect the business?” This means conducting a situational analysis that looks at the following four pillars: 1. The environment 2. The business 10  E-COMMERCE AND INTERNET MARKETING 3. The customers 4. The competitors. Here are some considerations and tools for conducting your brand’s situational analysis. Understanding the environment The environment is the overall context or ‘outside world’ in which the business functions. It can involve anything from global economics (how well is the local currency performing these days?) to developments in your industry. Every brand will have a specific environment that it needs to consider, based on the type of product or service it produces. An analysis of the business and brand environment will typically consider political, economic, social, technological, legal and environmental (PESTLE) influences to identify a clear set of considerations or issues pertinent to the marketing strategy. Understanding the business There are several marketing models that can be used to understand the business and brand with which you are working. Since it’s essential for all marketing messages to encapsulate the brand’s identity and objectives, this is a very important step. A crucial consideration is the brand itself. What does it stand for? What does it mean? What associations, ideas, emotions and benefits do people associate with it? What makes it unique? 11  E-COMMERCE AND INTERNET MARKETING Out of this, you can determine what the brand or product’s unique selling point (USP) is. A USP is the one characteristic that can make your product or service better than the competition’s. Ask yourself, ”What unique value does it have? Does it solve a problem that no other product does?” Understanding customers To understand your customers, you need to conduct market research. Try not to make assumptions about why people like and transact with your brand. You may find their values and motives are quite different from what you thought. Ongoing research and a data-driven business will help you to build a picture of what particular benefit or feature your business provides to your customers, allowing you to capitalize. List on this in your marketing content. One important area on which to focus here is the consumer journey, which is the series of steps and decisions a customer takes before buying from your business (or not). Luckily, online data analytics allow you to get a good picture of how people behave on your website before converting to customers; other forms of market research will also help you establish this for your offline channels. 12  E-COMMERCE AND INTERNET MARKETING On the Internet, a consumer journey is not linear. Instead, consumers may engage with your brand in a variety of ways, (i.e. across devices or marketing channels) before making a purchase. The goal is to reach customers with the right marketing message at the right stage of their journey. For example, you may want to use aspirational messages for someone in the exploration phase, but focus on more direct features and benefits (such as a lower price) when they’re almost ready to buy. The Cyclical Customer Journey 1. Awareness- this is to introduce the brand to the potential customer. This is achieved through massive advertising campaign. Included here are the different benefits of the product, where to buy, price, and what the brand stands for. 2. Consider- This is the part where the potential customer is considering buying the product of the brand. 3. Evaluate- This is the part where the customer is already analyzing the characteristic of the brand to know whether to buy it or not. 4. Buy- you have already captured the interest of the customer and has converted them from potential customers to actual buyers. a. Loyalty Loop- when you have achieved brand loyalty. 13  E-COMMERCE AND INTERNET MARKETING Understanding competitors Finally, it’s important to know who else is marketing to your potential customers, what they offer and how you can challenge or learn from them. Many competitors target the same needs in a given customer, sometimes through very similar products. Positioning places your brand in a unique place in people’s minds. It is impossible to create a strong value proposition or USP without knowing your competitors’ positioning strategy. On the Internet, your competitors are not just those who are aiming to earn your customers’ money; they are also those who are capturing your customers’ attention. With more digital content being created in a day than most people could consume in a year – for example, over 300 hours of video are uploaded to YouTube every minute (YouTube, 2017) – the scarcest resources these days are time, focus and attention. When considering competition, it’s also worthwhile looking at potential replacements for your product. The Internet is disrupting and accelerating the pace of disintermediation in a number of industries, meaning that people can now go directly to the business instead of transacting through a middleman (look at the travel industry as an example). To stay ahead, you should be looking at potential disruptors of your industry as well as the existing players. Exercises: 14  E-COMMERCE AND INTERNET MARKETING Chapter 2 Digital Marketing Strategy 15  E-COMMERCE AND INTERNET MARKETING Title: Chapter 2 Digital Marketing Strategy Description: This chapter explains how the internet can be used in creating a marketing strategy for their brands Learning Objectives:  Define Digital Marketing  Know the Digital Marketing Strategy  Explore the use of Internet in the Traditional Marketing Mix  Create an effective Digital Marketing Strategy Lesson Proper: trust in and loyalty towards the brand. What is digital marketing? If marketing creates demand, digital marketing drives the creation of demand using the power of the Internet. The Internet is an interactive medium. It allows for the exchange of currency, but more than that, it allows for the exchange of value. A business on the Internet can gain value in the form of time, attention and advocacy from the consumer. For the user, value can be added in the form of entertainment and utility. The reciprocity of the transaction is what’s important here – in other words, the exchange is a two-way street that provides benefit to both parties simultaneously. The Internet has changed the world in which we sell. It reaches beyond being a new channel for marketing and offers a new paradigm for the way consumers connect with brands and with each other. The online medium provides consumers with more choice, more influence and more power. Brands have new ways of selling, new products and services to sell as well as new markets in which to sell. The roles played by marketing agencies are shifting too. Traditional agencies are getting better at digital marketing, while agencies that started out as digital shops are starting to play in the above-the line space. More than ever, integrated strategies that speak to an overall brand identity are vital to achieving an organization’s goals. However, marketing on the Internet does not necessarily mean throwing out the rule book on marketing and business foundations and principles. Instead, the Internet provides a new environment in which to build on these principles. Profit is still revenue less cost. The Internet does not change that. Brands build loyalty through users who love their products or services. Users fall in love with products and services when their experience is tailored to their needs, as opposed to serving the brand. More than any 16  E-COMMERCE AND INTERNET MARKETING other type of marketing, digital marketing is measurable. This gives brands the opportunity to build tailored, optimized brand experiences for consumers. What is digital marketing strategy? Digital marketing strategy builds on and adapts the principles of traditional marketing, using the opportunities and challenges offered by technology and the digital medium. User-centric thinking, which involves placing the user at the core of all decisions, is vital when looking at building a successful digital marketing strategy. The advent of new technologies means the digital marketing strategist of today is offered not only a plethora of new tactical possibilities, but also unprecedented ways of measuring the effectiveness of chosen strategies and tactics. The fact that digital marketing is highly empirical is one of its key strengths. Everything can be measured: from behaviors, to actions and action paths, to results. This means that the digital marketing strategist should start thinking with return on investment (ROI) in mind. Built into any strategy should be a testing framework and the ability to remain flexible and dynamic in a medium that shifts and changes as user behaviors do. We define strategy as “a plan of action designed to achieve a particular outcome”, then the desired outcome from a digital marketing strategy point of view would be aligned with your organization’s overall business objectives. For example, if one of the overall business objectives is acquisition of new clients, possible digital marketing objectives might be building brand awareness online. A tactic differs from a strategy. It is a specific action or method that contributes to achieving a goal. For example, if the overall business objective is acquisition and the digital objective is to increase awareness, a paid search campaign would be a possible tactic towards achieving this. 17  E-COMMERCE AND INTERNET MARKETING Creating a digital marketing strategy Figure 1.2 Six steps in creating a successful digital marketing strategy Any activity with an end goal (whether it’s winning a war, building a city or selling a product) should have a blueprint or map in place for every person in the organization to follow in the process of achieving it. A strategy needs to cover the questions of who you are, what you are offering and to whom, as well as why and how you are doing so. The steps and questions below cover what an organization should be aware of when creating and implementing a strategy that will meet its objectives. The first step in crafting a successful strategy is to examine the context of the organization and the various stakeholders. 1. Context:  Who are you and what is it about your identity that makes you useful?  Who are your customers and what needs and wants do they have?  Who are your competitors? These might extend beyond organizations that compete with you on the basis of price and product and could also be competition in the form of abstracts such as time and mindshare.  What is the context in which you are operating (social, political and economic factors) and how is this likely to change in the future? A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is an ideal way to understand your business and your market. 18  E-COMMERCE AND INTERNET MARKETING Figure 2.3 SWOT analysis Once you have examined the market situation, the second step is an examination of your value proposition, in other words, what value your organization can add to that market. 2. Objectives: Digital marketing has technology at its heart. It is therefore crucial to involve both technical and aesthetic minds in the initial stages of strategy formulation. The objectives should speak to both system and story and the tools afforded by technology should be a starting point in the process of developing strategic objectives. The second factor to consider when setting objectives is that all channels of a brand operate as part of a greater whole. Digital marketing objectives should be aligned with the brand’s greater strategic objectives. 3. Value-Exchange: What value are you adding to the market, what are you trying to achieve and how will you know if you are successful? Digital can achieve many things in terms of users and value creation. Once you have defined what constitutes success and have delineated your prime objective, you can examine other goals that support this objective. For example, if your prime objective is for people to view the full range of products that your organisation has to offer, supporting goals could be “we want people to share their comments to support our range development” or “we want to identify the most enthusiastic users and recruit them as brand ambassadors”. Exploring all the options before defining the most specific and focused direction will result in the most successful direction. 19  E-COMMERCE AND INTERNET MARKETING 4. Tactics and Evaluation: A diverse variety of digital tools and tactics are available once you have defined your digital marketing objectives. The strength of the tools is dependent on the type of objectives set for the brand – for example, acquisition (or gaining new customers) may be best driven by paid search, while email is one of the most effective tools for selling more products to existing customers. The table below expands on some of the most popular tactics available to digital marketers and their possible outcomes. These will be covered in far more detail in the Engage section of this book. Table 2.1 Tactics and their outcomes. 20 E-COMMERCE AND INTERNET MARKETING Once the 21  E-COMMERCE AND INTERNET MARKETING objectives and tactics have been set, these should be cross-checked and re-evaluated against the needs and resources of your organization to make sure your strategy is on the right track and no opportunities are being overlooked. 5. Metrics: Metrics are important in defining what successful value-exchange is worth to an organization and how this worth will be measured. This step needs to be considered in conjunction with value-exchange. As previously discussed, digital is an empirical medium and digital marketing should start with ROI in mind. Setting up the analysis and measurement tools early on in the online strategizing phase will enable you to measure returns from inception. The metrics that matter to your business objectives are referred to as key performance indicators (KPIs). 6. Ongoing Optimization: The growing necessity for an organization to remain dynamic and agile ties in with metrics and should be considered in the early stages of strategy formulation, as well as being a continuous process in refining and optimizing tactics. The user experience and journey is vital to building successful brands. Budget should be set aside upfront to be dedicated to the analysis of user data and the optimization of conversion paths. Social thinking and socially informed innovation are also valuable and uniquely suited to the online space. Socially powered insight can be used to inform strategic decisions and execute on various areas of the organization, from product roadmaps to service plans. Brands are beginning to shift from being present in social media to actively using it, aligning it with actionable objectives and their corresponding metrics. This is critical in demonstrating ROI and the repeated impact of social channels on the bottom line. Managing the learning loop (the knowledge gained from reviewing the performance of your tactics, which can then be fed back into the strategy) can be difficult. This is because brand cycles often move more slowly than the real-time results you will see online. It is therefore important to find a way to work agility into the strategy, allowing you to be quick and proactive, as opposed to slow and reactive. Strong basic principles and the establishment of a set program or system to experiment, optimize and learn will make effective innovation and the implementation of learning easier. 22  E-COMMERCE AND INTERNET MARKETING It goes without saying that checking the websites and social networking platforms of competitors, as well as utilizing the analytics systems that are built into the platforms you are using, are first steps in measuring data. YouTube, Facebook and Flickr are all platforms that offer details on how your users are interacting with your content. Some further useful tools for gathering market intelligence are detailed in the Online Reputation Management chapter. These same tools can prove invaluable for market research, especially when the keywords monitored are chosen to reflect industry trends. Exercises: 23  E-COMMERCE AND INTERNET MARKETING Chapter 3 Crowdsourcing 24  E-COMMERCE AND INTERNET MARKETING Title: Chapter 3 Crowdsourcing Description: This chapter explains how the internet can be used in using the “crowd” or a group of people in helping to solve marketing problems Learning Objectives:  To know the concepts of Crowdsourcing  To discuss some crucial aspects of Crowdsourcing in marketing  To know how to formulate Social Media Strategy Lesson Proper: Introduction What is crowdsourcing? Well, we turn to the crowdsourced online encyclopedia for a definition: Wikipedia defines Crowdsourcing as “the act of taking tasks traditionally performed by an employee or contractor, and outsourcing it to a group of people or community (the crowd), in the form of an ‘open call’.” In its simplest terms, crowdsourcing is a distributed problem-solving and production model” one which often relies on an active community in order to be successful. Wikipedia is an example of what Clay Shirky calls Cognitive Surplus. Crowdsourcing, as we are discussing it in this chapter, relies heavily on the tools and communication forms made possible by the Internet. Given that the Internet connects people all over the world through different publishing tools and technologies, the information and ideas that can be published through these channels has become a commodity in itself. Crowdsourcing takes advantage of this by asking and enabling people to share their ideas or creations in exchange for either an emotional or monetary reward. In the past we had to gather physically to create crowds. Now with technology, crowds can be well-connected while being geographically distant. A savvy organisation can tap a wider range of talent and knowledge than that present within its own resources. We can consider the creative agency and client environment. For clients, solutions to problems can be explored at a relatively low-cost and often very quickly. Unlike traditional creative agency models where an individual is paid per hour, crowdsourcing permits a client to pay a once-off cost for an exponential number of solutions. Ultimately a client only pays for the solutions they make use of, while those in the community who are not paid usually retain their intellectual property (IP). 25  E-COMMERCE AND INTERNET MARKETING By listening to the crowd and requesting their contributions, organizations can gain first- hand insight into their customers’ needs and desires, and build products and services that meet those needs and desires. With an earned sense of ownership, communities may feel a brand-building kinship with the community through collaboration and contribution. Less experienced individuals can demonstrate and hone their skills, and more established practitioners can earn money without long-term commitment. One of the more widely known and non-commercial examples of crowdsourcing in the online world is Wikipedia (http://www.wikipedia.org), an online encyclopedia offering more than three million articles in the English language version alone. Created and maintained by volunteers, thousands of articles are added weekly and edited by a global community of students, professors and everyday experts around the world. This is not just an example of a crowd creating a pool of information, but also a community taking ownership of a project by ensuring information is accurate and within the code of conduct required. Figure 3.1 Wikipedia is one of the most well-known examples of Crowdsourcing. While Wikipedia is an example of volunteer-based crowdsourcing, crowdsourcing in its commercial sense has emerged in the last few years as a practice with many proponents and detractors. Larger businesses are turning to crowdsourcing for anything from communications executions to research and development. Of course such a dramatic shift from traditional commercial models raises some questions in terms of ownership and compensation. Crowdsourced solutions are often owned by the entity that broadcast the problem in the first place, and the individuals responsible for the solution are rewarded, in any number of ways. We’ll be covering a number of these issues in this chapter, and will delve into some practical advice to consider if you are interested in utilizing crowdsourcing for your own brand. 26  E-COMMERCE AND INTERNET MARKETING Key terms and concepts Amateur A person without formal training or professional credentials in a specific field. Brief A document giving essential information concerning the problem that needs solving. Creative A term used in the advertising industry to describe people who produce creative products. For example designers or copywriters. Collaboration An online community working together on a single project. Collective intelligence A shared intelligence from the collaboration of many individuals. Community A social network of individuals who interact through a specific medium. Crowd A large undefined group of people made up of many online individuals. Crowdsourcing Taking a job traditionally performed by a professional and distributing it to an undefined, generally large group of people in the form of an open call. Folksonomy A form of crowdsourcing also known as collaborative tagging, social classification, social indexing or social tagging. The practice and method of collaboratively creating and managing tags to interpret and categorize content. Ideation A process during which new ideas are created. Intellectual property (IP) Legal property rights over intangible creations of the mind, both artistic and commercial. New agency model The incorporation and use of crowdsourcing platforms to source marketing and communications solutions. Open Call When a request is made for anyone to submit solutions to a problem. Open Source In the context of Crowdsourcing this is when a cooperative activity is initiated and voluntarily undertaken by members of the public, not by a client or crowdsourcer. Outsourcing Work is conducted outside of an organisation by a specific defined individual or group of people. Spec work Fully executed creative work requested by crowdsourcing platforms that is not paid for upfront, and is only paid for when the work is chosen or accepted. Work that is not selected is not paid for. User-generated Various kinds of media content, publically available, that are produced by endusers. Wiki A simple website that can be edited in real time by a number of users. Wisdom of the crowd The collective knowledge, opinion or skills of a group of individuals rather than a single expert used to solve a problem. Usually used for consumer feedback and new product development. 27  E-COMMERCE AND INTERNET MARKETING History The term “crowdsourcing” was first coined by technology commentator Jeff Howe in a Wired Magazine article in June 2006. It’s a relatively new term, but the concept dates back as far as the 1700s. Early editions of the Oxford English Dictionary were crowdsourced when thousands of volunteers submitted entries on slips of paper that were compiled into a dictionary. Another early example of crowdsourcing is the Longitude Prize, an open contest run by the British government in 1714. The aim was to find a simple and practical method for the precise determination of a ship’s longitude, something that had up to that point, stumped experts. A clockmaker named John Harrison made the most significant contribution to the solution with his work on chronometers, and is generally considered the winner. Widespread use of the Internet has made launching a crowdsourcing project much easier. The Internet has enabled us to communicate a problem to crowds of diverse people from all over the world, who in turn are able to communicate with the problem owner and each other. Of course, focusing on the problem from a variety of perspectives increases the likelihood of a workable solution coming to light. One of the earliest known examples of a crowdsourcing project that made use of the Internet is the 1998 Tunnel Journal project in Leidschendam. The Tunnel Journal was an interactive artwork: an LED display integrated into the walls of a tunnel along Leidschendam’s main traffic routes. The community could feed the LED display with their own text messages via the tunnel’s website. The project was discontinued by Leidschendam councilors because uncensored messages began reaching the Tunnel Journal’s electronic message board. After revamping the website in July 2000, a new feature was added – a dynamic filter allowing visitors to ban texts from the electronic display. Thus the public became its own filter, preventing derogatory remarks from featuring. Crowdsourcing has emerged as an execution of a far larger trend influenced by the mass adoption of the Internet. The Internet acts as a global distribution channel, making it possible to publish information at a faster pace than ever on a global scale. But what matters far more is the quality and ability of an idea to stand out and spread. Ideas, and the subsequent materializations, are no longer regulated by money or time, but rather by the value of what’s on offer. An idea that took 10 minutes to come up with may be just as good, if not better, than an idea that took 10 hours of ruminating. 28  E-COMMERCE AND INTERNET MARKETING The “Rise of the Amateur” When it comes to crowdsourcing, amateurs are competing with professionals in fields ranging from computer programming to the sciences. These people are hobbyists and enthusiasts who may not have the relevant professional qualifications, but can possess talent and passion in any given field. This devotion to a particular subject is ultimately what drives the crowdsourcing vehicle. To a large extent the development of technology is again the great enabler here. People have access to a wider pool of information through the web. Software such as Photoshop and iMovie has made graphic design and film editing, for example, relatively easy to learn. Kinds of Crowdsourcing Invention: Crowdsourcing is used to source ideas, often for new or existing product development. This means the community is tasked with creating ideas from scratch while also improving on and ranking ideas. Examples of invention include Dell’s Idea Storm (www.dellideastorm.com) and My Starbucks Idea (www.mystarbucksidea.com). Figure 3.2 My Starbucks Idea is an example of a crowdsourcing initiative. 29  E-COMMERCE AND INTERNET MARKETING On My Starbucks Idea the community is asked to share, vote for and discuss ideas to improve Starbucks’ products and services. Creation: New content is created, owned and maintained by a community on an already existing platform. The crowd can also contribute finished work or just an idea, allowing other members to flesh out concepts. Good examples of this include Threadless (www.threadless.com), Wikipedia (www.wikipedia.org) and Idea Bounty (www.ideabounty.com). Idea Bounty works via a system through which a client may post a brief which is then distributed amongst the community. The community then responds to the brief with creative solutions. The best solution to the problem posed is chosen and its creator rewarded. Organization: Through this method crowdsourcing is used to create new content by organizing already existing content. The community is charged with ranking information in terms of relevance and popularity. Examples here include Digg (www.digg.com) and StumbleUpon (www.stumbleupon.com). StumbleUpon is an online community where users discover and rate web pages, websites, images and video content. It acts as a personalized recommendation engine using peer-voting and social networking principles. Prediction: Prediction aims to predict trends by asking the community to submit ideas and vote for them. Examples include Yahoo! Buzz (www.yahoo.com/buzz), Ramussen Markets and Media Predict (www.mediapredict.com). On Media Predict, users bet on media trends such as TV viewership and books that are likely to sell well. Media Predict can generate predictions as to what will and what won’t succeed; essentially helping media companies understand what consumers really want. How it works in business When applied in a commercial sense there are three dominant ways in which crowdsourcing is used: 1. Product development: 30  E-COMMERCE AND INTERNET MARKETING The crowd’s knowledge is used to improve an existing product or suggest new products. The consumer interaction and buzz also provide a valuable branding effect. Examples include Dell’s Idea Storm and GM’s FastLane blog (http://fastlane. gmblogs.com). 2. Initiatives and new business: In this case, crowdsourcing is used to generate business ideas or product concepts, and often funding as well. Crowdsourcing can also connect those who have business ideas with those who can provide the funding to get them off the ground. In 2009 Fiat Brazil asked Internet users to send in suggestions as to how the Fiat Mio (www.fiatmio.cc) could be improved. The company kept the brief wide, and eventually received more than 10 000 suggestions through social networking sites. These suggestions ranged from giving new car owners manuals on USB flash drives to more outlandish ideas such as funneling garbage through the engine in an effort to recycle. 3. Communications ideas: Crowdsourcing in a communication sense is used primarily within the advertising and marketing industry. It involves the crowdsourcing of ideas for the communication of a brand message, advertising message or value proposition. This could include the crowdsourcing of logo designs, televisions advertisement scripts or new marketing concepts in any shape or form. A well-known example is Dorito’s crowdsourcing of their Super Bowl advertisement (www.crashthesuperbowl.com). In a much-publicized open call to the public, Doritos tasked the community with creating an original, once-off spot – and received hundreds of advertisements How a crowdsourcing campaign is managed Given that crowdsourcing often depends on a community of respondents, there are different approaches to managing these platforms – and specific challenges - in an online context. 1. Centrally controlled This is where the process is centrally controlled by a guiding force that channels ideas and formalizes the entire process. Example: Idea Bounty - A specialist team helps define the challenge and brief, while the client chooses the winning idea. 2. Community controlled 31  E-COMMERCE AND INTERNET MARKETING This works in an entirely opposite way. Here the community controls the process and the ultimate outcome. Example: Threadless – Users create original t-shirt designs which other users rank in terms of popularity via a voting system. The most popular designs are printed onto shirts which are then sold by the site. The Importance of the Community and Motivations to Participate The idea of a community is the chief motivator behind crowdsourcing. The community should be viewed as a crowdsourcing platform’s most important asset – they are essentially an economically productive unit. Without a community, a crowdsourcing project could never flourish. Put simply, no work could actually be done. Understanding why communities exist and what motivates individuals to participate is essential to achieving success. Unfortunately, the needs of a community, how it should be managed, and rewarded, are often overlooked. Communities using crowdsourcing platforms exist for different reasons. Communities like the previously mentioned Dell’s Idea Storm and My Starbucks Idea exist because there are people who have a keen interest in and affinity for those brands. They participate in the community because they want to better products and services they receive. Individuals should be rewarded for their contributions with awards for outstanding ideas. Idea Bounty, like iStockphoto, offers keen hobbyists a platform to meaningfully contribute to a cause, and, importantly, be rewarded for their contributions. Exercises: Group work. Group with your feasibility research groupings. Submit only one paper that includes the names of all the members. Create a Facebook group that advertises you Feasibility Company, brand and product. Use the concept of crowd sourcing to help you improve the brand and product. The Facebook page must contain the following: 1. The about section must include the written profile of the company. What is the company all about? Why was it formed? What is its value to the public? 2. Picture profile of your proposed brand logo, pictures of your products, your main ingredients and if it is possible, some advertising pictures of the products. 32  E-COMMERCE AND INTERNET MARKETING 3. Invite at least 200 likers of the page (you can show the page statistics for this as proof). 4. Interact with your likers. Post information on your page so that the crowd can read and react to them. 33  E-COMMERCE AND INTERNET MARKETING Chapter 4 Social Media Strategy 34  E-COMMERCE AND INTERNET MARKETING Title: Chapter 4 Social Media Strategy Description: This chapter explains how social media can be used for marketing actives and how to include social medial in creating a marketing strategy. Learning Objectives:  The strategic uses of social media »  The steps involved in creating a social media strategy »  To design documents and protocols you should have in place for social media success  Lesson Proper: Introduction Social media channels are communication channels, which can be used to solve business, marketing and communication challenges. As more and more time is spent by consumers online, and that time is increasingly dominated by social media usage, organizations need to incorporate social media into their marketing strategies. In the US, comScore figures show that nine out of 10 internet users visit social networks, while Nielsen data indicates that Americans spend nearly a quarter of their time online on social networking sites and blogs. Using social media to solve business challenges Social media can be used strategically in a number of marketing and communication challenges: The challenges are the following: Community management Support and customer service Reputation management Search engine optimization Communication and outreach Advertising and awareness Sales and lead generation Insights and research 35  E-COMMERCE AND INTERNET MARKETING Figure 4.1 The use of social media marketing can help with a number of business challenges. Community Management Social media platforms are built around communities, and sometimes are virtual representations of real-world networks and communities. This same feature of social media can be used to build and maintain a community around, or supported by, your organization. “Community manager” is a relatively new role that has risen to prominence with the growth of social media usage by organizations. It has, however, been an important role in any community - from communities that thrive on forums to those run on platforms such as Facebook. Creating, building and nurturing a community means that organizations don’t only participate in conversations that are happening about and around them, but also actively lead and guide those conversations. These communities are generally made up of that organization’s biggest fans: those who feel like they have a strong stake in that organization. It creates an environment where those fans can interact directly with the organization, where the organization can send messages directly to those fans, and where the organization can elicit particular feedback from fans. Building and maintaining a community is a long-term plan. It starts with determining what the best platform is for that community: something that already exists (such as Facebook – www.facebook.com), or building a community platform for a particular community (either from scratch or using something like Ning – www.ning.com). 36  E-COMMERCE AND INTERNET MARKETING Support and Customer Service Social media is becoming an additional customer service channel. As consumers are increasingly comfortable transacting online, there is an expectation that the businesses they transact with will also respond to customer queries in the social space. Some customers have also found that customer service in a social space tends to be resolved more quickly, as brands are wary of having unresolved issues remaining out in public. For any organization that runs a social community, customer service is often one of the primary functions of servicing that community. What is interesting is that customer service in social media channels starts to become collaborative, with customers assisting customers and in doing so, reducing the reliance on an organization for support. Reputation Management Online reputation management (ORM) is growing as brands and individuals realize that the combination of search and social media means that all mentions of a brand or individual are only a quick search away, whether they be positive or negative. Social media is one of the spaces where a brand or individual may easily, and quickly, either respond to mentions, or find ways to further their own agenda. Social media refers to a range of media, from images to videos, to networks and text-based messages. With a little bit of planning and keyword research, a brand can use those social assets to effectively own searches on their brand name. The other side to reputation management is actually responding to social mentions of the brand, whether thanks and affirmation for positive mentions, or recognition and resolution for negative mentions. Some of this will fall to the community manager, and will be guided by your escalation protocol. Search Engine Optimization (SEO) Social media plays an important role in SEO. Social media provide additional assets that can be optimized so that a brand may “own” the results page for searches for their brand. A savvy SEO strategy will also make use of social media assets, links and likes for strengthening the position of other web assets in the search engine results pages. 37  E-COMMERCE AND INTERNET MARKETING Communication and Outreach Unlike other media, social media offers brands an effective two-way communication channel, and a real-time broadcast channel. This bidirectional communication is what makes social communities so exciting (and challenging). Just as consumers can communicate with each other, and send messages to businesses and brands, so businesses and brands can use this medium to communicate with and reach out to the public. Increasingly, social media is becoming a highly effective public communications tool. Businesses, governments and other organizations use Twitter and Facebook to broadcast timely messages, allowing interested parties to keep informed in real-time. This is fast becoming a vital aspect of newsworthy and breaking news events such as elections, disasters and global sporting events. Many organizations also use social media tools to broadcast service updates. Advertising and Awareness Where there is an audience, there is advertising. The more time people spend in social media, the more brands want to advertise there. It’s not just the time people spend on social networks that make them appealing advertising options - it’s also the rich demographic targeting opportunities. Adverts can be targeted based on the profiling information that individuals provide, either overtly or through their actions on the social network. Most social networks offer advertising options, providing for both the small advertiser as well as the large, big-spending advertiser. This is still a dynamic space, as the networks experiment with different formats and models. Some of the advertising opportunities for Facebook, Twitter, YouTube and LinkedIn are listed below. Facebook offers two paid for advertising solutions: Ad Space Units (ASUs) which can be bought on either a cost per thousand impressions (CPM) or CPC cost per click (CPC) basis, or Facebook Engagement Ads which are bought on a CPM basis with a minimum spend threshold. ASUs have no minimum spend, and are the small adverts which appear on Facebook pages that are not the home page. These adverts are served based on interests and demographic information. For example, an advertiser can request to have their advert shown to all women in London who are interested in men, who are 38  E-COMMERCE AND INTERNET MARKETING themselves single and between 25 and 35, and who like dogs or puppies. It does sound like an elaborate dating profile advert, but at the time of writing, an advert such as the one just described matched 1 020 people on Facebook. Figure 4.2 Facebook advertising makes it possible to target people according to their interests Sales and Lead Generation Adding a social layer to a commercial experience can create a richer experience for online consumers. These can be based overtly on social connections, or on inferred connections based on behavior. Levi’s Friends Store (http://store.levi.com) is an example of the former. Visiting the website while signed in to Facebook allows you to see which of your friends like which styles. Levi’s can then present this information with data that includes your friends’ upcoming birthdays. This is useful feedback for you, as you can see which styles are more popular among your friends, as well as users in general. This provides insight for Levi’s who can see which styles are more popular than others. You can see how it works at http://www.youtube. com/watch?v=Ed5vJeaEuzA. An excellent example of the layer based on inferred connections is Amazon’s collaborative filtering. If you’ve browsed on Amazon.com, you will no doubt have seen on product pages information like “people who bought this, also bought that”. In real- time, based on consumer purchase behavior, Amazon presents products that you are likely to have an interest in, based on people who browsed and purchased products that you like. Although you might not realize it, this is a social layer on the online shopping experience. 39  E-COMMERCE AND INTERNET MARKETING Insight and Research Social media can be a very powerful insight and research asset, but the information needs to be judged in its proper context. When you are planning, social media can provide a rich source of data, both demographic and preference based. You can use the information people share freely to understand more about your market, or your brand or product. ORM tools help you to track mentions and sentiment, giving you insight into how you are perceived. Using social network ad planners, such as Facebook’s ASUs or YouTube’s Ad Planner, can give you rich information about the size of your market, and things that they like. Using ORM again, you can measure sentiment and volume changes of mentions to help you to understand the impact of other campaigns. These can be televisions commercials, or online campaigns. Building your online community also gives you a group you can reach out to for information and feedback, though bear in mind that they are inherently biased just by the fact that they would join your social community. You could also use communities such as Flickr to see what people are sharing about their lives, without even realizing. Head over to www.flickr.com and search for “in my fridge” for a snapshot of this in action. This social data can be very valuable, but must be treated correctly. The lists of the top ten brands mentioned in on and offline conversations only have two brands in common, according to Ed Keller of word-of-mouth specialist the Keller Fay Group (Research, 2009). It is qualitative information, and is in many ways secondary research. For research purposes, it can and should be used to help form research questions for further communication. Creating a social media strategy Social media is a fast-moving channel, which means proper planning is vital to success. Successful social media strategies come from the underpinning knowledge that social media is a two-way communication channel: organizations interacting in this space need the resources not only to push messages out, but to deal with the messages coming in. 1. Get Buy-in 40  E-COMMERCE AND INTERNET MARKETING It’s important that there is buy-in for your foray into social media. It may be seen as a free resource, but even if you are not paying for exposure, there is a time and resource investment required. There might be a number of stakeholders who need to be aware of social media plans, and these stakeholders may be both internal and external. And, of course there will be sign-off needed for any budgeting or additional resourcing requirements. Taking pause to address the various stakeholders will also force you to do the research and planning necessary to take the next steps. Figure 4.3 The steps involved in a social media strategy. 2. Understand the Landscape It’s important to take a step back first. Social media is more than the social spaces you might interact with in your personal capacity. A good first step to understanding the landscape is to listen. Some important questions to answer include: What conversation already exists around your brand, your industry and your competitors? Where does it take place? Who is doing most of the talking? ORM tools, such as BrandsEye (www.brandseye.com) or Radian6 (www.radian6.com) can help you with the listening part of your planning, but in the early stages you might want to start with free tools such as Google Alerts (www.google.com/alerts). 3. Analyze 41  E-COMMERCE AND INTERNET MARKETING Using all the data you have been gathering, analyze! Think critically about social media and your brand, as well as your brand’s broader marketing, communication and business challenges. All of this should be looked at within the context of the information that you already know about your local marketing and business environment. Your outcomes here should include: A list of the social spaces your brand should be in. This is based on who your customers are, where they interact, and where they expect to interact with you. Non-official groups that already exist. An overview of the existing conversation (volume, frequency, and sentiment), as well as any content or conversation themes that occur. An overview of your competitors in this space. A list of potential brand ambassadors. 4. Set Objectives Your objectives are the desired outcome of your social media strategy. These should be based within the context of your marketing and business challenges. Firstly, you need to address how you will use social media for your organization. You then need to set objectives for each of those. To make them tangible and measurable, establish key performance indicators (KPIs) for your objectives, with benchmarks and targets where appropriate. Determine: What is it that you want to achieve? When do you want to achieve this by? How will you measure your success? For instance, your objective could be to grow a community of fans around your brand in a particular country. Thus, your KPI might be fan numbers, and you could look to set a target of 5 000 Facebook fans over six months. 5. Create an action plan This is where you need to make sure you have created the necessary documents and processes that form the foundation of your plan. These include tone of voice guidelines, community guidelines and conversation calendars, as well as roles and responsibilities of the various stakeholders. 42  E-COMMERCE AND INTERNET MARKETING You will need to: Decide on the roles and responsibilities of the project team. Determine what social media properties you will make use of. Commit to a volume of activity. Develop a conversation plan. 6. Implement This is the fun stuff! It’s time to kick off your plans and put all that research and thought into action. Alert stakeholders that you are starting your engagement plans, and make sure you have any tracking requirements in place. Continue to monitor for mentions of your organization, and responses to your messages. Keep to your general plan, but be prepared to adapt. 7. Track, Analyse, Optimise This is the beautiful thing about digital marketing: you can track every single user interaction and use this information to continually learn from and improve your efforts. You should track the success of your social media campaigns on an ongoing basis, and set milestones for your team at less frequent intervals (every couple of months or so) when you will sit down and do a more in-depth review. There are several tools you can use for tracking social media. You will need to build a suite of tools to suit your measurement and reporting requirements. Platform insights Facebook, YouTube, and (for advertisers) Twitter offer analytics and insights. These are a useful starting point for reporting on your social media efforts, from numbers of followers or fans, to interactions with the content you share. Web Analytics If you are using social media channels to send traffic to your own website, you should tag the links so that you can segment that traffic in your website reports. In Google Analytics (www.google.com/analytics), you would use campaign tracking parameters. URL shorteners 43  E-COMMERCE AND INTERNET MARKETING URL shortening services such as bit.ly and ow.ly offer usage data that will tell you how many people click on links you share, when they click on them, and where in the world they are from. ORM software ORM software, such as BrandsEye (www.brandseye.com), is an important measurement investment that you will need to make. ORM software helps you to keep track of all mentions of your brand, and understand the sentiment and influence of those mentions. You should be tracking this for changes over time. Social Media Dashboards There are a number of services that make it easier for you to centralize management of several social media properties, as well as making collaborative management easier. They also integrate analytics data from a number of sources, making reporting easier. Documents and Processes Good documentation and processes are the foundation for social media success, especially as this dynamic space is likely to involve many stakeholders from across your organization. In order to ensure that there is consistency across the various channels, processes and guidelines should be a part of your social media strategy. Start with the documentation and processes you already have in place for marketing and communication: brand and tone of voice guidelines, PR policies, etc. Build on these to create a robust foundation that suits this spontaneous, dynamic space. A Social Media Checklist is a good starting point to make sure that you have everything in place. Example Community Guidelines, Conversation Calendar and Escalation Protocol are also included for you. Community guidelines As well as a privacy policy and terms and conditions, it’s a good idea to establish community guidelines for the communities you manage, especially when the community is on behalf of a brand. Community guidelines help to set the tone for the community, and are useful to refer to should community members behave in a way that is undesirable. Of course, community guidelines don’t prevent such behavior, but are useful to fall back on should you need to remove comments or community members. 44  E-COMMERCE AND INTERNET MARKETING Guidelines should be friendly, with the tone in keeping with your community or brand. You can use the below as starting point, but customize for your situation. Hello fans! Thanks so much for joining us. Here is a quick overview on how you can get involved in this community. Do: - “Like” posts, videos and photos you enjoy and want to see more of - Comment on posts you find interesting with your feedback - Share posts you find most compelling with your network by clicking the “share” button or by copy and paste into your own profile Don’t: - Post obscene, profane, disrespectful or hateful in nature comments - Harass or threaten any person or organization - Solicit or advertise through this community - Post comments that encourage illegal activity We like it when you do the things that are on the “DO” list. We don’t like it when you do things that are on the “DON’T” list. If you do those things, we will remove your comments and posts, and we might remove you from the community. We’d rather not have to do that. For questions, comments or concerns regarding the above guidelines, please comment below or email us. Thanks! Escalation protocol An established escalation protocol helps to ensure that all parties are aware of procedures for handling social messages, and can respond as appropriate. This is especially necessary for large organizations where several people might be interacting in social media on behalf of a brand, or where several departments or agencies have a stake in the organization’s social media presence. An escalation protocol should include: Anticipated messages and appropriate, standard responses (for both positive and negative situations). Guidelines for determining the sentiment and risk of messages. Escalation channels for messages demanding signoff or further consideration. Contact details of relevant stakeholders. Guidelines for responding, including timelines for response, standard messages and tone. 45  E-COMMERCE AND INTERNET MARKETING Note: this process was created predominantly for Facebook, but these basic principles apply to most social media networking platforms. Figure 4.5 A decision flow chart is a useful way of disseminating this information. Exercises: 1. Why is Reputation Management important in social media? (Cite some examples) 2. What would you respond to customers with the following sentiments? (What would you say to them? a. Positive sentiment b. Neutral sentiment c. Negative sentiment d. Urgent sentiment 3. Why is answering customer post important? 46  E-COMMERCE AND INTERNET MARKETING Chapter 5 Online Advertising 47  E-COMMERCE AND INTERNET MARKETING Title: Chapter 5 Online Advertising Description: This chapter explains how to use the internet in promoting bands as well as the technical aspect in managing advertising over the web. Learning Objectives:  The various business objectives you can meet with online advertising  All about the various ad formats, payment models and ad types available  How and where to publish your adverts » How to run an online advertising campaign step by step Lesson Proper: Introduction Online advertising is a term often used to describe almost everything covered in this textbook. Simply put, online advertising is advertising on the Internet. Online advertising encompasses adverts on search engine results pages (covered in the chapter Pay Per Click Advertising), adverts placed in emails and on social networks, and other ways in which advertisers use the Internet. However, this chapter focuses on display advertising: graphical and interactive online adverts that are displayed on web pages. Whether online or not, the main objective of advertising is usually, to increase sales. As well as this, advertising aims to increase brand awareness and share of voice in the marketplace. Advertising is based on the simple economics of demand and supply. Advertisers aim to stimulate a consumer need (demand) and then satisfy that need (supply). Online display advertising began as simple hyperlinked images shown on websites and has since progressed to include video, sound and many other modern technologies. Images or video carry the message and a hyperlink takes the visitor to the advertiser’s desired landing page. Today, messages and interactions can be contained within the advertising display, without ever taking consumers to a landing page. Advertising, naturally, follows web-user behavior. Advertisers want to place their adverts where potential customers will see them. This trend is resulting in the growth of advertising options using rich, interactive technology, such as games and video and social networking. Although the Internet provides new scope for creative approaches to advertising, we see its true advantages when we realize how trackable (and therefore measurable) Internet advertising is. It is possible to track all interactions with the advert itself: how many impressions and clicks it received, post click and view data, and how 48  E-COMMERCE AND INTERNET MARKETING many unique users were reached. According to Eric Schmidt, CEO of Google “The Internet will transform advertising because of its trackability, not its beauty” (Lieb 2002). Key terms and concepts term definition Animated GIF A GIF (type of image file) which supports animations and allows a separate palette of 256 colors for each frame. Banner An online advertisement in the form of a graphic image that appears on a web page. Content network Content websites that serve PPC adverts from the same provider, such as AdWords. Conversion A visitor completing a target action. Cost per action (CPA) Refers to the cost of acquiring a new customer. The advertiser only pays when a desired action is achieved (sometimes called cost per acquisition). Cost per click (CPC) Refers to when an advertiser only pays when their ad is clicked upon, giving them a visitor to their site - typically from a search engine in pay per click search marketing. Cost per mil (CPM) Amount paid for every 1000 views of an advertisement. Google AdWords Google’s PPC program, which allows advertisers to display their adverts on relevant search results and across Google’s content network. HyperText Markup Language (HTML) A language read by web browsers. Certain HTML “tags” are used to structure the information and features within a web page. As an example, HTML emails usually contain graphics and can be interactive. Internet protocol (IP) address The Internet Protocol (IP) address is an exclusive number which is used to represent every single computer in a network. Internet service provider (ISP) Internet Service Provider – this is the company that is providing you access to the Internet, for example MWEB or AOL. Key performance indicator (KPI) A metric that indicates whether a website is achieving its goals. Pay per click (PPC) PPC is advertising on search engines where the advertiser pays only for each click on their advert. Popup Unrequested window that opens on top of the currently viewed window. Tracking Measuring the effectiveness of a campaign by collecting and evaluating statistics. Tracking code A piece of code that tracks a user’s interaction and movement through a website. 49  E-COMMERCE AND INTERNET MARKETING Traditional media Newspapers, magazines, television and publishing houses are the realm of traditional media. Unique selling point (USP) Unique selling point (or proposition) - what makes your offering different to your competitors’. Viral video This is a video that becomes immensely popular, leading to its spread through word-of-mouth on the Internet via email, social networks and other hosting websites. Web analytics A software tool that collects data on website users based on metrics to measure its performance. Web browser This is what allows you to browse the World Wide Web. Examples of browsers include Internet Explorer, Safari and Firefox. History Online advertising rapidly followed the developing Internet. As consumers are spending more time online, and hours spent on the Internet are eclipsing other media, the medium becomes increasingly important to any advertiser. According to Wikipedia, the first clickable banner advert was sold to a law firm in 1993 by Global Network Navigator. HotWired, an early web magazine, was the first to sell advertising space in large quantities to a number of advertisers. One of the first of these was AT&T (a US telecoms company), which went online in October 1994. This was part of a campaign that AT&T was running to promote the Internet to consumers, and included television and outdoor advertising. Believe it or not, this was cutting edge back in ’94! In 1996, the interactive advert was born. HP’s Shockwave “Pong” banner was the first rich media advert: you could play Pong in the banner. This ushered in a new wave of advertising, where users could interact with an advert without leaving the page they were visiting. Figure 6.1 The first rich media advert: HP’s shockwave “Pong”. Source: University of Pennsylvania 50  E-COMMERCE AND INTERNET MARKETING The Interactive Advertising Bureau (IAB - www.iab.net) was also founded in 1996 and is based in New York City. The IAB, among other functions, develops industry standards such as standard banner sizes and measurement guidelines. In 2003, the IAB expanded their online advertising formats to include pop-ups and rich media expanding formats. With a growing body of standards, media planners and buyers were able to book adverts across a variety of publishers by adhering to these guidelines. How it works Advertising, whether online or offline has a number of objectives: Building brand awareness and increasing share of voice in the market place. Reaching new customers and creating consumer demand. Informing consumers of the advertiser’s ability to satisfy that demand and develop brand loyalty. Driving direct response and sales. Building brand awareness Making people aware of a brand or product is an important long-term goal for any marketer. Once customers know about the brand, the marketer has taken the first step towards gaining the customer’s trust and patronage. The better known a brand is the more business they can do. And the ultimate goal is to do more business and sell more of the product or service. Online, creative advertising or banner advertising is largely visual, making it an ideal channel for promoting brand collateral. The visual strengths can be communicated well through this medium. Creating consumer demand Creating consumer demand is a three-step process: inform, persuade and remind. Consumers can’t want what they don’t know about. Advertising needs to convince consumers about what they should want and why they should want it. Modern online advertising provides a great way to communicate the unique selling points (USPs) of a product, thereby helping stimulate demand and reminding consumers about the product and why they want it. Satisfying consumer demand Once the consumer is aware of and wants a product, they need to find out how to satisfy that desire. If brand building has been effective, they will know that a particular brand exists. At this point it is important for the marketer to show the consumer how their particular brand or product will best meet that need. 51  E-COMMERCE AND INTERNET MARKETING Driving direct response and sales All forms of digital marketing need to drive traffic and sales in the long-term. However, the immediacy of online advertising also drives traffic and sales in the short and medium terms. Unlike traditional media advertising, online advertising can turn the potential customer into an actual customer right there and then. What’s more, it is possible to measure accurately how effective the online advertising campaign has been in this regard. How to Show Your Message: types of display advertising There are many different ways to display messages online, and as technology develops, so does online advertising. Here are some of the most common: Interstitial banners These are banners shown between pages on a website. As you click from one page to another, you are shown this advert before the next page is displayed. Sometimes the advert can be closed. Pop-ups and Pop-under As the name suggests, these are adverts which pop up, or under, the web page being viewed. They open in a new, smaller window. You will see a pop-up straight away, but will probably only become aware of a pop-under after you close your browser window. These were very prominent in the early days of online advertising, but audience annoyance means that there are now “pop-up blockers” built into most good web browsers. This can be problematic as sometimes a website will legitimately use a pop- up to display information to the user. Floating advert This advert appears in a layer over the content, but is not in a separate window. Usually, the user can close this advert. In fact, best practice dictates that a prominent close button should be included on the advert, usually in the top right hand corner. Floating adverts are created with DHTML or Flash, and float in a layer above a site’s content for a few seconds. Often, the animation ends by disappearing into a banner advert on the page. 52  E-COMMERCE AND INTERNET MARKETING Figure 6.2 Pop up banners run the risk of annoying users. Source: Wikipedia Wallpaper advert This advert changes the background of the web page being viewed. Usually, it is not possible to clickthrough this advert. The effect of these adverts is difficult to measure as there is no clickthrough, and its chief purpose is branding as the branded page will be visible so consistently. Map advert This is advertising placed within the online mapping solutions available, such as Google Maps. Figure 6.3 An example of a map advert. Banner advert A banner advert is a graphic image or animation displayed on a website for advertising purposes. Static banners are in GIFs or JPEG format, but banners can also employ rich media such as Flash, video, JavaScript, HTML5 and other interactive technologies. Interactive technology allows the viewer to interact and transact within the banner. Banners are not limited to the space that they occupy; some banners expand on mouseover or when clicked. Video adverts 53  E-COMMERCE AND INTERNET MARKETING This is a video advert in one of the formats shown above. It starts to play on mouse over, or on arriving at a site. Native content Native content advertising is the online version of Advertorials. This is where the advertiser produces content that is in line with the editorial style of the site, but is sponsored or in some way product endorsed by the brand; video is an increasingly popular method of native advertising. Great examples of this exist on Buzzfeed.com. More on this later in the Native advertising section. Sponsored Content Sponsored content advertising exists at the bottom of articles you read online. This is where the ‘suggested articles’ posts appear and, in most cases, this is paid-for promotion. Advertisers pay to have their content promoted under certain categories of sites or articles. There are standard sizes (measured in pixels) for banner advertising, whether the banner be static, animated or rich media. Creating banners to suit these sizes means the banners will suit many websites (advertisers sell space in these sizes as well). And here, size (both dimensions and file size) does matter, in that you can expect varying results in clickthroughs and conversions across the range of sizes. If you want to know what works best for your brand, test. Payment models for display advertising As well as a variety of mediums, there are also a number of different payment models for display advertising. CPI or CPM CPI stands for cost per impression. This means the advertiser pays each time the advert appears on the publisher’s page. The most common way of referring to this model is CPM or cost per thousand impressions (the letter M is the Roman numeral for a thousand). This is how a campaign is normally priced when brand awareness or exposure is the primary goal. CPMs for Rich Media adverts are usually higher than for standard media adverts. This is often based on file size. 54  E-COMMERCE AND INTERNET MARKETING CPC CPC stands for cost per click. This means the advertiser only pays when their advert is clicked on by an interested party, regardless of how many times it was viewed. CPC advertising is normally associated with paid search marketing, also called pay per click (PPC) advertising. Banners can be priced this way when the aim is to drive traffic. It is also a payment method sometimes used in affiliate marketing, when the aim is to drive traffic to a new website. CPA CPA refers to cost per acquisition. This model means the advertiser only pays when an advert delivers an acquisition. Definitions of acquisitions vary from site to site and campaign to campaign. It may be a user filling in a form, downloading a file or buying a product. CPA is the best way for an advertiser to pay because they only pay when the advertising has met its goal. For this reason it is also the worst type for the publisher, as they are only rewarded if the advertising is successful. The publisher has to rely on the conversion rate of the advertiser’s website, something which the publisher cannot control. The CPA model is not commonly used for banner advertising and is generally associated with affiliate marketing. Flat Rate or Sponsorships Sometimes owners of lower-traffic sites choose to sell banner space at a flat rate i.e. at a fixed cost per month, regardless of the amount of traffic or impressions. This would appeal to a media buyer who may be testing an online campaign that targets niche markets. There are several variations to what a sponsorship on a website entails. Examples include exclusive adverts on all the pages and slots of a specific page, newsletter, or section, and sponsoring content. Sponsorship means that no other advertiser will appear in that section. Sponsorships are often difficult to measure and are mostly used to raise brand awareness. Cost Per Interaction With this model, advertisers pay for rollover adverts, normally placed in videos or applications (such as Facebook applications), and based on the interactions with that advert. An interaction, sometimes referred to as an engagement, is generally defined as a user-initiated rollover (or mouseover) action that results in a sustained advert expansion. Once expanded, an advert may contain a video, game, or other rich content. It happens without taking an Internet user away from her preferred web page, and marketers only pay when an individual completes an action. 55  E-COMMERCE AND INTERNET MARKETING CPM favours the publisher, while CPA favours the advertiser. Sometimes, a hybrid of the two payment models is pursued. Typically, high traffic, broad audience websites will offer CPM advertising. Examples include web portals such as www.yahoo.com or news sites like www.cnn.com. Niche websites with a targeted audience are more likely to offer CPA advertising to advertisers with an appropriate product. These can also fall under the umbrella of affiliate marketing. Types of advertising can be seen on a scale from more intrusive (and thus potentially annoying to the consumer) to less intrusive. In the same way, payment models can be scaled from those that favor the publisher to those that favor the advertiser. When planning a campaign, it is important to know how the advertising will be paid for and what kinds of advertising are offered by publishers. A lot of this can be solved by using a company which specializes in advert serving, media planning and media buying. Targeting and optimising Ad servers serve adverts across a number of websites, and can track a user visiting websites using cookies or IP addresses. This means that ad servers can offer advertisers: Frequency capping: the ad server will limit the number of times a user sees the same advert in a session or time period. Sequencing: the network can ensure that a user sees adverts in a particular order. Exclusivity: ensure that adverts from direct competitors are not shown on the same page. Roadblocks: allowing an advertiser to own 100% of the advertising inventory on a page. The ad server can also target adverts based on the business rules of the advertiser or based on the profiles of the users: Geo-Targeting: online advertising has the ability to target markets by country, province or city, and can even drill them down to something as specific as their IP address. Network / Browser Type: markets can further be targeted via networks or browser types such as Mozilla Firefox, Internet Explorer, Google Chrome and Apple Safari. 56  E-COMMERCE AND INTERNET MARKETING Connection Type: users can be segmented and targeted according to their Internet connection type, e.g. whether they use broadband or dial up connections. Day and Time: advertisers can choose the time of day or day of the week when their adverts are shown. Advertisers can specify when their campaign should air, down to the minute. This usually depends on the client’s objective for the campaign or the product itself. Social Serving: websites gather demographic data about users and then serve each user with targeted and relevant advertising. For example, Facebook will allow advertisers to select specific characteristics of users who will be shown an advert. Behavioural Targeting: the ad server uses the profile of a user (built up over previous websites visited) to determine which adverts to show during a given visit. Ad servers can base this profile on cookies or on IP addresses. For example, the ad server may choose to show adverts for pet insurance on a news page to a user who has visited the pets and animals section of a general media site previously. Another way of behavioural targeting is to set up parameters to determine when a certain advert needs to be shown. For example: if the user has clicked on a banner advertising a test drive, and the user actually booked the test drive, the next time they see an advert from the advertiser, a different advert will be shown because the user already responded to the previous advert. Contextual Advertising: the ad server infers the optimum adverts to serve based on the content of page. For example, on an article about mountain bike holidays in Europe, the ad server would serve adverts for new mountain bikes, or adverts from travel companies offering flights to Europe, or perhaps adverts for adventure travel insurance. Putting it all together Knowing the various types of display options and payment models available are all very well, but you might be wondering how to put this all together as you plan your campaign. The very first thing you need to determine when planning display advertising is the goal of your campaign. Are you embarking on a branding campaign, or is your primary focus direct response? Having determined the goals of your campaign, identify the key performance indicators (KPIs) that will let you know if you are succeeding. Online advertising is an acquisition channel. It does not require that users actively seek an interaction, as PPC advertising and email marketing do. So, it is crucial that the adverts are placed in front of the audience that is most likely to convert. 57  E-COMMERCE AND INTERNET MARKETING Investigate your target audience – what websites are they likely to be visiting? It is likely that the type of creative you may use and the payment model you follow will largely be determined by the websites that you wish to advertise on. Niche websites with a smaller, but likely more targeted, audience will most likely charge a flat rate for display advertising, or a CPA rate. They could probably be flexible in display options that they give you, but you will need to take into account their bandwidth costs if they serve the adverts. High traffic websites with a broad audience will usually charge on a CPM basis. They will broker their advertising inventory through an advertising network, or even a number of advertising networks. Knowing your goals, your target audience and the format of your adverts, it’s time to brief your creative team to ensure that you have the optimum banners for your campaign. Your online adverts will need to: Attract attention Convey a message Entice action All advertising needs an appropriate landing page. Whether this involves creating a microsite, or merely ensuring users are coming through to an existing page on the website, ensure that clickthroughs are not being wasted. Generally, sending advertising traffic to your home page is not a good idea as it leaves the user deciding where to go next. Animation attracts attention, but be wary of being one of seven animated banners on a website. Banners should not be considered in isolation, but rather in the context of the website on which they will appear. Web users respond well to being told what to do, and the content of an online advert should be concise and directional. Examples include: “phone now for the best deals on insurance” “click here for fast home delivery” “donate now” Exercises: 1. Create online adverting designs of your feasibility brand and product. Make 5 different designs tha