Marketing, the Internet, and the Digital Age

Much of the world’s business today is carried out over digital networks that connect people and companies. These days, people connect digitally with information, brands, and each other at almost any time and from almost anywhere. In the age of the “Internet of Things” (IoT), it seems that everything and everyone will soon be connected digitally to everything and everyone else. The digital age has fundamentally changed customers’ notions of convenience, speed, price, product information, service, and brand interactions. As a result, it has given marketers a whole new way to create customer value, engage customers, and build customer relationships.

Digital usage and impact continues to grow steadily. More than 87 percent of all U.S. adults use the internet, and the average U.S. internet user spends almost six hours a day using digital media, primarily via mobile devices. Worldwide, more than 46 percent of the population has internet access. And 30 percent has access to the mobile internet, a number that’s expected to double by 2020 as mobile becomes an ever-more-popular way to get online.5

As a result, more than half of all U.S. households now regularly shop online, and digital buying continues to grow at a healthy double-digit rate. U.S. online retail sales were an estimated $350 billion last year, about 7.1 percent of total retail sales. By 2020, as consumers continue to shift their spending from physical to digital stores, that number is expected to grow to more than $520 billion (8.9 percent of total retail sales). Perhaps even more important, it’s estimated that more than half of all U.S. retail sales were either transacted directly online or influenced by internet research.6 As today’s omni-channel consumers become more and more adept at blending online and in-store shopping, digital channels will come into play for an ever-larger proportion of their purchases.

To reach this burgeoning market, most companies now market online. Some companies operate only online. They include a wide array of firms, from e-tailers such as Amazon, Overstock.com, and Expedia.com that sell products and services directly to final buyers via the internet to search engines and portals (such as Google, Bing, Yahoo!, and DuckDuckGo), transaction sites (eBay, Craigslist), content sites (the New York Times on the web, ESPN.com, and Encyclopædia Britannica), and online social media (Facebook, Twitter, YouTube, Instragram, and Snapchat).

Today, however, it’s hard to find a company that doesn’t have a substantial online presence. Even companies that have traditionally operated offline have now created their own online sales, marketing, and brand community channels. Traditional store retailers are reaping increasingly larger proportions of their sales online. For example, Macy’s is now the world’s seventh-largest e-tailer, with almost 20 percent of its revenues coming from online. Staples captures about 22 percent of its sales online; at Williams-Sonoma, it’s more than 50 percent.7

In fact, omni-channel retailing companies are having as much online success as their online-only competitors. For example, home-improvement retailer Home Depot has nearly 2,000 U.S. stores. But its hottest growth area in recent years has been online sales, which have grown at nearly 40 percent annually over the past five years:8

Home Depot's advertisement shows a Home Depot employee explaining a product to a woman. A text on the advertisement reads "Buy Online. Pick Up In Store."

A blue circle icon. Omni-channel retailing: Home Depot’s goal is to provide “a seamless and frictionless experience no matter where our customers shop, be it in the digital world, our brick and mortar stores, at home, or on the job site. Anywhere the customer is, we need to be there.”

THE HOME DEPOT name and logo are trademarks of Home Depot Product Authority, LLC, used under license.

Although it might be hard to imagine selling sheets of plywood, pre-hung doors, dishwashers, or vinyl siding online, Home Depot does that and much more these days. Last year, Home Depot sold some $4.7 billion worth of goods online, an amount equal to the total retail revenues of retailers such as Neiman-Marcus, Barnes & Noble, Tiffany, or Abercrombie & Fitch. Home Depot is now one of the world’s top 10 online merchants. Its online inventory exceeds 1 million products, compared with only about 35,000 in a typical Home Depot store.

The home-improvement retailer now offers its customers multiple contact points and delivery modes. Of course, customers can buy products off the shelf in Home Depot stores. A blue circle icon. But they can also order online from home, a job site, or anywhere in between on their computers, tablets, or smartphones and then have goods shipped or pick them up at a store. More than 40 percent of online orders are now picked up inside a Home Depot store. Finally, in the store, associates armed with tablets can help customers order out-of-stock items for later pickup or delivery. In all, Home Depot uses online as a sales channel to drive both online and in-store sales and as a way to improve the customer experience by providing product, project, and other information. “Our customers are changing the way they shop and how they engage with us,” says Home Depot. The goal is to provide “a seamless and frictionless experience no matter where our customers shop, be it in the digital world, our brick-and-mortar stores, at home, or on the job site. Anywhere the customer is, we need to be there.”

Direct digital and social media marketing takes any of the several forms shown in Figure 17.1. These forms include online marketing, social media marketing, and mobile marketing. We discuss each in turn, starting with online marketing.

Online Marketing

Online marketing refers to marketing via the internet using company websites, online advertising and promotions, email marketing, online video, and blogs. Social media and mobile marketing also take place online and must be closely coordinated with other forms of digital marketing. However, because of their special characteristics, we discuss the fast-growing social media and mobile marketing approaches in separate sections.

Websites and Branded Web Communities

For most companies, the first step in conducting online marketing is to create a website. Websites vary greatly in purpose and content. Some websites are primarily marketing websites, designed to engage customers and move them closer to a direct purchase or other marketing outcome.

For example, car companies like Hyundai operate marketing websites. Once a potential customer clicks in to Hyundai’s site, the carmaker wastes no time trying to turn the inquiry into a sale and then into a long-term relationship. The site opens with a promotional message, then offers a garage full of useful information and interactive selling features, including detailed descriptions of current Hyundai models, tools for designing your own Hyundai, an area to calculate the trade-in value of your current car, information on dealer locations and services, and even a place to request a quote online. Inventory search and schedule a test drive features encourage customers to take the plunge and visit a Hyundai dealership.

In contrast, brand community websites do much more than just sell products. Instead, their primary purpose is to present brand content that engages consumers and creates customer−brand community. Such sites typically offer a rich variety of brand information, videos, blogs, activities, and other features that build closer customer relationships and generate engagement with and between the brand and its customers. For example, at Sephora’s Beauty Talk site, visitors can interact with like-minded people to explore and discover beauty products, post photo and links, and ask other members to weigh in with information and advice (“all the things marketers dreamed would happen on Facebook, but didn’t,” notes one observer). A blue circle icon. And you can’t buy anything atESPN.com. Instead, the site creates a vast branded sports community: 9

Screenshot of ESPN's webpage shows a baseball video ready to be played. A text below the movie still reads "Strike a pose."

A blue circle icon. Brand community websites: You can’t buy anything at ESPN.com. Instead, the site creates a vast branded sports community.

© NetPhotos / Alamy

At ESPN.com, sports fans can access an almost overwhelming repository of sports information, statistics, and game updates. They can customize site content by sport, team, players, and authors to match their own special sports interests and team preferences. The site engages fans in contests and fantasy games (everything from fantasy football, baseball, basketball, and hockey to poker). Sports fans from around the world can participate in discussions with other fans and celebrities before, during, and after sporting events. They can friend and message other users and post comments on message boards and blogs. By downloading various widgets and apps, fans can customize their ESPN experience and carry it with them wherever they go. In all, ESPN’s website creates a virtual brand community without walls, a must-have experience that keeps fans coming back again and again.

Creating a website is one thing; getting people to visit the site is another. To attract visitors, companies aggressively promote their websites in offline print and broadcast advertising and through ads and links on other sites. But today’s web users are quick to abandon any website that doesn’t measure up. The key is to create enough engaging and valued content to get consumers to come to the site, stick around, and come back again.

At the very least, a website should be easy to use and visually appealing. Ultimately, however, websites must also be useful. When it comes to online browsing and shopping, most people prefer substance over style and function over flash. For example, ESPN’s site isn’t all that flashy, and it’s pretty heavily packed and congested. But it connects customers quickly and effectively to all the sports information and involvement they are seeking. Thus, effective websites contain deep and useful information, interactive tools that help find and evaluate content of interest, links to other related sites, changing promotional offers, and entertaining features that lend relevant excitement.

Online Advertising

As consumers spend more and more time online, companies are shifting more of their marketing dollars to online advertising to build brand sales or attract visitors to their internet, mobile, and social media sites. Online advertising has become a major promotional medium. The main forms of online advertising are display ads and search-related ads. Together, display and search-related ads account for the largest portion of firms’ digital marketing budgets.

Gillette's online advertisement shows a Fusion Proglide razor with the text "Incredible on Sensitive Skin."

A blue circle icon. Online display advertising: Today’s dynamic rich media ads incorporate animation, video, sound, and interactivity, engaging consumers and moving them along the path to purchase.

The Procter & Gamble Company

Online display ads might appear anywhere on an internet user’s screen and are often related to the information being viewed. Such display ads have come a long way in recent years in terms of engaging consumers and moving them along the path to purchase. Today’s rich media ads incorporate animation, video, sound, and interactivity. A blue circle icon. For example, while browsing sports-related content on your laptop, tablet, or phone, you might see a bright blue and green banner ad for Gillette Fusion PROGLIDE razors floating at the bottom of the page, with the provocative headline “Our Gentlest Shave.” A click on the banner expands it into a full interactive display ad, complete with an embedded 15-second demonstration video plus click-throughs to the Gillette Fusion PROGLIDE microsite and a buy-now link. Similarly, while perusing your favorite backpacking site, you might see an attention-grabbing video ad from The North Face. Roll over the brand logo and up pops an interactive ad panel, with the video continuing in the upper-right corner alongside information on featured products and real-time links to The North Face website and a store locator. Such dynamic ads can engage consumers and deliver substantial impact.10

Using search-related ads (or contextual advertising), text- and image-based ads and links appear atop or alongside search engine results on sites such as Google, Yahoo!, and Bing. For example, search Google for “LED TVs.” At the top and side of the resulting search list, you’ll see inconspicuous ads for 10 or more advertisers, ranging from Samsung and Panasonic to Best Buy, Amazon.com, Walmart.com, Crutchfield, and CDW. Almost 90 percent of Google’s $74.5 billion in revenues last year came from ad sales. Search is an always-on kind of medium, and the results are easily measured.11

A search advertiser buys search terms from the search site and pays only if consumers click through to its site. For instance, enter “Coke” or “Coca-Cola” or even just “soft drinks” or “rewards” into your search engine and almost without fail “My Coke Rewards” comes up as one of the top options, perhaps along with a display ad and link to Coca-Cola’s official Google+ page. This is no coincidence. Coca-Cola supports its popular online loyalty program largely through search buys. The soft drink giant started first with traditional TV and print advertising but quickly learned that search was the most effective way to bring consumers to its www.mycokerewards.com web or mobile site to register. Now, any of dozens of purchased search terms will return mycokerewards.com at or near the top of the search list.

Email Marketing

Email marketing remains an important and growing digital marketing tool. “Social media is the hot new thing,” says one observer, “but email is still the king.”12 Around the world, more than 200 million emails are sent out every minute of every day. According to one account, 72 percent of adults prefer that companies communicate with them via email, and 91 percent say they like receiving promotional emails from companies with which they do business. What’s more, email is no longer limited to PCs; 66 percent of all emails are now opened on mobile devices. Not surprisingly, 25 percent of companies in one survey say that email is their top channel in terms of return on investment.13

When used properly, email can be the ultimate direct marketing medium. Today’s emails are anything but the staid, text-only messages of the past. Instead, they are colorful, inviting, and interactive. Email lets marketers send highly targeted, tightly personalized, relationship-building messages. A blue circle icon. For example, toymaker Fisher-Price uses email to send timely check-ins, updates, and birthday wishes to subscribers. A mother might receive a colorful, personalized “happy birthday to your baby” email on her child’s first birthday that contains links to age-related playtime ideas, parenting tips, and product information.14

A Warby Parker's greeting reads “You've had your Warby Parker frames for one year now.”

A blue circle icon. Email marketing: Eyewear brand Warby Parker sends personalized emails to home try-on customers throughout the purchase and after-purchase process. “You’ve had your Warby Parker frames for one year now. Tell ‘em we said Happy Birthday!”

Courtesy of Warby Parker

Similarly, eyewear brand Warby Parker sends a sequence of nine informational and promotional emails to home try-on customers. Each is personally addressed and keyed to steps in the trial process, from initial registration and order confirmation to offers of selection assistance and instructions for returning frames. “The magical part was feeling like Warby Parker was right there with me throughout the process,” says one customer. Warby Parker also sends cheerful after-purchase follow-up and announcement emails. For example, it sends personalized emails to customers on the first anniversary of their purchase, with the message “You’ve had your Warby Parker frames for one year now. Tell `em we said Happy Birthday! We hope the first 365 days have been joyful.” And just in case the customer wants “to start more traditions,” the email also includes a link to Warby Parker’s website.15

But there’s a dark side to the growing use of email marketing. The explosion of spam—unsolicited, unwanted commercial email messages that clog up our email boxes—has produced consumer irritation and frustration. According to one source, spam now accounts for about half of the billions of emails sent worldwide each day. Workers in American businesses send and receive nearly 109 billion emails per day and spend nearly one-third of their workweek managing email.16 Email marketers walk a fine line between adding value for consumers and being intrusive and annoying.

To address these concerns, most legitimate marketers now practice permission-based email marketing, sending email pitches only to customers who “opt in.” Many companies use configurable email systems that let customers choose what they want to get. Amazon targets opt-in customers with a limited number of helpful “we thought you’d like to know” messages based on their expressed preferences and previous purchases. Few customers object, and many actually welcome such promotional messages. Amazon benefits through higher return rates and by avoiding alienating customers with emails they don’t want. In fact, in the recent SPAMMY awards, which each year recognize the worst email abusers but also the most liked, Amazon topped the most-popular email subscriptions list for the second year in a row.17

Online Videos

Another form of online marketing is posting digital video content on brand websites or on social media sites such as YouTube, Facebook, Vine, and others. Some videos are made specifically for the web and social media. Such videos range from “how-to” instructional videos and public relations pieces to brand promotions and brand-related entertainment. Other videos are ads that a company makes primarily for TV and other media but posts online before or after an advertising campaign to extend their reach and impact.

Good online videos can engage consumers by the tens of millions. The online video audience is soaring. Almost 75 percent of the U.S. population has viewed online videos. YouTube users now upload more than 500 hours of video every minute. Facebook alone generates 8 billion video views per day worldwide; Snapchat adds another 6 billion views.18

Marketers hope that some of their videos will go ­viral. Viral marketing, the digital version of word-of-mouth marketing, involves creating videos, ads, and other marketing content that are so infectious that customers will seek them out or pass them along to their friends. Because customers find and pass along the content, viral marketing can be very inexpensive. And when content comes from a friend, the recipient is much more likely to view or read it.

Android's video shows a baboon and with its hand around the body of a dog sitting next to it. Below it is the text "android. be together. not the same."

A blue circle icon. Viral marketing: Google Android’s “Friends Furever” video went viral in a big way. It was shared more than 6.4 million times across Facebook, Twitter, and the blogosphere in its first nine months, making it the most-shared video of all time.

Google and the Google logo are registered trademarks of Google Inc., used with permission.

All kinds of videos can go viral, producing engagement and positive exposure for a brand. A blue circle icon. For example, Google Android launched a compellingly sharable video called “Friends Furever,” which featured unlikely pairings of ­animals—an orangutan and a dog, a bear and a tiger, a cat and a duckling—being pals and enjoying life together. The video was the latest installment in Android’s two-year-old “Be together. Not the same.” marketing campaign. The campaign highlights how people can be different and still be stronger together, in line with Android’s core competency of running on diverse devices, each with its own design and features. The heartwarming “Friends Furever” video went viral in a big way. It captured more than 24 million YouTube views and was shared more than 6.4 million times across Facebook, Twitter, and the blogosphere in its first nine months, making it the most-shared video of all time.19

Many brands produce multi-platform video campaigns that bridge traditional TV, online, and mobile media. For example, Adidas’s recent “Take It” campaign—a series of action-packed 60-second video ads featuring famous Adidas athletes gutting it out in practice and on game day—began on TV but quickly zoomed to the top of the viral charts. The campaign drove home a captivating motivational message: “Do something and be remembered. Or do nothing and be forgotten. No one owns today. Take it.” The initial “Take It” ad broke during NBA All-Star Weekend, but that was only the beginning. The video ad went on to capture a whopping 21 million YouTube views in just the first week and 40 million in the first two months. Additional videos in the ad series grabbed millions more views, making “Take It” one of the most successful viral campaigns of the decade.20

Despite these viral successes, it’s important to note that marketers usually have little control over where their viral messages end up. They can seed content online, but that does little good unless the message itself strikes a chord with consumers. Says one creative director, “You hope that the creative is at a high enough mark where the seeds grow into mighty oaks. If they don’t like it, it ain’t gonna move. If they like it, it’ll move a little bit; and if they love it, it’s gonna move like a fast-burning fire through the Hollywood hills.”21

Blogs and Other Online Forums

Brands also conduct online marketing through various digital forums that appeal to specific special-interest groups and brand communities. Blogs (or web logs) are online forums where people and companies post their thoughts and other content, usually related to narrowly defined topics. Blogs can be about anything, from politics or baseball to haiku, car repair, brands, or the latest television series. Many bloggers use social networks such as Twitter, Facebook, Tumblr, and Instagram to promote their blogs, giving them huge reach. Such reach can give blogs—especially those with large and devoted followings—substantial influence.

Most marketers are now tapping into the blogosphere with their own brand-related blogs that reach customer communities. For example, on the Coca-Cola Unbottled blog, Coke fans and company insiders can “look at what’s beyond the bottle,” sharing posts on everything from new products and sustainability initiatives to fun and inspiring “what’s bubbling” fan stories about “spreading happiness.” On the Netflix Blog, members of the Netflix team (themselves rabid movie fans) tell about the latest Netflix features, share tricks for getting the most out of the Netflix experience, and collect feedback from subscribers. A blue circle icon. And the creative Nuts About Southwest blog, written by Southwest Airline employees, fosters a two-way dialogue that gives customers a look inside the company’s culture and operations. At the same time, it lets Southwest engage customers directly and get feedback from them.

The Nuts About Southwest blog  shows the titles of 3 posts An Honor of Service and Sacrifice, Southwest and Honeywell: Bringing you a great flight, and Southwest: The Magazine's April Freedom Story…Jon Acuff.

A blue circle icon. Tapping into blogs: The creative Nuts About Southwest blog, written by Southwest employees, fosters a two-way dialogue that gives customers a look inside the company’s culture and operations.

Southwest Airlines Co.

Beyond their own brand blogs, many marketers use third-party blogs to help get their messages out. For example, some fashion bloggers have amassed millions of followers, with fan bases larger even than the blogs and social media accounts of major fashion magazines. For example, 23-year-old Danielle Bernstein started the We Wore What fashion blog as an undergraduate at the Fashion Institute of Technology in New York City. The blog is now a source of daily outfit inspiration to a fan base of more than 1.4 million. Because of such large followings, brands flock to Bernstein and other fashion blog influencers such as BryanBoy, The Blonde Salad, Song of Style, and Gal Meets Glam, paying them $15,000 or more to post and tag product images in their blog, Facebook, and Instagram sites. Bernstein posts images that contain sponsored products from small brands such as Schultz Shoes and Revolve Clothing to large brands such as Nike, Lancôme, and Nordstrom.22

As a marketing tool, blogs offer some advantages. They can offer a fresh, original, personal, and cheap way to enter into consumer online and social media conversations. However, the blogosphere is cluttered and difficult to control. And although companies can sometimes leverage blogs to engage customers in meaningful relationships, blogs remain largely a consumer-controlled medium. Whether or not they actively participate in the blogs, companies should monitor and listen to them. Marketers can use insights from consumer online conversations to improve their marketing programs.

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