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    3 Mar 2008Kate Carruthers Copyright 2008 1

    Digital Marketing & StrategicFoundations

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    Agenda

    Changing nature of consumer mediaconsumption

    Creating an ecosystem that supports yourbrand

    Synthesising different media

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    Marketing Ecosystems

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    Marketing Ecosystems

    As John Singer has mentioned Marketing ecosystems area new framework for strategy management. They shiftthe view of brand as the primary unit for strategy-making to an aggregated view of competitive strategyand action at the system level. Advantage goes to those

    marketers that do the better job of designing ecosystemswith mutually-reinforcing effects from internal andexternal assets, and managing the ecosystems forgrowth, innovation, and continual improvement.(Singer, 2006)

    We are at a stage where new technologies are becomingpervasive and marketers are changing their businessmodels to leverage these new technologies. Thechallenge is for us to learn how to use these technologiesas effectively as we have come to use the old ones.

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    3 Mar 2008Kate Carruthers Copyright 2008 5

    Source: Jeremiah Owyang,

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

    http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/
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    Marketing Ecosystem

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    Marketing Ecosystem

    This is the foundation of the marketing ecosystem.With a sound business strategy supported by a wellthought out marketing strategy the digital strategyshould unfold fairly obviously. The digital strategy is

    perhaps the smallest part of the strategic planning,but it is critical as it has the capacity to become themost capital intensive piece. The mix needs to beright from a business and customer perspective.

    A key learning for me has been that unless each ofthese three are in place and interlinked effectively itcan be hard to execute with success. It can also behard to know how successful you have been withoutsome metrics defined and monitored.

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    Effect on Traditional Marketing

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    Effect on Traditional Marketing

    This diagram is familiar to most marketers, theextended marketing mix, which is based onvarious extensions of Bordens original idea ofthe marketing mix (Borden, 1964). Thequestion we need to address is how does digitaltechnology change the way we approachmarketing?

    Some good definitions of internet marketinghave been developed: Internet marketing isachieving marketing objectives through

    applying digital technologies. (Chaffey 2006)and eMarketing is achieving marketingobjectives through use of electroniccommunications technology. (Chaffey 2006)

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    Digital Marketing

    3 Mar 2008Kate Carruthers Copyright 2008 10

    Source: Chaffey (2006)

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    Digital Marketing Based on this and experience of marketing campaigns using the internet, I

    would argue that the internet is simply another medium and should be treatedaccordingly. Although, it can also be a channel as well. Many marketers getconfused when confronting internet as part of their marketing plans and getbamboozled by the technology. It is not about the technology. It all comesback to the business strategy and the marketing strategy that must beexecuted. Judicious selection of media is just part of normal marketing

    planning. Thus it is necessary to use familiar marketing planning tools: A Audit: An audit of internal strengths and weaknesses, an external opportunities

    and threats.

    O Objectives: SMART eMarketing objectives.

    S Strategy: eMarketing strategies.

    T Tactics: an eMarketing mix.

    C Controls: measuring the performance of our eMarketing plan. But this has been all about us so far. What about our customers? Has the

    internet changed them and what they expect? Do our old ways ofcommunication still hold true?

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    Customers

    Are our customersdifferent now?

    3 Mar 2008Kate Carruthers Copyright 2008 12

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

    http://www.saatchikevin.com/The_Story_Behind_Lovemarks/http://www.saatchikevin.com/The_Story_Behind_Lovemarks/
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    Technology

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    Are they really using this?

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    Technology

    The real problem for us to address is the changing way our customers are using technology and the media.In the not too distant past we could just broadcast our messages and they would get through. This wasbecause there were limited media channels competing for peoples attention. Now this is changing, MarkPesce sums it up nicely Attention is the limiting factor for the audience; we are cashed up but time-poor.Yet, even as weve become so time-poor, the number of options for how we can spend that timeentertaining ourselves has grown so grotesquely large as to be almost unfathomable. This is the reallesson of YouTube, the one I want you to consider in your deliberations today. In just the past three yearswe have gone from an essential scarcity of filmic media presented through limited and highly regulateddistribution channels to a hyperabundance of viewing options. (Pesce, 2008)

    It was reported in the UKs Guardian that younger people are turning away from email as a means ofcommunication Outside of work, SMS and instant messaging are fast becoming the writing tools ofchoice. Indeed, South Korea - that crystal ball of all our digital tomorrows - has even seen a report thatmany teenagers have stopped using it altogether. "It's for old people," they say. (Fitzpatrick, Dec 2007)This phenomenon would horrify a number of older folk who are addicted to email as a communicationchannel. Not to mention the vast army of electronic direct marketers. However, this is in contrast tobusiness where the supremacy of email continues unchallenged.

    This is one small example of different B2C and B2B uses of the same technology. It is also an example of

    the niches growing up around particular generations and usage patterns. Again it means that our medialandscape is becoming more fluid and more complex to navigate as a business.

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    New Media, Old Habits

    The rulesare changing

    Were not incontrol anymore

    This bringsopportunities

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    New Media, Old Habits The rules really are changing, companies can no longer control their own images and data. The

    proliferation of sites like You Tube and Flickr mean that the old ways of ruling, like ownership andcopyright, are being challenged so fast that legislation cannot keep pace. New ways for ordinarypeople to co-opt your content and turn it into something else pop up daily. The music industry is aclassic example of this phenomenon, they tried very hard to control online music, but their efforts havenot put the genie back into the bottle.

    Continued development of home based convergent technologies, such as personal DVRs like TiVo and IQ,have ensured that sampling of content by users will escalate. Also broadcast media strategies will,while still having specific application, no longer be broadly relevant to getting your message across.

    Further, changes in the way we use mobile phones will drive what is possible for consumption. One ofthe key features we are seeing now in the way that younger people interact with media is that they arenot always sitting at home. They will be consuming media while they are out and via their phones. Thismeans we need to start to understand how to craft messages in this slightly different medium youcannot just stick your existing web message on a mobile web page and expect to deliver a goodcustomer experience.

    Another key development is the growth of video as a medium for mobile delivery. This will require arethink of traditional video delivery, this is because people on the go are likely to seek to consumesnack sized video content. For example, they are unlikely to want to watch Gone With the Windontheir phone.

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    Social Networking

    3 Mar 2008Kate Carruthers Copyright 2008 17

    Source:

    http://www.ndtv.com/convergen

    Source: XCDhttp://xkcd.com/256/

    http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919http://xkcd.com/256/http://xkcd.com/256/http://www.ndtv.com/convergence/ndtv/web2.0story.asp?id=ARTEN20070009919
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    Social Networking There is a lot of talk these days about social networking and much jockeying for positions of

    ownership of those media (e.g. Murdochs acquisition of MySpace). But I think that this map humorous though it is intent sums up the nature of these social networking communities. Theare multiplicitous, the are mutable, and they have mostly yet to be monetised effectively. Inthis we see the technology creating new ways of interacting and all of us trying to catch up andwork out how to benefit from it.

    What does all this mean from a marketing point of view? Again it all comes back to the strategyand understanding the medium. There are rules we follow for placement of advertisements inprint media (e.g. where on a page, or where inside the publication) that have grown up overmany years of experience. However, it is only relatively recent that studies of eye tracking andsimilar have measured how people read computer screens and web pages. We are still at a veryprimitive level of understanding how people consume information from the web on their PC.Now we are adding into the mix mobile technology as well. We have a lot of research yet to bedone until we reach the same level of understanding as for traditional media channels.

    The big thing now a lot of organisations are focusing on is building their own online communities.The success of this will relate directly to how relevant their offering is to the consumer.

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    What About the Buzzwords?

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    Buzzwords

    All of these are just tools, there are expertswho already understand them if you dont.These all rely on different types ofoptimization strategies (e.g. multivariate

    testing, behavioural targeting). But thefoundation is always the same to listen toyour customers and deliver content that isrelevant to their interests. And it all comesback to the business and marketingstrategies.

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    Media

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

    Rank Newspaper Circulation

    1. USA Today (Arlington, Va.) 2,528,437

    2. Wall Street Journal (New York, N.Y.) 2,058,342

    3. Times (New York, N.Y.) 1,683,855

    4. Times (Los Angeles) 1,231,318

    5. Post (Washington, DC) 960,684

    6. Tribune (Chicago) 957,212

    7. Daily News (New York, N.Y.) 795,153

    8. Inquirer (Philadelphia) 705,965

    9. Post/Rocky Mountain News (Denver) 704,806

    10. Chronicle (Houston) 692,557Top1

    0USNe

    wspap

    ersby

    Circula

    tion2006

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    Media

    Lets have a quick look at some statistics about useof different media. Here are the top 10 USnewspapers by circulation. Outside of the top twocirculation drops off quite quickly.

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    Media

    NOTES: Based on ABC audit reports fornational consumer magazines for thefollowing periods: October toDecember 2007 for weekly magazines

    with AANPS 25,000+,.

    Source: Source: ABC (AustralianAverage Net Paid Sales)

    RANK AANPS CIRCULATION

    1 Australian Women's Weekly 570,228

    2 Woman's Day 465,565

    3 New Idea 388,257

    4 Reader's Digest 352,000

    5 Better Homes & Gardens 350,000

    6 That's Life! 321,076

    7 Super Food Ideas 301,000

    8 Take 5 251,240

    9 TV Week 240,029

    10 Cosmopolitan 175,45511 NW 170,046

    12 Australian Good Taste 166,265

    13 Cleo 160,137 Top26Oz

    Consum

    erMa

    gazine

    by

    Circula

    tion

    2007

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    Media Australia continues to have an active magazine culture with Magazine Publishers Australia reporting

    recently:

    In the 12 months to June 2007, gross copy sales of ABC-audited consumer magazines were around 223million. The retail value of consumer magazine sales is estimated to be more than $1.06 billion. Twenty-three of Australias top 100 audited consumer magazines have net paid sales in excess of 100,000. Six ofthe top 10 weekly magazines have sales in excess of 200,000.

    Around 90% of magazine sales in Australia are via retail outlets, such as newsagencies, supermarkets,convenience stores and auto service stations. Approximately 10% are sold via subscriptions.

    But the fact is the way people access and use media is changing. A great example of this is a friend of

    mine how reported that his children do not know what radio is. Cameron Reilly, of The Podcast Network(http://gdayworld.thepodcastnetwork.com) blogged:

    Rushing around this morning, driving my kids to piano practice. In a hurry, so the ubiquitous iPod wasntjacked into the car stereo. Instead I turned on the radio for the five minute trip to piano. After aminute, Hunter (age 7) asks me from the back seat Hey Dad - wheres your iPod? I explain its in mybag, I havent bothered to plug it in. But wheres the music coming from? he asks. The radio, Iexplain. Is that like TV? asks his brother Taylor (also age 7). I look at their faces in the rearview mirrorand realize they have no idea what radio is. They have never heard me listen to radio. They are amazedthat music is playing without the iPod plugged in. If you have any shares in Austereo - welcome to yourfuture marketplace. It doesnt even know you exist. (Reilly, 2008)

    There is much research showing how younger people are not reading newspapers like previousgenerations. That means we must use different channels. This is why we are all interested in the socialnetworking phenomenon and are trying to find out how people read this.

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    Media

    3 Mar 2008Kate Carruthers Copyright 2008 25

    Source: Digital Economy Factbook 2007 , p. 9

    TopW

    ebProp

    erties

    2007

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    Media Pew research from Jan 2008 reports that 48% of internet users said they had ever visited a video-

    sharing site such as YouTube. A year ago, in December 2006, 33% of internet users said they had evervisited such sites. That represents growth of more than 45% year-to-year.

    15% of respondents said they had used a video-sharing site yesterday -- the day before they werecontacted for our survey. A year ago, 8% had visited such a site yesterday. Thus, on an average day,the number of users of video sites nearly doubled from the end of 2006 to the end of 2007. Thisrepresents a significant shift in internet usage patterns, and I suspect that this is only the beginningof the next evolution of the internet.

    Past usage of the internet related to static sites that delivered information, but this growth of

    interactive sites, where even if users do not produce the material themselves they do distribute it toothers, often with commentary and adaptation.

    This list of top sites is very interesting, especially when you delve into precisely which websites arerepresented in these results. For example, Fox Interactive Media actually comprises the followingwebsites:

    http://www.myspace.com http://www.photobucket.com http://www.flektor.com

    http://www.springwidgets.com http://www.ign.com http://www.gamespy.com

    http://www.direct2drive.com http://www.foxsports.com http://www.scout.com

    http://www.whatifsports.com http://www.rottentomatoes.comhttp://www.askmen.com

    http://www.americanidol.com

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    http://www.myspace.com/http://www.photobucket.com/http://www.flektor.com/http://www.springwidgets.com/http://www.ign.com/http://www.gamespy.com/http://www.gamespy.com/http://www.direct2drive.com/http://www.foxsports.com/http://www.scout.com/http://www.scout.com/http://www.whatifsports.com/http://www.whatifsports.com/http://www.rottentomatoes.com/http://www.rottentomatoes.com/http://www.askmen.com/http://www.americanidol.com/http://www.americanidol.com/http://www.americanidol.com/http://www.askmen.com/http://www.rottentomatoes.com/http://www.whatifsports.com/http://www.scout.com/http://www.foxsports.com/http://www.direct2drive.com/http://www.gamespy.com/http://www.ign.com/http://www.springwidgets.com/http://www.flektor.com/http://www.photobucket.com/http://www.myspace.com/
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    3 Mar 2008Kate Carruthers Copyright 2008 27

    Media

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

    5% drop in the

    number of UKFacebook users

    between

    December andJanuary

    MySpace fallin share from

    23.14% to

    22.58%

    Facebook's market share

    dropped from 18.36% inDecember to 17.95% in

    January

    http://tvnz.co.nz/view/page/1318360/1596328http://tvnz.co.nz/view/page/1318360/1596328
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    Media According to TVNZ recently market shares for popular social networking sites declined:

    Figures from Nielsen Online in the United Kingdom show a 5% drop in the number ofFacebook users between December and January, with a similar fall for social networkingwebsites MySpace and Bebo.

    MySpace experienced a similar fall with its share going from 23.14% to 22.58% in the sameperiod.

    Hitwise Australia's social networking and forums subcategory shows Facebook's marketshare dropped from 18.36% in December to 17.95% in January.

    This type of reporting about fluctuations in numbers of users, while correct as a numericalstatement, fails to grasp the essential changes that these websites have driven in the wayspeople consume media and interact with each other. The most important fact to realise in thisstory on TVNZ is that, anecdotally, kids are leaving Facebook because their parents are joiningit. Also they do not take into account the switching costs. For example, a friend wanted tostop using Facebook (it was his New Year resolution) but I noticed him logged onto Facebook afew days later. Why? Because most of his contacts are stored in there. He has since decided to

    remain a judicious Facebook user so as to avoid trying to transfer all his contacts. Thus mainstream media reports of the death of social networking are probably premature.

    What is more likely happening is that users have gotten over the honeymoon and are starting toassess how to best use these tools in their lives. Similarly the providers of these sites areworking out how to successfully monetize them. This means we need to grapple with bothsides of this equation to obtain value for our businesses.

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    Synthesis

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    Consumer

    Experience

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

    is like the long prophesied death of the mainframe in ITcircles, or the paperless office. Much prophesied but noteventuating to date.

    This means that we need to go back to basics to decide howto allocate our media budgets. Identify where your target audience is spending time

    online/offline. Determine your target audience's online/offline behavior. Determine your target audience's motivations, likes and

    dislikes and key influencers online/offline. Uncover what your competition is doing online/offline to gain

    a competitive advantage.

    The central question to understand is the consumer experienceand how we can connect with that, by whatever channel works.The trick is understanding how the various channels work.

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    Whats important?

    1. Trust & listen to your customers

    2. Build on the foundation of good strategy

    3. Understand the medium4. Master the medium

    5. Find experts

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    Whats Important? The foundation in business strategy mentioned at the beginning of this session

    is critical, without this any success is merely accidental. Upon that foundationa sound marketing strategy and supporting processes. At the centre is thecustomer, from whose perspective all that we deliver must make sense. Thento enable our marketing activities capability in technology and to understandthe possibilities and limitations inherent in it we need skilled people. Thosepeople need to understand not only business, but also marketing, and also beskilled in understanding web technology.

    What is really important is to establish trust with our customers, to listen to

    their needs and to understand the media we use to communicate with them soas to achieve maximum benefit. Dont be afraid to ask experts to assist. Thebody of knowledge required to deliver effective marketing in the world of web2.0 any beyond is a combination of business, marketing and technology. The 5points to remember are:

    1. Trust & listen to your customers - respect the messages you receive

    2. Build on the foundation of good strategy

    3. Understand the medium

    4. Master the medium

    5. Find experts

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    References

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

    Borden, N. H. (1964), The Concept of the Marketing Mix, Journal of Advertising Research, June, Vol. 4, pp. 2-7.

    Britton, Daniel B. , McGonegal, Stephen, et al. (2007) The Digital Economy Factbook, The Progress & Freedom FoundationWashington, D.C.

    Chaffey, David, et al. (2006) Internet Marketing: Strategy, Implementation and Practice, Prentice Hall UK

    Fitzpatrick, Michael , "Digital generation dismisses email as 'for old people, The Guardian, December 6 2007,http://www.guardian.co.uk/technology/2007/dec/06/digitalcommunication

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

    Pesce, Mark (2008) Unevenly Distributed: Production Models for the 21st Century , 31 Jan 2008,http://blog.futurestreetconsulting.com/?p=42

    Rainie, L. "Online Video Audience Surges", Pew Internet Project, 9 Jan 2008,http://pewresearch.org/pubs/682/online-video-audience-surges

    Reilly, Cameron, My Kids Dont Know What Radio Is, 1 Mar 2008,http://gdayworld.thepodcastnetwork.com/2008/03/01/my-kids-dont-know-what-radio-is/

    Singer, John (2006) Marketing Ecosystems: Framing Brand Management for Business Ecosystems athttp://www.bluespoonconsulting.com/whitepapersandnews.htm

    http://tvnz.co.nz/view/page/1318360/1596328http://tvnz.co.nz/view/page/1318360/1596328http://tvnz.co.nz/view/page/1318360/1596328http://www.guardian.co.uk/technology/2007/dec/06/digitalcommunicationhttp://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://blog.futurestreetconsulting.com/?p=42http://blog.futurestreetconsulting.com/?p=42http://pewresearch.org/pubs/682/online-video-audience-surgeshttp://pewresearch.org/pubs/682/online-video-audience-surgeshttp://gdayworld.thepodcastnetwork.com/2008/03/01/my-kids-dont-know-what-radio-is/http://www.bluespoonconsulting.com/whitepapersandnews.htmhttp://www.bluespoonconsulting.com/whitepapersandnews.htmhttp://www.bluespoonconsulting.com/whitepapersandnews.htmhttp://gdayworld.thepodcastnetwork.com/2008/03/01/my-kids-dont-know-what-radio-is/http://pewresearch.org/pubs/682/online-video-audience-surgeshttp://blog.futurestreetconsulting.com/?p=42http://www.web-strategist.com/blog/2008/03/01/my-definition-of-marketing/http://www.guardian.co.uk/technology/2007/dec/06/digitalcommunicationhttp://tvnz.co.nz/view/page/1318360/1596328