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DIGITAL MARKETING ASSETSDavid R. Bell

Xinmei Zhang and Yongge Dai Professor

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Two Core Digital Marketing Assets

• The Brand and its meaning, associations and narrative

– Brands still must deliver functional, emotional, and symbolic

value; in addition, they face three new imperatives

• The Customer and the relationship with the firm

– CLV is still a guiding concept; however we need to consider

“RLV” as well as treatment and selection effects

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• Accounts for “one third” of global stock market value

• Increasingly important in “age of intangibles” (almost

50% of global asset base)

• Research shows that “Brand Momentum” helps to

explain movements in stock prices

• A strong brand is a necessary condition for success in

the e-commerce ecosystem

The Brand Asset

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Leading Brands: Established

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Leading Brands: Emerging

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Digital Considerations

• [Outstanding value proposition is still non-negotiable]

• Authenticity and transparency

• Brand personality and “humanization”

• Infinite life of marketing actions (and the potential for capitalizing

on serendipity)

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• “JetBlue Cheeps” promoted via Twitter

• AYCJ ($599 for thirty days)

• Sold out in a week, 10m blog references, 31m search queries,

700% lift in traffic to site

• http://www.29daysuntil29.com/

• And … #McDStories

Digital Considerations in Action

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JetBlue “Cheeps” All You Can Jet (AYCJ)

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JetBlue “Cheeps” All You Can Jet (AYCJ)

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McDonalds “#McDStories”

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Exercise

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The Customer Asset

• Goal: Attract, engage, and retain customers subject to two

constraints:

• The value generated by the customer should exceed the

acquisition cost, i.e., CLV > CAC

• Conceptually, at least, CLV should incorporate “RLV”

• Action: Encourage existing customers to refer others and thereby

benefit from selection and treatment effects

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Digital Considerations

• [Attractive target customer is still non-negotiable]

• Conversations rather than monologues

• Rich interaction through digital and physical touch-points

• Exceptional leverage of marketing incentives (and the potential

for capitalizing on behavior of “extreme” individuals)

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Decision Funnel

• [A “classic” view of the decision making]

• Awareness

• Consideration

• Evaluation

• Choice

• Post Choice Behavior (NPS)

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Decision Journey

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“The goal of (digital) marketing … is to reach

consumers at the moments that influence

their decisions”

[Remember: “empowered” consumers increasingly

pull information from others (reviews, social

sources)]

Implication

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Exercise

• Read articles on how www.harrys.com and www.jet.com acquired

customers during their prelaunch

• What principles did these companies apply?

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Summary

• Brand assets and customer assets are developed via a dialog

rather than a monolog

• The digital environment requires a different approach with

emphasis on transparency, authenticity, humanization

• Heterogeneity of brand and customer assets is greatly amplified

(need to consider “extreme” responses)

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DIGITAL MARKETING TOOLS

AND TACTICSDavid R. Bell

Xinmei Zhang and Yongge Dai Professor

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“Digital Marketing* … is the use of Internet

connected devices to engage a customer …”

[*It’s still “marketing”]

Definition

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• This means that the objectives are still …

• Thinking

• Feeling

• Action

• But that the metrics might be different

• And that the cost-benefit calculus might change

*Reminder

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• Motivation and Examples

• Taxonomy: A Way to Think About Digital Marketing Tools and

Tactics

• Research Examples: Paid Search and Display

Overview

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Taxonomy

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• Over a 1 trillion display ads are served

• Search-driven advertising reveals intent

• Content is becoming richer (more video and animation)

• Most of the platform growth is mobile and domain

growth is social (SNS)

• Online advertising spend is dramatically (double digit

CAGR)

• Offline and online activities are becoming intertwined

into a single narrative

Trends and Themes

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• Metrics are being created and reinvented

• Accuracy of tracking is enhanced significantly

behavioral tracking (person + time + location + activity

+ connected others + “context”)

• Privacy issues are coming to the fore (consumers

might begin to withhold data and reduce their digital

footprint)

https://duckduckgo.com/

https://startpage.com/

MAP

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• Every digital marketing initiative can be characterized by:

• Origin: Pull (consumer seeking), Push (firm driving),

and “Organic” (peer-to-peer, social)

• Trigger: Component of consumer decision making

process we are trying to influence

• Outcome: Whether the effort was a “success” and

what would constitute evidence for this

Implication

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• Organic Search: Where the ranking of websites and inclusion

in a search is “relatively unbiased” and depends on Page Rank

Algorithm

• Paid Search Advertising: Where firms pay search engines to

serve ads in response to keyword searches and ranking is

based on bids

• Underlying Theory: See Hal Varian, Chief Economist of Google

video https://www.youtube.com/watch?v=PjOHTFRaBWA

Research: Search

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10

How do consumers search using search engines?

They use “KEYWORDS”

Consumer Action

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WorldWideWeb

Search Engine Optimization (SEO)

Paid Search Advertising

Organic

Links

Web

Sponsored or

Featured Links

Result

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Keyword

Organic search

results

2

3

4

5

6

1

Paid search

results

Rank

Paid and Organic Results

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• Organic Search: Most people look the top three links,

but there is a large drop off for links 4 through 10

• Sponsored Links: About half the searchers read the

top link, but readership drops off a good deal after that

• Why? [At least two reasons]

• PROSAD http://techtv.mit.edu/videos/18315-prosad

Research Findings—Rank and Performance

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• Generic Words: “Hotel LA” as a candidate for bidding by a

supplier (e.g., Hilton)

• Branded Words: “Hilton Hotel LA” as a candidate for

bidding by a supplier (e.g., Hilton)

• Problem: If they differ in cost, how should the firm allocate

resources?

Research Findings—Generic and Branded Words

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• Generic Words: “Hotel LA”

• Low CTR, e.g., 0.3%

• Low conversion rate, e.g., 1.0%

• Implies relatively high cost per sale, e.g., $50

• Branded Words: “Hilton Hotel LA”

• Higher CTR, e.g., 15.0%

• Higher conversion rate, e.g., 6.0%

• Implies relatively low cost per sale, e.g., $3

Research Findings—Generic and Branded Words

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• In 1994 www.HotWired.com sold banner ad to AT&T; sold based

on “impressions” (number of people who saw it) now on CPM

“cost per mille”

• In 1996 P&G negotiated a deal with Yahoo! to pay on CPC “cost

per click”

• Search advertising started to take over (got to 50% by 2008)

• Two key benefits (relative to offline ads): (1) less need to

aggregate buyers, (2) better matching

Display History

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• Banner ads number in the trillions

• Average click through of less than one in 1,000 is a bit

better than chance of being struck by lightening … but …

• Some of my historical favorites …

• http://mashable.com/2012/05/28/10-insanely-clickable-

banner-ads/

• Recall that there are several billion Google searches per

day (only 9,800 in 1998); “now-casting”

Display “Fun Facts”

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Research Findings—Obtrusiveness and Targeting

• Obtrusive ads: Where the ad uses video, pop-up or “take over”

technology to get the user’s attention

• Targeted ads: Where the content of the ad matched the content

of the site

• Which is better: Targeted or Obtrusive or ads that are both

Targeted and Obtrusive

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Summary

• The digital marketing taxonomy is Bought, Earned, and Owned

• Marketing goals “remain the same” but metrics, platforms, and

devices are changing

• Search and display are “classic” pull and push methods in the

digital marketing space

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EARNED AND INTEGRATED

SOCIAL MEDIADavid R. Bell

Xinmei Zhang and Yongge Dai Professor

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Media Framework

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Social Media Landscape

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Overview

• Properties of alternative media platforms

• Our two key themes are cultivation and integration

• Our goal as (digital) marketers is to understand how to create

fans for our products and develop thematic campaigns that

leverage multiple platforms both online and offline

• We’ll also explore and case studies in integrated media and

principles gleaned from research on earned media

• And we’ll conclude with an exercise

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Social Media Landscape

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Social Media Landscape

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Benefits to Brands and Consumers

• Integrated social media deliver

– Exposure and awareness

– Fans and leads

– Reduced overall marketing expenditures

• Integrated social media facilitate

– Consumer feelings of trust and affinity

– Formation of communities

– Dissemination of targeted offers

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The Key Principles

• Campaigns that “work” are thematically consistent and

integrated across platforms

• They also anticipate reaction

• What do case studies and research imply?

– Old Spice (thematic consistency)

– Ocean Spray (multi-channel integration)

– Pepsi (anticipation of response)

– University of Pittsburgh study (micro-lending)

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Case 1: Old Spice

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Campaign Elements

• Original campaign (over 50m views)

– “I’m the man your man could smell like”

• Some analysis

– Memes and performance

• The story continues

– Other celebrities enter the fold

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Case 2: Ocean Spray

• Case Facts

– Falling sales, falling prices to

farmers

– Brand repositioned as “Good tasting

and from a good place”

• Integrated SMM Goal

– Reintroduce cranberry as the

“surprising little fruit” that has

“modern day benefits”

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Events and Experiences

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Bogs Across America

13

Public Relations

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Television Advertising

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Digital

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New Products

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Case 3: Pepsi

• Pepsi Max Original

– Race car driver Jeff Gordon

goes on a test drive in

disguise

– The Internet reacts

• Pepsi Max Sequel

– Brands must anticipate the

response and have the

“sequel” ready

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Earned Media Research

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Study Features

• Delineated traditional earned media and social earned media:

– Traditional earned media has large reach and a heterogeneous

audience

– Social earned media has a narrower reach and a homogenous

audience

• External (bloggers, influencers, local media)

• Internal (content created at site by the community)

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Study Findings

• Traditional earned media has the larger marginal effect

• Social earned media impacts are more frequent

• The total impact of social earned media is larger and community

generated content is key

– “Go social, go local!”

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Exercise

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INTRODUCTION TO MOBILE

David R. Bell

Xinmei Zhang and Yongge Dai Professor

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Overview

• Mobile history, evolution, and platform competition

• Mobile and frictions, specifically search and geographic friction

– Our job as (digital) marketers is to understand the implications

of devices for behavior

• Implications for marketing

• Exercise

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Telephone History

• April 3, 1972

• First mobile phone call

is placed between

Motorola and AT&T

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Evolution

• SMS

• QR Codes

• Mobile web

• Proximity-optimized tools (geo-fencing, location awareness)

• Mobile wallets and payments

• Augmentation and wearable technology

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SMS

• Ubiquitous—almost

universal support

• Response—fast (likely

to be read upon receipt)

• Access—mostly requires

“opt in”

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QR Codes

• Two dimensional bar

code

• Source of product

information, requires

active “pull”

• Launched in Japan in

1994

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Mobile Web

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Proximity Optimized Tools

• Localized—wireless

distribution of

advertising and content

• One example is

Shopkick (acquired by

SK Planet)

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Mobile Wallet and Payments

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Augmented Reality

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Platform Competition

• Recent Thanksgiving in the United States

– Visits to mobile sites 2:1 (Apple: Android)

– Same ratios observed for views and orders

– Almost identical average order values

• Demographics are different

– iPhone users tend to be older and more affluent

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Review of Frictions

• Search friction

– Search costs are dramatically lower online but not completely

zero (ranking influences the click through rate)

• Geographic friction

– Online commerce overcomes geographic isolation, however

distance still matters for choice (ranking by distance affects

the click through rate)

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Mobile vs. Fixed Internet

• Key question

– What does the research say: Do our findings on search and

geographic friction change when consumers are on the mobile

Internet, instead of the fixed Internet

• Similarities and differences

– Both devices access the “same” information

– Mobile is: (1) smaller, (2) more portable, and more likely to be

accessed when the search is “contextually relevant”

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Research

• NYU study using data from Korea

– Search: moving up one position increases the click-through

rate by 37% (M) and 25% (F)

– Geographic: A one mile decrease in distance between the

location of the buyer and seller increases the click-through

rate by 23% (M) and 12% (F)

• These results imply that the mobile device reintroduces some

friction into the market

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Critical Implications for Marketing

• Targeting

– Ability to send (and receive) content and data from a specific

individual

• Timing

– Ability to send (and review) content and data at an

“optimized” time for decision-making

• Proximity and Interactivity

– Ability to send (and review) content and data when the

consumer is near a specific channel / decision point

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Exercise: Daily and Frequent / “Life Changing”

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REPUTATION AND REVIEWSDavid R. Bell

Xinmei Zhang and Yongge Dai Professor

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• Motivation and Examples

• Theory: How Information Affects Markets

• Research Examples: Offline Reviews and Online Reviews

Overview

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• Lots of sites for …

• Vacations, restaurants, cars, movies, and

contractors but also for other things as well …

• http://www.zocdoc.com/

• http://www.harmonycentral.com/

• http://www.flyertalk.com/

• http://www.epicurious.com/

• http://www.makeupalley.com/

Reputation and Reviews in Practice

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• Attract the right kinds of individuals and entities

• Motivate users to act in the right kind of way, e.g.,

reveal the truth

• Empower users to know and trust others

Ideally, Platforms Should …

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• More information to consumers is almost always better

(economists and policy markers normally support

policies to make more info available)

• In addition, when information is provided by firms it

might affect their behavior as well. (How: For better;

for worse?)

• Information asymmetry between firms and consumers

Theory

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TV Expose in Los Angeles

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• Los Angeles County passed an ordinance requiring

restaurants to display rating cards

• The researchers checked the following data

• All inspections of all restaurants

• Quarterly revenue (via tax data)

• No. of people admitted to hospital with food bourne

illnesses

Research Study: Offline Reviews

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• The rating cards will help mitigate information

asymmetry

• If this happens then …

• Demand at good places should go up

• Demand at bad places should go down

• Restaurants themselves might improve quality (if

the benefit exceeds the costs)

• Note too, that ratings reduce search costs forconsumers

Hypothesized Effects and Findings

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• On average, reviews are positive (4.14 at Amazon and

4.45 at BN)

• One-star reviews are pretty rare (7%, 3%) and five-star

reviews are abundant (57%, 67%); Amazon reviews are

longer

• Consumer reviews influence sales

• Better reviews on a site increase sales at that site

• The negative effect of a one-star review > positive

effect of a five-star review

• The text of reviews are actually read

Research Study: Online Reviews

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“Giving raves to family members is no

longer acceptable. Neither is writers’

reviewing other writers. But showering

five stars on a book you admittedly

have not read is fine.”

Harriet Klausner, in 2000, now has

over 25,000 reviews on Amazon. "You

ever read a Harlequin romance?" she

said. "You can finish it in one hour."

http://nyti.ms/ThraPg

http://nyti.ms/RO6i4t

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• Reviews could be helpful … But, authenticity is a concern

• http://bit.ly/1VoqXIv (PBS Documentary)

• https://www.fiverr.com/

• Approach and Key Findings

• Examine the distribution of reviews (histograms)

• Net gains should be highest for independent hotels

with single-unit owners

• Such hotels have more five-star reviews

• Neighbors of such hotels have more one-star reviews

Research Study: Online Reviews

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Summary

• Reviews and reputations have an enormous influence over

decision-making

• There are strong incentives for various parties to provide false

information

• Review systems “work” when they require verification

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