ADVERTISING AND DIGITAL MEDIA

It is estimated that in 2009 almost 74% of the U.S. population – or more than 22 million citizens – use the Internet. There are five primary types of advertising in digital media: search, online display, email marketing, social media marketing, and mobile marketing.

  1. Search: search, or keyword advertising, dominates all forms of digital advertising. Marketers can bid through auction systems on words or phrases related to their offering – advertisers only pay the search engine a fee when consumers click on sponsored links. This is a viable option for small advertisers with limited budgets.
  2. Online display: the second-largest type of digital advertising – include banners, buttons, microbars, skyscrapers, etc. these ads can be static, animated, or contain video, but most contain the direct-response feature of a link to the advertiser. Click-through rate (CTR) is the traditional measure of success for online display ads. CTR = number of clicks / number of times it is seen. CTR fails to consider a display ad’s influence on branding and other forms of marketing communication. Display ads are monetized in several ways, but cost-per-impression (CPM) still represents the industry norm – CPMs on ad networks range from $.60 to $1.10.
  3. Email marketing: “the rock star of direct marketing because it is the most cost-effective and most trackable.” Click-through is higher for consumer products and financial services. Marketers are moving from mass-emailings too much more targeted and personable approaches by using demographic data. New vocabulary for online marketers:
  4. Spam: online advertising messages that are usually unsolicited by the recipient
  5. Opt-in: a form of permission marketing in which online customers are sent messages only after they have established a relationship with a company. Only consumers who have granted permission are contacted.
  6. Opt-Out: procedures that recipients use to notify advertisers that they no longer wish to receive advertising messages. A term usually associated with online promotions.
  7. Congress passed the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) Act of 2003 which establishes requirements for those who send commercial email and gives consumers the right to ask e-mailers to stop spamming them.
  8. Social media marketing: includes blogs, social network sites, chat rooms, message boards, podcasts, and video and sharing sites. There are two primary ways to advertise on Facebook: set up a profile page and actively enlist friends and fans to sign up, and then send bulletins about special events and discounts, OR companies can run traditional online display ads on member pages. They can target audiences based on the information Facebook users provide on their profile. Advertisers on Facebook can choose to pay-per-click or pay by the number of impressions generated. Advertisers use video-sharing sites like YouTube as well. The Internet makes it possible for advertisers to run edgier and more consumer-produced content than they would be able to run in the broadcast media. Advertisers are finding ways to leverage the popularity of social media in such a way as to engage customers rather than making them feel as though the advertiser is invading their personal space
  9. Mobile Marketing: advertisers see the potential in mobile but must tread carefully because research shows that consumers are annoyed by unwanted mobile solicitations. Smartphone apps are a marketer’s dream because advertisers can use mobile in creative ways to deliver value and advertising to users while developing new customer databases.
  10. Digital as a complement to other media: digital advertising can stand-alone but it is most often used as a complementary role in integrated campaigns. TV seems to work well with online messages because the medium’s high credibility can build brand equity among large groups of prospects very quickly. Many online promotions must deal with three groups of prospects: the first and largest are the surfers and casual users à web advertising must gain attention quickly, the second group is the entertainment/information-oriented regular users of a site à looking for an interactive activity and will return to a website often if it provides the entertainment and information they seek, the third group is those who are actively in the market for a product/service àthe site should provide relevant, up-to-date product information.

Branding accomplishes two goals in the online world:

It gains awareness for the website itself:

“dot-coms” is a generic designation that refers to companies engaged in some type of online commerce.

Branding is important for the companies that want high visibility on the web.

A number of companies have found that traditional advertising works better than online messages to encourage website visits. *

The Role of Digital Media and Marketing: there are a number of uses for the internet and commercial websites:

As a source of direct sales

As a source of advertising-supported communication

As a source of marketing and promotion information

As builders of consumer engagement

Digital Media and Marketing Research: clearly one of the primary benefits of internet marketing is the ability to gain information about individual buying habits and product preferences. However, one of the emerging advantages of internet technology is the ability to collect market research quickly and inexpensively from a larger respondent base than might be possible with conventional research methodology – a marketer can now sample globally. Some dangers associated with conducting research online is that online survey participants are typically younger and less tech-phobic than other members of the population.

Privacy concerns: the FTC has launched a number of inquiries about online policies and practices. The FTC advocates 4 elements for online privacy policies:

1.     Disclosure of what information is collected

2.     Choice for customers to opt-out

3.     Access by consumers to their personal information

4.     Security standards for information use and access

Digital branding, audience, and Daypart: although the internet provides problems for multinational companies attempting to execute localized strategies on a global basis, it offers a number of major advantages as well.  For example, companies can provide information about their products as well as receive orders from their customers in other countries without incurring additional expense. 13 – 24 year olds spend 16.7 hours/week online and 13.6 hours watching television.

Internet dayparts:

Direct Response Marketing: direct-response marketing has embraced many of the techniques and technologies of interactive media, but it would be a mistake to think that traditional means of direct response from direct mail and infomercials are going away in the near future.

Direct Response – Pros:

Has the potential to reach virtually any prospect on a geographical, product use, or demographic basiDirect response is a measurable medium with opportunities for short-term, sales-related response.  Direct response allows advertisers to personalize their messages and build ongoing relationships with prime target audiences that are often impossible in traditional mass media vehicles.

Direct Response – Cons: Higher cost per contact is a major problem with many forms of direct response, especially direct mail. Expenses in printing, production, and postage all have increased significantly in recent years.  To keep up with an increasingly mobile population, prospect lists must be updated constantly at considerable expense to advertisers.  Public and government concerns with privacy issues have become a major problem for the direct-response industry. Internet marketers, in particular, are facing restrictive legislation and regulations at both the state and federal levels that have limited their ability to reach new prospects through certain types of contacts.

There are three objectives of direct response marketing:

1.  Direct orders. Includes all direct-response advertising that is designed to solicit and close a sale. All the information necessary for the prospective buyer to make a decision and complete a transaction is provided in the offer.

2. Lead generation. Includes all direct-response advertising that is designed to generate interest in a product and provide a prospective buyer with a means to request additional information about an item or to qualify as a sales lead for future follow-up

Traffic generation. Includes all direct-response advertising conducted to motivate buyers to visit a business to make a purchase. The advertisement provides detailed information about a produc but usually no order form. 

Three Important Features of Direct Response:

Direct response is targeted communication

Direct response is measurable

The message of direct response is personalThe growth of direct-response is directly attributable to a changing marketplace. We have moved from a manufacture-driven economy to one that is dominated by huge retailers.

Database Marketing: using computer technology, businesses are sorting through large amounts of data to look for new consumer insights, market segments, and patterns of behavior. This more sophisticated research and data cross-checking is called data mining. It allows companies to enhance profitability by examining how they have been successful in the past and apply those lessons in the future. A number of predictive models (called behavior maps) are used by businesses to predict future purchases. Data warehouses are centralized company-wide data storage and retrieval systems. The key to CRM and the benefits of database marketing is to provide information that allows a company to maintain the loyalty and profitability of its customers. The primary element in data mining is that the end result is a relationship that us beneficial to both the company and the consumer.

Television and direct response marketing: Direct-response television (DRTV) comes in a variety of formats, but the most familiar are the short-form spot (30 seconds to 2 minutes) and the program-length infomercial. DRTV marketers are designing their messages with a twofold purpose: (1) immediate sales response and (2) bringing prospects to a company’s website in order to have them bookmark the site and become regular customers. The most used forms of DRTV are:

1.  The traditional 30 second format with a tagline allowing consumers to order merchandise.

2.  The 2 or 3 minute commercial

3.  The infomercial: long-form television advertising that promotes products within the context of a program-length commercial.  Regardless of its format, DRTV has certain inherent advantages as an advertising tool:

It shows the product in use and provides opportunities for product demonstrations in realistic circumstances

DRTV can create excitement for a product.

DRTV offers immediate results. Within 15 minutes of a commercial spot, a company will receive 75 percent of its orders. Because most DRTV spots are not time sensitive, they can be scheduled in fringe dayparts for significant discounts. In addition, production costs of most DRTV are less than traditional television commercials.  DRTV complements retail sales.  DRTV is a great technique for testing various product benefits and measuring sales response.  Direct-response advertising is sold both on a paid and per inquiry (PI) basis. PI advertising can be very beneficial, especially to companies with good products but little capital.

Television shopping networks: a number of major retailers and designers use home shopping networks to sell their products to this niche consumer market. These networks will continue to grow and occupy a larger place in general retailing.

Radio and Direct Response: Despite its targeted audiences and niche programming, radio has not been a major player in direct-response marketing. Although the economic promise of “visual” radio is in the near future, for the present, radio can serve as a valuable supplement for a variety of direct-response marketers. The combination of low commercial rates and tightly targeted audience composition can saturate prime prospects with frequently occurring ads.

Magazines and Direct response: it is in the area of business and trade publications that direct response is especially important. Magazines with editorial objectives geared specifically toward some particular business or profession can be extremely beneficial to direct-response marketers. Despite the importance of B2B magazine direct-response, consumer magazines also can provide an important means of reaching prospects. Magazine direct response provides the intimacy of direct response with the traditional advertising virtues of magazines.

Catalogs: one of the oldest and most popular forms of direct-response selling. The role of the internet is a chief concern of catalogers that mail billions of catalogs each year. Another challenges id the increasing number of companies that are entering the ranks with either catalog sales or internet sales. Virtually every cataloger has a strong e-commerce site. The internet may offer catalog companies relief from catalog related production and postage costs that account for a large percentage of their total operating costs. As catalogers begin to take advantage of online options, they are discovering that their basic marketing techniques must be adapted to these new channels. One of the primary challenges involves dealing with the customer-controlled online environment and finding ways of encouraging prospects to visit the cataloger’s website. There are a number of keys to the successful process of moving a person from a prospect to a buyer: The right product. Generally, catalogers have a hard time moving merchandise that is easily obtainable at retail outlets so there has been increased consideration to the uniqueness of products. Product differentiation is always important, but it is doubly so for catalog products  Exciting creative execution. People can’t try out what they see so the sales story has to be conveyed in attention-getting messages that grab the imagination of the reader  Reach a targeted group of prospects. Waste circulation is more expensive in direct marketing sp every effort has to be made to keep it to a minimum. Fulfillment of customer service. The process of successful selling doesn’t end with a single purchase. Catalogers must establish a means of database management that will allow product inventory management as well as a means of determining the quality of customers on a lifetime value basis.

Direct mail advertising: because of the rising expenses associated with direct mail, it is anticipated that direct mail’s share of direct-response advertising will decrease in the future. One of the problems facing direct mail is that the sheer volume of mail coming to households makes gaining a competitive advantage very difficult. This challenge is all the more reason that direct mailers must take steps to reach targeted prospects with an interesting message and a worthwhile product. There are a number of organizations involved in the direct-mail list process:List brokers: in direct-mail advertising, an agent who rents the prospect lists of one advertiser to another advertiser. The broker receives a commission from the seller for this service.

List compilers: usually a broker who obtains a number of lists from published sources and combines them into a single list and then rents them to advertisers.

List managers: promotes client’s lists to potential renters and buyers. The primary job for the list manager is to maximize income for the list owner by promoting the list to s many advertisers as possible.

Service bureaus: one of the primary jobs of the service bureau is to improve the quality of lists. This is called list enhancement and one of the most important steps is the merge/purge. This is a system used to eliminate duplication by direct-response advertisers who use different mailing lists for the same mailing. Mailing lists are sent to a central merge/purge office that electronically picks out duplicate names. Saves mailing costs, especially important to firms that send out a million pieces in one mailing. Also avoids damage to the goodwill of the public.

Lettershop: a firm that not only addresses the mailing envelop but also is mechanically equipped to insert material, seal and stamp envelopes, and deliver them to the post office according to mailing requirements.

Response lists: lists of prospects who have previously responded to direct-mail offers. These lists are more productive and the rental charges are higher than for compiled lists.

List protection: the most common list abuse is multiple mailings beyond an agreed-upon limit. To monitor this, the list owner will include a number of fictitious names that can be tracked to see the number of mailings àthis is known as list decoying. The much greater problem is that the mailing offer may be too closely competitive with the list owner’s products (want profit, not competition)

Testing direct-mail advertising: the most commonly tested e-mail elements in descending order of importance – subject lines, calls to action, design, body copy, offers, and timing The key elements in testing direct mail are the list, the offer, and the creative presentation. Direct-mail testing can be expensive so it is important to concentrate on major elements that normally determine the success or failure of a mail campaign. It is extremely crucial to research validity to test only one element at a time.

Other direct-mail techniques:

Package insert: these messages, called bounce-back circulars, are delivered to customers who are proven direct-marketing users. The cost is much less than solo mailings because the sales message is being delivered as part of another package

Ride alongs: direct mail pieces that are sent with other mailings, such as bills. Same advantage as package inserts except they are going to a company’s loyal customers with whom a company has a proven and recent sales relationship.

Statement stuffers: these cost nothing to deliver because the mailing expense is being incurred anyway. They are at least seen, because everyone eventually gets around to opening their bills. Most recipients are credit qualified and have already dealt with the company before or they would not be getting a statement.

Ticket jackets: airline, bus line, train ticket jackets; companies such as car rental firms find these to be an ideal way to reach their prime target audience.

Cooperative (joint) mail advertising: high postage costs result in advertisers joining together and dividing up the cost among them. Two major drawbacks: it is extremely impersonal and it is difficult to reach specific customers through joint mailings with the same precision that marketers would have with their own lists.

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