Digital Marketing Teigland

Digital Marketing Dr. Robin Teigland Stockholm School of Economics [email_address] www.knowledgenetworking.org www.slideshare.net/eteigland

Background to digital marketing

Reshaping the marketing mix – 4Ps

From OGC to UGC

Stepping into the internet – A look at VWs

Digital marketing implementation

Benefits and challenges of digital marketing

Guest speaker – Marketing by MySpace

Today’s discussion

What is digital marketing?

The application of digital technologies that form channels to market …

Internet (2D to 3D)

Mobile communications

Interactive television

Interactive traditional media (billboards, print)

Wireless

… .. to achieve corporate goals through meeting and exceeding customer needs better than the competition .

Adapted from Jobber 2007

Did You Know: Shift Happens

http://www.youtube.com/watch?v=pMcfrLYDm2U

How are these trends affecting the traditional marketing mix?

Key elements of the digital age Jobber 2007

Previous generations born into hierarchy

Family

Schools

Society

Work

Religion

Connected – born digital

Autonomous – make own decisions

Multitasking

DesAutels 2008 Gen-Y

Increasing number of digital media JP Allen 2009 www.webguild.org

Increasing use of social media Rey 2008 Communication Personal Media Self-expression Collective Intelligence Content Production

6 degrees of separation Milgram 1967, DesAutels 2008

Traditional marketing vs digital marketing http://adultaddstrengths.com/2008/11/05/obama-vs-mccain-social-media/

OBAMA dot GOV

Barak

Lessig call

DesAutels 2008

From OGC to UGC

Reshaping the marketing mix Jobber 2007

Digital marketing media

Internet (2D and 3D, virtual worlds)

Mobile communications

Wireless

Interactive television

Interactive billboards and print

Adapted from Jobber 2007

Reshaping price Transparent Flexible Dynamic Jobber 2007

Reshaping place

Global, virtual, & always on

Distance no longer a cost

Business location irrelevant

24/7 real-time trading

Sear’s online catalogue Jobber 2007

Reshaping place IBM’s Green Data Center in Second Life

Reshaping promotion Permission-based Instantaneous – real time Interactive Jobber 2007

Personalized British Airways Trip Guide Personalized with customer name Direct link to “My booking” area of BA.com Search fields pre-populated with customer travel dates and destination Customized destination information including sightseeing and airport info Source: Chaffey 2009

Reshaping promotion - Interactivity www.mobilitysite.com www.bbc.co.uk/ Convergence of technologies

Reshaping promotion - Interactivity

Interactive ads in traditional print media

Augmented reality, mobile phones

http://www.youtube.com/watch?v=RsZTbIjLHNA&feature=related (zoo)

http://www.youtube.com/watch?v=S-G8u-01t0k&feature=PlayList&p=46ED12AC63B128FC&playnext=1&playnext_from=PL&index=1 (car)

Interactive billboards

Video, mobile phones

http://www.youtube.com/watch?v=BK7qfpvod2w&feature=related (Shanghai)

http://www.youtube.com/watch?v=5-bNZRAypgQ&feature=PlayList&p=CDD9F931D4215694&playnext=1&playnext_from=PL&index=1 (Nokia)

Interactive video advertisements

Video, internet

http://www.youtube.com/watch?v=tJrq-ZwBehA&feature=PlayList&p=B74C1DB8C72A381E&index=4 (Volvo)

Viral marketing

Encourages users of product or service supplied by business to encourage friends to join in as well

Haag & Cummings 2008

www.bluemountain.com

1) Send card

2) Card has link so other person can send card

Reshaping product Individualized Customized Digitalized But this is only the beginning….so much more to come!

From OGC to UGC

Shifting sources of value

Open business model

Competitive advantage through leveraging external resources (Chesborough 2003)

Permeable organizational boundaries

Redefinition of acceptable sources of value and knowledge

Potential sources of value

Users as organizational resource (von Hippel 1988, 2005)

User interactions with organizations creates value through user-generated content (Di Gangi & Wasko forthcoming)

Di Gangi 2008

History tends to repeat itself…. Steam engine Internal combustion engine Microelectronics Late 18 th C Late 19 th C Late 20 th C Schön 2008

Moving towards the experience economy Gilmore & Pine 1999, Prahalad & Ramaswamy 2004

Crowdsourcing: Capturing the wisdom of crowds

What is it?

Customer participation in business and business development

Why the interest?

Experience

Ownership

Engagement

Loyalty

Brayrie 2007

From organization-generated content (OGC) to user-generated content (UGC) Content created by a user to be used by a user Content created by an organization to sell to a user Di Gangi 2008

An anthropological intro to YouTube Three US TV Networks is less than… YouTube Wesch 2008

Rapid growth of UGC Web Sites Organizations increasingly introducing UGC websites (e.g., social networking, electronic communities) as organizational resources Deloitte 2008, DiGangi 2008

Why are organizations using UGC websites? Deloitte 2008

The Pink Community – Victoria’s Secret DesAutels 2008

Interactive TV

Motorola Q – Creating content

Examples at Dell Brayrie 2007 Self-support Product development

eZ Systems and the eZ ecosystem: An open source business model eZ Partners Community Customers

#1 open source content management software

Enterprise open source – “Grow the cake”

60 Employees in 8 countries (Europe & Asia)

230+ Partners

5000+ Customers

30,000+ Community members

www.ez.no Skien, Norway

Customers of

Reshaping the marketing mix

From OGC to UGC

Within five years, the 3-D Internet will be as important for work as the Web is today. January 2008 By the end of 2011, 80 percent of active Internet users (and Fortune 500 enterprises) will have a “second life”, but not necessarily in Second Life. Steve Prentice Gartner

Towards 3-D internet Level of Interaction Time Individual - Web 1.0 Thinking Mosaic, Prodigy, Compuserve, AOL, Netscape Connected Web 2.0 Thinking Facebook, Friendster, Yahoo, Blogger, Wikipedia, eBay, Typepad, LinkedIn. Amazon, MySpace, Textamerica, Delicious, HubPages SENSORY 3D Internet Thinking SecondLife, Active Worlds, There, SimsOnline, Club Penguin, World of Warcraft, 3D planets, ToonTown, Habbo, VSlide, Protosphere

No financial crisis in VWs?

Increasing members

Increasing companies

Increasing turnover

Wonderland

Releasing new products

Toyota

Launches real and virtual products simultaneously

Enables avatars to customize vehicles in SL

Co-creating solutions for today… Philips Design Group Lead-user innovation workshops

… as well as for tomorrow HSB: Building the house of the future in a competition with KTH and Chalmers architecture students

Increasing effectiveness in traditional industries “ Soon all fashion designers will be originating their designs and managing the production in virtual worlds ….Why such a dramatic change? Economics, pure and simple .” Shenlei Winkler, Director Fashion Research Institute

3D internet Before the first plate of aluminum is ever bent for production, the pilots and the passengers will have flown the plane and the crew will have serviced the plane. CEO of Boeing supplier

780,000 users USD 400 mln turnover 2007

Entropia Universe by MindArk

Ability to develop skills and sell virtual goods

Island sold for USD 26,500 in 2004

Asteroid space resort sold for USD 100,000 in 2005

Clothes Against Violence – limited edition virtual jackets sold for more than same model of real world jackets

Virtual universe with real cash economy

Fixed exchange rate to US Dollar, 1 USD = 10 PED

Five banks auctioned for USD 404,000 in 2007

Real life bank license granted by Swedish Government to MindArk Bank in March 2009

A business model like the real world

Raw materials and skills needed to build

Goods deteriorate and need to be replenished

China is making big efforts in virtual worlds!

“ Virtual economy district – a world where millions will work, communicate, and be in love”

Reaching out to the 150 mln overseas Chinese

7 million inworld at same time

Ability to borrow money to finance operations through Mind Bank

www.crd.gov.cn, www.foreignpolicy.com “ The real China is only a piece of land. We believe that there must be a China in the virtual world and the real world.” Robert Lai, Chief Scientist, CRD

What should you do in virtual worlds? Experiment, “play”, and learn Stay on the look-out Consider creating independent operations Don’t forget other emerging media

From OGC to UGC

Reshaping the marketing mix Jobber 2007

Stages in digital marketing planning Jobber 2007

What are the drivers?

What is the environment?

What is the objective?

How can you create superior value?

How should activities be integrated?

What competencies are needed? Etc.

What should be measured?

Marketing audit and SWOT analysis

Customer connectivity

Customer channel usage

Results generated online

Marketplace impact

Jobber 2007

Marketing objectives and strategy

How to create competitive advantage?

- Lower prices

- Lower costs

- Improved service quality

- Greater product variety

- Improved product customization

Jobber 2007

Match the tool to the purpose Tool Purpose Example Blogs Conversation Relationship building Information sharing Getting customer feedback Facebook governance Discussion forums Self-support Problem solving Customer engagement Dell Wikis Collaboration Customer engagement Motorola Q Social networking sites Community development Relationship building Customer loyalty Viktoria’s Secret Jeep Virtual worlds Collaboration Innovation Engagement Nokia Philips IBM

Serena Software – An integrated approach

#1 Applications Lifecycle Management (ALM) & business mashup

96 of Fortune 100 as customers

800 employees in 18 countries across globe

One hour every Friday to Facebook to find fun and connect with co-workers, customers, family, and friends

YouTube, Facebook, Homepage

http://video.forbes.com/fvn/cmo/serena-social-network-strategy

Assessing digital competencies Jobber 2007

Tools for assessing your capabilities Download from: http://www.davechaffey.com/Internet-Marketing/C4-Strategy/benchmark-your-internet-marketing-strategy Chaffey 2009

What is the right organizational structure?

No perfect way to organize.

Example of team structure for small-medium retailer Chaffey 2009

From OGC to UGC

Benefits and limitations of digital technologies to customers Jobber 2007 Benefits Limitations Convenience Delivery times Access to information Information overload Enhanced functionality Access to technology New products and services Security Lower prices Cost implications

Benefits and limitations of digital technologies to organizations Jobber 2007 Benefits Limitations Investment reduction Operational costs Reduced order costs Set-up costs Improved distribution Short-termism Opportunity for reduced selling costs High-cost content Relationship building Connective to transactional relationships Customised promotion Over-specialization New market opportunities Technological deserts Marketing research opportunities Authenticity

Are there any benefits from social media, or is it all hype? Poole 2008: IBM Global Technical Services Knowledge Community of Practice Business Impact Survey 2007, completed by approximately 2,300 respondents

But there are challenges to UGC

Around 40% of UGC websites have more than 500 members

But few engage, i.e., contribute, retrieve, and explore UGC

Deloitte 2008, Di Gangi 2008

Users create their own meanings Wesch 2008

There is nowhere to hide http://www.youtube.com/watch?v=t8XxcOj3Seo Fortune, Rey 2008 Monitor social media sites and react in a timely fashion

Ethical issues in digital marketing

Digital divide

Social exclusion

Intrusions on privacy

Marketing to children

Jobber 2007

Global digital divides Jobber 2007

DesAutels 2008

Requisite variety is ever increasing

There is more turbulence –

Socially, economically, environmentally, technologically.

Watch out! Forces converging….

People

Net generation

Neuroplasticity

New demands

Technology

Social software (Web 2.0)

Broadband access

Mobile hardware

Business Environment

Globalization

Pace of change

Information load

Mahaley 2008

The 5 I’s of digital marketing

Identification – customer specifics

Individualism – tailored for lifetime purchases

Interaction – dialogue to learn about customers’ needs

Integration – of knowledge of customers throughout company

Integrity – develop trust through non-intrusive marketing such as permission marketing

Peppers & Roger 1997 Will it replace the traditional marketing mix?

We digitized audio and video, why can’t we just digitize, you know, Earth” Philip Rosedale Chairman of the Board Linden Lab

“ I think there’s a world market for maybe five computers.” Thomas Watson, Chairman of IBM, 1943 “ There is no reason anyone would want a computer in their home.” Ken Olson, President, Chairman and Founder of Digital Equipment Corporation, 1977 “ Heavier-than-air flying machines are impossible.” Lord Kelvin, President, Royal Society, 1895

Thanks and see you in world! Karinda Rhode aka Robin Teigland [email_address] www.knowledgenetworking.org www.slideshare.net/eteigland

Sources and acknowledgements

Allen, JP, https://usffiles.usfca.edu:443/FacStaff/jpallen/www/5thingswithcustomersv3.pdf (Accessed 24 April 2009).

Chaffey, D. 2009. Benchmarking to improve your digital marketing strategy, www.davechaffey.com/blog/ .

Deloitte, 2008. 2008 Tribalization of Business Study.

DesAutels, P. 2008. The Multinational’s Nemesis, ICIS 2008.

Di Gangi, P. 2008, The Content Web Sites, Co-Creation of Value: Exploring Engagement Behaviors in User-generated Content Web Sites, Colloquium at Florida State University College of Business