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How has the internet transformed marketing


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Presentation about the impact of internet on marketing.

1st November, 2016

Joni Salminen
PhD, marketing

Published in: Business
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How has the internet transformed marketing

  1. 1. Joni Salminen PhD, marketing Email: “HOW HAS THE INTERNET TRANSFORMED MARKETING” 1
  2. 2. Who am I? 2 Joni Salminen PhD, marketing • Dissertation 2014: Startup dilemmas – Strategic problems of platform startups on the Internet • Master’s thesis 2009: Power of Google – A study on online advertising exchange • Bachelor’s thesis 2007: Search- engine marketing on the Internet Experience: • Teaching digital marketing at the Turku School of Economics (2012–2016) • Digital marketing manager in ecommerce company Elä (since 2011)
  3. 3. Why does ’digital’ matter? • Individuals’ time spent on media and companies’ marketing budgets are moving more and more into digital media. • Digital marketing tends to be the fastest growing form of marketing – there is a need for experts (job opportunities, skills). 3
  4. 4. The end for mass media? 4 Not yet!
  5. 5. Budget gap in advertising spend (Flurry Analytics, 2012) 5 0 5 10 15 20 25 30 35 40 45 50 TV Printti Netti Radio Mobiili % Ad spend vs. media consumption Mainospanostus Vietetty aika Marketing investments do not follow customers instantly and perfectly! TV Print Online Radio Mobile Ad spend (firms) Time spent (people)
  6. 6. Influence of digital in consumers (Järvinen, 2015) 6
  7. 7. Strategic grid of social espionage (Salminen & Degbey, 2011) Engage Not engage Spy Full pot “Machiavellian payoff” Not spy “Sucker’s payoff” Empty pot 7 ”For example, if a competitor suffers from technical problems, a possible reaction would be to launch an opportunistic marketing campaign (…). Therefore, the process would aim to (1) detect competitor’s problem, (2) respond rapidly by offering alternative, (3) win new customers. It is critical that the common pitfall of (…) delayed action is avoided – (…), the window of opportunity is easily lost as customers take adaptive behavior. (…) there is a common bullwhip effect that hinders big corporations’ ability to leverage real-time information efficiently. A possible solution involves removing the firm’s CI unit and instead empowering operational units to take direct action based on their proprietary judgment.”
  8. 8. AIDA vs. IADA (Salminen, 2012) Traditional advertising follows the AIDA model. • Attention • Interest • Desire • Action Search advertising, however, follows an IADA model. • Interest • Attention • Desire • Action 8 What are the implications? Instead of imagining the customer as the “target” of advertising, firms should understand their active role in searching for information, and tendency to ignore advertising that is not relevant for the task at hand (cf. “banner blindness”). Moreover, if the process begins from an endogenous interest, exogenous advertising loses its ability to persuade (or manipulate) customers. Finally, advertising is delivered by request, or pull, instead of pushing. This contextual advertising is more likely to have immediate utility to the customer because it uses more advanced proxies to capture likely interests than before. Because interest, not attention, is the driving force of the sales funnel, firms are no longer forced to persuade potential customers through advertising but, instead, other elements of marketing.
  9. 9. Example of IADA: Search-engine marketing 9 intent solution
  10. 10. Different paradigms and path dependency 10 AIDA IADA 1st reaction “seems interesting” • go to Google • go to community 2nd reaction click (curiosity) click (intent) 3rd reaction ? ? P A T H Which is more likely to convert?
  11. 11. Target or not to target, that is the question! Do demographics matter any more? – If you think that men and women / different age groups response in different ways  demografic paradigm – If you think that a 13-year-old boy and 80-year-old woman can be interested in your message  intent paradigm • When you are targeting, you think the message will find the right people • When you do inbound marketing, you think that the right people will find the message • Both are ways to solve the matching problem… but which one is more efficient? 11
  12. 12. Inbound marketing (Karjaluoto, 2015) 12 Inbound marketing Outbound marketing Content marketing ”Interruption model” Customer-initiated contacts Firm-initiated contacts Content, SEO, social media Traditional channels (cold calls, paid ads, face-to-face) Focus on those who are already interested Focus on selecting the ”right” target audience ”Soft” selling ”Hard” selling
  13. 13. The failure of campaign-based marketing “This is the search graph for Kodak – Successful campaigns, yet no gained growth. You can see that regardless of their marketing efforts, their growth is negative.” (Åström, 2013) 13
  14. 14. Continuous marketing process (’elämyslahjat’) • A marketer wants the development of interest to be steadily increasing, and not regressive • The importance of seasonal dynamics depends on the nature of the business 14
  15. 15. Marketing moves from campaigns to process (=continuous optimization) 15
  16. 16. Claude Hopkins, 1866–1932 16 Download for free: www.scientificadvertising. com/ScientificAdvertising .pdf • Testing is like in the 1920s but today... • we can test hundreds or thousands of ad combinations for tens or hundreds of target groups à 2€ • and the results are ready the same day.
  17. 17. Everything you know from marketing can be applied to the digital context Consumer psychology has not changed (people are still people) ”…even if the medium had changed, basic human needs have not. And, indeed, it turns out that there are a lot of lessons from 1982 that are still quite useful for a 2007 search engine marketer.” ─David Rodnitzky 17
  18. 18. …however, we can question the role of humans! 18 implications of machine learning to marketing: • humans: creativity • machines: optimization
  19. 19. Digital marketing funnel (Salminen, 2012) 19 Before click After click click Do not focus only on this… …but to the entire funnel Conversion :) No conversion :( • conversion optimization • marketing automation
  20. 20. Digital marketing funnel (Salminen & Piippo, 2016) 20 After conversion Relationship No relationship Before click After click click Do not focus only on this… …but to the entire funnel Conversion :) No conversion :( • conversion optimization • marketing automation
  21. 21. Marketing properties (cf. Pyhäjärvi, 2013) 21 Target website Organic and paid marketing Properties Campaigns 1. Marketing permission 2. Lead nurturing 3. Conversion • Email subscribers • Fans, followers • Custom audience (Facebook, Twitter) • Remarketing (Google, Youtube)
  22. 22. ”Hub strategy” (Balegno, 2011) 22 In the center of strategy there is the website (conversion point), to which different sources feed traffic and which leads to specialized content platforms The purpose of so-called perifery profiles is to build communities, store content and communicate with customers and stakeholders Each perifery profile has its own plan and they are guided as parts of a unified architecture.
  23. 23. Pecularities of online business strong pressure to give free products as a result of 1) hyper-competition, and 2) minimal cost of digital distribution user is not synonym to customer → pressure to find indirect monetization models (usually advertising) Ergo, digital influence is pervasive to business logic, not only marketing.
  24. 24. Digital transformation (Järvinen, 2015) 24 • Companies have hired specialists to manage change, but the success is influenced by top management understanding • There are both success stories (e.g. Schibsted) and failure stories (e.g. Sanoma)
  25. 25. In the future… • There is no ”digital marketing”, there is only marketing. • There is no ”ecommerce”, there is only commerce (omnichannel). • There is no ”mobile analytics” and ”Web analytics”, there is only analytics. 25
  26. 26. However, there is strong fragmentation. The (currently) dominant areas of digital marketing: 1. Online advertising 2. Search-engine marketing 3. Social media marketing 4. Content marketing 5. Blogger reachouts 6. Affiliate marketing 7. Email marketing 8. Marketing automation 9. Conversion optimization 26
  27. 27. Strategic development of digital marketing competences (Tekula, 2012) 27 Broad knowledge (generalists) Deep knowledge (specialists) Applies to both individuals and agencies General broad + Selective deep = ”T-shaped” digital marketer
  28. 28. Thank you! Joni Salminen PhD, marketing 28