A lecture on strategic digital marketing at University of Oulu, Fall 2015.

1. Joni Salminen
PhD, marketing
joolsa@utu.fi
Some strategic considerations on
digital marketing and d-marketing
channels…
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2. Strategy?
”A strategy describes how the ends (goals) will be
achieved by the means (resources). Strategy can be
intended or can emerge as a pattern of activity as the
organization adapts to its environment or competes.
Mintzberg defined strategy as "a pattern in a stream of
decisions" to contrast with a view of strategy as
planning, while McKeown (2011) argues that "strategy is
about shaping the future" and is the human attempt to
get to "desirable ends with available means". Dr. Kvint
defines strategy as "a system of finding, formulating,
and developing a doctrine that will ensure long-term
success if followed faithfully.“”
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3. Strategic issues in digital marketing
• choice of channels/platforms
• what’s the role of digital in our business?
• how to participate in platforms?
• strategic behavior of actors
• organizing work (composition; in-house vs.
outsourced)
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4. How to choose channels?
a. customer behavior
b. customer journey
c. profitability (measurement)
d. reach (target audience)
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5. Strategic approaches to channel choice à la
Roman generals
a. Focus – do everything possible to dominate in
one channel/platform
b. ”Divide et impera” – divide your resources
between several channels/platforms
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6. Consumers’ use of digital platforms:
strategic perspective
a. singlehoming: a user typically uses one platform
(e.g. search behavior; Google)
b. multihoming: a user uses many platforms (e.g.,
social media; Facebook, Twitter)
Similar to consumers, companies should consider
diversifying their marketing investments across
platforms.
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7. Adoption of platforms (cf. adoption of
innovations, Rogers 1952)
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start
divesting
start
diversifying
invest
heavily
start testing

8. “Facebook loses 80 percent of its users by
2017” (Cannarella & Spechler, 2014)
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9. ”Debunking Princeton” (Develin et al., 2014)
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”This trend suggests that
Princeton will have only
half its current enrollment
by 2018, and by 2021 it
will have no students at
all, agreeing with the
previous graph of
scholarly scholarliness.
Based on our robust
scientific analysis, future
generations will only be
able to imagine this now-
rubble institution that once
walked this earth.”

10. ”Debunking Princeton” (Develin et al., 2014)
” While we are concerned for Princeton University, we
are even more concerned about the fate of the planet —
Google Trends for "air" have also been declining
steadily, and our projections show that by the year 2060
there will be no air left.”
10

11. The decline of platforms: ”50% of teens are
bored of Facebook”
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12. What is the best strategies for a dominant
platform to remain on top?
1. Acquisition of fast-growing rival platforms
(e.g., Instagram, WhatsApp, Snapchat…)
2. Continuous improvement of the platform
(hiring the best engineers…)
Ultimately, it is expected that the dominant
platform will stumble to innovator’s dilemma
(Christensen, 2010) due to its legacy structures,
and will be disrupted by an entrant (cf.
MySpace/Facebook).
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13. Even though individual platforms change,
the idea of platform remains (cf. Plato!)
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14. Modeling unique touchpoints in
(multichannel) customer journey
• customers switch between digital and analogue
channels
• the process may vary across industries/customer
segments
• it is important to identify the touchpoints we are able
to use to interact with potential and existing
customers
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15. Service Blueprint approach (Bitner, 1992)

16. Omnichannel purchasing journey (BCG,
2015)
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17. What’s your company’s role in the day
in life of a customer? Insignificant.
(Apply customer-dominant logic,
Heinonen et al., 2010)
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19. A relevant question is: ”How does digital
transformation influence our marketing?”
But what about its impact on our business
model?
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20. Analyzing impact of digital transformation on
a business model (cf. Osterwalder, 2010)
Impact of
digital?
Impact of
digital?
Impact of
digital?
Impact of
digital?
Impact of
digital?
Impact of
digital?
Impact of
digital?
Impact of
digital?
Impact of
digital?

21. 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)
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22. The problem of bought attention (shark fin
effect)
“This is the search graph for ‘Mitt Romney’ and as you
can see… no one cares about Mitt Romney if he doesn’t
buy a shit load of media to get elected.” (Åström, 2013)
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23. ”Every product has an amazing dropoff of
usage from when people first encounter it”
(Chen, 2015)
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RETENTION IS THE KEY!!

24. 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
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25. Marketing moves from campaigns to
process (continuous optimization)
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26. ’Viral’ is only good when it leads into
sustainable results.
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27. Due to low relevance, leads generated by
outbound marketing are too expensive
“Conversion rates for B2B ads continue to average
about 2.8%. That means, on average, you’d need
17,000 impressions to generate one lead—at an
average cost of $1,258! So again: banner ads are
branding, not revenue or lead generation. They may
very well have a role to play in your marketing mix,
but it’s important to understand what that role is.”
(Pick 2008)
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28. Due to poor performance of online
advertising, there has been a major shift in
digital marketing into what is known as
”inbound marketing”
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29. Inbound marketing (Karjaluoto, 2015)
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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

30. 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
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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.

31. Different paradigms and path dependency
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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?

32. Managing digital marketing channels
• Strategic level: goals, KPIs
• Tactical level: channel portfolio, campaigns
• Operational level: implementation, creative
marketing
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STRUCTURE
CONTENT
campaigns
channels

33. Digital platform portfolio matrix (cf. BCG)
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Platformgrowth
Performance
High
Low
High Low
?

34. Budget allocation: does free channel mean
free work? No.
Organic efforts Paid efforts
Platform A 30% 70%
Platform B 70% 30%
Platform C 50% 50%
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Example of budget
allocation across
marketing platforms.

35. The iceberg fallacy in social media
marketing (Petramala, 2013)
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visible part
planning
Well planned and executed
only appears simple!

36. Steps to implementing social media in an
organization (Lahtinen, 2015)
1. Creating a social media strategy deriving from
company strategy and to which the whole
organization is committed
2. Budgeting the costs
3. Organizing time for social media implementation
and management
4. Training the employees in the use of social media
tools and platforms
5. Deciding whether to outsource content production
or manage it in-house (resourcing)
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37. How does ”operative” become ”strategic”?
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The importance of
empowerement!
no strategic importance =
no empowerement = no
use for customer
• operational level is
linked to strategic goals
• what takes place at
operational level
(customer interface) is
a strategic matter

38. ”Random acts” strategy
(Balegno, 2011)
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A strategy in which a company creates
blogs, social media profiles and
haphazard content without a systematic
plan or purpose.
The opposite is
strategic social media
marketing, in which
companies follow
more or less formal
processes focusing on
development of
routines and a unified
architecture.
messages tend to
be commercial and
processes random

39. ”Hub strategy” (Balegno, 2011)
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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.

40. Strategic grid of social espionage
(Salminen & Degbey, 2011)
Engage Not engage
Spy
Full pot
“Machiavellian
payoff”
Not spy
“Sucker’s payoff” Empty pot
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”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.”

41. A practical example…
“In your case, you might want to contact people that are
frustrated with existing tools, like basecamp:
a quick search for #basecamp reveals:
– It seems like #Basecamp does about 70% of a lot of
things, but not 100% of any-one-thing. Too bad.
– cuting off after 20 messages within categories & not
having pagination sucks! I cant find anything!!!!!
– WTF kind of sense does it make to click on a Milestone
link & go to a LIST of milestones instead of THE
milestone?
The first one looks promising. You might contact
him and see if he would use your product.”
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42. Generalizing the digital marketing results
into whole marketing of an organization
• expanding learnings from a channel A into the
range of channels {a:d}, including both online
and offline channels
• e.g., Facebook advertising campaign shows with
statistical significance that ”slogan A” works best
in a given target group → use it in other
marketing
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43. Remember, digital marketing can also show
the discrepancy of previously defined
marketing personas (assumed best
customers) and target groups that actually
are most likely to engage with the brand or
convert.
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44. Marketers want to use platforms to drive
their own goals. A common way in digital
marketing is to build ’properties’ on top of
platforms.
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45. Marketing properties (adap. Pyhäjärvi, 2013)
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Advertising Page
Advertising
Assets
Page
C*
*Campaign
landing
1.
2.
3.
A.
B.

46. Digital marketing properties can be split into
three groups
1. Paid properties = paid traffic (e.g. Google ads) that
converts into customers or subscribers
2. Earned properties = organic traffic (e.g. Google
search) that converts into customers or subscribers
3. Rented properties = an audience which is built by
organic and/or paid means but whose attention is
not owned (e.g., Facebook page).
Strategically, one should invest most heavily on earned
properties, and avoid dependence on rented ones (e.g.,
by diversification).
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47. Roles of networks
a. platform that connects advertisers and publishers
(e.g. Google AdWords/AdSense)
b. marketing channel that can be used to find and
target end users with marketing messages (e.g.
Google search)
c. strategic actor that aims at maximizing its own gain
(Google as a company)
Networks have a critical role in reducing transaction
costs and monitoring and managing quality. (Risk of
adverse selection, ”lemon market”.)
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48. Adverse selection (Akerlof, 1970)

49. Roles of actors in digital marketing
(Salminen, 2009)
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ADVERTISER A
ADVERTISER B
ADVERTISER C
ADVERTISER D
PUBLISHER A
PUBLISHER B
PUBLISHER C
PUBLISHER D

50. Roles of actors in digital marketing
(Salminen, 2009)
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ADVERTISER A
ADVERTISER B
ADVERTISER C
ADVERTISER D
PUBLISHER A
PUBLISHER B
PUBLISHER C
PUBLISHER D
NETWORK
Network’s
properties

51. Roles of actors in digital marketing
51
ADVERTISER A
ADVERTISER B
ADVERTISER C
ADVERTISER D
PUBLISHER A
PUBLISHER B
PUBLISHER C
PUBLISHER D
NETWORK B
NETWORK A
NETWORK C

52. Roles of actors in digital marketing
(Jernström, 2015)
52
ADVERTISER A
ADVERTISER B
ADVERTISER C
ADVERTISER D
PUBLISHER A
PUBLISHER B
PUBLISHER C
PUBLISHER D
NETWORK B
NETWORK A
NETWORK C
AGGREGA
TOR A
AGGREGA
TOR A

53. Optimal digital marketing organization
• small, independent teams
…or…
• one large, hierarchical organization
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54. Strategic development of digital marketing
competences (Tekula, 2012)
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Broad knowledge (generalists)
Deep
knowledge
(specialists)
Applies to both
individuals and agencies
General broad +
Selective deep =
”T-shaped” digital
marketer

55. Alternative approaches to managing digital
marketing partners
1. A set of specialists – company chooses the best
partners per channel/platform and they report to the
marketing manager (many contact points;
transaction costs)
2. A lead agency – company chooses one digital
marketing agency which manager sub-contractors,
i.e. specialists (one contact point)
3. A generalist agency (un-optimal) – company
chooses one digital marketing agency that does all
their digital marketing (one contact point).
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56. ”Digital marketing manager” model
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Digital
marketing
manager Agency A
Agency B
Agency C

57. ”Lead agency” model
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Digital
marketing
manager
Lead agency Agency A
Agency B
Agency C

58. Growing business with digital marketing
partners – some considerations
• aim for long-term partnerships (transaction costs)
• find the best specialists per channel (according to
chosen channel portfolio)
• agree KPIs together with the agency (commitment)
• follow the achieval of them – don’t be a sucker!
(information asymmetry)
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59. Outsourcing digital marketing: the dilemma
of budget balancing
• the ratio between e=media budget and
a=management budget
• when a>e, there is a disbalance
• but how close to e can a get?
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60. Keeping moral hazard in check!
• moral hazard, i.e. risk of opportunism (principal-
agent problem)
• moral hazard arises, when
a. delegation of tasks from principal to an agent
b. information asymmetry between them, so agent
knows more than principal
c. inability to monitor agent’s actions
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61. Keeping moral hazard in check!
• moral hazard, i.e. risk of opportunism (principal-
agent problem)
• moral hazard arises, when
a. delegation of tasks from principal to an agent → in-
housing digital marketing management
b. information asymmetry between them, so agent
knows more than principal → digital marketing
training (e.g. executive lessons from Joni :)
c. inability to monitor agent’s actions → auditing by an
objective 3rd party
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62. Thanks!
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