Digital Marketing Book - Chapter Three

1. 1
3
Chapter
Digital models
The business world is changing faster than ever before. Old approaches
and models are being turned on their head. In this chapter, we show how
to assess your online marketplace, review new business, revenue and
communications models and develop budget models.

2. 2
3.1 Introduction to digital models
MODEL Anything that represents reality
There are many different implications of change across a variety of models:
• Development of online marketplace models
• Change in business and revenue models
• “Markets become conversations” (Levine et al, 2000) between customers
and customers & employees
• Change in value chains and distribution channels, new value networks are
formed
• New revenue streams through ads and affiliated links
• Marketing transparency through open systems and control mechanisms
• Interactive brand equity
• Shift to virtual businesses

3. 3
3.2 Online revenue models
9
Ad revenue
models
1. Subscription access to content
2. Pay Per View access to documents
3. CPM display advertising on site
4. CPC advertising on site
5. Sponsorship of site sections of content types
6. Affiliate revenue
7. Subscriber data access for email marketing
8. Access to customers for online research
9. Freemium models
Revenue from

4. 4
3.2 Online revenue models

5. 5
3.3 Intermediary models

6. 6
3.3 Intermediary models
The long tail marketplace model – Zipf’s law
Refers to any large collection of items ordered by size or popularity.
Describes how the frequency or popularity of items declines in a regular
way.

7. 7
3.3 Intermediary models
Situation in which the ”long tail” can be
encountered:
• Popularity of search terms within a
category or for an individual site.
• Popularity of content within a web
site.
• Popularity of items purchased for an
e-retail site.
• Popularity of web sites in a category
measured through unique visitors

8. 8
3.4 Attribution models
Customers buy in different ways
1st step Setting up clear goals in Google Analytics
2nd step Tagging different media channels
It is important to use a unified tracking
system
Achieving customer conversion:

9. 9
3.4 Attribution models

10. 10
3.4 Attribution models
Checklist to assess your tracking capabilities
Q1. Do you have unified tracking across all media?
What high-level reporting do you have that enables you to compare cost (CPA),
value (ROI, ROAS or LTV) and conversion across all media?
What granularity do you have; i.e. how far can you break down by?
Q2. Do you have unified tracking across all media?
Last referrer
First referrer
Weighted mix between the two
Have you successfully removed
duplication through using common tagging
codes?
Do you analyse the halo
effect of combined media/
channel impressions?
Q3. How well do you understand your sales cycle?
Q4. Do you assess traffic quality on types of value events (other than sales)?
Q5. Have you checked the accuracy of your campaign management systems?

11. 11
3.5 Communications models
Former models
Mass communications model
S
Sender
C
Customer (mass audience)
S
Sender
OL
Opinion Leader
C
Customer (mass audience)
S OL C
S C

12. 3.5 Communications models
Figure 3.10 A web of conversations – accelerating word of mouth (C=Customer; OL=Opinion Leader)
Affiliate marketing also spreads awareness
of a brand amongst a community of relevant
customers, who in turn talk to each other
and can spread ordinary or clever viral
messages within their own communities.
60

13. 13
3.5 Communications models

14. 14
3.6 Customer information processing models
ALEA model
Rossiter & Bellman (1999)
Attention
Learning
Emotional responses
Acceptance
- Sustained attention is related to the
evaluative intensity of the
consumer’s emotional response to a
content node encountered during a
visit to a web ad.
- Brand attitude is affected by the
appropriateness of the sequence of
emotions encountered during a visit
to an online ad and by the
appropriateness of the final emotion
experienced.
Hofacker’s
model (2001)
1. Exposure
2. Attention
3. Comprehension and perception
4. Yielding and acceptance
5. Retention

15. 15
3.6 Customer information processing models
Marketers and advertisers and ad
agencies and data analytics
companies are responding to the
changing market, where customers
screen out even high quality content
(like the world class violinist); a
market where customers’ attention
span is only seconds; a world here
customers only allow ads in if they
are highly relevant to them at that
particular time and place.
Figure 3.12 People rush past one of the world’s greatest violinists as they screen out information in their busy lives
Source: The Washington Post/ Getty Images

16. 16
3.7 Customer buying process models
Regardless of B2B or B2C, buying
models are changing

17. 17
3.7 Customer buying process models
The ‘Butterfly Effect’ is emerging where buyers dip in and out
of the buying process.
The whole process has become a Dynamic
Customer Journey.

18. 18
3.7 Customer buying process models

19. 19
3.7 Customer buying process models
Low-involvement purchases
Figure 3.15 Model used to design content and services for the Tektronix web site
Copyright Tektronik. All rights reserved. Reprinted with permission.
The Tektronic Learn-Buy-Use model shows how this approach can be used to deliver relevant
content that support sales and branding objectives.

20. 20
3.7 Customer buying process models
Low-involvement purchases
Reviews bump up conversions

21. 21
3.8 Loyalty models
The IDIC loyalty model
Peppers & Rogers (1997)
1. Customer identification
2. Customer differentiation
3. Customer interaction
4. Customer communications
Achieving customer advocacy and Net Promoter Score
”forward/recommend to a friend”, “share”, “like” and “comment” options
Email with “forward to a friend” option
Customer feedback and positive experience showcasing
Business sites with testimonials and case-study sections with success
stories
“wisdom of crowd” with top-selling products
Facilitating
Involve customers more in shaping web services and core product
offerings

22. 22
3.8 Loyalty models
The IDIC loyalty model
Peppers & Rogers (1997)
1. Customer identification
2. Customer differentiation
3. Customer interaction
4. Customer communications
Achieving customer advocacy and Net Promoter Score
Use online reputation management tools for tracking negative reactions
Develop a process and identify resources
Assess and manage the influence of negative comments within the natural
listings of search engines
Practice fundamental marketing principles of listening to customer
comments
Managing online detractors

23. 23
3.9 Social media models
Social Network
Broadcast
network Telephone and
email network
After the Web 2.0?
- Immersive, virtual, 3D networks
- IoT
- Intelligent bots
Nielsen’s 9—9-1 rule of participation inequality
Encouraging more users to contribute
90% Of users are lurkers
9% Of users contribute from
time to time
1% Of users participate a lot and
account for most
contributions

24. 24
3.9 Social media models
Guidelines for advertisers in social networks
(Microsoft)
1. Understand consumer’s motivations for
using social networks
2. Express yourself as a brand
3. Create and maintain good conversations
4. Empower participants
5. Identify online brand advocates
The golden rule: behave like a social networker
• Be creative
• Be honest and courteous
• Be individual
• Be conscious of the audience
• Update regularly
Social Network
Broadcast
network Telephone and
email network
After the Web 2.0?
- Immersive, virtual, 3D networks
- IoT
- Intelligent bots

25. 25
3.9 Social media models
Metcalfe’s law
Refers to the power of an interconnected
network to enable collaboration and extend the
reach of an organisation
Social media models
Where communities are created as part of a business
proposition, the law shows the importance of
supporting the growth of the network through the
difficult initial phase until a ’critical mass’ of
participants is achieved

26. 26
3.10 Social business models and the
Ladder of Engagement
• Customer engagement created stronger brands and more advocates
• Identifying engaged customers is important
Moving customers up the Ladder of Engagement
creates brand loyalty, unleashes brand zealots, and can
help improve an organization’s processes, products and
services.

27. 27
3.10 Social business models and the
Ladder of Engagement
Figure 4.8 The Ladder of Engagement Source: Smith and Zook (2016)

28. 28
3.10 Social business models and the
Ladder of Engagement
Social
business
models
• Ratings and reviews
• Digital marketing practice ask
and answer
• Collaborative co-creation
- Advertisements
- Brand names
- Products and services
- Managing collaborative co-
creation by having clear rules and
leadership, and transparent
processes

29. 29
Chapter summary
• Models describe the process by which business is conducted between an organization, its customers,
suppliers, distributors and other stakeholders.
• Online revenue models include CPM and fixed sponsorships, CPC models and CPA affiliate models. Ads
can also be displayed as part of a network.
• Online marketplace analysis helps understand customer behaviour to identify search terms to promote
companies, partner sites and media buys.
• New attribution models ensure that online media spend is allocated to media which are influencing sales.
• Communications models have enabled a change from many-to-one, to many-to-some and to one-to-one
communication.
• Buying models can accommodate the linear process for high-involvement purchases, mixed-method buying
and traditional models such as AIDA and low-involvement ATR.
• A quality product, service and web site are basic prerequisites to build customer loyalty. The role of the web
in advocacy and negative mentions should be assessed and monitored.
• The introduction of social media has massively changed business models.
• The Ladder of Engagement model demonstrates how selected customers can become more engaged with a
brand and ultimately how this can create a whole new business model. Social business models are next as
employees are empowered to utilize social media.