1. Digital Marketing Planning
Session 2 Understanding an Online Business

2. Learning Outcomes
At the end of this session, students should be able to;
Appraise the Internet as a vehicle for revenue generation using different revenue streams:
Evaluate the stages in digital adoption from /static sites to the transformed organisation and how it can focus the online plan
Appraise different types of digital transactions and relationships and their impact on planning
Evaluate the effectiveness of digital revenue models for online operations
Assess current website design in respect of its suitability for purpose and audience
Syllabus references 2.1 – 2.5
During this session we’re going to take a closer look at digital business models – including the options available to organisations as well as considering the different transaction contexts too. Finally we look at some the important usability factors that organisations must consider for their web presence.
We’d recommend that you read chapters 2 and 7 of the recommended Chaffey & Ellis-Chadwick text

3. Diffusion-Adoption Curve
Early
Majority
Late
Majority
% age of adopters
Early
Adopters
Laggards
According to Rogers, the rate of diffusion of new technology or innovation can be attributed to a combination or product and people differences.
The diffusion-adoption curve describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups. The model classifies people trialing new products into 5 categories.
The five adopter categories are:
Innovators: risk-taking, information seeking, and very experimental, enjoy the degree of early challenge or even uncertainty involved.
Early adopters: Often respected opinion leaders within their social groups, seen often as role models for others.
Early majority: more deliberate before adopting new ideas; interact frequently with peers and trendsetters. They like to merely stay ahead within the curve from that more informed decision-making.
Late majority: Tend to be cautious to adopt but ‘feel’ pressure of peers to adopt, tend to need intervention strategies to overcome barriers and see their ‘needs’ resolved by the innovation
Laggards: Traditional , last in the social system, often they pay little attention to opinions of others, they have more a clear point of reference in the past to overcome, are often suspicious of new innovations and their decision process is often lengthy.
The diffusion-adoption curve can be used as an analytical tool to understand the stage in which customers are in adoption of a technology or any product as well as the adoption of a new digital marketing technique (this could be a new social media network, for example).
Innovators
2.5%
13.5%
34%
34%
16%
Time
Rogers, 1995 cited in Chaffey & Ellis-Chadwick, 2012

4. Adoption of Technology
This shows a useful application of the diffusion-adoption curve, highlighting the adoption of technology.

5. The Adoption of Technology is Accelerating
This diagram shows how the adoption of technology is accelerating – highlighting is took TV 14 years to reach 50 million global users, compare to only 80 days for the iPad.
This also suggests that consumers are increasing comfortable with adopting new technology.

6. Stage Models of the Digital Marketing Capability
Site provides relationship marketing opportunities with individual customers
Level 5: Fully interactive site
Level 4: Interactive site
Level 3: Simple interactive site
Level 2: Simple static website (‘brochurewear’)
Level 1: Basic entry in website directory (i.e yell.com)
Level 0: no web or social presence
Site supports transactions with users, functions will vary according to the type of company
Users are able to search the site & gain information on products and prices
Contains basic company contact & product information
Companies tend to follow a natural progression in developing their website to support their marketing activities. The slide shows the various levels of digital marketing.
Think about your own company’s website (or one you are familiar with) – what type of web presence do they have? What evidence is there of this?
Company places entry in directory website (yell.com)

7. The Online Value Proposition
Online value proposition clarifies the differential advantage and positioning of an organisation
It involves developing messages which:
Reinforce core brand proposition and credibility
Communicate what a visitor can get from an online brand
That they can’t get from the brand offline
They can’t get from competitors of intermediaries
Communicating these messages to all appropriate online and offline customer touch points in different levels of detail
A key part of developing positioning is developing an online value proposition.
What is a customer value proposition?
Development of a clear customer value proposition is now an integral part of customer-centric marketing, customer-relationship management and branding. A construction of a value proposition requires consideration of:
Target segments
Focal customer benefits
Resources to deliver the benefits package in a superior manner to competitors
Also encompasses the totality of the experience that the customer has when selecting, purchasing and using the product
What is an online value proposition?
Identification of a clear differentiation of the online proposition compared to the companies conventional offline proposition, i.e. to extend the offline proposition
Identification of a clear differentiation of the online proposition from competitors based on cost, product innovation or service quality
Outlines how the proposition will be communicated to site visitors and in all marketing communications. Developing a strap line can help this
Outlines how the proposition will be delivered across different parts of the buying process, i.e. it should not just refer to the product itself, but also give an indication of the pre-sales and post-sales support that can be provided by the online service
To summarise, the ‘Online Value Proposition’ or OVP should:
Reinforces core brand proposition and credibility, but also shows:
What can a visitor get from an organisation’s online services that…
They can’t get from them offline?
They can’t get from competitors?
This article from Smart Insights provides some useful examples of OVPs:

8. The Online Value Proposition: How To Deliver Value?
Cost
I want the best deal
Be cheaper to own
. Convenience
Save me time
Be faster & simpler
Content
Help me decide
Make my life easier
Customisation
Tailor it for me
Personalise my recommendations
Choice
Fit my unique needs
Making the right choice
Community
I want to belong
Sell
Reach during buy-mode
Sense and Respond to increase lifetime value
Speak
Research needs
Inform and build relationships through
Serve
Provide online content and services
Save
Sell and service more efficiently
Sizzle
Differentiate our brand
VALUE FROM CUSTOMERS
We can use the 6 C’s to assist us in building an OVP:
Content - Can you provide content a customer can’t get anywhere else? Or that they need? Can you make it easy for them by supplying interactive, unique and engaging content?
Customisation – Can you offer mass customisation of content whether received as web site pages or alerts. Amazon is a good example of using mass customisation as part of an OVP with their on site personalisation (recommended product, ‘people who bought product X also bought product Y).
Community - How can you help the consumer ‘belong’ and contribute to the online community – reviews of products, use of social media.
Convenience – What convenience can you offer to the customer? Delivery times, availability of support staff etc.
Choice – Can you give the consumer a wide choice? Can you meet their unique needs?
Cost reduction – Can you help reduce the customers costs? Comparison websites often lead with this for their OVP.
An organisation can also think about developing an OVP using Chaffey’s 6 S’s too.
VALUE FROM COMPANY

9. Profit = Revenue - Costs
Business Models
Profit = Revenue - Costs
Sales turnover plus other income, e.g. interest
Fixed + variable
A good business model does two things;
Generates sufficient profit for the owners, consistently and sustainably.
Generates enough revenue to pay its bills when due.
This slide reminds us what a good business model should achieve – profit!

10. Who can we transact with?
From: Supplier of content/service
Consumer or citizen
Consumer-to-consumer (C2C)
eBay, peer-to-peer, blogs and communities
Consumer-to-business (C2B)
Consumer-feedback, communities, campaigns
Consumer-to-Government (C2G)
Feedback through pressure groups or individual sites
Business (organisations)
Business-to-consumer (B2C)
Transactional, relationship-building, brand-building, Media owner. Comparison intermediary
Business –to-Business (B2B)
Transactional, relationship-building, brand-building, Media owner. B2B market places
Business-to-Government (G2B)
Feedback to government businesses and non-government organisations
Government
Government-to-consumer (G2C)
National govt transactional (Inland rev), National govt information. Local govt services
Government-to-business (G2B)
Govt services and transactions (tax), legal regulations
Government-to-Government (G2G)
Inter-government services, exchange of information
Consumer
To: Consumer of content/service
Business
This slide considers various audiences that an organisation can transact with for their business proposition. It is likely that many organisations will generally transact with consumers (B2C – selling to consumers) and/or business (B2B – through selling to other businesses, or using other businesses to assist in selling to consumers, such as Google or an ad network).
The slide also presents some additional types of transactions, such as consumer-to-consumer (examples: Ebay, local selling sites, such as Gumtree etc.), consumer-to-business (consumer feedback, such as review sites like Reevoo) and transactions with government departments too.
Govt
Chaffey and Ellis-Chadwick, 2012

11. Potential Revenue Models
Product/service sales
Advertising
Sponsorship
Subscription
Affiliate
Infomediaries
‘Freemium’
Over the next few slides we will look at the various revenue models that an organisation can choose to adopt.
This article from Smartinsights.com is a useful accompaniment for this section:

12. Product Sales This is traditionally known as ecommerce
Applies to anything which is sold online, e.g. books, CDs, DVDs, food, groceries, clothes etc.
Online retailers need to set up a distribution operation to receive orders, process payments, ship goods and process returns.
Retailers now must consider the multi-channel (or Omnichannel) environment and how they are integrated to provide a consistent customer experience – example channels include: in-store, apps, online website, mobile website, Facebook pages etc.
Many of you will be aware of the concept of ecommerce – simply put, it’s online buying.
An organisation
This article provides a useful introduction to the concept of the ‘omnichannel’ and how it may affect retail businesses:
Here are a selection of useful articles that look at ecommerce trends in 2014, including omnichannel:
Later in this session, we’ll look at ecommerce a bit more in terms of how digital technology is enabling the automation of many ecommerce processes.
While this article is taken from 2012, it still provides a useful and comprehensive insight into Amazon as an online retailer.

13. Sponsorship
Site owners can accept payment from a company to sponsor a section of the site or newsletters for a fixed period.
This gives valuable publicity to the sponsoring organisation and a revenue to the site owner.
Useful for sites providing information as the sponsorship fees provide the funding to run the site.
Sponsorship as a revenue generating is becoming more popular with the advent of Native Advertising – which focus on organisations providing or sponsoring relevant content on third-party sites.
You can learn more about native advertising by listening to this webinar:

14. Display Advertising
Site-owners can accept advertising on their site and charge the advertisers for it.
The charge can be either for a fixed display advert (banner advert, charged by 1,000 impressions - CPM), or by an action (click, sale, lead or registration).
Site owners can choose to sell the advertising space themselves or work with an agency or network.
Google AdSense is an advertising service for site owners that serves automatic text, image, video, and rich media adverts that are targeted to site content and audience.
This revenue model may not be suitable for all organisations as it will depend on the volume of traffic be generated by the site - the amount and quality of traffic as well as the audiences targeted will guide how attractive the site is to other businesses.

15. Affiliate Schemes
Site owners direct visitors to a vendor of goods and services and receive a payment in return (commission)
Payment is on a cost-per-action basis (CPA), the action could be a view (CPM), click (CPC), sale (CPS) or lead (CPL).
Comparison sites such as Kelkoo, Compare The Market and Money Supermarket are funded by such methods.
Affiliate schemes are often arranged via networks who provide a market place for vendors wanting a larger audience and site owners wanting an advertising revenue.
Examples of UK networks include and
This considers using affiliate marketing as a way of generate money (so operating as an affiliate), rather than using it as a way of generating product or service sales (which we discussed in session 4).
Using affiliate marketing as a way of generating site revenue is relative simple and there are no or very low set up costs. Affiliate networks are usually free to join (some now charge a nominal fee) and will provide affiliates with any promotional material required as well as all the tracking facilities.

16. Subscription & Pay-Per-View
Providers of information content can either charge per document or file, or allow unlimited access for a period, e.g. one year.
Most providers offer a dual approach, i.e. pay-per-view for single items or a subscription.
Examples include legal music downloads, market research ( and news-based sites, e.g. FT.com.
Becoming more common (and desirable for providers) in the news industry, for example, ,
Subscription revenue model offer businesses predictable and constant revenue streams fir the duration of the subscriber’s agreement. While the consumer may find subscriptions more convenient as they believe that they will buy the product on a regular basis and will save money.
Subscription models can help a business think about customer relationship further and also can assist in monetising customer relationships further.
This revenue is proving increasingly popular with online businesses, for example publishers as well as video-on-demand services.

17. Infomediary
The infomediary model is characterised by the capture and/or sharing of information.
Its simplest form is the registration model - organisations require users to register before gaining access to information on their websites, even if the information itself is provided at no charge.
The model therefore recognises that there is a value in personal data and an opportunity to monetise this information.
An example of this is an organisation offering free whitepapers - registration is a condition for downloading the paper so the company can capture data from the interested party and use it to make sales calls and potentially acquire new clients.
The infomediary model works on the basis that data about consumers or businesses can be valuable, especially when that information can be analysed and used to target future campaign.
This model requires the business to often undertake some form of advertising to promote the ‘free download’ available.

18. Freemium
Freemium is a business model by which a product or service is provided free of charge, but a premium is charged for advanced features or functionality
Most Internet products or services fall into the definition of an Experience Good: a product that needs a period of use before the customer can determine the value they can derive from it.
For example, Dropbox – many didn’t know they needed such a product until they tried it.
Freemium it not the same as product/service that offers a free trial. A free trial allows users to try out a product or service for limited time, after which the user must pay to continue using the product or service. While a freemium model, provides a free product that is always free, generating value in itself.
This is an interesting article that considers how much businesses should give away as part of using a freemium model:

19. Choosing Revenue Schemes
Most online businesses use a variety of methods, e.g. they sell things but also provide access to display advertising.
Many people think net = free, but the content provider needs an income to run the service.
Cost-per-action advertising or infomediary models provide funding revenue to allow for this.
Subscription models can also be used, particularly with access to music, movies, research reports and news content
Affiliate schemes allow access to a whole new audience that the site owner couldn’t find themselves.

20. Website Objectives Brand Development Revenue generation
Customer service/support
There are three primary goals for any Internet presence:
Brand Development – online presences compliments offline branding efforts such as corporate image promotion, product information over and above other media, public relations, human resource information (vacancies, job details etc.)
Revenue generation – online presence increases revenue for the organisation through sales, prospect generation and direct marketing
Customer service/support – enhancing the service and support offered to customers and potential customers, for example, pre-sales information, post sales information, CRM and personalisation
It’s important for an organisation to therefore, optimise their website to facilitate the achievement of these objectives.

21. Usability
Usability is a quality attribute that assesses how easy user interfaces are to use.
Usability is defined by 5 quality components:
Learnability
Efficiency
Memorability
Errors
Satisfaction
Web usability is about making a website in such a way that the site users can find what they're looking for quickly and efficiently. On the Web, usability is a necessary condition for survival. If a website is difficult to use, people leave. If the homepage fails to clearly state what a company offers and what users can do on the site, people leave. If users get lost on a website, they leave. If a website's information is hard to read or doesn't answer users' key questions, they leave.
. A usable website can reap huge benefits to a business and it is suggested that every £1 invested in improving a website's usability returns £10 to £100 (IBM research).
According to Jakob Nielson (nngroup.com), there are 5 components of website usability:
Learnability: How easy is it for users to accomplish basic tasks the first time they encounter the design?
Efficiency: Once users have learned the design, how quickly can they perform tasks?
Memorability: When users return to the design after a period of not using it, how easily can they re-establish proficiency?
Errors: How many errors do users make, how severe are these errors, and how easily can they recover from the errors?
Satisfaction: How pleasant is it to use the design?
Another key quality attribute is utility, which refers to the design's functionality: Does it do what users need?

22. Usability Conventions
Users have gradually become accustomed to particular layouts and phrases on the Internet, for example:
Organisation logo is in the top-left corner and links back to the homepage
The term ‘About us’ is used for organisation information
Navigation is in the same place on each page and adjacent to the content
Anything flashing or placed above the top logo is often an advertisement
The term ‘Shopping cart’ is used for items you might wish to purchase
It’s important that an organisation adheres to the usability conventions Internet users have become accustomed to and design their web presence with these in mind.
Consumers read web pages in a different manner to the way they read printed matter. Users generally don't read web pages word-for-word – instead they scan them. When they scan web pages certain items stand out such as headings, link text, bold text and bulleted lists and are therefore, important conventions for an organisation to remember. Usability studies have shown that 8.6 seconds is the maximum time web users will wait for a page to download (nngroup.com, 2014), so the speed of the web presence is also important too.

23. F-Shaped Pattern For Reading Online Content
Research shows users read online content in an ‘F-shape’
Research shows that on desktops, users read online content in an F-shape. This has several implications on site design including:
Users won't read text thoroughly in a word-by-word manner.
The first two paragraphs must state the most important information.
Start subheads, paragraphs, and bullet points with information-carrying words that users will notice when scanning down the left side of content in the final stem of their F-behaviour.
Source: NNGgroup.com

24. Reading Mobile Content
Research suggests that it's twice as hard to understand complicated content when reading on a smaller screen, such as a smartphone.
A smaller screen hurts comprehension for two reasons:
Users can see less
Users must move around the page more, using scrolling
The implications of users using a smaller screen include:
Users can see less and must rely on their highly fallible memory when trying to understand anything that's not fully explained within the space. Therefore, less context means less understanding
Users must move around the page more, using scrolling to refer to other parts of the content instead of simply glancing at the text. Scrolling introduces 3 problems:
It takes more time, thus degrading memory.
It diverts attention from the problem at hand to the secondary task of locating the required part of the page.
It introduces the new problem of reacquiring the previous location on the page.
Source: NNGgroup.com

25. Information Architecture
Information architecture defines the way that information is organised on a website.
This is typically hierarchical in but it is important to remember that the Web is a hyperlink medium - users do not necessarily follow orderly or linear progressions
In general, a site navigation should:
Be easy to understand (and grouped into logical units)
Be visible (not require scrolling to find key navigation)
Support the visitor's task (and not the organisations)
Be consistent throughout the site (except when the context for the task changes)
Use clear and distinct labels (so people know what to expect on the next page)
Provide context (visitors need to know where they are on a site)
Be tolerant of mistakes (allow visitors to easily reverse their last action and get back to their previous state)

26. Top 10 Mistakes in Web Design
Jakob Nielson highlights the top 10 mistakes organisations can make in their website design:
Bad Search
PDF Files for Online Reading
Not Changing the Color of Visited Links
Non-Scannable Text
Fixed Font Size
Page Titles With Low Search Engine Visibility
Anything That Looks Like an Advertisement
Violating Design Conventions
Opening New Browser Windows
Not Answering Users' Questions
Source: NNGgroup.com

27. User-Centred Design
This should start with understanding the nature and variation within the user groups. Issues to consider are:
Who are the important users?
What is their purpose for accessing the site?
How frequently will they visit the site?
What experience and expertise do they have?
What nationality are they? Can they read your language?
How will they want to use the information: read it on screen, print or download it?
What type of browsers do they use? How fast is their Internet speed?
What size screen will they be using?
User-Centered Design (UCD) is the process of designing a website’s or application’s user interface, from the perspective of how it will be understood and used by a human user. Therefore, rather than the user being require to adapt their own behaviours and attitudes in order to learn and use a system, the system can be designed to support their existing behaviours and attitudes. The result of user-centred design is a system is design that offers a more efficient, satisfying, and user-friendly experience for the user, which is likely to increase sales and customer loyalty.
The slide outlines the key considerations for UCD.

28. User-Centred Design Four stages of user-centred site design:
Identify different audience
Rank importance of each business
List three most important needs of audience
Ask representatives of each audience type to develop their own wish lists.
Rosenfeld and Morville, 2002, cited in Chaffey and Ellis-Chadwick, 2012

29. Elements that Increase Website Credibility
Professional design
Showing a real organisation behind the site
Demonstrating organisation expertise
Making the site easy to use and useful
Use social proof such as testimonials, quotes and references
Eliminating all spelling, typographical and grammatical errors
Ensure everything on the website works and it is kept up-to-date
Show contributions to community
With a plethora of websites available for users to interact with, it is important for an organisation to not only differentiate themselves from competing sites but also gain the users trust when accessing their website (especially for e-commerce websites or those that capture data). There are some key element of website design that can assist in increasing the credibility of it:
Professional design – users quickly evaluate a site by visual appearance, therefore, it is important for organisation to pay attention to design and arrangement of elements, images, typography etc.
Showing a real organisation behind the site – provide contact details and an ‘about us’ section as well as posting images and biographies of staff to show the people behind the organisation are real
Demonstrating organisation expertise through case studies, research, articles or reports.
Making the site easy to use and useful – can the customer find the information they are looking for easily? Is the navigation intuitive and simple?
Use social proof such as testimonials, quotes and references – showing that others have bought from the organisation and have been satisfied can assist in reducing perceived risk.
Eliminating all spelling, typographical and grammatical errors – all of these can reduce trust is the professionalism of the organisation.
Ensure everything on the website works and it is kept up-to-date - out of date information can also impact on how the organisation is viewed and their professionalism
Show contributions to community – such as social media interactions or sponsorship within wider community.

30. Test Your Understanding
Read the Boo.com case study here:
Answer the following questions:
Which strategic marketing assumptions and decisions arguably made Boo.com’s failure inevitable? Contrast these with other dot-com era survivors that are still in business such as lastminute.com
Use the marketing mix framework to appraise the marketing tactics of Boo.com
Post your answers on the discussion forum
Questions taken from Chaffey and Ellis-Chadwick, 2012

31. Bibliography
Apostel, S and Folk, M. (2005) First Phase Information Literacy on a Fourth Generation Website. Computers and Composition [online] (Accessed 1 Nov 2013)
Chaffey, D and Ellis-Chadwick, F (2012) “Digital Marketing: Strategy, Implementation and Practice”, Fifth Edition, Prentice Hall
Gay, R, Charlesworth, A and Esen, R (2007) ‘Online Marketing – A Customer-led Approach’, First Edition, Oxford University Press
Author Unknown (2008) Web Users Are Getting More Ruthless,. BBC.co.uk, (accessed 12th July 2012).
Nielsen, J (2011), Top 10 Mistakes in Web Design. NNGroup.com. [accessed 13 April 2013]