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Digital Marketing Planning Session 2 Understanding an Online Business.

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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 email/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

3 Diffusion-Adoption Curve Time Innovators 2.5% 13.5%34% 16% Early Adopters Early Majority Late Majority Laggards % age of adopters Rogers, 1995 cited in Chaffey & Ellis-Chadwick, 2012 3

4 Adoption of Technology

5 The Adoption of Technology is Accelerating

6 Stage Models of the Digital Marketing Capability 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 Level 0: no web or social presence Site provides relationship marketing opportunities with individual customers 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 Company places entry in directory website (

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

8 Sell Reach during buy-mode Sense and Respond to increase lifetime value Speak Research needs Inform and build relationships through e-mail Serve Provide online content and services Save Sell and service more efficiently Sizzle Differentiate our brand The Online Value Proposition: How To Deliver Value? VALUE FROM CUSTOMERS VALUE FROM COMPANY 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

9 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. Business Models

10 Who can we transact with? 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 From: Supplier of content/service To: Consumer of content/service Govt Business Consumer Chaffey and Ellis-Chadwick, 2012

11 Potential Revenue Models Product/service sales Advertising Sponsorship Subscription Affiliate Infomediaries ‘Freemium’

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.

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.

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.

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

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. Becoming more common (and desirable for providers) in the news industry, for example,,

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.

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.

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 1.Brand Development 2.Revenue generation 3.Customer service/support

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

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

23 F-Shaped Pattern For Reading Online Content Research shows users read online content in an ‘F-shape’ Source:

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 Source:

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

26 Top 10 Mistakes in Web Design Jakob Nielson highlights the top 10 mistakes organisations can make in their website design: 1.Bad Search 2.PDF Files for Online Reading 3.Not Changing the Color of Visited Links 4.Non-Scannable Text 5.Fixed Font Size 6.Page Titles With Low Search Engine Visibility 7.Anything That Looks Like an Advertisement 8.Violating Design Conventions 9.Opening New Browser Windows 10.Not Answering Users' Questions Source:

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?

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

30 Test Your Understanding Read the case study here: marketing-mix/boo-com-case-study-a-classic-example-of-failed- ebusiness-strategy/ marketing-mix/boo-com-case-study-a-classic-example-of-failed- ebusiness-strategy/ Answer the following questions: –Which strategic marketing assumptions and decisions arguably made’s failure inevitable? Contrast these with other dot- com era survivors that are still in business such as –Use the marketing mix framework to appraise the marketing tactics of 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] _in_point.htm? 6%252F (Accessed 1 Nov 2013) _in_point.htm? 6%252F 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,., (accessed 12th July 2012). Nielsen, J (2011), Top 10 Mistakes in Web Design. [accessed 13 April 2013]

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