Issue: Digital Marketing Digital Marketing By: Joan Oleck and Vickie Elmer Pub. Date: March 2, 2015 Access Date: September 23, 2021 DOI: 10.1177/2374556815573711 Source URL: http://businessresearcher.sagepub.com/sbr-1645-94775-2641073/20150302/digital-marketing ©2021 SAGE Publishing, Inc. All Rights Reserved. ©2021 SAGE Publishing, Inc. All Rights Reserved. Has technology fundamentally changed how companies court customers? Executive Summary Have you logged onto the Internet today? Used a mobile phone or tablet? Then you have seen digital marketing: ads that pop up on whatever website you are viewing. Not to mention placements on Google—and podcasts, electronic billboards and text messages, all vying for your attention (and business). You also likely have received invitations to play electronic games and become eligible for rewards, with—no surprise—tie-ins to products. All these channels are transforming today's advertising landscape. Since its arrival in the late 1990s, digital marketing has increasingly driven brand promotion. It's interactive and allows companies to collect user feedback immediately. These advantages mean that the growth in advertising is taking place in digital marketing. But its newness also means that businesses have to get creative to find the most effective campaigns. Overview “Sorry … sorry … sorry,” rang out from YouTube videos and television screens around the world beginning in late 2013. Pantene's #ShineStrong “Not Sorry” ad gently chided women for their tendency to apologize, even when they have nothing to apologize for: An office staffer trying to make a point at a business meeting. A woman whose elbow has just been knocked off an armrest by a man sitting down next to her. A wife taking back her share of the bedcovers from her husband. Viewers tweeted the ads, “liked” the ads, talked about the ads, endlessly. In short order, “Not Sorry” went viral—spreading from person to person, via blog, email and social media. YouTube recorded 2 million views within one week when one of the ads was released in mid-2014. 1 That viral popularity was exactly the response Pantene wanted. In fact, it's the response seemingly all brands seek. Digital marketing—campaigns that use online tools, including social media and Web or mobile advertising—increasingly drives business and brand promotion, particularly plugs directed at millennial-generation consumers. Digital marketing differs from print and broadcast in two important respects. First, it's interactive. Users can respond and provide feedback to companies immediately. And, second, digital marketers can leverage user feedback to monitor and measure promotions in real time to determine what works—or doesn't. After they measure, marketers can concentrate on what they Young women in Wellsville, N.Y., check a 2 smartphone. Marketers strive to reach would-be want most, which is converting clicks to customers. The advantages inherent in instant consumer feedback, together with the savings from not wasting money on customers where they can grab their attention. To ineffective marketing, have fueled explosive growth in digital marketing since its sell to modern consumers, that means marketing emergence in the 1990s. However, its ever-changing options challenge business online, increasingly through social media and mobile executives to create the most effective campaigns, and to determine whether trendy apps. (Education Images/Getty Images) tools deliver the best return on investment. By 2019, U.S. advertisers will spend $103 billion on search marketing, display advertising, social media marketing and email marketing— more than on broadcast and cable television advertising combined, Forrester Research forecasts. That's up from an estimated $67 billion in 2015. While interactive marketing will overtake television advertising by 2017, its growth rate is starting to slow slightly, according to Forrester. 3 Global Internet Access Rises Percentage of households with Internet access, 2005–14 Page 2 of 23 Digital Marketing SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. Source: “Key ICT indicators for developed and developing countries and the world (totals and penetration rates),” International Telecommunication Union (ITU) /ICT Indicators database, undated, http://tinyurl.com/pyr44mv Across the globe, more households are connected to the Internet, but developing countries still lag. In 2005, only 8.1 percent of households in developing countries had Internet access; in 2014, 31.2 percent did. The percentages are far higher in developed countries: 78.4 percent of households were connected in 2014, up from 44.7 percent in 2005. The Cambridge, Mass.-based research company in a report attributed this growth to three factors: the recovering economy; media proliferation, particularly the growth of interactive media; and a growing body of evidence that digital marketing works. “Marketers now have 15 years of experience from which to build the case for digital,” Forrester said. Also from the report: In a survey of 395 North American and U.K. enterprise marketers, 62 percent said they expected their digital marketing budgets to increase in 2014; only 8 percent expected a decrease. (Twenty-nine percent expected the budgets to stay the same, and 1 percent didn't know.) Indications are that marketers are staffing up. The survey group said their interactive marketing teams consisted, on average, of 18 staffers. As a whole, more than 40 percent of companies surveyed devoted more than 25 workers to interactive marketing, and 12 percent devoted 16 to 25. Consumers are spending more time on interactive media, but marketers' spending doesn't always track this trend. Surveys of U.S. adults online found they spent 32 percent of their media time watching TV in 2014, down from 34 percent in 2009, while TV ad spending increased to 43 percent from 31 percent of budgets. Media time spent on the Internet rose to 52 percent in 2014 from 45 percent in 2009; ad spending also increased, from 12 percent to 24 percent. Digital marketing is “more than an incremental step in marketing,” says Christine Barton, a partner at Boston Consulting Group (BCG). “I think it is shifting the way marketing and media are consumed.” She adds, “It's also changing the way that consumers interact with the retailer experience, as well as [with] retailer brands and branded- manufacturer brands.” By its nature, digital marketing is “two-way reciprocal marketing,” Barton says, as opposed to traditional “push marketing” from companies to consumers. Reciprocal marketing involves “a more holistic and systemic engagement or conversation, where the company is listening and responding as much as talking and pushing its point,” she says. Digital marketing also takes advantage of millennials' obsessive use of mobile devices, especially smart phones, Barton says. Millennials are “just the lead indicators for the Gen X and baby-boomer generations” when it comes to new digital behavior such as using mobile Page 3 of 23 Digital Marketing SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. devices as shopping aids, she says. Global Digital Ad Spending to Top $200 Billion by 2018 Digital advertising spending worldwide, 2012–17 (in $U.S. billions) Source: “Digital Ad Spending Worldwide to Hit $137.53 Billion in 2014,” eMarketer, April 3, 2014, http://tinyurl.com/nwkn8qo Market research analysts project worldwide spending on digital advertising will grow to more than $200 billion by 2018, nearly double the total spent in 2012. According to estimates, companies will have spent $137.5 billion on digital advertising by the end of 2014. As with any marketing effort, a major question is whether digital marketing improves business results. “If you believe the capital being allocated towards it is any indicator that it works, the answer is overwhelmingly yes,” says Scott Galloway, a marketing professor at New York University's Stern School of Business and the founder of business intelligence company L2 and of RedEnvelope, an online luxury gift company (now under other ownership). Digital marketing is “growing faster than any other marketing channel out there, so it either works well or we're all really stupid, because we keep spending more and more money on it,” Galloway says. Gartner Inc., a Stamford, Conn., information technology research consultancy, found in a survey of companies with $500 million or more in annual revenue that their marketing budgets were 10.2 percent of revenue in 2014, with half the companies planning to increase spending in 2015. Some 68 percent of these companies had a separate digital marketing budget, averaging a quarter of the total marketing budget, and this category showed a steady rise. 4 “Progressive companies tend to place more priority and accountability on digital marketing,” a Gartner analyst wrote. 5 Yet marketers cannot count on digital taking over and other mediums disappearing, says the man credited with inventing the Web's banner ads. “A lot of people will predict banners will go away, or TVs will go away. They'll all be here. Nothing will replace something else,” says Joe McCambley, co-founder and creative director of The Wonderfactory, which works in content marketing and app development, often for major publishing companies. Of course, companies face pitfalls in back-and-forth online communication with customers. Even as companies are promoting a product, consumers may be slamming it via social media—think of online reviews and Twitter backlash. Just one