Digital Marketing Excellence - 3

* Digital models
The business world is changing faster than ever before. Whether business models, revenue models, communications models or buying models, old models are being replaced by new and revised models.

before exploring the different models, what is a model exactly? A model is anything that represents reality. It could be a model aeroplane, a map, a diagram, algebra or a formula. Here, we are particularly interested in descriptive models that describe a process of the current way in which a business operates in its dealings with customers and intermediaries such as media sites or price comparison engines.

One of the reasons why we pursue digital marketing is to sell products and make revenue. There is a wide array of online revenue models for media owners to consider, from traditional CPM and fixed sponsorships through the upstarts CPC and CPA. With contextual advertising options available from the main search networks and with the growth of display ad networks, there are now options for all site owners to review their ad revenue potential.

In digital environments, customers develop new patterns of media consumption and product selection. Brands need to be visible at the right time in the right place as consumers change their pattern. They would use search engines, review sites, and affiliates to choose their preferred supplier. So online marketers need to review their online marketplace models to understand their digital market-space that can deliver competitive advantage.
The online marketplace is the click ecosystem which describes the flow of online visitors between search engines, media sites, other intermediaries, your competitors and you. Prospects and customers in your online marketplace will naturally turn to search engines to find products, services, brands and entertainment. Search engine act as a distribution system which connects searchers for different phrases to sites. Companies need to analyze consumer use of key phrases entered from generic searches for products and services, more specific phrases and brand phrases incorporating their brand and competitor names. Companies also need to discover which online intermediaries or competitors have the best share of these phrases or are popular in their own right as well-known brands that attract visitors directly.
The main members of the e-marketplace (intermediary) model are Customer segment, Search intermediaries, Intermediaries and media sites, and Destination sites. Search intermediaries mostly means the main search engines like Google, Naver, Daum and so on. Intermediaries and media sites could be Mainstream news media sites or portals, Niche/vertical media sites, Price comparison sites, Superaffiliates like e-commerce, Niche affiliates or bloggers. As you can guess, Destination sites mean the sites that the marketer is trying to generate visitors for. It is vital that marketers understand their position in the online marketplace to be successful in digital marketing as analysis of their online marketplace can help them to understand customer behavior in order to identify potential search terms with which you should promote your company and also potential partners or media buys.

We know that different customers but in different ways. Some visit your web site once and immediately buy. Others visit several times before buying. That is, different customers take different journey using different channels to buy the same products. (Channel include display ads, paid search (PPC), e-mail, partners/affiliate blog link, online PR, social media platform and so on) Therefore, you need to clearly understand which sources of traffic and which campaigns are most effective. The way of understanding their effectiveness in digital marketing is called 'attribution model'.

Setting up clear goals in analysis is the first step to understanding which sources of traffic and which campaigns are most effective. The second step is tagging different media channels. For example, original search, direct referral, etc. One thing to take note of here is to use unified tracking system. If not, you will suffer from discrepancies between systems.
In simplifying the understanding of media effectiveness, a common approach is to attribute or credit the sale or other outcome to the last click. This is a good approach in that it avoids double counting. However it doesn't reflect the role of the mix of media such as display advertising and natural search in influencing the sale. Therefore, It is told that measuring the last click wins only reveals which channel the consumer come from on their visit when converting.

To complement the defeat, There is another approach of revealing the relative importance of different media channels in influencing conversions. This is called multi channel funnels analysis and it reveals the grouped combination of channels which resulted in conversion. This analysis for revealing purchase path can be carried on complex levels over just two-level.
It is worth remembering two things using the analysis. (1) Always set up your analytics to separate visitors who search using brand name and remember that although these reports give an insight, they do not give a complementary accurate analysis as all of this is cookie dependent. (2) Many visitors use several different devices. Each device is counted as a new visitor and some visitors systems delete cookies.
Even though there is some issues, digital marketing can ultimately drill down to very granular details to isolate and identify which channels (or tools) are performing.

The easier facilitation of customer communities came with the internet. In the communities, customers talk to each other (C2C) and back to the company (C2B) and also back to opinion former and influences. The flow of communications between customers and opinion leaders - all built around the brand. The company facilitates these conversations. In doing so, it keeps close to customers as it can look and listen to what being said.

Along with the change, advertising agencies are confronted by another big shift in their communications models. They have to move from getting attention to 'giving attention'. Now when visitors land on the brands site, It is the brand that must pay attention. And they are starting to figuring out which effectively lets brands present visitors with information tailored to their specific interests. To make the most of the advertising opportunities on social media, marketers need to take this targeting to the extreme, create custom messaging for as many different target groups as feasible, and get really granular and test enough variations to properly optimize your campaign.

If we need to tailor ads to customer segments, It is also important to know how customers process information. The book introduces two models one for display ads and one for web sites.

The first one is ALEA model (Attention, Learning, Emotional responses, Acceptance). I assume many almost all of the people who study marketing is familiar with this model. The second one is Hofacker's model. Please note the followings.

1. Exposure: is the message there long enough for a consumer?
2. Attention: what grabs the attention? movement? color?
3. Comprehension and perception: How does the consumer interpret the stimulus?
4. Yielding and acceptance: is the information accepted by the customer?
5. Retention: how well can the customer recall their experience?

If they process information like models above, what goes through a customer' mind moments before they purchase? To sell products, you have to know how and why people buy. In the book, two scenarios are suggested.

First, A high involvement purchase. For a high involvement purchase like a car, customers go through a rigorous buying process from problem identification to information search to evaluation to decision to buy (action) to post purchase. You need to remember that it is not a linear sequence of a stage. The whole buying process has become the dynamic customer journey. In the digital world, customers also search for other people's opinions about their customer experience (CX) from companies' products. They seek validation from someone like them in the 'influence loop' when going through the decision making process.
Obviously, however, not all purchases require this much effort. These are many low-involvement purchases that we make everyday, which do not warrant this kind of effort. Explanations for this is also diverse. Sometimes, it is explained as customers skipping or addressing a stage simply in the process. And sometimes it is explained with other models. The AIDA model is representative. According to this model, customer simply go through 4 stages (attention, interest, desire, action) in the low-involvement purchases.

Anyway, no matter what purchase model a customer go through, what you need to remember here os that the actual purchase of a product or service is not the end of the marketing process, rather it is literally in the middle of buying model.

In the process of customers repeating their purchases some customers become loyal. Actually 'repeat business is five times more profitable than new business. Therefore having loyal customers is one of the most important parts in business. Then how can a brand develop loyalty and strong relations with customers? Quality product is basic prerequisites. That is not all. In fact, satisfying customers should be replaced by delighting customers, since satisfied customers still defect. CRM guaranteeing privacy and security should follows. And then you need to add value to the relationship, reinforce brand values at every opportunity, integrate your products and services into your customers systems. By extending the partnership and share systems, you can form a certain amount of 'lock-in' in the relationship with your customers where customers avoid the disruption caused by changing suppliers.
Another key aspect of loyalty is advocacy. Some argue it is the ultimate measure, with the answer to the ultimate question 'Would you recommend us?' needing to be 'Yes' for as many of your customers as possible. The value of promoters is generated by positive word of mouth and they also  naturally have higher retention and spend rates. At the same time, the influence of detractors needs to be assessed since they can create negative word of mouth. Take the Dell, reports estimate that the average consumer is worth US$210, Whereas a detractor costs the company US$57 and a promoter generates US $328. I hope you check the page 138 and 139 to check out the ways of facilitating online advocacy.

As we can see at the Dell's case, the power of network effect is potent. Moving from a broadcast network to a telephone/email network, social media has grown so rapidly because we are social animals. We like to communicate, be part of a community, interact with each other. Nevertheless, it is definitely hard for customers to participate in the community of your brand. the majority of visitors to a community lurk or don't participate. According to Jakob Nielsen, 90% of users are lurkers who never contribute, 9% of users contribute a little and 1% of users account for almost all the action. But once a customer turns into an active player, the influence that he have on other customers and  a business is huge. (refer to the Reed's law) in the digital world unlike a broadcast network and a telephone and email network era. loyal or active customers can even influence the way a business is run.

The Ladder of Engagement is intended to show how customers can drive the business (using social media culture) through mobilizing customer engagement in a carefully structured way. Marketers who understand and influence customer engagement better than their competitors are more likely to become brand zealots. Therefore it is important to identify engaged customers and start a brand ambassador program to further strengthen the relationship and energize their word of mouth. The ideal customer doesn't have to be someone who buys a lot. The ideal customer could be an influencer who is a small irregular buyer but who posts ratings and reviews, as the reviews could influence over 100 people. But it is not the end of the Ladder of Engagement. It goes far beyond just shaping stories and messages as it ultimately goes through to shaping products, services, processes and even the very way a business is run.

Marketers need to know about the sentiment, opinion and affinity a person has towards a brand. This is expressed in diverse form such as repeat visits, purchases and so on. Markers need to know whether customer engagement is measured and used to improve products, services and processes. It is possible to increase some customers' level of engagement by moving them up from giving a product rating, to actually testing and buying the ideas. Many of these moving up the ladder will become brand champions and ambassadors. It is needless to say it can create brand loyalty. This is why moving some customers up 'the Ladder of Engagement' is valuable.

the ladder of engagement (Smith and Zook (2011))

The highest level of co-creation in the ladder occurs when customers co-create the products that they subsequently buy. Not everyone will rise to the top of the ladder. According to 90-9-1 rule by Nielsen, may be only 1% of web site visitors will rise. But the influence that those 1% that they have is tremendous this is why identifying engaged customers is important. While moving customers and other stakeholders up the Ladder of engagement strengthens brand loyalty and boost sales, it does require careful planning, systems and resources. Using the Ladder of Engagement is a long-term strategic decision.

(As the book is mentioning the beginning of a relationship with customers and I think it is important I want to write that down here. "Remember that the second  visit to a web site is the beginning of a relationship, Therefore it is always worth asking the question: what is a brand doing  to bring relevant visitors back to the site?")

Each step should be carefully managed to move customers up the ladder. Moving up the ladder doesn't happen in sequence and from the beginning. Customers can start to climb the ladder from the middle. What is important is to choose right steps for your offering. Brands use different steps depending on their strategies and offerings. Amazon make good use of Rating and reviews and the Home Depot exploit the step of discussions by inviting customers to ask DIY questions and eventually getting other customers to answer the questions. other companies make the most of opportunity to use the steps in the higher levels of engagement by holding a contest for ads, brand names or even products and services. These require expert management skills covering legal rights, financial agreements, regular communications, project management. In fact, this also requires crystal-clear rules, clear leadership and transfer processes for setting goals and resolving conflict. Once mastered, however, the results can be fantastic as essentially the business becomes a pure customer-driven business.

Now in digital world, consumers have an almost effortless ability to monitor and quality, pricing, availability, and business sentiment and find alternatives. Therefore, It is clear that You can only get a good result online when you have good online marketing models.