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Lectures Digital Marketing Analytics
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Lecture 1What is digital marketing?
Marketing is defined by the AMA as:
“The activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large.”
Online marketing the AMA defines as:
“Term referring to the Internet and e-mail based aspects of a marketing campaign. Can incorporate
banner ads, e-mail marketing, search engine optimisation, e-commerce and other tools.”
Digital marketing according to the financial times is:
“The marketing of products or services using digital channels to reach consumers. The key objective
is to promote brands through various forms of digital media.”
“Digital marketing extends beyond internet marketing to include channels that do not require the
use of the internet. It includes mobile phones (both SMS and MMS), social media marketing, display
advertising, search engine marketing, and any other form of digital media.”
Moore’s Law
- Moore’s Law states that the number of transistors in a dense integrated circuit doubles
approximately every two years.
- Also applies to many other (digital) electronics, such as quality-adjusted microprocessor
prices, memory capacity, sensors and even the number and size of pixels in digital cameras.
- Result is that the digital possibilities grow exponentially.
o For example, double speed of internet, double storage.
Nielsen’s Law
- Increasing internet bandwidth
- Annualised growth rate of 50%
- Compound growth over 10 years 57x
Data is not a goal in itself, it is about what you do with the data
You have to combine data to generate information. When you transfer this information into insights
it becomes useful and becomes knowledge.
,Market share of online retailing growing
- Online retailing wins market shar from traditional retailing
- There is quite a large difference between categories.
Online advertising market
New channels and possibilities to reach consumers.
Research possibilities in digital marketing
Digital marketing has some advantages in terms of conducting marketing research:
More and richer data is available
o In traditional retailing, data usually is collected through store scanners or via
surveys.
o Disadvantages of this is that the impact of marketing (e.g. pricing, displays,
advertising) can only be investigated at the aggregate level.
o The amount of usable observations is therefore limited.
o In online retailing individual customers, the (marketing) contacts they had and their
shopping baskets can be investigated. Thus, targeting can be done individually
o With traditional (mass) advertising, only information is available on the reach and
impact of the campaign at the aggregate level.
o For online advertising, you can investigate more closely which customers have been
reached and how this changed their behaviour.
o Customers can be tracked individually through their different stages through cookies
and other tracking techniques (e.g. clickstream data)
o Relatively easy to do large scale A/B testing (e.g. groups of customers see different
versions of a website, receive different mails, or get different display ads). Easier to
do big scale experiments
o Empirically investigate word-of-mouth through social media, mobile communication,
etc.
Lecture 2
Online advertising
Online advertising growing, search is the biggest.
Forms of online advertising
There are many different forms of online advertising available:
- Email advertising
- Display banner advertising
- Search engine advertising
- Retargeting
- Affiliate programs
Compensation program with affiliate links. If you share this affiliate link, you get a
percentage of the generated revenue.
- Online video ads
,Compensation methods
How do firms pay for online advertising
- Advertisers pay the content provider for the advertisement space
- In traditional (mass) media the costs of an advertisement or commercial depends on a few
factors:
o Type of advertisement (print, sound, video)
o Size and position of the advertisement
o The audience size (reach)
o The target group (e.g. broad vs specific)
o The quantity (in which you buy the space, e.g. discount on larger amount)
- For online advertising there are a few different payment schemes, including:
o Cost per mile (CPM): Amount to be paid per 1,000 ad impressions
o Cost per click (CPC): Amount to be paid per click on an ad
o Cost per action/acquisition (CPA): Amount to be paid (or a share of revenue) when a
click on the ad led to a certain action (e.g. filling in a form, buying a certain product
or subscribing to a service).
Simple online path to purchase
- When having data about the amount of impressions, clicks and
conversion per advertisement, you can easily compare different
advertisements and (in principle) calculate the ROI of different
campaigns.
Click through rate is high when 1,500 by 100,000 impressions.
- In practice it does thus not matter that much if the payment is on
the basis of CPM, CPC or CPA. These numbers are easily
comparable if you know the (expected) click-through rate and the
(expected) conversion.
Differs due to the goals of the campaign:
o Brand awareness (as many views as possible, not as
interested in website visits and conversion)→ typically
manager chooses for CPM, so pay for the reach of the
campaign
o Generate traffic → pay per click, CPC
o Increase revenue→ CPA
Must know how they relate to one another!
e.g. question on exam: “Is this a realistic return on investment or are there any drawbacks?”→ Not
the actual return on investment (ROI). Totally unknown company. People were only aware of the
company due to the banners (impressions). People only clicked on the website because of the
banner and afterwards bought something because they saw the banner. If so, the ROI is accurate.
Take Amazon as an example, what if they didn’t post the banner. Would these website visits still be
there without the campaign? Probably partially yes because of the big brand awareness of Amazon.
Conversions would have happened either way, also without the banners.
Search engine advertising usually uses cost per click, CPC.
, Organic and sponsored search results
1. Type in key word
a. Organic search results
Best options according to the algorithm the search engine uses, companies don’t
have to pay to be viewed
b. Sponsored search results
Paid adds, relate to the key word but companies pay to be included based on CPC.
Companies have to indicate how much they want to pay, based on that they will be
ranked by the search engine.
CTR search results
- Most attention is given to the first few search results.
Rank 1: 30% of all traffic
Rank 2: 15% of all traffic
Rank 3: 5% of all traffic
Other ranks: Less than 5%
- Scoring high on Google (and other search engines) on important keywords is thus of great
importance
- This can be reached by being very relevant, conducting ‘Search Engine Optimisation’ and by
Search Engine Advertising
Search engine optimisation
- Search engines use complicated algorithms to determine the ranking of the search results
for each keyword (combination).
- The exact algorithms are secret and change over time.
- It is however known what important components are, and how you can improve a website
to perform better at search engines.
- This is important to increase traffic to the website, both through organic (free) search, but
also for paid search!
Search engine optimisation
- Have unique content, which is well written, for humans, focusing on a specific (sub) topic.
- Make the content fit a (few) specific keywords on
which it has to perform well
- Optimise the technical side of the website
o Uptime
o Speed
o No errors
o Well structured
o Up to date
- Make sure (good) external sites link to you, including
social media.
- Monitor the performance of the website on search
engines, improve continuously, check what visitors are looking for, conversion/bounce rates,
etc.
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